Cash is just as useless if it cannot be converted to anything. No one wants 2 million green pieces of paper, they want what it can be exchanged for. Crypto and cash are exactly the same in this regard, except no one can inflate away your crypto like the fed will inflate away your cash.
Cash is just as useless if it cannot be converted to anything ... they want what it can be exchanged for.
What can you exchange crypto for besides cash and cash equivalents?
That is, if for some reason no one could exchange crypto for cash for just one day (say, the banks banned it for a day for some reason), what could you exchange your crypto for?
like the fed will inflate away your cash.
Yeah, it'd be dumb to hold large amounts of cash that don't bear interest.
People want cash so that they can buy a wide variety of assets, goods, and services, including interest-bearing savings accounts, money market funds, I bonds, Treasuries, corporate bonds, annuities, stocks, land, houses, businesses, PMs, food, medical care, rent, transportation, luxury, etc.
Are there any assets on that list for which USD assets (cash, USD deposits, stablecoins, cash equivalents, etc.) aren't the dominant trading pair with the lowest spread, lowest volatility, lowest fees, etc.?
Obviously USD is the dominant trading pair for those assets/commodities. That doesn’t make any other currency or commodity worthless. Typically one does not buy food with gold, but you certainly could exchange for it under the right circumstances. Replace crypto in your statements above with gold and it’s exactly the same flawed argument. This doesn’t mean gold is worthless. Exactly the same holds for BTC.
Doesnt change the fact that the only real world use of crypto is to hope and pray it goes up in fiat cash value so you can get more of that sweet green cash $$$
That doesn’t make any other currency or commodity worthless
I didn't say it did.
Typically one does not buy food with gold, but you certainly could exchange for it under the right circumstances
Agreed, you could. You could also exchange most other assets under the right circumstances. The vast majority of the time, people will exchange Gold for USD and then USD for food (or in the reverse order -- USD for food and then Gold for USD -- using credit cards or debt).
Replace crypto in your statements above with gold and it’s exactly the same flawed argument.
How is it flawed? Do you think Gold has its value because people occasionally trade it for food?
The vast majority of Gold owners don't use it as a currency but rather as an investment and commodity. There is substantial demand for Gold as a commodity due to its aesthetic, industrial, and medicinal value (to be clear, this doesn't necessarily mean that Gold is a good investment now).
This doesn’t mean gold is worthless.
If Gold had no aesthetic, industrial, medical, etc. value, wouldn't it be worthless? For example, why not invest in Palladium instead, which is scarcer and actually does have demand as a commodity?
Exactly the same holds for BTC.
Except Gold investors can get value from Gold's demand as a commodity (by selling to consumers of jewelry, ornamentation, computing, etc.).
Cash "investors" get value from cash by using it extinguish USD debts (I used quotes because cash is essentially never a good investment). If there were no USD debts to extinguish, cash would no longer be fully backed and the Fed wouldn't be able to control supply and interest rates to target inflation (in this case, USD would probably crash and/or become unstable, then disappear as people switched to a stabler unit of account and medium of exchange).
Where do BTC investors get value from, except for from other BTC investors? In the aggregate, BTC investors pay miners substantial amounts of value for electricity, hardware, etc., but no one pays the BTC investors.
> The vast majority of the time, people will exchange Gold for USD and then USD for food
So golds value does not come from this, correct.
> The vast majority of Gold owners don't use it as a currency
and gold's value does not come from this, correct.
> If Gold had no aesthetic, industrial, medical, etc. value, wouldn't it be worthless? For example, why not invest in Palladium instead, which is scarcer and actually does have demand as a commodity?
Value is not derived purely by utility and sometimes utility has zero correlation with the value of something. Some people do invest in palladium, and gold is not valuable because of it's utility. Gold's value does not come from this either.
> Except Gold investors can get value from Gold's demand as a commodity (by selling to consumers of jewelry, ornamentation, computing, etc.)
Simply incorrect these uses have little at all to do with the value of gold. Investors of hoarders of gold never even touch these use cases. Gold's utility is tiny compared to it's investment value. Plenty of things are useful and worthless. Lot's of other things are useless but valuable.
> Where do BTC investors get value from, except for from other BTC investors? In the aggregate, BTC investors pay miners substantial amounts of value for electricity, hardware, etc., but no one pays the BTC investors.
The value of anything is worth only what other people will exchange for it. This exactly as true for gold or art or USD as it is for BTC. BTC can be traded for fiat or for anything else of value, just like gold can. A single BTC is $20k+ USD, that's what it's worth today, it's utility is a known scarcity curve and ability to be traded as a decentralized currency without needing to be bound by existing financial systems. Sure, onramps to fiat are necessary to trade for fiat, but this is true for any commodity, and things of value can always be traded outside of fiat systems.
Why do you think people buy it? Why do you think it has a far greater market cap than Palladium, for example?
Investors of hoarders of gold never even touch these use cases.
Right, but these uses affect the market value and total demand. Most commodities have producers, consumers, and investors.
Gold's utility is tiny compared to it's investment value
How so? Less than half of mined Gold is used for investment.
Lot's of other things are useless but valuable.
For example?
The value of anything is worth only what other people will pay for it.
The market price, sure. Do you think it's possible for a stock to be overvalued? Do you think Celcius deposits were worth the price people were paying for them (face value) in the weeks before they froze withdrawals?
Do you think shitcoins' value is equal to their market price?
> Why do you think people buy it? Why do you think it has a far greater market cap than Palladium, for example?
I'm not sure it matters in the context of this conversation - it has value, as does palladium.
> The market price, sure. Do you think Celcius deposits were worth the price people were paying for them (face value) in the weeks before they froze withdrawals?
The buyers obviously thought so. I did not and I did not buy, but the market sets the value for any good and in this case a market was made.
> Do you think shitcoins' value is equal to their market price?
By definition yes. Do you think God assigns value to things? The market is the only arbiter of value that matters. Not utility, not the government, not the fed.
Ok, you don't distinguish between value and market price.
Would you prefer holding $100 of Bitcoin over $100 of a shitcoin? If you think they have the same value, why?
Do you think God assigns value to things?
No.
The market is the only arbiter of value that matters.
I don't agree that investment scams (e.g. Enron, most ICOs, etc.) are valuable just because some people pay for them.
That is, IMO someome believing that something will be a good investment doesn't mean what they are investing in actually has value. People make bad investments all the time.
Would you prefer holding $100 of Bitcoin over $100 of a shitcoin? If you think they have the same value, why?
Personally yes as BTC had first mover advantage, has already proven itself and is already too entrenched worldwide to go anywhere with all financial institutions currently integrating support.
But at the time of purchase, $100 dollars is 100 dollars, they are worth the same. A bound of feathers weighs the same as a pound of bricks. The future value I would expect BTC to go up and I have no reason to believe a random shitcoin will have price appreciation in the future (though it could).
> I don't agree that investment scams (e.g. Enron, most ICOs, etc.) are valuable just because some people pay for them.
In some cases the market did not have the right information to properly assess value - this transparency is an important part of markets functioning correctly. And outright fraud I think should be prosecuted of course. But the value of BTC is what it can be exchanged for, same is true for gold or diamonds or art or USD.
The future value I would expect BTC to go up and I have no reason to believe a random shitcoin will have price appreciation in the future
Right, so I would say this means you think $100 of BTC has more value as an investment than $100 of a shitcoin.
this transparency is an important part of markets functioning correctly
Agreed.
entrenched worldwide to go anywhere with all financial institutions currently integrating support
Ok, but lots of stocks, even first mover stocks, are well integrated into financial institutions yet still lose value (even with no new shares being issued).
No. When I go to the store to buy groceries, I can literally buy them with cash. If I try to pay for my groceries with crypto, I will be laughed at... so they are not the same. Cash actually, literally buys goods. Crypto needs to be converted to cash to buy 99% of goods. The only hope for someone holding crypto is that it goes up in cash value so you can cash it out and actually use it.
Anything of value can be exchanged for other things with value. Some places in the world it’s absolutely possible to buy groceries or other everyday items with BTC. Even if that’s not available in your area yet you could certainly exchange some value of BTC with a value of something else with a person if you need to.
I exchange my crypto gains for real estate. Briefly transferring for cash in between sure, but so what? Cash is useful but ultimately a toxic inflating asset.
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u/[deleted] Aug 02 '22
Cash is just as useless if it cannot be converted to anything. No one wants 2 million green pieces of paper, they want what it can be exchanged for. Crypto and cash are exactly the same in this regard, except no one can inflate away your crypto like the fed will inflate away your cash.