Crypto Is Money Without a Purpose - It isn’t a financial service and shouldn’t be regulated as one. Laws on gambling are more relevant.

WSJ ^ | 12/19/2022 | Todd H. Baker

[catnipman]

crypto trading looks a lot like the forms of finance we’re all familiar with. It’s made up of things called “exchanges,” “brokers,” “lenders,” “deposits” and “hedge funds.” Crypto also carries the special mystique of the blockchain, which has let traders treat critics as anti-innovation Luddites.

[however] the purposelessness of the crypto trading system emulates finance the same way the board games Risk and Monopoly emulate war and real-estate investing.

Crypto trading is also gambling. It performs no intermediation function to help expand the economy or improve society. Crypto trading is, as “Seinfeld’s” George Costanza might have said, finance about nothing.

Crypto trading should be regulated for what it is—a form of gambling that emulates finance—and not what its advocates tell you it is.

[entropy12]

I have masters degree in engineering. ANd 37 years experience practicing my profession in real world.

Here is what I think. RELY MORE ON ACTUAL RESULTS THAN THEORIES AND OPINIONS.

So examine results. Bitcoin has dropped to 1/3 from it’s recent high. That is 66% drop. US dollar has dropped 17% in 2 years. The actual evidence is all that counts.

[entropy12]

That is how all PONZI schemes work. Those who get in early benefit a lot. Late investors lose everything when every Ponzi scheme goes bankrupt.

[Vermont Lt]

So has Netflix.

What part of, “ it’s not an investment” do you guys not understand. Lol.

[Rlsau1]

I agree, energy is the world’s reserve currency. Without it we are back to the stone age (metaphorically speaking). Gov’t hates all things they can’t control to their benefit. Bitcoin is a different animal from all the rest. It has value because some entities are willing to take it in exchange for hard goods. This is done in “the market” which is the best vehicle . Central planners (governments) screw up everything they touch, always have and always will. As great empires destroy themselves it is always from within, and the process is repeating. Western civilization is late in the 3rd quarter or early in the forth of this current game. Capital Controls always enter the picture at some point toward the end as the overlords are desperate to prevent the total collapse long enough for themselves to escape. Bitcoin would certainly be a handy thing to have access to if you needed to flee to someplace outside the blast zone.

[catnipman]

“without you being aware, on one word: perceived.”

and you know i wasn’t aware of the word “perceived” when i used it, how? mind reader, are you?

[Wuli]

As pure as the blockchain idea is (totally “Libertarian”) as a value cryto relies on the same thing all things rely on - belief in a given value, regardless of the route by which that value has arrived. If you accept a cost value you can pay it if you want to.

However, there are physical things outside of a stock or a bond, including physical activities and the value of those activities (capital investment, production of goods or services, revenues, supply and demand of resources, ect, ect, that are BEHIND the values of stocks or bonds.

Cryto has none of that, and while every belief in a value of something is in part a bet, cyrpto is a pure bet and nothing else.

What many crypto buyers failed to understand was that no where near all or most crypto buyers would be crypto true believers, that many would be just using crypto as a speculative hedge, and when other investments went sour they’d sell their crypto holdings to offset or cover losses in other things. Which is exact]ly what has happened lately. Crypto has hit lows it can’t seem to get off of as losses in stocks see near eqqual sales of crypto to cover for those losses. If crypto had ever been what its true believres sold it as, it would have held up in its highs when stocks decclined. It can’t because it will never be a trading meadium unaffected by trades in other things. Nothing is.

[entropy12]

I am too old and too wise to “invest” in any single company or crypto. I only invest in 500 biggest companies in United states. It is easy to do. Just buy index fund dealing with SPX 500 companies.

[catnipman]

“However, there are physical things outside of a stock or a bond, including physical activities and the value of those activities (capital investment, production of goods or services, revenues, supply and demand of resources, ect, ect, that are BEHIND the values of stocks or bonds.”

it’s called “utility value”, and you are correct, crypto has zero utility value ...

[Owen]

I am a mind reader. Right now you’re thinking you wish there wasn’t that red illuminated text top of the FR page that makes you read a reply.

[Vermont Lt]

That’s fine. I am mostly in cash and commodities. What works for you is good for you.

My point is that any internet bulletin board is going to give you bad financial advice. They can point you in a direction…but taking advice from strangers is never a good idea.

What I see mostly about cryptos is a superficial understanding of them as an investment. 99% of the time the information is either misleading, inaccurate and often times completely wrong.

I guess I should stop trying to educate, as most folks on FR are not interested in learning or understanding the basics.

[Gunslingr3]

If the answer to government is anarchy then that’s not much of an answer.

Too vague and loses the point. The solution to government theft of your purchasing power via inflation of the money supply is money they can’t inflate.

Or as freedom advocate and economist Friedrich Hayek observed, “I don’t believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can’t take them violently out of the hands of government, all we can do is by some sly roundabout way introduce something they can’t stop.” That was in 1984, before a medium of exchange that didn’t require third party trust or government backing was created in 2009.

[who_would_fardels_bear]

The problem is that you still need to trust the people who own the nodes. Who owns the nodes? Are these really distributed among lots of different people, or are they being monopolized by a few people? My understanding is that there are only about ~10,000 full nodes which are the ones that are the most important.

However bad government "backed" currency is, there is some hope of getting the government involved if theft occurs. If I use my money or credit card to purchase an item, and I don't receive that item, then I can declare a theft and the government could theoretically help me to either get the item I paid for or help me get my money back.

If I'm using a decentralized currency, however, then why should the government help me? I pay for a Rolex and the Rolex doesn't arrive or it's a fake. What is my recourse if I used Bitcoin? I can point to the fact that the transaction is indelibly tracked in the blockchain, but where is the Rolex? Did I actually receive it and am lying about receiving it, or did it never arrive? Why should the government get involved?

Also, right now it appears I really can't use Bitcoin to buy things. Transactions take a long time to complete with all of the mining and checks required to add it to all of the relevant copies of the blockchain. I can pay a higher fee to speed up my transaction, but now I might be better off using cash or credit.

If Bitcoin weren't currently subjected to speculation, then its value would be tied to a specific algorithm that has no relation to the increase in global wealth. It could be inflationary or deflationary just like fiat currency if the growth of Bitcoin doesn't keep pace with the supply/demand.

[Gunslingr3]

However bad government "backed" currency is, there is some hope of getting the government involved if theft occurs.

So who in the government will give me back the value stolen via inflation over my lifetime? They’re not going to, and the inflation will only continue to erode the value of savings denominated in USD.

If I use my money or credit card to purchase an item, and I don't receive that item, then I can declare a theft and the government could theoretically help me to either get the item I paid for or help me get my money back.

You’re conflating a service provided by credit cards companies to encourage you to use their medium of exchange with the government. The credit card companies write off fraud as a business expense, they don’t use the government to make you whole.

If I'm using a decentralized currency, however, then why should the government help me? I pay for a Rolex and the Rolex doesn't arrive or it's a fake. What is my recourse if I used Bitcoin? I can point to the fact that the transaction is indelibly tracked in the blockchain, but where is the Rolex? Did I actually receive it and am lying about receiving it, or did it never arrive? Why should the government get involved?

Not bad questions, and the same questions apply to cash, but without the block chain record of money changing custody. Turns out Silk Road solved these concerns - without the government.