@ianrussell said:
Crypto is only part of the reason that the coin market is heating up.
And the other part of Crypto to remember, is that BTC used to be $50. It's now $49,000. Even if it crashes to $25,000, it's still worth 500x what it was.
Ian
It’s far more extreme than that! It used to be fractions of a penny back in 2010. Also, it has crashed > 80% multiple times in the last decade. There’s no rational floor (or ceiling, frankly, other than the total wealth in the world). I’d be interested to know what the average cost basis is for current holders.
I was trying to be conservative with my comparison. As BTC is used more, the crashes should not be as severe.
@ianrussell said:
Crypto is only part of the reason that the coin market is heating up.
And the other part of Crypto to remember, is that BTC used to be $50. It's now $49,000. Even if it crashes to $25,000, it's still worth 500x what it was.
Ian
It’s far more extreme than that! It used to be fractions of a penny back in 2010. Also, it has crashed > 80% multiple times in the last decade. There’s no rational floor (or ceiling, frankly, other than the total wealth in the world). I’d be interested to know what the average cost basis is for current holders.
I was trying to be conservative with my comparison. As BTC is used more, the crashes should not be as severe.
Ian
My question, and that of others I discuss this with, is whether BTC is used. I know it has the "promise" of use, but is it actually used for things other than speculation (and paying ransomware)?
@ianrussell said:
Crypto is only part of the reason that the coin market is heating up.
And the other part of Crypto to remember, is that BTC used to be $50. It's now $49,000. Even if it crashes to $25,000, it's still worth 500x what it was.
Ian
It’s far more extreme than that! It used to be fractions of a penny back in 2010. Also, it has crashed > 80% multiple times in the last decade. There’s no rational floor (or ceiling, frankly, other than the total wealth in the world). I’d be interested to know what the average cost basis is for current holders.
I was trying to be conservative with my comparison. As BTC is used more, the crashes should not be as severe.
Ian
My question, and that of others I discuss this with, is whether BTC is used. I know it has the "promise" of use, but is it actually used for things other than speculation (and paying ransomware)?
See the other thread. Total transactions are now higher than PayPal.
Generally agree, but a lot of this money was made from "nothing" or very little. There's a lot of speculation involved.
If Bitcoin "crashes" to $5,000, that's still higher than it was as recently as 2 years ago in 2019.
That depends on the coin.
At $0.09 per kilowatt hour it costs about $35,000 to mine a single bitcoin right now. If prices fall too low, the miners simply will not sell.
As an Ethereum miner, my cost per coin is something like $650. But I know that Ethereum swings violently, and I will not sell anything I mine under $4,000. You would have to see some real fundamental changes to get Ethereum holders like me to sell for under our target range.
"It's like God, Family, Country, except Sticker, Plastic, Coin."
@ianrussell said:
Crypto is only part of the reason that the coin market is heating up.
And the other part of Crypto to remember, is that BTC used to be $50. It's now $49,000. Even if it crashes to $25,000, it's still worth 500x what it was.
Ian
It’s far more extreme than that! It used to be fractions of a penny back in 2010. Also, it has crashed > 80% multiple times in the last decade. There’s no rational floor (or ceiling, frankly, other than the total wealth in the world). I’d be interested to know what the average cost basis is for current holders.
I was trying to be conservative with my comparison. As BTC is used more, the crashes should not be as severe.
Ian
My question, and that of others I discuss this with, is whether BTC is used. I know it has the "promise" of use, but is it actually used for things other than speculation (and paying ransomware)?
See the other thread. Total transactions are now higher than PayPal.
Generally agree, but a lot of this money was made from "nothing" or very little. There's a lot of speculation involved.
If Bitcoin "crashes" to $5,000, that's still higher than it was as recently as 2 years ago in 2019.
That depends on the coin.
At $0.09 per kilowatt hour it costs about $35,000 to mine a single bitcoin right now. If prices fall too low, the miners simply will not sell.
As an Ethereum miner, my cost per coin is something like $650. But I know that Ethereum swings violently, and I will not sell anything I mine under $4,000. You would have to see some real fundamental changes to get Ethereum holders like me to sell for under our target range.
OK, but how many bitcoin will you (anyone) mine if it costs $35,000 to mine one but they are available on the open market for $20,000. You may be right about the strength of the hands, but I'd be very surprised if there weren't miners out there who would say "I've invested $350,000 in mining ten coins. Bitcoin is down to $20,000. If I sell now I can at least get $20,000 back. If I wait there is no telling how low it can go." I just described every crash iun history, except for the mining part.
Generally agree, but a lot of this money was made from "nothing" or very little. There's a lot of speculation involved.
If Bitcoin "crashes" to $5,000, that's still higher than it was as recently as 2 years ago in 2019.
That depends on the coin.
At $0.09 per kilowatt hour it costs about $35,000 to mine a single bitcoin right now. If prices fall too low, the miners simply will not sell.
As an Ethereum miner, my cost per coin is something like $650. But I know that Ethereum swings violently, and I will not sell anything I mine under $4,000. You would have to see some real fundamental changes to get Ethereum holders like me to sell for under our target range.
OK, but how many bitcoin will you (anyone) mine if it costs $35,000 to mine one but they are available on the open market for $20,000. You may be right about the strength of the hands, but I'd be very surprised if there weren't miners out there who would say "I've invested $350,000 in mining ten coins. Bitcoin is down to $20,000. If I sell now I can at least get $20,000 back. If I wait there is no telling how low it can go." I just described every crash iun history, except for the mining part.
Many miners continually sell coins into the market to pay for overhead, at a bare minimum. The HODL crowd tends to not be long-term believers, usually just the equivalent of mid-term holders, and even some of those long-term dudes are gradually selling out. Many with substantial amounts of crypto generally slowly sell some holdings. Not all, but many do that.
"It's like God, Family, Country, except Sticker, Plastic, Coin."
The same is true of the stock market. The stock market can increase in value. If there are 1 billion shares of Ford at $20 per share, when the next trade is at $21 then you've added $1 billion to total stock market value. HOWEVER, that is all paper. The only way to unlock that $1 billion is for all of the shareholders to exchange their shares for $21. But is there $21 billion that would come into the market to make those purchases? Probably not.
This makes no sense and has clearly not been fully thought through. Suppose that today there are 1 billion shares of Ford selling at $20 each as has been hypothesized above. Let's further suppose that Ford makes a profit (net earnings) of $1 billion this year. Twenty years from now let's suppose Ford is not only making an annual profit of $10 billion but is paying a dividend of $5 per share. Would you still suggest that Ford is only worth $20 per share? Isn't the $5 billion annual dividend "unlocking" some of that extra wealth? This isn't likely to happen to Ford? Sure, I agree, but I'm almost positive that there is some company that will increase its earnings tenfold in the next twenty years. Many, many companies will increase lesser amounts, but will increase earnings and dividends enough to create real wealth for shareholders. Maybe even Ford.
The same is true of the stock market. The stock market can increase in value. If there are 1 billion shares of Ford at $20 per share, when the next trade is at $21 then you've added $1 billion to total stock market value. HOWEVER, that is all paper. The only way to unlock that $1 billion is for all of the shareholders to exchange their shares for $21. But is there $21 billion that would come into the market to make those purchases? Probably not.
This makes no sense and has clearly not been fully thought through. Suppose that today there are 1 billion shares of Ford selling at $20 each as has been hypothesized above. Let's further suppose that Ford makes a profit (net earnings) of $1 billion this year. Twenty years from now let's suppose Ford is not only making an annual profit of $10 billion but is paying a dividend of $5 per share. Would you still suggest that Ford is only worth $20 per share? Isn't the $5 billion annual dividend "unlocking" some of that extra wealth? This isn't likely to happen to Ford? Sure, I agree, but I'm almost positive that there is some company that will increase its earnings tenfold in the next twenty years. Many, many companies will increase lesser amounts, but will increase earnings and dividends enough to create real wealth for shareholders. Maybe even Ford.
Short answer: no.
You might want to think more carefully about the details of the actual wealth/money/value. Your example actually proves my point. You are justifying a future value by dragging new money representing actual GDP productivity into the market to increase its value. And it doesn't matter if Ford is selling for $40 at that later date, you can still only unlock that value by exchanging it for cash.
That $5 billion annual dividend comes from productive pursuits - they made cars and sold them. You are adding money/productivity from outside the market to justify the alleged increase in price. Increases in "earnings" come from making product and selling product. They do not represent wealth creation within the stock market itself. Quite the opposite. The stock market value can only, ultimately, represent the underlying productive pursuits of the company.
In the end, the only way to spend your Ford shares is to convert them to cash. To "cash out" your Ford requires bringing money to the stock market to trade for shares. So stock valuations are only paper profits until they are converted to cash to be spent. As such, there has to be money coming into the system to unlock that value. That money creates a zero sum game with overall GDP which is what generates the money.
You simply cannot look at the stock market as a closed system. You can, within the market, trade Ford for Apple. But you can only unlock the value increases by conversion to cash.
For something to be zero sum there has to be a gain and a loss.
In the Ford example that leads to the stock market-GDP(needs to be global) … which loses or takes a loss when Ford is sold? Does the stock market lose or does the GDP lose?
@MsMorrisine said:
For something to be zero sum there has to be a gain and a loss.
In the Ford example that leads to the stock market-GDP(needs to be global) … which loses or takes a loss when Ford is sold? Does the stock market lose or does the GDP lose?
It doesn't "lose", it gets traded. You trade GDP (money) for the stock shares. If you want to consider that as "losing" GDP, you could. You are transferring the GDP value into/out of the market.
Google it. There's a lot of discussions of the market mechanism and the relationship to GDP.
“Nevertheless, the situation like the stock market etc. is not a zero-sum game because investors could gain profit or loss from share price influences by profit forecasts or economic outlooks rather than gain profit from other investors' losses.”
Even if you consider the global economy as a closed system your point about pulling out value = value put in by someone else is still wrong because the supply of money is not fixed. It is not like matter. It can be literally printed. Valuations can also be increased because of expectations, and yes, obviously increases in productivity. The stock market is certainly tethered to the reality of GDP but it’s with a string not a bar.
The stock market is not a zero sum game. This is true by definition. The sum of all assets is not zero. The sum of listed option holdings on Tesla is zero. They are very different.
@MsMorrisine said:
For something to be zero sum there has to be a gain and a loss.
In the Ford example that leads to the stock market-GDP(needs to be global) … which loses or takes a loss when Ford is sold? Does the stock market lose or does the GDP lose?
“Nevertheless, the situation like the stock market etc. is not a zero-sum game because investors could gain profit or loss from share price influences by profit forecasts or economic outlooks rather than gain profit from other investors' losses.”
Even if you consider the global economy as a closed system your point about pulling out value = value put in by someone else is still wrong because the supply of money is not fixed. It is not like matter. It can be literally printed. Valuations can also be increased because of expectations, and yes, obviously increases in productivity. The stock market is certainly tethered to the reality of GDP but it’s with a string not a bar.
The stock market is not a zero sum game. This is true by definition. The sum of all assets is not zero. The sum of listed option holdings on Tesla is zero. They are very
But you are not understanding the point. The stock market, viewed as a closed system is NOT a zero sum game. You can't, however, get the money out. When viewed in the context of the entire economy, the stock market cannot create wealth, only GDP can do that. If you don't like "zero sum game", let's drop the term. The stock market cannot create wealth, it can only transfer it. In the end, only productive elements create real wealth.
You can bid the stock market up to 100,000 but you can't get the paper profits out unless someone puts cash in.
“Nevertheless, the situation like the stock market etc. is not a zero-sum game because investors could gain profit or loss from share price influences by profit forecasts or economic outlooks rather than gain profit from other investors' losses.”
Even if you consider the global economy as a closed system your point about pulling out value = value put in by someone else is still wrong because the supply of money is not fixed. It is not like matter. It can be literally printed. Valuations can also be increased because of expectations, and yes, obviously increases in productivity. The stock market is certainly tethered to the reality of GDP but it’s with a string not a bar.
The stock market is not a zero sum game. This is true by definition. The sum of all assets is not zero. The sum of listed option holdings on Tesla is zero. They are very different.
And, buy the way, Wikipedia is wrong. They talk about share price, but share price isn't the issue. It's getting the value out of the market. That requires someone put cash into the market.
Fair enough. In the absence of any changes to productivity or inflation-less printing of money, the “can be exchanged for good and services” pie has not been increased. Whether it flows to the stock market or crypto or cash is immaterial in this view. That’s not a typical definition of wealth or wealth creation but I understand your point.
Now we’re talking about the absence of wealth creation in the case where no company produces more than it did? Then saying the stock market is therefore not a wealth creator and is a zero sum game (a term I did not bring in)?
I’m still left wondering how GROSS domestic(?) product decreases when stock is sold or gdp increases when stock is bought(?)
Fair enough. In the absence of any changes to productivity or inflation-less printing of money, the “can be exchanged for good and services” pie has not been increased. Whether it flows to the stock market or crypto or cash is immaterial in this view. That’s not a typical definition of wealth or wealth creation but I understand your point.
Thanks. Yes. That's my only real point. In the end. Wealth can only increase with GDP. It's rather secondary to the crypto discussion, as I don't think we've reached that point.
Now we’re talking about the absence of wealth creation in the case where no company produces more than it did? Then saying the stock market is therefore not a wealth creator and is a zero sum game (a term I did not bring in)?
I’m still left wondering how GROSS domestic(?) product decreases when stock is sold or gdp increases when stock is bought(?)
I’ve never heard of an ipo affecting gdp before.
Again, it's a trade off not a loss. An IPO doesn't affect GDP in aggregate but it does reallocate productive assets to the IPO. A $40 billion IPO does not create any wealth in aggregate, it reallocates $40 billion to the IPO. If the stock market goes up $1 trillion, there is not a $1 trillion increase in aggregate wealth because you can only unlock the $1 trillion by trading the stock for $1 trillion in capital that is external to the stock market.
Any increase in "wealth" greater than the increase in productive assets or GDP is just inflation.
Comments
I was trying to be conservative with my comparison. As BTC is used more, the crashes should not be as severe.
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The goods and services are the wealth, not the money.
My question, and that of others I discuss this with, is whether BTC is used. I know it has the "promise" of use, but is it actually used for things other than speculation (and paying ransomware)?
See the other thread. Total transactions are now higher than PayPal.
https://www.google.com/amp/s/www.cnbctv18.com/cryptocurrency/bitcoin-network-surpasses-paypal-in-transaction-volumes-11693172.htm/amp
https://blog.coinpayments.net/off-the-ledger/crypto-takes-retail-by-storm-as-transaction-volumes-jump-90-in-2021
That depends on the coin.
At $0.09 per kilowatt hour it costs about $35,000 to mine a single bitcoin right now. If prices fall too low, the miners simply will not sell.
As an Ethereum miner, my cost per coin is something like $650. But I know that Ethereum swings violently, and I will not sell anything I mine under $4,000. You would have to see some real fundamental changes to get Ethereum holders like me to sell for under our target range.
"It's like God, Family, Country, except Sticker, Plastic, Coin."
Great info! It reminds to me to work on my NFT project
OK, but how many bitcoin will you (anyone) mine if it costs $35,000 to mine one but they are available on the open market for $20,000. You may be right about the strength of the hands, but I'd be very surprised if there weren't miners out there who would say "I've invested $350,000 in mining ten coins. Bitcoin is down to $20,000. If I sell now I can at least get $20,000 back. If I wait there is no telling how low it can go." I just described every crash iun history, except for the mining part.
Many miners continually sell coins into the market to pay for overhead, at a bare minimum. The HODL crowd tends to not be long-term believers, usually just the equivalent of mid-term holders, and even some of those long-term dudes are gradually selling out. Many with substantial amounts of crypto generally slowly sell some holdings. Not all, but many do that.
"It's like God, Family, Country, except Sticker, Plastic, Coin."
This makes no sense and has clearly not been fully thought through. Suppose that today there are 1 billion shares of Ford selling at $20 each as has been hypothesized above. Let's further suppose that Ford makes a profit (net earnings) of $1 billion this year. Twenty years from now let's suppose Ford is not only making an annual profit of $10 billion but is paying a dividend of $5 per share. Would you still suggest that Ford is only worth $20 per share? Isn't the $5 billion annual dividend "unlocking" some of that extra wealth? This isn't likely to happen to Ford? Sure, I agree, but I'm almost positive that there is some company that will increase its earnings tenfold in the next twenty years. Many, many companies will increase lesser amounts, but will increase earnings and dividends enough to create real wealth for shareholders. Maybe even Ford.
Buyouts regularly happen at a premium over market prices. So I can see a stock rising 5% in 1 day and still they get a buyout at say 22
Short answer: no.
You might want to think more carefully about the details of the actual wealth/money/value. Your example actually proves my point. You are justifying a future value by dragging new money representing actual GDP productivity into the market to increase its value. And it doesn't matter if Ford is selling for $40 at that later date, you can still only unlock that value by exchanging it for cash.
That $5 billion annual dividend comes from productive pursuits - they made cars and sold them. You are adding money/productivity from outside the market to justify the alleged increase in price. Increases in "earnings" come from making product and selling product. They do not represent wealth creation within the stock market itself. Quite the opposite. The stock market value can only, ultimately, represent the underlying productive pursuits of the company.
In the end, the only way to spend your Ford shares is to convert them to cash. To "cash out" your Ford requires bringing money to the stock market to trade for shares. So stock valuations are only paper profits until they are converted to cash to be spent. As such, there has to be money coming into the system to unlock that value. That money creates a zero sum game with overall GDP which is what generates the money.
You simply cannot look at the stock market as a closed system. You can, within the market, trade Ford for Apple. But you can only unlock the value increases by conversion to cash.
For something to be zero sum there has to be a gain and a loss.
In the Ford example that leads to the stock market-GDP(needs to be global) … which loses or takes a loss when Ford is sold? Does the stock market lose or does the GDP lose?
It doesn't "lose", it gets traded. You trade GDP (money) for the stock shares. If you want to consider that as "losing" GDP, you could. You are transferring the GDP value into/out of the market.
Google it. There's a lot of discussions of the market mechanism and the relationship to GDP.
The mechanism is not a zero sum game
Perhaps @jmlanzaf should just Google Zero Sum Game.
https://en.m.wikipedia.org/wiki/Zero-sum_game
“Nevertheless, the situation like the stock market etc. is not a zero-sum game because investors could gain profit or loss from share price influences by profit forecasts or economic outlooks rather than gain profit from other investors' losses.”
Even if you consider the global economy as a closed system your point about pulling out value = value put in by someone else is still wrong because the supply of money is not fixed. It is not like matter. It can be literally printed. Valuations can also be increased because of expectations, and yes, obviously increases in productivity. The stock market is certainly tethered to the reality of GDP but it’s with a string not a bar.
The stock market is not a zero sum game. This is true by definition. The sum of all assets is not zero. The sum of listed option holdings on Tesla is zero. They are very different.
https://www.morningstar.com/articles/841310/is-the-stock-market-a-zero-sum-game
https://www.morningstar.com/articles/841310/is-the-stock-market-a-zero-sum-game
But you are not understanding the point. The stock market, viewed as a closed system is NOT a zero sum game. You can't, however, get the money out. When viewed in the context of the entire economy, the stock market cannot create wealth, only GDP can do that. If you don't like "zero sum game", let's drop the term. The stock market cannot create wealth, it can only transfer it. In the end, only productive elements create real wealth.
You can bid the stock market up to 100,000 but you can't get the paper profits out unless someone puts cash in.
Also
https://occaminvesting.co.uk/is-investing-a-zero-sum-game/
And, buy the way, Wikipedia is wrong. They talk about share price, but share price isn't the issue. It's getting the value out of the market. That requires someone put cash into the market.
Fair enough. In the absence of any changes to productivity or inflation-less printing of money, the “can be exchanged for good and services” pie has not been increased. Whether it flows to the stock market or crypto or cash is immaterial in this view. That’s not a typical definition of wealth or wealth creation but I understand your point.
Sigh.
Seriously?
Now we’re talking about the absence of wealth creation in the case where no company produces more than it did? Then saying the stock market is therefore not a wealth creator and is a zero sum game (a term I did not bring in)?
I’m still left wondering how GROSS domestic(?) product decreases when stock is sold or gdp increases when stock is bought(?)
I’ve never heard of an ipo affecting gdp before.
Simple economics... anything that causes people to lose wealth has a downstream effect on the purchase of what that wealth could or would have bought.
If trillions of dollars are lost, that has the potential to affect the value/price of everything from luxury items like coins to art, to Ferraris.
https://occaminvesting.co.uk/is-investing-a-zero-sum-game/> @david3142 said:
Thanks. Yes. That's my only real point. In the end. Wealth can only increase with GDP. It's rather secondary to the crypto discussion, as I don't think we've reached that point.
Again, it's a trade off not a loss. An IPO doesn't affect GDP in aggregate but it does reallocate productive assets to the IPO. A $40 billion IPO does not create any wealth in aggregate, it reallocates $40 billion to the IPO. If the stock market goes up $1 trillion, there is not a $1 trillion increase in aggregate wealth because you can only unlock the $1 trillion by trading the stock for $1 trillion in capital that is external to the stock market.
Any increase in "wealth" greater than the increase in productive assets or GDP is just inflation.
Bloomberg quotes today: "volatility is deadly". " store of value claim is spurious".
Lets move some more of that crypto into hard assets people....like rare coins.
Or are you crypto crusaders buying the dip?
I bought the dip.
Volatility will wane as adoption increases. It is NOT YET a store of value or a medium of exchange.
Silver went up 150% in a year then down 20% in 6 months. I guess it isn't a site of value either.