Crypto Currency Thread (Vol.2)
Discussion
WY86 said:
Some Crypto is minted and not mind, but again this is software and not a currency, research yourself and learn if your that interested.
The difference between software and currency when we are discussing a digital asset is semantics really. Anyway, I've looked up the difference and it still seems like a solution looking for a problem. Anything which involves locking away a large number of tokens to make the process work is quite clearly inefficient - you can't spend your tokens while they are locked up and all the process does is remove the number in circulation.
Condi said:
g4ry13 said:
Wrong! 
Or at least partly wrong.
You only earn a dividend if the company pays a dividend. If you invest in growth stocks then you accept that you're not investing for a dividend. Facebook, Amazon, Netflix, Google and many others have never paid a dividend.
People have been buying these shares hoping they will be able to find someone to sell them to down the line for more than they originally paid. That actually sounds quite familiar, where have I heard that before?
.
But Or at least partly wrong.
You only earn a dividend if the company pays a dividend. If you invest in growth stocks then you accept that you're not investing for a dividend. Facebook, Amazon, Netflix, Google and many others have never paid a dividend.
People have been buying these shares hoping they will be able to find someone to sell them to down the line for more than they originally paid. That actually sounds quite familiar, where have I heard that before?
.
If there are 1000 Google shares when it has a value of 1m, then each share is worth 1000. If they use that money to buy servers, invest in marketing, increase their uses and make a profit. That profit is retained in the business instead of being paid out as a dividend. 3 years later the business has 3m in assets, then those shares are worth 3000 each.
You are "not just hoping someone else pays more", you are investing in a physical business which takes X of materials, adds Y of value (labour, processes etc) and sells it for a profit. As a shareholder you have a claim on this profit, now or in the future.
Are you really not able to understand the difference between investing in a business and buying crypto? Can you honestly not see the difference in almost every single aspect of what they do?
This translated to an annual gross profit of $7.716B in 2019, $9.72B in 2020 & $12.365B in 2021.
Netflix has never paid a dividend - none of the above profits have been repaid to the shareholders by way of a dividend. It was merely reflected in the price of the shares - a person would pay $350 in May 2019 and hope that down the line price would reflect fair value for the company and be worth more than originally paid.
Fast forward to today and Netflix shares are worth a little over $180. Despite a profitable 3 years, the only claim shareholders have is a 48% loss! That sounds like a splendid proposition to me.
Condi said:
The difference between software and currency when we are discussing a digital asset is semantics really.
Anyway, I've looked up the difference and it still seems like a solution looking for a problem. Anything which involves locking away a large number of tokens to make the process work is quite clearly inefficient - you can't spend your tokens while they are locked up and all the process does is remove the number in circulation.
So is hoping someone locks up a load of shares in a company and drives the price up and your quick enough to sell before a rug pull... Anyway, I've looked up the difference and it still seems like a solution looking for a problem. Anything which involves locking away a large number of tokens to make the process work is quite clearly inefficient - you can't spend your tokens while they are locked up and all the process does is remove the number in circulation.
g4ry13 said:
3 years ago Netflix shares were priced at around $350. Netflix used the money to buy servers, invested in marketing, invested in content, increasing their number of users and other expenses in order to grow the business.
This translated to an annual gross profit of $7.716B in 2019, $9.72B in 2020 & $12.365B in 2021.
Netflix has never paid a dividend - none of the above profits have been repaid to the shareholders by way of a dividend. It was merely reflected in the price of the shares - a person would pay $350 in May 2019 and hope that down the line price would reflect fair value for the company and be worth more than originally paid.
Fast forward to today and Netflix shares are worth a little over $180. Despite a profitable 3 years, the only claim shareholders have is a 48% loss! That sounds like a splendid proposition to me.
Yes, price of shares goes up and down. The profit is still there, it hasn't gone anywhere, and shareholders still have a charge over it. What has changed is the discounted future cash flow which I mentioned earlier. Whether they were overvalued before, or are undervalued now is a fair question, but irrespective of where the share price is at any point, the shareholders have bought something with intrinsic value. Maybe Netflix will start paying a dividend? Maybe they will put up prices or put advertising in their product to increase revenue? One thing for sure is that the management will be under pressure to increase the returns to shareholders one way or another, and you would expect them to take steps to do so, otherwise the owners of the business (shareholders) can replace them with someone able to do a better job. This translated to an annual gross profit of $7.716B in 2019, $9.72B in 2020 & $12.365B in 2021.
Netflix has never paid a dividend - none of the above profits have been repaid to the shareholders by way of a dividend. It was merely reflected in the price of the shares - a person would pay $350 in May 2019 and hope that down the line price would reflect fair value for the company and be worth more than originally paid.
Fast forward to today and Netflix shares are worth a little over $180. Despite a profitable 3 years, the only claim shareholders have is a 48% loss! That sounds like a splendid proposition to me.
WY86 said:
Condi said:
The difference between software and currency when we are discussing a digital asset is semantics really.
Anyway, I've looked up the difference and it still seems like a solution looking for a problem. Anything which involves locking away a large number of tokens to make the process work is quite clearly inefficient - you can't spend your tokens while they are locked up and all the process does is remove the number in circulation.
So is hoping someone locks up a load of shares in a company and drives the price up and your quick enough to sell before a rug pull... Anyway, I've looked up the difference and it still seems like a solution looking for a problem. Anything which involves locking away a large number of tokens to make the process work is quite clearly inefficient - you can't spend your tokens while they are locked up and all the process does is remove the number in circulation.
The idea of buying shares is not "to drive up the price" unless you're a meme-share chump and in which case you deserve to have the rug pulled and lose all your money. Maybe if that is your reference point crypto is perfect for you, and you can leave real finance to those who understand it.
Condi said:
g4ry13 said:
3 years ago Netflix shares were priced at around $350. Netflix used the money to buy servers, invested in marketing, invested in content, increasing their number of users and other expenses in order to grow the business.
This translated to an annual gross profit of $7.716B in 2019, $9.72B in 2020 & $12.365B in 2021.
Netflix has never paid a dividend - none of the above profits have been repaid to the shareholders by way of a dividend. It was merely reflected in the price of the shares - a person would pay $350 in May 2019 and hope that down the line price would reflect fair value for the company and be worth more than originally paid.
Fast forward to today and Netflix shares are worth a little over $180. Despite a profitable 3 years, the only claim shareholders have is a 48% loss! That sounds like a splendid proposition to me.
Yes, price of shares goes up and down. The profit is still there, it hasn't gone anywhere, and shareholders still have a charge over it. What has changed is the discounted future cash flow which I mentioned earlier. Whether they were overvalued before, or are undervalued now is a fair question, but irrespective of where the share price is at any point, the shareholders have bought something with intrinsic value. Maybe Netflix will start paying a dividend? Maybe they will put up prices or put advertising in their product to increase revenue? One thing for sure is that the management will be under pressure to increase the returns to shareholders one way or another, and you would expect them to take steps to do so, otherwise the owners of the business (shareholders) can replace them with someone able to do a better job. This translated to an annual gross profit of $7.716B in 2019, $9.72B in 2020 & $12.365B in 2021.
Netflix has never paid a dividend - none of the above profits have been repaid to the shareholders by way of a dividend. It was merely reflected in the price of the shares - a person would pay $350 in May 2019 and hope that down the line price would reflect fair value for the company and be worth more than originally paid.
Fast forward to today and Netflix shares are worth a little over $180. Despite a profitable 3 years, the only claim shareholders have is a 48% loss! That sounds like a splendid proposition to me.
A few bad earnings report over the last few quarters and all that value which investors weren't able to collect on over the last 3 years has disappeared from their pockets.
Bringing this back to the main point which was partly wrong:
- Not all shares pay dividends
- The means of realising the increased value of investing in growth stocks is by selling your holdings to someone for more than you paid.
Condi said:
I'm sure you're not that stupid, but this has become a pointless discussion. If you cannot honestly see the difference then why do you own shares? You either don't understand shares or don't understand crypto, but are happy enough to invest in both.
The idea of buying shares is not "to drive up the price" unless you're a meme-share chump and in which case you deserve to have the rug pulled and lose all your money. Maybe if that is your reference point crypto is perfect for you, and you can leave real finance to those who understand it.
hang on a second your the one who wanted me to break things down as simple as possible... I understand how the stock market and crypto works. Yes year on year stocks will go up based on hopefully a positive results but as I am sure you aware there are only so many shares to buy so if someone does buy a large quantity the price will spike as it does to not just meme stocks. The idea of buying shares is not "to drive up the price" unless you're a meme-share chump and in which case you deserve to have the rug pulled and lose all your money. Maybe if that is your reference point crypto is perfect for you, and you can leave real finance to those who understand it.
but again trying to discuss certain cryptos with someone who has a less than basic grasp on how it works or the deeper long term value is challenging to say the least.
g4ry13 said:
I would argue that Netflix has very little intrinsic value. The main value is their brand. If Myspace and Yahoo have taught us anything it's that a brand is not enough to keep you at the top.
A few bad earnings report over the last few quarters and all that value which investors weren't able to collect on over the last 3 years has disappeared from their pockets.
Bringing this back to the main point which was partly wrong:
- Not all shares pay dividends
- The means of realising the increased value of investing in growth stocks is by selling your holdings to someone for more than you paid.
Careful your talking sense now, maybe they will discover that stock markets are indeed pyramid schemes where the ones in charge and have the biggest positions usually win out against retail investors. A few bad earnings report over the last few quarters and all that value which investors weren't able to collect on over the last 3 years has disappeared from their pockets.
Bringing this back to the main point which was partly wrong:
- Not all shares pay dividends
- The means of realising the increased value of investing in growth stocks is by selling your holdings to someone for more than you paid.
If someone has been saying 'convince me' for 8-10 YEARS - followed by a detailed explanation which is met with the response 'yeah, but... convince me' - as is the case for some in this forum it is safe to say they will not be turned now.
Feeding that is a complete and utter waste of someone else's energy.
Better to spunk that energy planting a tree or nursing a sickly rabbit.
Feeding that is a complete and utter waste of someone else's energy.
Better to spunk that energy planting a tree or nursing a sickly rabbit.
WY86 said:
but again trying to discuss certain cryptos with someone who has a less than basic grasp on how it works or the deeper long term value is challenging to say the least.
When the people who pretend to understand how it works lose lots of money, it proves to me nobody really knows how it works.bloomen said:
If someone has been saying 'convince me' for 8-10 YEARS - followed by a detailed explanation which is met with the response 'yeah, but... convince me' - as is the case for some in this forum it is safe to say they will not be turned now.
And yet despite all of those detailed explanations (most of which don't stand up to scrutiny) the same basic questions remain... What is it used for? We've had store of value and medium of exchange most often quoted but the volatility means it's a crap store of value and the number of people using it for a medium of exchange is going down and not up, so crypto has failed there too. In reality the answer to this question changes with the wind.
How is it better than what we already have? Apparently it is useful for people in far flung parts of the world where they don't have banking, but even Africa has banking on their mobile phones now and are able to pay for goods via text message. To start with it was super important it was anonymous, now it's not anonymous and it's useful that it can be traced. Then it was important that you could split 1 Bitcoin into infinitesimally small parts, but nobody ever said why that was better than Pounds and Pence. It was important it was deregulated, then the number of scams increased and the amount of KYC and DD increased, and latterly the SEC is looking at it more closely, so it's becoming more and more regulated.
digger_R said:
My personal take is that there are other reasons behind the growth of crypto and it's definitely not the utopian vision of the future that many claim it to be. Digital currencies are here to stay - what form they take in the future is still an unanswered question.
This post is one of the best on here recently. Very pragmatic. Most people who talk about how great crypto is are simply talking their book. They need an increasing number of buyers to fuel the system and allow them to make a profit. All this nonsense about use cases and how much the future relies on crypto is quite clearly nonsense because over 10 years after Bitcoin was first used to buy a pizza the number of places which accept it as a currency is tiny and whichever way you look at it, it has totally failed as a medium of exchange. When something truly revolutionary comes along which is as scalable as crypto, it doesn't take 10 years for people to see the benefits and start using it. Once you admit you're just in it for the profits and see it as gambling then fair enough, far better to be upfront about it than pretend you really believe its the future. Edited by Condi on Friday 20th May 11:58
Condi said:
This post is one of the best on here recently. Very pragmatic. Most people who talk about how great crypto is are simply talking their book. They need an increasing number of buyers to fuel the system and allow them to make a profit. All this nonsense about use cases and how much the future relies on crypto is quite clearly nonsense because over 10 years after Bitcoin was first used to buy a pizza the number of places which accept it as a currency is tiny and whichever way you look at it, it has totally failed as a medium of exchange. When something truly revolutionary comes along which is as scalable as crypto, it doesn't take 10 years for people to see the benefits and start using it.
you know what the beautiful thing is it will slowly filter into your life and you won't even realize, that behind that contract or license agreement is a blockchain recording it and storing that information. What i actually see from all this belittling is a generation a little afraid that something they don't understand is gaining traction and are not able to leverage it to make smart investments.
WY86 said:
you know what the beautiful thing is it will slowly filter into your life and you won't even realize, that behind that contract or license agreement is a blockchain recording it and storing that information. .
Why is this important? Data is stored anyway on databases, I don't see why a blockchain is preferable in 99% of cases to a simple database. Don't get me wrong, smart contracts and such like probably do have a future, but they don't need crypto currency to work; payment can still made in Dollars from bank accounts using the traditional and well trusted banking system. Equally smart contracts don't need to be on a huge public database, they can be run on much smaller industry specific chains.
In the industry I work in everyone sends a list of their trades off to a central database once or twice a day, and that database checks everyone's positions. Any errors are flagged up and counterparties told to correct them. It is arguably a lot of what blockchain stuff is about - there is a 3rd party record and database of what everyone is doing to prevent mistakes, but it's been going about 10 years already.
In terms of used for, here is a very basic example around NFTS.
now i know you will start drooling at frothing at the mouth at the idea of an expensive cartoon ape...
but what NFTS could do is say for example you download a game or a piece of software and paid money for the download. Now say you complete the game or have no need for the software. currently you are stuck with that you can delete it but you have lost that money.
now with NFTS you could add that into the software so when your use is done you could list on the marketplace and re coupe some of the money.
you can't do that currently with digital downloads.
WY86 said:
you know what the beautiful thing is it will slowly filter into your life and you won't even realize, that behind that contract or license agreement is a blockchain recording it and storing that information.
What i actually see from all this belittling is a generation a little afraid that something they don't understand is gaining traction and are not able to leverage it to make smart investments.
You may be right. I’ve just read a chunk of this thread and really want to understand crypto but I just don’t get it. It still looks like a giant case of pyramid selling to me.What i actually see from all this belittling is a generation a little afraid that something they don't understand is gaining traction and are not able to leverage it to make smart investments.
Anyway if I don’t/can’t understand crypto it’s clearly not for me so I’ll stick with my share portfolio.
Maybe I’m just too old to learn something new.
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