What do you guys think of the notion of scarcity in cryptocurrency? It is a given that scarcity alone is not value, scarcity is a necessary but insufficient condition of value. — hypericin
Given this, are cryptocurrencies truly scarse? — hypericin
At first I agreed with this 100% and this is certainly the traditional view, but then I remembered the sudden rise in dogecoin's value which is the furthest thing from scarce. — BitconnectCarlos
People's perception of the longevity and value of the currency, I suppose. — Tzeentch
They are willing to buy to the degree it is scarce. As I said scarcity is a necessary but insufficient condition for value.If people think something is valuable and are willing to buy it, it's valuable. — ssu
Generally, there are thousands (at least) of cryptocurrencies, and there will be thousands more created in the future. The barrier to creating them is quite low. Given this, are cryptocurrencies truly scarse? — hypericin
Not actually.They are willing to buy to the degree it is scarce. As I said scarcity is a necessary but insufficient condition for value. — hypericin
They are willing to buy to the degree it is scarce. As I said scarcity is a necessary but insufficient condition for value. — hypericin
The means of exchange probably needs to have some kind of inherent value, such as gold has. — Leontiskos
There's no scarcity of let's say the US dollar. Only that the Central Bank won't do this. But with a few pushes on a computer, they could make tomorrow 100 trillion dollars. — ssu
The means of exchange probably needs to have some kind of )inherent value, such as gold has. — Leontiskos
. But with a few pushes on a computer, they could make tomorrow 100 trillion dollars. — ssu
How could that be scarcity in the meaning that we usually understand it? — ssu
The common problem money printing creates isn't necessarily a lack of scarcity, but a lack of value stability. — Tzeentch
Gold has some "Internet value" (as problematic as that is) but that (decoration, electronics) has little relation to it's value, the bulk of which derives from it's status as a store of value. Cryptos have acquired this status (during which process it is possible to become rich), like it or not. — hypericin
When the grid goes down..." most investors holding gold investments won't have access to "their" physical gold. Isn't it held in trust in some Fort Knox like depositories? The securities of which are both grid dependent and have some physical blunt force inaccessibilities built into the structures — kazan
Not actually...money doesn't work that way. It's not about scarcity, it's money moving in the economy and being used to buy stuff.If the belief spread that they might do this, the value of the dollar would plummet to 0, due to the belief in an imminent loss of scarcity. — hypericin
All cryptocurrency, at least all that is valuable, is scarce. — hypericin
Is it? Or just expensive and sometimes artificially so? — Benkei
Loss of "value stability"(that is, decline) happens in proportion to loss of scarcity and loss of confidence in future scarcity. — hypericin
You see, the value of the dollar only goes down if that 100 trillion enters the economic system. Only then it will drive up prices and thus lowers the value of the currency. But as you have only had the time to buy a Ferrari and fifty boxes of Champagne before forgetting just where you parked the money, your actions haven't crashed the dollar. — ssu
Hence if there's 100 trillion in some obscure derivatives market, that amount won't wreck the price of the dollar... as long as those 100 trillion stay in the obscure derivatives market! — ssu
Was in reality the one trillion, doubling of the Fed balance sheet, flagged instantly? Nope. We actually only later found out close the system had been at a total collapse. Or that corporations that didn't have any financial problems were given money, because it otherwise "would look bad".I don't think so. Of course in reality this loan would have been flagged instantly. — hypericin
First of all, the Fed doesn't have to announce and it didn't announce just how much it aided the markets during the financial crisis. Then it loaned over 1 trillion dollars. I remember that time well, nowhere was it stated that the Fed lent 1 trillion dollars. And furthermore, the way it really did assist the banks and financial institutions was very generous:Just imagine that the Fed announced that they were stimulating the economy by printing 100 trillion dollars. — hypericin
Broadly stated, the Fed chose to provide a "blank cheque" for the banks, instead of providing liquidity and taking over. It did not shut down or clean up most troubled banks; and did not force out bank management or any bank officials responsible for taking bad risks, despite the fact that most of them had major roles in driving to disaster their institutions and the financial system as a whole. This lavishing of cash and gentle treatment was the opposite of the harsh terms the U.S. had demanded when the financial sectors of emerging market economies encountered crises in the 1990s.
When the grid goes down, the crypto-heads will discover the difference between gold and crypto as a store of value. — fishfry
Now if your simple idea of the value coming from "scarcity" be right — ssu
It is a given that scarcity alone is not value, scarcity is a necessary but insufficient condition of value. — hypericin
money doesn't work that way. It's not about scarcity, it's money moving in the economy and being used to buy stuff. — ssu
Now if your simple idea of the value coming from "scarcity" be right, the a tenfold increase in Fed assets and the tripling+ of the M2 monetary base would have severe inflationary effects. Well, the annual inflation rate between 2003 and 2024 has been 2,59% annually. — ssu
Good that you agree with the Fischer equation. Yet it's actually very important to understand it, because the increase in the money supply doesn't automatically mean that it's value goes down. For example when a speculative bubble bursts creating a banking crisis, the velocity of circulation tanks. Banks won't be lending anymore, but will sit on their money like Scrooge McDuck. Hence if the Central Bank prints more money or in the Nordic model, creates a "bad bank" where all the toxic garbage loans are parked, this doesn't create inflation.And yet in the quantity theory of money graphic you posted, both scarcity (money supply) and velocity determine price. I agree with the graphic. — hypericin
This is a policy decision. If you just bail out the people that where carelessly creating the bubble at the first place, then the game will just continue. If you let large banks go bust or put away to jail the most reckless bankers, that sends a totally different message.This increase in supply does not sit stagnant like you suggest. It is invested in the stock market, in real estate, and other assets. — hypericin
Well, usually inflation is measured by an average of what people consume and the price of housing ought to be taken into account. Usually it isn't and statisticians use things like hedonics to lower the inflation statistics. There is a real economic and political incentive to report inflation being far lower than it actually is.If you measure inflation by the cost of goods you need to survive, inflation might actually be 2.59. If you measure by your ability to buy a house, inflation is quite a bit higher. — hypericin
Is what most people think your criterium? What do you say an investment is, what "investment" means in a financial context, then we can consider whether gold is an investment.I think most people consider gold to be an investment. — hypericin
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