This came off as pretty bitter. I apologize, but I am bitter, and I'm having a shit couple weeks.

What real math is involved in predicting the stock market? I understand there is a lot of theory behind TRYING to predict it, just as there is a lot of study in trying to predict trends in the stock market, which is why you are better off investing in groups of stocks as opposed to a singled stock (there you go, that's the grand total of what I know about the stock market). But so far as shorting stocks (betting that they'll fall) and buying stocks (betting that they'll rise), there isn't much real math, is there? Isn't it all just a gamble? Not even a statistical gamble, like dice or cards, but a public market analysis with the uncertainty of public trading and public sentiment thrown in, not to mention the hope of government bailouts on occasion?

I don't see a huge amount of difference in crypto except for physical assets, which don't cover the stock price for public companies, generally.

Now, how horribly wrong am I? I'm willing to admit I missed the mark, entirely as I don't understand trading. That's what my broker does.

I have a MSC in Statistics, studied quantitative finance. Generally I'd agree with you. For general investing there's often little math involved other than some simple ratios and comparisons. Three numbers I look at most often are the Price-to-Sales ratio, Gross Profit %, and annual revenue growth. There's no complex math involved here at all.

Where investing does get mathy is in calculating risk. When constructing a portfolio, generally the aim is to maximize returns while minimizing risk below some threshold. There is some very interesting and fun maths involved in this process that is beyond the scope of general investing.

Are there some search terms or resources you would recommend looking into to learn more about this fun maths?

Very bizarre strategy, but really, really interesting.

Lots of fun parabolas and hyperbolas :-)

These types of analysis don't necessarily predict anything on their own especially in the short term, though they likely do have value in the long term when you stack up lots of these signals.

The problem with applying math to crypto investing (not trading) is that there's no market, no sales, no cash burn rate, no actual accounting going on to base a longer term thesis on.

Are we really comparing the two markets?

Owning a stock means owning a piece of a business. If you have all the stock in the world, you seized all means of production, good job.

If you own all the UnpossibleJimCoins in the world what exactly has changed? Oh but that coin is not insert another coin, it doesn't have the consensus/cult.

Also, in the limit, if you owned all the stock in the world, you have destroyed the stock market.

Because ultimately, stock market is about speculating the future potential of the business and pricing it into today's stock price and more importantly having someone believe that and be available to buy from you at that price. So, it is a sophisticated collective story-telling-belief-system based on imperfect and asymmetric information using fancy mind-bending jargons. By having some regulatory safeguards, it is lent an air of legitimacy but really only the crudest of scamsters are stopped.

Dead wrong, and indeed that is the difference to crypto.

If you own all Bitcoins in the world, it is worth nothing and your net worth is zero. If you own all stocks in the world, you can direct all of those public companies to pay a large chunk of their profit to you every month in dividends, and make those companies do whatever you want them to do (research a way to build a Mars colony, or build better fusion reactors or pay off politicians to do your bidding), which is real power and real wealth.

For example, if Elon Musk owned all of Tesla he would have access to $3.7B of its annual free cash-flow or $3.3B of net income. He won't be able to afford to buy Twitter with that. But because he has Tesla stocks which gets a huge multiple on those metrics, he can pledge a fraction of his fraction of ownership in Tesla to get a huge loan with which he is able to buy Twitter (and still enjoy his ownership rights of Tesla stocks!). That's because of stock market.

That is clearly not true. What you own, is something worth X amount of Y, where Y is what other believe it is worth.

"Means of production" has a very specific meaning and what you're saying is not it.

When you buy a share in a company, you own a slice of that company. You have voting rights, access to shareholder meetings, annual reports, bod meetings etc.

What that share is worth is what others perceive it's value. what it's market "worth" is completely irrelevant to the fact you own a share.

In an increasingly large number of companies even this notion of a vote is a facade. For instance at Facebook and Google, Zuckerberg and Larry/Sergey would maintain majority control even if you bought all the stock on the open market, because of stock tiering. So when you buy stock in these companies you're practically not even buying a vote. I mean you technically are, but it's like participating in an election of with 100 other people, where one guy gets a vote that magically counts as 101 votes.

That why things like the occasional 'share holders look to force Zuckerberg out' type articles are 100% clickbait. Google and Facebook also even tried to force scenarios on shareholders where the real owners of the company were going to "sell" their shares without giving up control by introducing non-voting shares. These plans were only stopped thanks to the courts because they, of course, passed a shareholder vote. [1]

[1] - https://arstechnica.com/tech-policy/2017/09/shareholders-for...

Facebook also demonstrates it - Zuckerberg and a few others (many of whom have given him voting power on their behalf) own 'Class B' stock, which is worth 10 votes (and thus could reasonably be treated as each share being worth 10 of Class A shares). What is sold to everyone else is 'Class A' stock worth 1 vote. Despite owning fewer stock shares, then, Zuckerberg has more votes and thus has effective majority control.

You mention due to stock tiering, but that's just it, those tiers don't remove votes, or even owning a share of the company (your stock still does), it just ensures that majority control stays in the company's control. It doesn't change the claim that stock shares = shares in the company. It just changes the percentage each stock is of the company, so it's not as simple as 1 stock = 1/(# of outstanding shares) control, but it still is (100% stock) = (100% control), and (X% of voting power from stock) = (X% of control).

the stock exchanges really missed a trick by not prohibiting this sort of bullshit

When you buy a share of a company, you hold that share at a broker. That broker in turn uses a clearing company which then in turn moves shares around between accounts at DTCC on a net basis between brokers. The only company in this chain that knows what shares you own is your broker. To everyone else in the world your share is held by, for example, Fidelity or Vanguard.

You retain every economic right to the share, you just don't _technically_ own it. This gets more complicated with margin accounts, where as part of the margin agreement you agree to allow your broker to lend your shares to shorts, so for some periods of time you may not actually own the shares you think you own.

[1]: https://en.wikipedia.org/wiki/Depository_Trust_%26_Clearing_...

The obvious example being a hostile take over. One can literally buy up more of a company than anyone else and then attention to take control of the company. One defence being too literally discount shares for existing owners so they can buy up more of the company.

We just saw this happen with Twitter.

1. Stock market valuation has a fairly tidy theoretical foundation that is not too much use in practice for prediction. (It is used for IPOs etc. in some form, when a market price hasn't been established yet.) It involves basic algebra, along the lines of sum_t=1^infty D/(1+r)^t = D/r, etc.

Fisher Black (of Black-Scholes fame) memorably wrote: "An efficient market is one in which price is within a factor 2 of value", where price = market price, and value = true value, as determined by that tidy formula assuming you had all the correct inputs, which you don't.

2. Similar for FX and Rates, though there is a bit more to it.

3. In derivatives, you have much more sophisticated maths (stochastic processes, Ito calculus, PDEs, Monte Carlo). Its focus is not so much prediction of the future, but a) deducing the true current state of the market from observable prices, and then b) from that true state deduce the price of derivative products, and c) computing risks (partial derivatives), which then lets you d) synthesise these derivative products. But that's not very relevant here.

4. Trying to predict the market is a whole other ballgame. You can work with time series analysis, regression and more sophisticated statistical methods and ML, and use any number of inputs: price history, company fundamentals, macro fundamentals, text/sentiment analysis, order book (market micro structure), etc.

Funny thing about this business is that there's a lot written about it, but those that have figured it out use it to make money, and don't write about it.

5. Now, cryptography involves real maths, but entirely different again, mostly number theory (such as n^p = n (mod p), for p prime).

GP might have been complaining that many vociferous crypto bros lack the basics to understand the mathematical foundations of cryptography. Though, I must say, I think one can understand e.g. hash functions and asymmetric encryption etc. quite well from their functionality alone, without needing to understand the math behind it (just as you don't need to understand transistors to understand what a NAND gate does).

Given the apparently inability of active funds to routinely outperform passive funds[0], "not much" would be my response.

One could be really cynical and reduce it to: some people get lucky, some of the time. That's all.

[0] https://www.ft.com/content/06317e0e-b6bf-4fdc-9255-cf664cb92... ( https://archive.ph/NumMp )

Renaissance Technologies and Two Sigmas are just two examples of firms that constantly beat the market using math, algorithms and machine learning. It's doable, but not easy.

This kind of thing is inherently un-provable. You can have a method that works stupidly well for decades, and then it stops working. Building a model that provenly (in the mathematical sense) works with X% efficiency would be akin to building a free energy device.

Your life at 0.00000x% risk is one thing. I'm fairly relaxed about that.

Your capital at - say - 50% risk of total loss is another. I don't play that game.

When it comes to serious financial modeling in big firms, everything from PDEs and stochastic calculus to cutting edge forecasting models and deep learning is fair game.

Ummm, not really. If it were readily predictable, then <ooops> it actually couldn't be predictable.

We simply can't all be making money all the time.

Stocks represent part of real businesses which produce real goods or real services. So they are tangible.

Crypto are just some bits somewhere. They don't represent anything meaningful.

That dirt is very tangible. So is the vast organization running that dirt: it builds roads, runs a military, and (in extreme cases) sends out people with guns if you don't pay those taxes.

That makes those dollars pretty darn tangible.

I'd further argue that nothing truly has tangible value because by definition, value is an intangible concept. The question isn't whether it's tangible, but whether its value to risk ratio is good enough for you.

- former "investment advisor" with all those licenses, CFA, etc

Stock market has something called "fundamentals" which gives you insights into the real value of stocks. If a company invests $1bn to develop their business, their value will go up. Major oil producer goes to war? Crude oil futures will go up. 100% every time. It is not rocket science, and no astrology is involved.

It is what people do that turns it into a gambling machine. They try to predict tomorrow's price by looking at chicken entrails and they get cocky and confident during bull runs. This behavior is not restricted to the crypto space.

A lot of the math is automated these days. PE ratios, SMA (simple moving average), etc. etc.

The basis of most stock analysis is price per earnings, or also known as "How much does $1 of profits cost?". Ex: PE of 20 means that it costs $20 to buy $1/year of profits. PE of 100 means it costs $100 to buy $1/year of profits.

Using this as a baseline, you can estimate the future performance of many stocks. You then correct for public sentiment, bailouts, supply changes (are chips getting rarer and/or more expensive?), and try to predict _future_ profits, not just historical profits.

The company with the most profits, at the lowest price, wins in the long run. Buying $100/year worth of profits for just $1000 investment is better than buying $100/year worth of profits for $50,000.

But the "math" is easy. You just take the profits from last year, then divide it by the #shares * $value of the shares. You can also try to be "forward-PE" by predicting next year's profits and dividing it with today's #shares * $value of shares.

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The #shares changes over time. Companies can make new shares or "buyback" shares at any time. That is why when you hear about company "share buybacks", the stock goes up (fewer shares means lower PE, meaning the people who are buying the remaining shares get more $profits per $investment).

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EDIT: Note that under this theory, it doesn't "matter" what the company does with its profits. Profits can go back to the investors through dividends. Or, profits can be spent back on the same company through Capital-Expenditures (ie: building bigger factories or larger systems). "Growth" companies issue no dividends, because they "recycle" all profits into growing. Or the company can buy another company with the profits. Etc. etc.

While "Value" companies tend to return the money as dividends to the share holders.

Shareholders don't really care. If the profits are given to the shareholders, then shareholders can buy up more of the stock (growing their %ownership, and they themselves get more % of the profits next cycle).

If the profits are invested into itself, then shareholder value goes up as appropriate (instead of $1-million worth of factories, next year the company is doing everything with $1.1-million worth of factories and gets 10% higher profits all around).

If another company was bought, same thing, except the factories are separated by different names / locations.

Of course, the "details matter". Some industries are better suited for growth than others. But the fundamental assumption is "control more profits for fewer dollars".

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EDIT2: Anyway, what ends up happening is that the math-part is easy. Its the prediction part that's hard.

Pyramid trap? Pyramid quagmire? IDK, but "scheme" implies something I don't think is there - control.

People buy it because they expect the price to go up. The price goes up so more people buy it expecting further gains. The fundamentals arguably don't justify such a high price, and so you have a speculative bubble. Eventually, the bubble will pop and most investors will lose money.

I suspect BTC is a bubble because everything it does can be done better by other things. I also suspect that Lightning is fundamentally insecure. If you analyse the true intentions of the people who use it, there's no sober purpose; they just want it because they expect the price to go up. It's not about helping the developing world; because if it was, then there are better but more boring ways of doing it. Hence, it's a bubble built from speculation.

But similar things can be said about many things, and some commodities are able to sustain their bubbles for decades or centuries. Gold is going strong for millennia, with a price far exceeding its practical value. BTC probably won't last that long, but unless it's disrupted by legislation it might still have decades left in it.

The bitcoin network is extremely valuable. Trustless money is important in a world where all other currencies are created, controlled, and manipulated by governments. We know humans are prone to make poor choices, commit crimes, etc. Especially governments. Why do we allow them to create money when and how they want?

Some* people buy it because they expect the price to go up.

Other people are switching to bitcoin because it is better money than their local currency.

> everything it does can be done better by other things

Like what? Trustless transfer of money governed by a protocol that is highly decentralized and secure.

USD, EUR, GBP and CHF are less volatile. The countries that manage them all have good credit ratings. Compare to BTC which has lost >55% of its value in the last 6 months. And you're calling that a currency?

Using safe fiat, or even gold, would be the "boring" solution because it doesn't go up in value much. If anything, it slowly loses value, but nothing among those 4 beats the >55% / 6mo drop of BTC.

If you're concerned about inflation, a finance expert might give you a "boring" lecture on how to counter it.

Maybe there should be a guide to the "boring" solutions to the problem that crypto supposedly solves in an "exciting" and (for now) lucrative way.

The phrase is "financial market"

Edit: I was being overly general with the term "pyramid scheme"

And does paper fiat have intrinsic value?

Bitcoin is trustless money. It's mindblowingly amazing that we now have trustless money. We've never ever had that before. That is the value.

Yes, to the extent that people with guns will enforce its value (as I mentioned above).

> Bitcoin is trustless money. It's mindblowingly amazing that we now have trustless money. We've never ever had that before. That is the value.

You'll have to forgive me if I disagree that "mindblowingly amazing" constitutes "intrinsic value".

100% agree. I did not mean to argue that the value is in the fact that it is amazing. The value is in the trustless money network.

Bitcoin requires you to trust at least three things: Others will exchange it with you. Governments will not make holding/using it illegal. It will not lose it's value overnight. There is absolutely no reason to believe these will continue to be true.

I believe that bitcoin began as a straightforward "pump and dump" scheme, dressed up in a techno-libertarian narrative to appeal to its intended marks, young tech males with disposable income. As the size of the market has grown, I suspect the original cartel holds a smaller percentage of the outstanding supply, but I'll bet it's still enough to move the market deliberately when they choose.

It's trustless, sound money and therefore better than my bullshit fiat.

Then again, I also think most tech stocks are just stupid. Especially Tesla, but thankfully I'm not either betting against them. Let's see if I'm proven correct in long run.

If you think about it, many people make several million dollars over their life time but see it as to high of a risk to put 10k into something that could go to zero but it also could go to 100k or even more. That does not make much sense. The question should not be "should I risk the 10k? The question should be "am I in a financial position that allows me to lose 10k?" If the answer is "Yes" then consider doing it, you will not miss the 10k at the end of you life but you will remember what you did with the 100k if it happens.

I see where you're trying to go by framing a loss against lifetime earnings, but I think that could lead some investors to mislead themselves. Someone who is willing to bet 10K on black at the roulette table is almost certainly going to gamble more than once in their lives. The question should be, "am I in a financial position that allows me to lose 10k right now, and can I trust myself to walk away from the table if I do lose?"

I would never encourage anyone to just trow money any anything that could potentially somehow give you more back. Roulette, lottery etc. are all statistically against you and you have zero way to choose clever or otherwise affect the outcome in your favor. Buying something with speculative value is completely different and it certainly is a good idea to actually inform yourself first about what yo buy. If you subjectively think the chance of loosing everything is over 50% I would look for something else after all the goal is to not lose so it should not be a blind throw it should just be something with high risk AND high reward.

I know someone who intentionally bough some rare apple device for like 1.1k. Fully aware that it might be worthless soon or break and loose most of its value. But it had a realist chance to gain value and it did, he sold it for over 10k 5 years later. Thats about +800% a risk/reward ration that does make sense.

The example you provide of purchasing a fragile collectible is similar; almost all collectibles (be they fine art, beanie babies, or NFTs) lose value, so purchasing one is very much a bet.

You could walk into a betting shop and put 10k on all kinds of things that will most likely go to zero but have a finite probability of going to 100k or even more.

Q: How do you suggest determining the odds of success? Most of us can't invest in every 10k opportunity (and even if we did, we might not win out in the long run)

Can you define "obviously"?

Spoiler, but for financial investments, there are no [genuine] odds. That's kind of my point about the efficient markets hypothesis.

For example, Tesla was at $88.60 on January 3, 2020. It's at $728 now (and peaked[?] at $1222-ish in November 2021].

Presumably there were not very many people who, in January 2020, thought Tesla would increase in value, or it wouldn't have been at $88.60 for very long.

I don't think it's about risk, it's that if you hold stocks or crypto or many other kinds of investment, and your holding is worth $x right now, if you're a believer in the efficient markets hypothesis, you have no real idea whether it's going to go up or indeed down in the future.

I bought a house because it's a place for our family to live, not because I belive it's going to appreciate in value. If you buy ten houses, you need to have information - or sheer belief - that your investment is going to pay off.

It’s a use case I didn’t consider a decade ago.

If you’re exchanging weapons or illicit drugs (nation state) it can easily be millions.

As a run-of-the-mill software engineer, its a world I only have a passing knowledge on.

But gold is also a commodity, and I don't think I've ever heard it called a pyramid scheme.

Source: https://grow.acorns.com/warren-buffett-why-gold-is-an-unprod...

Connector plating, jewelry, dentistry, optics plating for [james webb].

The fair criticism, I suppose, is that the "compelling reasons" a person might pay for a pile of copper are much more numerous than for gold (or bitcoin).

But, OK: think of fine art for a moment... it is also an unproductive asset, the value of which depends wholly on what other people feel like paying, since there is no immediately profitable economic activity in which you can engage with a Monet (unlike the pile of copper). Are you therefore calling fine art a pyramid scheme? I think we are watering down the definition into meaninglessness.

Gold is used in manufacturing but not as much as it could be, because the price is set much higher by speculation/hoarding. So Buffet’s point is that the price is set not by its productive use but by its unproductive use.

Bitcoin is the same as gold but without the productive use to set a price floor. If the speculative market for gold tanked you’d settle on something like 5-10% IIRC as the imputed value based on manufacturing uses. Bitcoin has zero value for manufacturing uses. Maybe there is a price floor for smart contract usages if the speculative market evaporated but I think it’s much lower than 5%.

I do think there is in fact a "productive use" for cyptocurrency, which is transacting on the dark web. It has been earnestly used as a currency in that context for a very long time... it's just that bitcoin boosters would rather not talk about it.

I strongly agree that dark-web transactions were the largest “productive” component of BTC, but I think the “BTC as payment mechanism” has a much lower equilibrium price than asset-based usages because you essentially buy to make a purchase, and then sell on the other side. So for $1B of transactions in a year you might only need $1M of currency (maybe it’s an order of magnitude higher if you don’t immediately sell your BTC on the receiving side) which would give a price of $0.05/BTC (assuming 21M BTC total). Fermi calculation here, I think this is a lower bound for $1B transactions. The real calc is a bit more involved and I wouldn’t be surprised if it was one or two OOM higher.

As you can see the dark web usecase settles on a much, much lower value for BTC than the current market price. You need $T/yr to be transacting in BTC, or folks to be holding a float in BTC because they are getting paid and plan to pay for things, to get a valuation in the $1000s. Which is fine, but supports the point I made above about the “productive use prices” being a much smaller fraction of current price than even gold’s.

It's relevant because Buffett is prone to talking his book, and while he does walk the talk about fundamentals/cashflow in general, he almost certainly did not make these comments out of some deeply-held principle (he obviously would not have said these things in 1998). He is not actually the kindly grandpa image he is careful to cultivate and his comments are usually calculated. The context in 2011 was discomfort with the new QE policies and concerns about inflation. Buffett was not really concerned with "greater fool" assets in a moral sense so much as convincing his investors that (1) sitting around and hoping for gold to act as an inflation hedge (2) in the case inflation actually manifested was plainly inferior to just owning cashflows that would scale with the value of the dollar anyway.

(He was right, obviously)

> So for $1B of transactions in a year you might only need $1M of currency

I think that's an insane estimate. That's a money velocity of around 300. The US dollar typically has a velocity between 1 and 2. Nor is $1B in transactions anywhere near the reality for dark web activity.

Still, I tend to agree that illegal use cases limited to just ransomware and buying and selling drugs online, while not necessarily a "small" scope of activity, would probably support a fair price only in the hundreds of dollars.

But it's honestly probably graduated to more utility as a potent money laundering tool now that it is broadly recognized and in some ways "legit" in the eyes of regulators. It's just so easy for someone with dirty cash to buy coins and claim they mined them in 2010 and just now discovered the dusty old drive in a desk drawer. It's next to impossible to disprove or prosecute, and best of all it means you only pay capital gains (as opposed to ordinary income, which would be the case for money washed through a cash business). I don't doubt that kind of activity supports a price in the thousands, at a minimum... the UN estimates 2-5% of global GDP is laundered money.

As someone else observed in this thread, the main "value creation" of the fine art market is similarly money laundering and tax avoidance, which is the primary driver behind the facially ridiculous payouts for individual works at auction rather than "artistic passion" or whatever.

What is interesting about all this, though, is that if the speculative value evaporated such that the illegal activity was all that supported bitcoin, it would seem almost certain that regulators would bring down the hammer (at least to the extent that it would not be useful for laundering money anymore), which makes the "intrinsic value" kind of hazy in an ultra-bearish scenario.

Not that I think the speculative value is likely to evaporate entirely... this isn't the first crypto winter by any means, and historically speaking it's right on time (halfway between block halvings).

Are there any for-profit museums focused on fine art?

https://en.wikipedia.org/wiki/Louvre#Management,_administrat...

> The Louvre is owned by the French government. Since the 1990s, its management and governnace have been made more independent.[91][92][93][94] Since 2003, the museum has been required to generate funds for projects.[93] By 2006, government funds had dipped from 75 percent of the total budget to 62 percent. Every year, the Louvre now raises as much as it gets from the state, about €122 million. The government pays for operating costs (salaries, safety, and maintenance), while the rest – new wings, refurbishments, acquisitions – is up to the museum to finance.[95] A further €3 million to €5 million a year is raised by the Louvre from exhibitions that it curates for other museums, while the host museum keeps the ticket money.[95] As the Louvre became a point of interest in the book The Da Vinci Code and the 2006 film based on the book, the museum earned $2.5 million by allowing filming in its galleries.[96][97] In 2008, the French government provided $180 million of the Louvre's yearly $350 million budget; the remainder came from private contributions and ticket sales.[92]

COVID bailout:

https://news.artnet.com/art-world/france-museums-rescue-pack...

Crypto isn’t so much a commodity as a collectible like a stamp or a beanie baby.

But it IS a currency.. It is uses for daily payments and legally considered a currency in multiple countries today. I fully expect that list to balloon up over time.

You're talking about USA in 2022 and not the rest of the world or the future.

For 99.9% of daily cash-equivalent transactions it is significantly clunkier than the new "FinTech" solutions: Venmo, CashApp, Zelle, etc. For purchases, credit cards generally actually offer a kickback so it's not even a contest.

El Salvador gave everyone $30 of free bitcoin. What happened afterward speaks volumes.

These are layers on top of the dollar. I agree they’re a great consumer experience.

Why not equally nice layer on top of bitcoin?

And yes it is a pyramid, almost all of the value come from the fact that central banks hold most of it and almost never sell to the open market and most of the rest is in jewelry with 2-3 generation turnaround time so essentially removed from the gold market.

According to current (May 2022) regulatory framework in the USA. In other countries it is currently a currency.

- Donald Trump

Not really but I am sure he is a practitioner of the philosophy. The actual quote is from H. L. Mencken and applies to both money and politics (which might be the same thing:)

No one in this world, so far as I know—and I have searched the records for years, and employed agents to help me—has ever lost money by underestimating the intelligence of the great masses of the plain people. Nor has anyone ever lost public office thereby. The mistake that is made always runs the other way. Because the plain people are able to speak and understand, and even, in many cases, to read and write, it is assumed that they have ideas in their heads, and an appetite for more. This assumption is a folly.

I know there are stocks that don't do either of those things (although rare) but the idea is they will one day in the future. You're still paying now for a piece of future profits. That's very different from a pyramid scheme.

Netflix? Alibaba?

Netflix has done buybacks in the past but their financials aren’t great right now.

You mean "a large enough contingent of shareholders", right?

We've spent many years learning exactly what those things are thanks to all this insufferable nonsense. I know more about crypto than practically 90% of the crypto community. I know all the personalities, the history, the fraud, the crime, the grift. I've read countless whitepapers. I've learned about 'traditional' finance.

All because of the brigading army of the insufferable.

1. something (usually raw material or primary good) that can be bought and sold - Bitcoin sort of fits that definition.

2. something (usually raw material or primary good) that can be processed to produce something useful. Bitcoin is not a commodity in that sense, which might be what GP was trying to highlight.

He’s even said he’s propped up by others.

You are being annoyed with people when they’re not reciting the right semantics? Some form of just stick to the script?

The entire internet is full of insufferable bullshit brigading of opinions because that’s what it’s for.

I’ve been online since the 80s for the weird. Now it’s full of insufferable normies.

Maybe it’s outlived it’s usefulness as a social engagement tool.

Not at all, I'm sick and tired of being told to "do my own research" in response to thoughtful and measured criticism by people who clearly have no idea what they're talking about.

For what it's worth, you seem consumed by your envy. Accept that crypto investors, even the most stupid ones, took a risk you didn't take and were rewarded handsomely.

Long story short: That project is long gone. I viewed BTC as an interesting payment method that might have some inherent value as an efficient and anonymous means of transfer, which it's not anymore. I never trusted it and I didn't want to gamble on its fluctuations since the casino was denominated in USD and I was already exposing my savings to literal gambling risk (albeit playing as the house - still scary). So eventually I took to just getting rid of BTC daily, trading out the day's rake, and only buying it to do payouts. Closed the casino in 2013 and never saw any major profit, stakes being as low as they were.

I'm a middle aged working coder with a net worth short of $1m. I've thought a lot about what my life could have been like if I hadn't done ANYTHING except hold that initial 5000 BTC instead of getting out of it. And you know what? I'm not sorry about it. I did what seemed smartest to me at the time: I got rid of what I thought was a bad investment. And by then I knew plenty more about Bitcoin than most of the people who've bought into crypto since. Under the same set of conditions, where that was a meaningful chunk of my savings, I'd do the same again every time.

You're absolutely right that there is nothing healthy about being bitter or angry towards people who strike it rich - even, or perhaps especially, if they do so by pure luck.

Life is a casino. Envy gets you nowhere, and it's not a good look. Show a little class and you might get comped for the show.

[edited for readability]

In fact, frequently I feel sorry for them because they seem so desperate to be friends with me - because my life experience had been "real" and presented me with real shit they never had to deal with. They lack more for true friends than you or I. And I can't covet what they have when I can see, plainly, that I wouldn't want to trade places with them. And that a lot of times they want to trade places with me.

We all die. Happiness and bliss is just as likely to find you in a park behind a dumpster as in a penthouse. All the rest of the angst about judging who deserves what is just a waste of the time you have on this earth to define yourself independently.

This is about wealth inequality. This is about watching as resources are entirely captured for a very small few. But history will continue to teach lessons about what happens when the rich get too big for their britches.

Down that path lies authoritarianism: who decides what is productive?

Is art productive? Is your comment on HN productive? Is beer productive? Is Haskell productive? Are you productive? It isn’t hard to argue most everything is non-productive. Remove all non-productive uses of money or time, and what is left?

The scariest part of this line of thinking being so common is that it has happened! We've bench-marked humanity towards productivity before: dosed drinking water with amphetamines instead of fluoride and outlawed art and mandated labor at tank factories. Productivity!

Down that path lies authoritarianism, but more than that: down that path lies mass murder. What could be more productive than removing those who block productivity?

I appreciate your comment but I am always blown away by how kindly people respond to that idea of "unworthy activity", as if its not one of the cruelest ideas a person can possibly have. It's more common here because it's a community of engineers - we work with complex automations all the time - so it's only a natural mistake to see humanity as a complex automation too, and want to engineer it. But I still can't forgive the callousness.

There is not an equivalent 1st amendment “right” to spend our time and money as we will. Too many people just spout an opinion on what we should be “allowed” to do: without thinking of how that could be used against them.

It drives me crazy how willing so many people are to decide what is best for others: the rich, the poor, the disabled, the foreign. And how little insight people have that their own choices are definitely pure waste in the eyes of others.

When did liberty get debased?

It's why it's much easier to walk around a city and spot an empty balcony, high up in the sunset, than to appreciate the city itself.

"Someone should be enjoying that balcony! Why is the rich owner somewhere else, and there are thousands of us pedestrians wishing we could spend just a moment up there? Inefficiency!"

is a much more viral thought than being completely overwhelmed by the amount of human effort your eyes are looking at. If we could properly understand it we'd all just be weeping with gratitude and humility all the time, and that wouldn't be productive at all! Being biased towards negative emotion should be assumed to be the default. So liberty didn't have to be devalued - it just hasn't been properly valued yet! Much more optimistic :)

Sorry for long reply!

One underlying cause for complaining about the waste of others is status seeking, of which virtue signalling is a part of.

People don’t have to be reasonable, but your effort is admirable.

I think engineers look at the world with different eyes, as you say. I find our infrastructure systems as profound - and also the beauty of how our interfaces with those systems hide deep complexity. The average person doesn’t see flushing a toilet as amazing technology, nor understand the vast number of lives saved by civil engineering (doctors are window dressing on society).

Regardless, academically defining something as more or less productive than something else is not authoritarian. Nor is deciding personally if something is “good” or “bad”.

Now if someone in government decided to create and pass legislation based on their personal academic or philosophical beliefs, and not based on some factual usefulness of the legislation, than I think that would fall under the definition of authoritarian.

mjburgess’ comment appears to be using virtuous, religiously worded, moral arguments against the “waste” of cryptocurrencies. I am not making an economic argument and neither was mjburgess: my argument is about liberty and I am against people that imply that our personal choices or values are unworthy, because by their morals the choices of others are waste. I personally might agree that cryptocurrencies appear to be negative value for the economy, and I might see them bring negative value to some of my acquaintances. That is not the issue. We should aim for the ideal of being as free as practical to make wasteful choices: the waste of having a child, breathing, thinking, or doing absolutely anything, really. As you say, that freedom needs careful balancing against how our personal liberties affect others.

I am looking at that comment as an single example within a wider milieu: one dangerous opinion dressed up in what superficially appears to be a sensible economic argument.

> is not authoritarian

Strawman words in my mouth. I never said it was authoritarian, I said: “down that path lies authoritarianism”.

Narrator: It wasn't

"Hey, look, just take risks, because if you don't, you'll be poor AND bitter."

I never asked anyone to take risks, and buying into unproductive assets is usually not a good idea. Neither is gambling. But holding this kind of resentment will eat at you. If other people get lucky, you should be glad, not hateful.

Everything else is just a smoke screen to make "your lucky existence" justified compared to the masses who did nothing wrong except be born into this system.

Assuming by country you mean the US, just being born there is already incredible luck. I have no idea what you're talking about really, there will always be people with less "luck". I work very hard, consider myself very lucky in general, but also unlucky in some aspects. And hell, I can't afford a home either, but I'm okay with that because I don't expect society to hand me one.

You shouldn't be, these cryptobros have been orchestrating general scams, rugpulls, hype scams, pump and dumps and all this having an effect on normal people's lives.

Do not be sorry.

The only difference being I don't shill pyramid schemes on the internet for profit.

I kinda sit back and wait and take profit when it makes sense to me.

I certainly don't tell other people about it when I do it.

    crypto bros are finally getting a punch to the mouth

Should we also benchmark stock prices against IPO prices? That information is only useful (and applicable) to those who go in at the beginning,and that is a small (and shrinking) proportion of overall traders. Apple being down 15% YoY is useful to more people than knowing it's up 25000% since it's IPO decades ago.

"What good is envy? It’s the one sin you can’t have any fun at." - Charlie Munger

I'd rather listen to someone closer to the bottom, who actually had to sacrifice for that viewpoint, like Jesus or a well adjusted homeless person.

Reality is more complex than you make it. Not all billionaires are horrible people in case you didn't know.

But yes, enjoy your Jesus fantasy.

> It's less that I'm glad the market is crashing, and more that I'm glad that the insufferable homeowners are finally getting a punch to the mouth. Seriously, these people are the worst. Your average "home investor" has no skills, no mathematical foundations, nothing. Except for pure stupid luck, and the ability to spew inane economic babble 24/7. And yes, they think they are much smarter than you, because they achieved better financial results than you did while only doing 1/1000 of the work to get there. I truly hate the fact that these people are so rich. It makes me want to move to Alaska and just try to ignore society for the rest of my days.

> This came off as pretty bitter. I apologize, but I am bitter, and I'm having a shit couple weeks.

Not trying to criticize you too much; I'm more reflecting on this text because this is how I catch myself feeling about people who have participated in the inflation in the bay area with respect to homes.

The crypto stuff is just another bubble, sticking to fundamentals will still lead you to (well earned) success. Bubbles come and go, skills and financial acumen are forever.

Never mind that their processes are a bureaucratic hell and it takes 100 of their engineers to implement the same thing which just 1 really good engineer working for a startup could implement in the same amount of time - Look at Whatsapp as an example; before they were acquired, they had hundreds of millions of users and only 55 engineers in total... Facebook has over 10K of them and gets a lot less done...

Talent outside of big tech is not unusual; it is the norm, but most startups which are full of talented engineers don't go on to become Whatsapp because the market doesn't care about technical talent above a certain (rather low) threshold.

Everything is a lottery. Any appearance of meritocracy is an illusion crafted by media and PR firms in an effort to keep the system from falling apart. Only extremely lucky, delusional outliers think that the narratives make sense nowadays.... Through a lot of people who know that the narratives don't make sense still pretend that they do.

what sickens me more is all these companies jumping on the crypto.nft.metaverse bandwagon, like f off seriously.

What do you do when literally everyone you know IRL is into it? Everyones brain has been warped by speculation.

Source: I am in a tech-oriented urban environment and I know nobody who is into crypto.

Even if I could live to 500 years, I don't have the time to waste on random activities like this. I've never felt like North America is my home anyways, nevermind the people. I'm mostly over having any sort of social life here, have zero hope or desire to do so left.

All I ever wanted to do was play music but all I ever ended up doing was paying rent.

A significant fraction of young single men feel a deep compulsion to indulge in risky behavior with a potential high reward in order to make a name for themselves or earn their place in society. I don't know if it's genetic, cultural, both. But for many young dudes, it's not enough to simply work a good job and enjoy their leisure time.

Men like this are the free radicals of society. If the society can't find a healthy productive outlet for their drive to compete, take risks, and seek fame and adventure, then they will just do outright dangerous shit with potentially large collateral damage.

For most of human society, hunting, exploring, dangerous jobs, and war were significant outlets for this. They gave men a way of doing something courageous that their culture held in high esteem.

But today, we have domesticated animals, explored every square inch of the Earth, automated all of the risky manufacturing and resource-gathering jobs, avoided large-scale war outbreaks (and used technology to reduce military casualties and fatalities). There are simply less paths available for a young man who feels like he has nothing to take pride in unless he succeeds in some bold risky adventurer.

For a while, videogames functioned as a simulated output for that impulse. I think that's why many gamers flipped the fuck out during Gamergate when they felt that their avenue to satisfy that urge was being invadaded and taken from them.

It was, I think, a driver of the rise of the alt-right, doomsday preppers, and Trumpism. This impulse elect a wildcard as President, burn it out down and start over because in a world of chaos, there is maybe an opportunity for the bold.

And now, I believe, much of the crypto world is driven by that exact same impulse. Young, overwhelmingly male, "crypto bros" desperately looking for some unexplored frontier where they can build something new and forge an identity for themselves.

The problem is that there is no there there. It's all a house of cards. No actual new value is being created, so it's just crypto bros competing with other crypto bros in what will likely end up being a zero sum game (except for all the unfortunate other investors who get sucked in).

Even if crypto all collapses, the core problem will remain. These dudes will just find something new to slake their thirst for risk. Hopefully it will be on something less destructive to society.

I feel like social media ups the ante on a lot of borderline or negative human traits because instead of CONNECTING us it's actually pushing us further apart.

It's a tangential thought I know but the fact that there exist people bragging/boasting/ saying LOOK AT ME LOOK AT ME LOOK HOW EASY IT IS - this creates a pretty unhealthy feedback loop and like you said, there's no value there.

I have smaller kids and I fear for their mental well being because of the pressures of the internet and how it's bleeding into reality in weird new ways that aren't exactly healthy.

That's your whole theory, and there's nothing weird about it. Everyone knows young men take risks to make their fortune and gain esteem. It's just window dressing for a claim you threw out there without any supporting argument.

This is a deeply unsatisfying and spiritually empty existence. This leads to all the behaviors you mentioned as a form of rebellion and/or attempt at escaping the bonds of that kind of life. This sentiment has been catalogued in a variety of movies, including "Fight Club," the ur-text of Gen X anomie.

But crypto bros aren't trying to escape that. They are doubling down on being homo economicus because now they're investing in financial objects that are completely decoupled from even representing something as meaningful as a share of ownership in a business.

I think young men with this mindset will play whatever game society places in front of them. They just need a playing field where they can feel they can compete and have a chance to be seen making a home run. Crypto was there so they jumped on it.

My dislike of bitcoin is mostly due to its enormous energy usage. And the scarcity of GPUs.

I senserely hope your weeks will get better.

> pure stupid luck

I say

> A bigger idiot

I used to be a huge believer. Brian Armstrong gave me my first Bitcoin in 2011 at District in SOMA. Electricity was included in my rent so I bought 10 video cards and mined for about two years on 5 systems. At a company I founded, I use Bitcoin to pay for food and drinks. According to the Barista, I was the first person to ever pay for coffee with Bitcoin at Coupa Cafe (despite having to stand there and wait 10 minutes while the transaction cleared).

But nothing has come of it. All the years of promises and applications, nothing. Ether DApps, sure, but how much of the modern internet runs on those? I also mined StorJ and Monero for years. Apart from a way of making money and storing value, crypto is useless. Processing fees are way too high to even be considered as a replacement for payments not to mention other barriers such as the ability to integrate with antiquated point of sale systems entirely designed around credit/debit and cash.

So I put all of my holdings into a retirement account and don't worry about the price. But I've given up on crypto and everyone who babbles on endlessly like they know something I don't about how it's going to change the world. So even if Crypto loses its value some, I'm glad because the lack of easy, effortless gains will disappear for a lot of those people and most of these short term hucksters will fade away. I'll gladly exchange crypto's price for less crypto bros. My cost basis is around $150 so I have a long ways to go before I care that much.

That's how I feel about the crypto (and to a lesser extent stock) bros. The future is unknowable, and even people who trade these thing professionally make fairly marginal gains (that they make up for in quantity); saying you made millions from bitcoin just says "this guy got really lucky!".

I would say, that depends who they are playing against?

This entire viewpoint made a lot of sense until this final sentence. Your point is that you’re okay the market crashed because your cost basis is 150$ and BTC is still at 28.5k$?

The reason you don't see this with other cryptos, by the way, is that their utility is severely limited (in a technical sense) and therefore the underlying value is entirely speculative.

> Apart from a way of ... storing value

Do you think USD (or some other fiat) is a good medium for storing value? If not, can you see that your latter claim invalidates the former?

Whether or not you need that will depend on where the world goes. A CDBC social-credit system world presents a lot of incentives to use something else.

And if you do need it, you need it ahead of time. Good luck trying to learn and set up networks from scratch when they are considered illegal etc.

The people who hate the intermediaries are the sellers, because they don't like losing a small % of their sale to a payment processor. But sellers do not have the power to change this. They have to accept payment in whatever form customers are willing to provide it in. Customers aren't going to move away from PayPal and credit cards without a good reason, and so far crypto has failed to provide that reason.

In general this is just an illustration of the racket between banks and card companies, since customers really only seek to pay using the payment options their bank provides upon opening an account, although I guess that's not a surprise given Visa started out under Bank of America[0].

If banks provided a crypto wallet that had all the benefits of regular accounts like direct deposit and FDIC insurance, which they might eventually do[1], I doubt many would hesitate to use it. The only barrier would be if using the crypto wallet presented a fee that Visa and the rest of the card industry loves to keep a secret by charging the merchant instead, with the merchant passing on those costs to the customer in the form of higher MSRPs.

0: https://minesafetydisclosures.com/blog/2019/5/29/part-l-a-hi...

1: https://www.federalreserve.gov/faqs/what-is-a-central-bank-d...

In practice you need a bank account to use bitcoin, there's essentially nobody who uses bitcoin that doesn't have a bank account, so the "no intermediaries" thing isn't really meaningful, nobody cares about this.

[0]: https://www.bitcoin.com/get-started/how-to-locate-and-use-a-...

[1]: https://coingeek.com/localbitcoins-restricted-to-only-10-sta...

LocalBitcoins is not practical, nobody wants to meet up in the streets to trade cash for bitcoins.

The Canadian truckers didn't have bank accounts for a moment (maybe still ongoing). As financial prosecution, eventually algorithmically (have you seen on the threads on HN recently about people getting permabanned from various services for seemingly no reason?) ramps up, and CDBC rolls out...

There is no constitutional guarantee for the freedom to use payment networks so this inevitably will be used as leverage for compliance with anything governments/national banks want

It was Canadian truckers yesterday, Russians today - are we so naive to think it will be nobody tomorrow? Or are we ok with the exiling of people from society as long as its somebody we don't like?

You're connecting to some nodes, right, to send the transaction? Those are intermediaries. Very very few holders of crypto run their own nodes, these days.