Gotcha. Yeah, I think he just wanted to get into mining after talking himself out of it for so long. I think he just chose Etherium because he sees more upside there at the current moment than other currencies. I assume he’ll move on to mining something else after what you are talking about happens.
EDIT: I just asked him and he has more of a “I’ll cross that bridge when I get to it,” attitude than I expected. Dude is single, makes really good money, lives in a big house that he built, but is currently empty because his roommates moved out at the beginning of the pandemic, gets all he consumes delivered to his door, and had a health scare a couple months ago. I think he’s looking at this as a fun hobby as much as anything, so I’m not quite sure he cares as much about his ROI as the people on this board would. But he also likes gambling, so he’s gambling a bit on the chance of an upside that is out of his control too.
Not really a good analogy. Those are all legitimate businesses that generate profits that can benefit shareholders. The shareholders can benefit from dividend payments even if the market values the shares at $0.
Bitcoin produces nothing of value. The only way you can make a profit is by selling it to someone else that buys it at a higher price. That person is buying because they have an expectation of selling it to another fool at an even higher price, just like a Ponzi scheme.
Stop calling it a Ponzi - that’s a type of fraud. Are people who buy any stock that doesn’t pay dividends, like AMZN, buying into something “just like a Ponzi” under this thinking? Some 15-20% of the S&P500 don’t pay dividends, and I’m sure vastly more small caps don’t either. They aren’t all frauds, or just like a fraud either, come on.
I would also add, that in the case of gold or possibly crypto, people may not be expecting to sell at a higher price. They may find other assets unattractive and are hoping to lose less in a crash than they would otherwise. These are in some sense an alternative to cash for those with less trust in the government money supply.
Yes, it is. That’s what cryptocurrencies are. It’s just hidden behind math that most people can’t comprehend.
What’s even worse is that it enables criminals and rogue states to generate huge sums of money.
Even foreign currencies are backed by something, like acceptance in a whole country and the ability of the issuing government to collect taxes, etc. Crypto has nothing of the sort. I’m pretty sure most legal entities that accept crypto don’t hold it too long, but convert it to the local currency (like Overstock). Tesla is a big new exception, but that doesn’t absolve crypto from being a Ponzi scheme.
Are people who buy any stock that doesn’t pay dividends, like AMZN, buying into something “just like a Ponzi” under this thinking?
Of course not. The reason Amazon doesn’t pay a dividend is that the shareholders don’t want it to pay a dividend. They want them to reinvest the profits into the business to maximize growth. That way they can pay a larger dividend in the future if shareholders desire.
First, he said “like Amazon”. Second, the reason Amazon doesn’t pay a dividend is that “not enough” shareholders want them to pay one.
Finally, please investigate the phrase “speculative bubble”. That is, possibly, what is going on with cryptos. Also, please ask scripta about his mind-reading of Bernie Madoff. He was the author of a pyramid scheme. I also suspect that there is a dictionary somewhere which defines a pyramid scheme.
That “background” forgets to mention an critical caveat – NFTs do not contain the actual art and the art isn’t stored on the blockchain. The NFT only has the web address (URL) of where the art is located at the time the NFT is created. Web addresses are subject to link rot, which means there’s absolutely no guarantee that the art, which is supposedly worth ridiculous amounts of money, will exist at the same address tomorrow. Most of this is incredibly stupid. And the parts that aren’t incredibly stupid do not need to be on a blockchain.
I’d assume there’s money to be made just like in buying/selling physical artwork, possibly with lower barrier to entry since it’s newer. But I also expect more scams and more froth from NFTs compared to physical artwork. Either way, hard pass for me (breaks my rule of investing in something I don’t fully understand).
I couldn’t figure out how to buy an NFT without paying absurd transaction costs. After Beeple sold his NFT for $69M I decided to buy a cheap NFT. So I went around shopping for somethingthe cheapest NFT I could find just for FOMO / speculation / entertainment / to say I did it… But to buy it it took Etherium. So I got some Etherium. but then to actually buy it they kept quoting me ‘high mining transaction fees’ or something and it would have been like $50 minimum. So if you want to spend $1 the fee is $50 … I never could figure it out. Seemed crazy
Except you’re not really buying the artwork, you’re buying something akin to a certificate of ownership. Would you buy the Mona Lisa from the Louvre if a condition of sale was that the painting permanently stayed in the gallery and you could go visit it like any other patron? You nominally own it, but that ownership is meaningless for any practical purpose, unless you can find a bigger fool to sell it to.
The most recent story I read on the subject was about that DAO collection that tried to buy the copy of the constitution. They’re trying to refund the donated coins to the people who donated them. The average donation was ~$400, but the cost to refund it / transaction cost / burn fee is ~$150. It does not make sense for “small” transactions.
That’s a decent try at an analogy, except the Mona Lisa is an actual famous painting and the Louvre is owned by the government of France, supported by government funds and admission fees, and, unlike a privately owned website, has an incredibly good chance of surviving forever. And to see the original, you actually need to go there.
A more complete analogy is: would you pay for an ownership certificate to some digital chicken scratch if a condition of sale was that the image is not unique (all copies are identical), everyone can view it at any time without any costs or restrictions, it was not made by anyone famous, and your “ownership certificate” is only for the copy of the image located at a specific web address without any guarantees for the continuous survival of that address.
Anyone know… . how this works then? Is this how its supposed to be? I mean it doesn’t make any sense to me for crypto to have a high transaction fee.
Or is the transaction fee more fixed amount so that its really only meant to move larger amounts of money? I thought that crypto was hyped as a new currency but its not at all practical if transaction fees are 1000x what we pay with the existing systems.
I don’t think it’s a fixed amount, but a function of how busy the network is, how smart or stupid the consensus mechanism is, i.e. proof-of-stake (smart) vs proof-of-work (stupid), and probably the price of the coin, since miners are compensated with a fraction of the coin. The busier the network (i.e., the more transactions are occurring), the higher the transaction cost. More miners on the network should mean cheaper transaction costs. ETH is at $4500 and transactions are near $5, BTC is at $57K and transactions are near $200.
My understanding is that the network cost of the transaction is independent of the amount of the transaction (so it costs the same to send 100 coins as it does to send a fraction of a coin), but exchanges may charge a percentage fee on top of that for their own profits. There are also currency conversion, deposit, and withdrawal fees, and they’re all different for different coins and exchanges. I haven’t done any of it myself, that’s just my understanding.
Yeah I thought that the fees were related to network activity and so I checked multiple times multiple days to try and wait for it to ‘cool off’ so that the transaction fees would drop. Never did see the fees go down they were always like $40-50. This was with ETH. $5 on a $4500 transaction would be fine. Even $50 on $4500 isn’t too awful. But if you have to pay $5 for any transaction then that makes it basically unusuable for anything but larger purchases. Maybe there were 3rd party fees I couldn’t see… but it said specifically it was for miner fees.
I see from source below that fees were fairly high early this year:
Here’s an article that covers the part about NFTs that is not incredibly stupid, because there is a market and the company can make money. Also mentions the incredibly high energy cost of transactions on the Bitcoin network, and the much lower (2 million times) cost of the alternative they plan to use:
However, it’s still really stupid, because:
That market is made up of stupid people (who pay real money for digital items, at least some if not all of which will be purely decorative, not “functional”), and more importantly
There’s absolutely no reason for these items to be NFTs. They’re only usable in the game, so it could just as easily be a simple record in the company’s own internal database as it has always been done – no public blockchain or the associated extra electricity needed.
