I remember when people mined bitcoins in the college computer lab. Originally, you were supposed to get compensated for making the network function with bitcoins. But that is so difficult now, only people with a lot of compute power can mine anything. In other words, people that already have a lot of money. Not exactly a mechanism for redistribution.
Thank you for writing this. I just talked to someone at a crypto conference who wanted to sell NFTs to help indigenous villagers in Peru, and I was trying to explain to him why doing that would solve a problem more for investors (increasing social status, vanity) that for villagers. It's not that more money and better financial literacy wouldn't help those villagers, but that there are simpler and more direct ways to help them, i.e. increasing their access to fast internet and clean water.
Crypto's real game changer as a technology is enabling creators (of anything) to bypass middlemen in distributing their assets. Founders can now list their tokens on a decentralized exchange and bypass traditional venture capital. Artists can now list their art on an NFT marketplace and bypass auction houses like Sotheby's. Non-profits should be able to turn themselves into self-sustainable DAOs by using smart contracts to lower operating costs and tokens to boost fundraising. Not to shill, but I tried to explain this in https://fengtality.substack.com/p/what-is-the-job-of-crypto.
I am a 71 retiree and I have done pretty well in the stock market. I have been with the same stock broker/investment advisor for more than 30 years. In the days of the tech boom I went against his advice and held some tech stocks that I should have sold. But I learned my lesson. In todays world find professionals you trust and heed their advice. This works for medicine, plumbers, and investment advisors.
In work life I began as a librarian/archivist and later records manager/e-discovery specialist so I was never a high flyer but all things considered I have done rather well.
Some of the things you write about remind me of the stories people tell when they come back from Las Vegas. I won $100 one person says. Another will say I won $500. Pretty soon you get the notion that everyone who goes to Vegas wins and that there is a bucket filled with money where you can simply help yourself -- but sadly that is not true.
The problem I see is that enough people around the world feel jaded and disillusioned with slow growth in their net worth (me included) that they feel like buying when the price falls. Essentially, it keeps getting propped up. You only need someone at the margin to buy it a certain price to send a signal to the rest of the market that an asset is worth that much, right? With an addressable market in the millions, there's still some way to go. Most people invest in Bitcoin out of curiosity and store them away for several years.
It does collapse, it will probably be when the whales decide to exit.
Been a Boglehead for six months now! Ukraine has confused me considerably but I still believe in US total market funds!
Who's to say that the Reddit WallStreetBets people responsible for ginning up the GameStop bubble in the first place aren't clever hedge fund bros creating anonymous Reddit accounts from behind fancy VPNs?
And if you really want a more economically equal society, vote for leaders who will implement policies to raise the wealth of the broad middle class.
--------------------------
The reason the US (and a fair bit of the western world but the US specifically) finds it so hard to have policies that support the broad middle class is that such policies require people to admit they're losers.
The whole capitalist game has been summarised very well by Trump - Are you a winner or a loser?
And obviously no one want to answer "I am a loser". We're trying to get laid, after all (men, that is).
But the problem is that, if you're a winner then you cannot support collective action or redistributive policies. Winners don't need that. They do not shrug but actually shred the world and rise to the top by sheer strength of will and ingenuity and stamina and innovative genius, not by begging for public healthcare...
That's what it'll take for the middle class to rise - look around to my brothers and admit "I am a loser too ; but I have no interest in going gentle into that good night and, together, we can not only survive but strive".
Late to this piece via Hexapodia - don’t know how I originally missed it. Very good sum up of a social phenomenon that’s been fascinating to watch, knowing full well that “this time it’s not different” other than it’s all playing out on the internet, with its distinctive fandom dynamics.
But the true purpose of my comment is to wonder what the fan base is for Stevie Winwood and Traffic, beyond those of us who followed him from when he first appeared through his various groups and gigs. Your opening quote was perfect, and timeless. And now I’m going to be hearing in my head for days The Low Sparks of High-heeled Boys.
Good article. It would have also been useful to explain the fundamental difference between Bitcoin and meme-stocks, and other stocks from an investing point of view. Bitcoin and meme-stocks have no positive cash flow which means their value going into the future is zero or negative; meme-stocks at least have some assets, usually the brand, that could conceivably generate some future value in the hands of another company--Bitcoin doesn't even have that. typical companies in the stock market are expected to generate revenue and profits that get shared with the stockholders.
Preface by saying I have never felt the impulse towards egalitarianism. It’s one of those first principle things that people either have or don’t, and is very determinative of political ideology.
That being said, nobody should be surprised that a small group of more talented people will win at literally any endeavor, including trading “meme” stocks. This is the story of all of world history.
You can change the rules to create different groups of elites (knights, political commissars, land owners, nerds, etc.) but you’ll never change the fact that some people are better and there are returns to quality.
I remember when people mined bitcoins in the college computer lab. Originally, you were supposed to get compensated for making the network function with bitcoins. But that is so difficult now, only people with a lot of compute power can mine anything. In other words, people that already have a lot of money. Not exactly a mechanism for redistribution.
Thank you for writing this. I just talked to someone at a crypto conference who wanted to sell NFTs to help indigenous villagers in Peru, and I was trying to explain to him why doing that would solve a problem more for investors (increasing social status, vanity) that for villagers. It's not that more money and better financial literacy wouldn't help those villagers, but that there are simpler and more direct ways to help them, i.e. increasing their access to fast internet and clean water.
Crypto's real game changer as a technology is enabling creators (of anything) to bypass middlemen in distributing their assets. Founders can now list their tokens on a decentralized exchange and bypass traditional venture capital. Artists can now list their art on an NFT marketplace and bypass auction houses like Sotheby's. Non-profits should be able to turn themselves into self-sustainable DAOs by using smart contracts to lower operating costs and tokens to boost fundraising. Not to shill, but I tried to explain this in https://fengtality.substack.com/p/what-is-the-job-of-crypto.
I am a 71 retiree and I have done pretty well in the stock market. I have been with the same stock broker/investment advisor for more than 30 years. In the days of the tech boom I went against his advice and held some tech stocks that I should have sold. But I learned my lesson. In todays world find professionals you trust and heed their advice. This works for medicine, plumbers, and investment advisors.
In work life I began as a librarian/archivist and later records manager/e-discovery specialist so I was never a high flyer but all things considered I have done rather well.
Some of the things you write about remind me of the stories people tell when they come back from Las Vegas. I won $100 one person says. Another will say I won $500. Pretty soon you get the notion that everyone who goes to Vegas wins and that there is a bucket filled with money where you can simply help yourself -- but sadly that is not true.
The problem I see is that enough people around the world feel jaded and disillusioned with slow growth in their net worth (me included) that they feel like buying when the price falls. Essentially, it keeps getting propped up. You only need someone at the margin to buy it a certain price to send a signal to the rest of the market that an asset is worth that much, right? With an addressable market in the millions, there's still some way to go. Most people invest in Bitcoin out of curiosity and store them away for several years.
It does collapse, it will probably be when the whales decide to exit.
Been a Boglehead for six months now! Ukraine has confused me considerably but I still believe in US total market funds!
Bitcoin is a risk asset. Nothing more, nothing less.
Who's to say that the Reddit WallStreetBets people responsible for ginning up the GameStop bubble in the first place aren't clever hedge fund bros creating anonymous Reddit accounts from behind fancy VPNs?
And if you really want a more economically equal society, vote for leaders who will implement policies to raise the wealth of the broad middle class.
--------------------------
The reason the US (and a fair bit of the western world but the US specifically) finds it so hard to have policies that support the broad middle class is that such policies require people to admit they're losers.
The whole capitalist game has been summarised very well by Trump - Are you a winner or a loser?
And obviously no one want to answer "I am a loser". We're trying to get laid, after all (men, that is).
But the problem is that, if you're a winner then you cannot support collective action or redistributive policies. Winners don't need that. They do not shrug but actually shred the world and rise to the top by sheer strength of will and ingenuity and stamina and innovative genius, not by begging for public healthcare...
That's what it'll take for the middle class to rise - look around to my brothers and admit "I am a loser too ; but I have no interest in going gentle into that good night and, together, we can not only survive but strive".
Late to this piece via Hexapodia - don’t know how I originally missed it. Very good sum up of a social phenomenon that’s been fascinating to watch, knowing full well that “this time it’s not different” other than it’s all playing out on the internet, with its distinctive fandom dynamics.
But the true purpose of my comment is to wonder what the fan base is for Stevie Winwood and Traffic, beyond those of us who followed him from when he first appeared through his various groups and gigs. Your opening quote was perfect, and timeless. And now I’m going to be hearing in my head for days The Low Sparks of High-heeled Boys.
Ha yes be a boglehead indeed! Imagining you posting in bogleheads threads with those old rich farts would be a delight.
And damn you, Noah! This gated post finally pushed me to fork over $$$. Well-earned.
BTW, for a while there the FIRE movement felt like bogleheads for the masses, but crypto and NFTs totally swamped it.
Could you reach out to steven.andres@sdsu.edu? I'd like to use this blog post in my class on cyber crime where we also touch on digital currencies.
Damn, this is a really good article that many people need to read, but you've made it private!
Good article. It would have also been useful to explain the fundamental difference between Bitcoin and meme-stocks, and other stocks from an investing point of view. Bitcoin and meme-stocks have no positive cash flow which means their value going into the future is zero or negative; meme-stocks at least have some assets, usually the brand, that could conceivably generate some future value in the hands of another company--Bitcoin doesn't even have that. typical companies in the stock market are expected to generate revenue and profits that get shared with the stockholders.
Preface by saying I have never felt the impulse towards egalitarianism. It’s one of those first principle things that people either have or don’t, and is very determinative of political ideology.
That being said, nobody should be surprised that a small group of more talented people will win at literally any endeavor, including trading “meme” stocks. This is the story of all of world history.
You can change the rules to create different groups of elites (knights, political commissars, land owners, nerds, etc.) but you’ll never change the fact that some people are better and there are returns to quality.