Pointbite.com - Technology & Economics: Recent Episodes
Sharif Aly
If somebody got rich without producing anything of value, their purchasing power came from someone else’s hard work. Trying to find a way around that basic premise is how all scams propagate.
In order to keep a network that is 10 times larger profitable for its owners, customers would need to pay 10 times as much to use it. Unless you think splitting equipment and facilities across many different parties make their costs 10 times lower. It really should be obvious to everyone that something which costs more to run will cost more to use. How likely do you think such a service is to succeed. Clearly, we have a problem.
NFT’s really are just as dumb as you think they are. Non fungible tokens are links to some resource, usually an image hosted somewhere else, that is assigned to a wallet.
There is only 1 such token and it can only be assigned to 1 wallet, technically, but not really.
The purpose of a stable coin is to track the price of some other asset, most commonly, the US dollar. They are crypto currencies just like any other crypto currency, but the central authority that issues them explicitly and deliberately manipulates the market to maintain a desired price. Most stable coins claim to be backed by other assets, which they can use to settle redemption requests or trade with market participants to maintain the price peg.
I often describe crypto tokens as gift certificates, and utility tokens are the best example of why. You’re basically buying the right to consume a service. In the context of software, it’s basically like buying a license. If you stop here and don’t go any deeper, this all looks pretty good.
But of course you know by now I never stop at the surface, let’s go deeper.
Since El Salvador adopted Bitcoin as legal tender: their bonds have declined in value, their credit has been downgraded, who knows how much money was stolen from Chivo wallets, their stylish backwards hat wearing President has lost money “buying the dip”.
So the big question everybody keeps asking is still unanswered, is Bitcoin good for developing countries and the people who live there?
If you’re at a poker table and you don’t know who the sucker is, it’s you. Always remember, the only thing that matters is customers using products. And if people are getting rich without building a product that “delights” their customers, they are probably running a scam.
What we are seeing is two technologies trying to merge hype cycles to maximize their pumps. Remember, blockchains are just inefficient databases that aren’t owned by a single entity. For an end user, whether you’re in an immersive virtual world or not, if a service you are using is implemented with a blockchain ideally you wouldn’t even know.
Many people struggle to see the difference between tokens and stocks because the only property of stocks they understand is their ability to be traded.
But, apples and oranges are not the same even though they are both edible.
Blockchains can do some exceptional things unheard of just a few years ago, but the solutions they offer today are often just clunky, slow and unnecessarily complex distributed versions of things that already work quite well.
Who wants to store their life savings on a phone? Ultimately, everyone who has a non-trivial amount of bitcoin will need to trust someone somewhere to guard their wealth, re-creating the bank. So much for de-centralization.
Investments should create value. They should fund inventions, creations, discoveries or contribute something meaningful to humanity.
Yes it's true, money is just a social contract. Money is whatever we agree should be used to facilitate trade, but does that apply to Bitcoin?
I will be posting a series of podcasts describing the reason I believe Bitcoin is more hype than reality. In order for this exchange of ideas to be fruitful, we need to set a very important ground rule — no debate can succeed if the participants are incapable of separating what they “wish” from what “is” — meaning, wanting something to “be” isn’t enough evidence that it “is”.