[Electromotive]

Originally Posted by SmartCat

..

I learnt a lot from your economics thread back when I started with stocks in 2018. Thanks for all your contributions.

Originally Posted by SmartCat

some meme coins now have value simply because Elon Musk has called it out as his favorite. The coin that we both create at home will have no such value.

All your arguments assume that price is whatever the other party is willing to pay. Which is true in the current social media environment. The thing I have problem wrapping my head around is that what happens if FUD campaign is started against crypto? The lower limit is zero and a bunch of numbers don't have any desirability unlike art or vintage cars.

Crypto's inflection came because a very successful campaign took place against fiat and money printing by central banks (Money printer goes brrr! memes.) Recall that crypto crashed with the stock market crash of 2020 and only after October/Nov of 2020 did crypto start to rocket based on inflation fears. This shows that nobody really knows what the value should be. But I think a return to mean is a given, probably as soon as interest rates start to go up.

All crypto has enabled is a transfer of wealth based mostly on...FUD? I don't know. I hope there is something in behavioral economics to explain all this.

[SmartCat]

Originally Posted by Electromotive

have any desirability unlike art or vintage cars.

Art/Classic cars might have desirability but has high ticket value, high transaction costs and transactions are all done offline. It's the exact opposite for cryptos and hence even more desirable. You can buy cryptos for Rs. 100 for example and watch it go to Rs. 120 in an hour, tick by tick.

I hope there is something in behavioral economics to explain all this

For non-participants, cryptos are just a bunch for meaningless numbers. But for actual crypto traders/investors, it is an outlet for dopamine release. Do a Google search for "trading and dopamine". Even if people lose money in cryptos, they will be back again after a couple of years.

It is exactly why stocks day trading and futures/options trading too is insanely popular (and addictive). After all, Futures & Options is a proper zero sum game, 90% of traders apparently lose money but that has not stopped its popularity.

Bonus: Unlike stocks day trading or equity futures/options trading, crypto markets are open 24 hours a day, 7 days a week.

[Fuldagap]

Richard Dawkins in his book The God Delusion said that atheists know more about God than religious people. I'm sure if he wrote a book about cryptos he'd have said that an economics professor knows more about cryptos than a professor teaching Arabic.

Analogies aside, BAT more than doubled its price today compared to the price in May '21.
BAT, among other things, rewards its users for advertisements. The already misleading market cap became even more misleading. Currently ranked at 68 in terms of market cap among more than 14k other cryptos in the market. The only crypto in mainstream that's going up while every other major crypto, including Bitcoin, is bleeding.

[SmartCat]

Originally Posted by Fuldagap

BAT, among other things, rewards its users for advertisements.

I actually used Brave Browser (since it had ad blocking) for a couple of months when it first launched. At launch, they had plans to create an ad network that only showed ads relevant to users, and also reward users for watching/viewing ads with cash. Looks like they have adopted the crypto route to launch this ad network.

Now, my question is, how would one value this BAT crypto? How to arrive at its fair value? Why is it worth $1.62 per unit and not $0.16 per unit or $16.2 per unit? In other words, how to determine if a crypto is undervalued or overvalued?

[IP_Man]

Originally Posted by warrioraks

Virtual real estate plot sells for record $2.4 million

Shall we call it intangible asset

[Fuldagap]

An interesting, worth a watch interview on the current possible scenario

https://www.youtube.com/watch?v=NPPLx-OPzn8

[Gansan]

Originally Posted by SmartCat

Art, Wine, Vintage/Classic Cars, Antiques and Collectibles are significant (aka big $ transactions per year) asset classes with no/negligible intrinsic value.

Art will be bought for high valuations if it is by a long dead master. It's uniqueness and scarcity creates the value. Leonardo's or Michelangelo's paintings or sculptures for example. These two will qualify as antiques as well. They are rarities and there are people to offer big bucks for them. They can be put on display and the owner will derive huge prestige, may be even monetary benefit. They are tangible assets.

The recently discovered jewellery in Padmanabaswamy temple for example. The valuation comes not only from the intrinsic value of gold/silver/precious stones, but also from the fact they may be centuries old.

I can't imagine how crypto currencies compare that way.

[Electromotive]

Originally Posted by Gansan

I can't imagine how crypto currencies compare that way.

And you will be right. But being right won't put money in your pocket.
While I still hold the position that crypto is a pyramid scheme and might one day collapse, but the question we should be asking ourselves is - can we make money out of it - you know, more of the good 'ol fiat that can be used to buy things that improve our lives? That is currently possible, as long as the bubble sustains. SmartCat has done the smart thing (duh!) and got in and probably made a good amount this run. I regret I wasn't brave enough. At the end or the day, it is neither crypto nor fiat which will matter, it will be the quality of your life and material possessions which matter.

I have been watching the bitcoin charts over the past few days and a interesting trend is it goes down slowly but rises steeply in a short amount of time. It appears vested interests are trying to keep the price high and stable so gradual cashing out can occur for the early investors. This is all speculation though.

[SmartCat]

Originally Posted by Electromotive

SmartCat has done the smart thing (duh!) and got in and probably made a good amount this run.

I have no investments in cryptocurrencies. That's primarily because I haven't been able to figure out the "fair value" of a crypto. But as a matter of interest, I keep a close watch on crypto space since it is related to the world of investments, economics and finance.

Once the Indian Govt comes out with proper laws (including on income tax), it is very likely that existing reputed stock brokers too will enter the crypto space (eg: like Robinhood in US). Eventually, futures and options too will be introduced. That's probably when I will trade crytocurrencies (trade, not invest).

[Gansan]

Originally Posted by Electromotive

While I still hold the position that crypto is a pyramid scheme and might one day collapse, but the question we should be asking ourselves is - can we make money out of it

Originally Posted by Gansan

In the meantime, we can try our luck with cryptocurrency and make some gains, by putting in an amount which may cause heartburn if lost, but will not seriously hurt us. Like one bets in a horse race. Basing our entire or major investments on crypto will not be a good idea.

I didn't say we should not make gains from cryptocurrency. Just don't put in life savings intending to make a killing.

Even in pyramid schemes one can make money if one enters early enough. Those who enter late will be left holding the baggage though. We can't exactly time it. So even I might put in some money and make some gains!

[Electromotive]

Originally Posted by Gansan

I didn't say we should not make gains from cryptocurrency. Just don't put in life savings intending to make a killing.

Even in pyramid schemes one can make money if one enters early enough. Those who enter late will be left holding the baggage though. We can't exactly time it. So even I might put in some money and make some gains!

Apologies, I missed that post. I feel the same.
Have you invested in crypto? If yes, what have you learnt, if you don't mind sharing.

[Gansan]

Originally Posted by Electromotive

Have you invested in crypto?

Not yet. I too am looking for pointers.

Meanwhile, a few days ago my two wheeler mechanic came to see me saying one friend has started a "business" in which he got the oppurtunity to "invest", and wanted me to join as his downline! He said the friend will call on me but I declined. Then he sent me a link of the "business" by Whatsapp and it was the Youtube link of a crypto called Valubit coin, which seems to operate on a MLM concept! Each one who joins has to recruit five people!

That is how far the craze has spread!

[Electromotive]

Originally Posted by Gansan

Then he sent me a link of the "business" by Whatsapp and it was the Youtube link of a crypto called Valubit coin, which seems to operate on a MLM concept! Each one who joins has to recruit five people!

That is how far the craze has spread!

Ideally, that would signal the top but these days irrationality seems to be the norm. Everyone wants to get rich quick. Unlike companies, crypto doesn't create value, just transfers wealth from the naive to the cunning, or that's what I would like to believe.

Consider this, for every dollar equivalent in crypto to be cashed out an equal amount of fiat dollars have to flow in. The total inflow of fiat dollars is no where close to the marketcap of all the numerous crypto coins and tokens. So, what happens when suddenly people try to cash out in large numbers? Off a cliff it goes. There is a lot of incentive in keeping the fiat dollars flowing in.

[Fuldagap]

Sandbox have started Sandbox Alpha yesterday. Interesting event to checkout the Sandbox game.
For the uninitiated it is a metaverse in itself, yet to see full life. One can go and play in Sandbox, which has virtual land and opportunities for creators to build anything they want. All this while you monetise your stuff and earn in the currency called Mana which can, like other cryptos, be converted to fiats.
Many top notch IT giants are already land owners in Sandbox. The event, Sandbox Alpha, has sent prices of Mana soaring.

[IamNikhil]

Government is going all guns blazing against Crypto.