I wasted years of my life in crypto

Both supporters and critics approach it too religiously. Yes 99% is scams and rugpulls. The rest of the higher profile coins are, at the very least, tools to make money. Why emotionally sell all your crypto vs holding some higher quality as insurance with potential upside? Or even, ride the periodic bulls and take profits, rinse and repeat? If it's full of scammers, why not take some of their money? Does this require "believing" in it? One can not believe in it at all, and thus actually insulate themselves from getting caught up in the hype.

>The rest of the higher profile coins are, at the very least, tools to make money.

Make money from what?

Make money from the next greater fool who walks in the door. That's the essence of crypto, magic beans and greater fools.

I'm not into cryptocurrencies and I hold exactly 0 of them but... Isn't basically how people make money out of gold?

That's also the essence of the stock market because you are getting paid in money, not in products/services produced by the company that you hold stock of

Gold has a use case in the real world. We can't manufacture it, so every time it is used to plate a printed circuit board, or XYZ other real application someone needs to purchase it from someone else. Some amount gets recycled, but certainly some not.

Crypto has zero fundamental use case in the real world.

Why crypto? Why not one of the millions of other things you can invest in? Should I hold some onion futures as insurance with potential upside, or ride the periodic bulls of the Nepalese rupee and take profits?

For the most part, yes. "I am a gold speculator" is, for those reasons, not exactly socially productive employment.

no it really isnt. the value of crypto as it relates to FIAT is in trading volume over time, and it does not mean anyone needs to be a fool left holding the bag unless the trading volume decreases and doesnt return.

I want to buy something and use BTC as a medium for exchange. I take $10,000, buy BTC, send BTC to the seller, the seller takes the BTC and exchanges it for $10,000

However, we are not the only buyers and sellers and it takes time for the transfer to go through. So you have a variable amount of $ being held against the fixed amount of BTC, albeit with a variable amount available for purchase.

so i buy some BTC to make my trade, the amount of BTC decreases, the cost to buy more goes up. another person buys for the same reason. they spend more $ per BTC, but it doesnt matter - the value of what they are buying is the same so they buy less BTC. this happens for many people all concurrently.

the seller receives my BTC and then one of two things happens.. if trading volume has increased since i sent it to them then the BTC is more valuable and they make extra money. or if the trading volume has decreased since i sent it to them then the make a little bit less money.

there is a minor gaming of the system that happens with people trying to buy while trading volume is on the rise and then sell back while trading volume starts to decrease. this is why it looks like an MLM / scam - because this obviously doesnt scale, it isnt objectively valuable to increase competition for the resource while its needed to then try to release all that was purchased back into the trading pool while no one needs it. It is just a situation that is gameable in small doses if only a few actors do it.

People buying BTC for no reason other than to sell it back creates a gap in value on the other side for the sellers who need to sell the BTC they received in exchange for goods they valued at a specific $ value. The burden will be distributed across all the late sellers as trading volume decreases.

However, they dont need to sell the BTC if they would take a loss. They could just hold it until trading volume goes back up again, assuming trading volume is just fluctuating with standard customer behavior and not a change in belief of the stability of the currency.

Ultimately, the burden only really needs to be felt by those people who are buying the coin near its peaks who are trying to flip it and then missing their sell window. Actual vendors have wiggle room, as they only lose their COGS - even though they have their Revenue tied up in BTC, so they are still making profit if they sell, just a little bit less. the traders trying to game the system short term, however, are the ones who have more at risk as they have bought the BTC with after-tax liquid funds and need to sell it at enough of a higher price so that they make more profit after transaction fees as compared to alternative investments. As the price of BTC drops, they are the ones who are forced to sell at a minor loss and move the funds to other investments they believe are gaining value to avoid keeping the value tied up beyond their investment window waiting for the price to come back up.

The value proposition for holding BTC long term is basically a claim that the use of digital currency as an exchange of value will be so much more common in the future and BTC will be used for it, such that even times of "low trading volume" then will make current all time highs (in active trading volume) look tiny, even when accounting for the increase in tradable BTC that will come with all the BTC not currently in circulation do to people holding and waiting for that time to come.

So the traders rug pulling each other is kind of just a subplot going on with crypto and completely avoidable while still investing in crypto.

Because of the returns, volatility and the liquidity obviously. This is a stupid question. I'm not even talking about "investing", it's a trading vehicle. Short term. Those other things you mentioned are less correlated directly to changes in global liquidity and overall risk assets, so in a sense even more risky and obscure. The fact that you even suggested "holding" onion futures means you're missing the point.

Looking at the chart of Nepalese rupee I don't see any bull market going back to 2005 so what are you talking about?

"Everything is the same" is a bad thesis. Just look at the charts.

In the 1960s and 70s European countries became nervous about the US economy and sent dollars to NYC in exchange for gold.

The US even dispatched some high ranking officials to Europe to stem the tide. It predictably had the opposite effect. So America had the option: stop printing money because gold reserves are finite or end the gold standard.

Sure, not everything is the same. My question is, why crypto over all millions of other things you could invest in? Are you suggesting it's a better choice because of the volatility?

(The onion futures thing was a joke. Onion futures trading is specifically illegal in the US.)

Trading it, obviously. Buying low, selling higher. Riding the repeated boom and bust cycles and getting in and out during some portion of the boom. What I'm saying is one can do this even if they have zero "belief" in crypto and know it's full of scams, scammers, and religious zealots.

Yes since you can extract a gain within some small portion of its bull market that's compressed into a shorter period of time relative to some other assets like gold. It means you aren't holding for as long.

Crypto rises harder and falls harder. For traders, this is very useful.

Of course I know you were just riffing, but the particular terrible nature of the assets you compared it to was worth pointing out. Since you did ask how they were any different.

Different asset classes have different uses. A thing that doesn't move around much for a long time is not so great to trade, maybe to invest. Crypto is a great sponge for liquidity.

Volatility might be useful but it also means you'll lose your shirt unless you have some secret technique others don't. If one can reliably ride the periodic bulls, take profits, and repeat, then they ought to be one of the wealthiest people on the planet by now.

Yes I know but... is that use case what really drives the price in the real world? I'm really asking. My intuition would say "no, the main driver is people trading it as a financial product", just like Bitcoin.

It is basically a big game of hot potato. If you are OK with that, fine, but you are still just gambling on a party game chip.

There is a little bit of real value in having a rail that is hard to block, so you can move money across borders or around account freezes, sanctions, or runaway inflation. But that probably only justifies a tiny slice of the current price.

Most of the rest is speculation.

Fiat is different. A national currency is tied to the economy that uses it. Wages, rent, groceries, taxes, all live in that unit. Even if it crashes on FX markets you can still use it inside that country to buy local goods and services, and over time prices and wages shift along with it. The currency may fall against the dollar, but the local cost of living in that currency moves with it too.

The dream was that crypto gets adopted economically in a similar fashion, and even globally, that simply didn't happen, so it ended up just being gambling.

Yes, gold is very similar, but it has the benefit of being centuries old and not dependent on complex infrastructure.

Specifically, there is value in a global peer to peer and agreed upon standard of exchange of a guaranteed scarce resource that can't be double spent, such as gold and some cryptos.

Imagine a war, a natural catastrophe, societal collapse or upheaval.

You have to pack up, go elsewhere, or you're suddenly occupied.

Basically you have to ask yourself, what's more likely to be worth something in the future or elsewhere that I can park my money into until I need it?

Since Gold has such a history of being accepted by various cultures and people around the world, and it is very resilient, it doesn't require power, infra, computers, nodes, won't get easily destroyed to environmental incidents, can be stashed away for centuries without degrading, etc. It is arguably more likely to still be used as an exchange of value in the future.

Crypto, well, you have to be specific, let's say Bitcoin BTC, how likely is it that your wallet on your hard drive if you migrate from a war and find yourself in a new world order at the other end of the world, you can still use them to trade for goods/services and they're worth close too or more of what they were before?

It's hard to predict, but arguably it seems less resilient than Gold and therefore less likely for it to hold its value over time. That said, it may still appear better than USD, Euros, or shares in some company, etc.

That's why people say BTC is a "store of value", like gold. You use it to stow away value for when you need it later (even generations later), because it appears to be good at holding value even through geopolitical shifts, passage of time, and so on.

But, if people aren't actually using it for storing value, but instead for speculative bets, it means they are taking money out of it and not leaving it in, it becomes volatile, and volatility is a bad "store of value", because when you might need the value if it's at a "low" it's gone, and it failed at the use case.

If you go outside BTC, it becomes even less likely the other cryptos are good stores of value, and more and more they become speculative bets and a game of chicken.

And even BTC has high volatility and is used for speculative bets a lot. And gold isn't immune to his either.

There's no good answer here, nobody knows the future for sure, but that's the idea.

When people defend crypto as a store of value, now you know what they mean. They're basically hoping it'll hold value through borders, time, and so on.

Yes, but now, years later, there's been very little if any uptick in using BTC as an exchange of value, and many times less so for other coins.

I think that's where OP might have realized that, the ideal hasn't happened and it's use case is just a game of chicken.

> Crypto has zero fundamental use case in the real world.

ransomware would beg to differ.