Do Cryptocurrency Speculators Fear Utility?steemCreated with Sketch.

in discussion •  last year

Utility:
The state of being useful, profitable, or beneficial.

Currently, the "marketcap" for all cryptocurrency projects is over $130 billion. I'm using air-quotes there because we don't really know how much of that value is real. What percentage of token holders could drive down that number if they decide to liquidate for some other form of value like fiat currency, gold, or silver? How much of that value is real and exchangeable for other goods and services?

If you've been following my blog for any amount of time, you know I'm a huge fan of cryptocurrency and somewhat of a hopeful optimist. I'm also attempting to be a realist in terms of using reason, logic, and evidence to directly impact my understanding of reality. When I see ICO projects raising tens of millions of dollars in "value" in moments, I have to wonder, is this for real?

I get how much value is escaping the fiat currency system and how almost any blockchain-based value token is a better form of money (i.e. a better ledger which, at its core, is what money actually is). But I can't help but notice what happens when the hype around a cryptocurrency project dies away, and we're left to evaluate its actual utility at accomplishing stated goals.

When this happens, speculators turn into investors. They turn off the wishful thinking and start making more rational comparisons to other players in the space both inside and, importantly, outside the cryptocurrency scene. Once a project starts actually doing the thing it claims to disrupt within a market vertical, we can no longer pretend it will be world-changing unless it actually is changing the world.

I'll give two examples to illustrate my point. Right now, from my perspective, two cryptocurrencies are clearly delivering on their stated promises with a proven track record of success: BitShares and STEEM.

BitShares is a fully-functional, decentralized exchange with self-funded, ongoing development, multiple levels of security, and great flexibility for creating all kinds of secure tokens either as pegged or free floating value assets. Many of the promises made by other up-and-coming decentralized exchange projects can be seen right here which forces us to ask the question: how valuable is this as a real market service? Who's wiling to pay for it and how much will they pay?

BitShares is currently trading for less than $0.08 and is 28th on coinmarketcap.com.

Speculators will have a much more difficult time telling new stories about how BitShares will disrupt the world because the reality is already up and running. Now it's just a matter of deciding what we're going to do with it and whether or not those actions provide enough value to justify a high token valuation.

STEEM is also delivering on its promise with ~40k accounts active in the last 30 days. This system is functional right now. It's no longer a promise of some idea at some point in the future. We can now evaluate it against existing competitors in the space such as Facebook, Twitter, Medium, Reddit, and the like. We can ask questions like, "How well does it hold up? How much utility is it providing?"

STEEM is currently trading at $1.13 and is ranked 21st on coinmarketcap.com.

Like BitShares, it can process thousands of transactions a second and has super quick blocktimes (only 3 seconds!). STEEM also has completely free transactions! Compared to many other cryptocurrency projects, it is technically far superior. So why the low price? Why are there so many other projects with higher valuations that haven't really done much yet but promise great things in the future?

Could it be we love the promise of future disruption and avoid the reality of current utility?

Even Bitcoin, the cryptocurrency flagship, has to deal with the gap between perception and reality. As a tool for the unbanked or a cheaper/faster remittence system or a consumer banking and payment platform alternative, it's currently coming up short. The fees are too high, the transfer time is too long, the global adoption by merchants is too low, and the conflict with governments seems to be increasing daily.

And yet, I still agree with Rick Falkvinge's 2013 post: The Target Value For Bitcoin Is Not Some $50 Or $100. It Is $100,000 To $1,000,000.

Bitcoin certainly has hurdles to overcome – scalability and usability being two of them – but it has done remarkably well in maturing in the two years since I started looking at it. My prediction of a mainstream breakthrough around the year 2019 remains, and it still depends on getting mainstream usability; a target market cap may be reached about a decade after that happens, as a technology typically takes ten years from mainstream breakthrough to maturity.

We're still dealing with scalability and usability issues more than 4 years later. And yet, the price is no longer $41, as it was in 2013 when that was published. Today it's $3,800+.

How much of that is again pricing in future value? How much of that is based on actual utilty today?

These are some tough questions we should be asking ourselves. In many ways, the markets are not rational and neither are we humans. Things will be all over the place as we play our games of hopeful optimism and irrational exuberance. At the same time, when the dust settles and fiat continues to noticably decline in purchasing power, we'll have to ask ourselves, where do we want to be?

While there's great speculative money to be made as ICO projects rise and fall, I also think there's wisdom in storing your long-term value in demonstrated real-world utility. Eventually, the speculators will have to find shelter somewhere. The comparison between the cryptocurrency markets today and the Internet dot-com bubble of 2000 is a good one. Do you want to be wrapped up in a pets.com speculative investment or backing the next Google or Amazon?

When making your investing/speculation decisions, keep utility in mind. Find projects you're excited about because they meet real needs. Eventually, I think you'll be glad you did.

What do you think about the cryptocurrency space when it comes to utility and value?

I'm adding the #discussion tag based on a recent post by @timcliff because great discussion here really does separate this platform from many others.


Luke Stokes is a father, husband, business owner, programmer, and voluntaryist who wants to help create a world we all want to live in. Visit UnderstandingBlockchainFreedom.com

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Bitshares building an SEC compliant, regulated decentralized exchange and listing and trading compliant tokens is the biggest news in crypto. If people think China cracking down on ICOs and exchanges is bad, they have seen nothing yet. When, not if, the SEC steps in crypto is going to feel a thousand pound gorilla breathing down their necks.

Bitshares can currently handle all crypto trading on the planet - on every exchange in every token - with a few zeros in capacity to spare. Bitshares will still provide decentralized trading of un-regulated tokens/securities, but will soon provide whitelisted, safe, clean tokens to trade as well.

Every single crypto investor should be hedging regulatory crackdowns (China, SEC etc.) by taking a position in Bitshares and buying BTS right now. My God, every time I read the the Bitshares State of the Network post I can't understand why BTS isn't in the top 5 on CMC based on current status/adoption/development/utility/transactions etc.

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My God, every time I read the the Bitshares State of the Network post I can't understand why BTS isn't in the top 5

This!

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I feel the same way. So much amazing stuff going on, and it seems like most of the rest of the crypto space is just ignoring it. It's really... odd.

You make a great point about if (when?) the SEC really brings the hammer. I resteemed a post early today that's a good discussion about that. We may have some time still, but anything could change quickly when it comes to government decree.

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I follow the entire crypto market and am fairly well versed on the top 20-30 tokens - by that I mean I have pretty decent understanding of what they are for and where they are at development-wise. There is literally nothing that comes close to the Graphene based chains, nothing. Bitshares and Steem are easily the most mature, most scalable, most used, fastest and most secure chains in the world. What is really odd is that, by any metric you could choose, BTS and STEEM should be the highest valued tokens on the market. Yes, right up there with ETH and BTC. Honestly, would $10-$20 BTS look odd to anyone? Anyone?

And yet, the Graphene chains are largely ignored by the small group of big money speculators that seem to pump useless half-baked shitcoins to billion dollar caps every week or two.

I'm starting to thing 90% of the crypto market is a scam created by a small group of people. They run the exchanges, create USDT out of thin air, they release shit coins, pump them and sell to suckers.

There is a great Reddit post about USDT on r/bitcoin right now asking if anyone knows anyone that participated in the $120 million of USDT created last week. No takers and a lot of downvotes.

I never, ever, thought I'd say this... but the SEC can't drop the hammer soon enough. I'll bet there's not a dozen tokens on CMC with any intrinsic value in a post-SEC crack down market. BTC, BTS, STEEM, EOS, XMR, STORJ, LTC, XMR, MAID, GNT... I run out pretty quick.

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We could have some very, very interesting times in front of us. Thank you for sharing your analysis and thoughts.

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Good isight (!) and wow I own at least a little bit of six of those. Note to self, buy the others....

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"Could it be we love the promise of future disruption and avoid the reality of current utility?"

That is a really good question. For me I think the answer is no, because I am with you in supporting STEEM and BitShares for their utility despite them being neglected by the speculative boom of others. I think for the majority of "hot money" the answer is yes. Far too many people are investing in this space hoping to make a quick buck in the next get-rich-quick scheme. The prospect of a modest 20% return per annum does not interest them. They want everything to "moon" so they can buy their "Lambos".

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Lambos all around!

Heheh. Yeah, it's difficult sometimes to stick with rational investing when there's so much irrational money all around to be made. I remember when I invested in OMG, NEO, and SAN and they blew up. I could have made a nice return then, but I guess I'm more of a buy and hold investor. Still though, they did much better than STEEM/BitShares (so far anyway).

Spot on with this post!

Hype and novelty attract those who want to be rich "right now". Steem and Bitshares haven't mooned yet, long after they were released. So they're probably seen as not going anywhere by most of these speculators.

I understand not wanting to wait. Nobody is against getting rich quick. But my bet is on the long term. Valuable things aren't built overnight. And the value of Steem will come from masses of non-crypto people joining.

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the value of Steem will come from masses of non-crypto people joining.

I really like the sound of that. I hope you're right.

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I don't know how old you are, but I remember when I had no idea what an internet was or why it could be useful. I think it's the same with crypto. We are at the point now where most people either have no idea or just a vague idea of what it is. The only people I know into crypto are either on Steemit or they started getting into it because I talk about it so much. And those are few.

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I'm 38 so I too remember when the Internet was just coming around. I agree and I think Bitcoin is more disruptive than the Internet. It'll just take some time for everyone else to realize that.

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I totally agree, people who are into gold, silver, stocks, and traditional investments are generally already invested and already have their minds made up. Like the cell phone, big and clunky with not many users 20 years ago, that market needed time to develope and improve...same will be the case with crypto currency. My only concern is manipulation by the central banks. This kind of goes against the crypto is out side of their forces logic. But when they can print and invest a seemingly infinite amount of dollars they can drive prices up and down for just about anything. If they see crypto as the enemy, wouldn't surprise me to see them start a scare campaign coincided with a mysterious entity selling a ton of bitcoin all at once, driving the price significantly lower.

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I'm 60 years old from the Austrian economics way of thinking. Since many decades, I have been a "real" assets man - gold, property and equities. I have never been a fan of new fads. I missed a few profits because of that, but generally did alright. I managed to get through 1999 with a 73% profit despite not owning a single dot-com.

I don't think bitcoin is a fad. Since June this year I have been acquiring bitcoin. I am aiming for 5% to 10%, although I realise many would say 20% in bitcoin is a good number at this moment. I don't disagree. For me 10% gold and 10% bitcoin seems like the right number, gold for insurance - it has stood the test of 20'000 years, and bitcoin for rapid profit.

As for the alt-coins, and tokens, I have been terribly dissappointed by the ones I looked at. Ripple is an example. I think 99.9% of Ripple investors have got the wrong end of the stick. They think it will become valuable when the Ripple global payments system replaces the Swift system.

The same kind of misconception exists with many alt-coins where there is some kind of belief that a successful business will lead to a more valuable alt-coin. I haven't had time to look at many alt-coins, but the ones I studied properly (i.e. read and comprehended the white paper), are all going to be rubbish investments.

For that reason I will stick with bitcoin which has accepted monetary value that will increase as the 99.5% of the population who don't own any, start to look more closely.

When I find an alt-coin that has monetary value, I will add it to my portfolio. So far I am not convinced, although there are three or four or five which merit further study.

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Investors are always looking for new asset classes, particularly ones that are not correlated to the existing asset classes.

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I agree. But after socializing with many older traditional investors, many are set in their ways are a even scared to touch crypto. But I see that too is starting to change.

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What I like about Steem is that authors get paid for content, unlike other social media platforms. I have told my son about Steem, and I hope he joins. He has a big following on Snapchat and Instagram - he needs Steemit :-) He, and people like him, will take Steem to the next level. The word will get out, just takes time.

@lukestokes - Hats off to your practical viewpoint. Following sequence I have often observed in real world:

  1. A hype is created about a utility or service
  2. Hype causes a disconnect between perception and reality because of emotional biases created by peer pressure and/or factors such as greed. We tend to 'want to believe' everything that fuels our greed. We tend to term realistic analysis as negativity and brush it under the carpet.
  3. The service or utility starts delivering and the price settles somewhere between emotionally driven perceived value and realistic value.

As you have said - if an existing utility or service exists in the same space/ parameters, then we should use it to keep ourselves sane. Bitshares and Steem are great examples.

I do not have too much experience of crypto yet but I think the basic principle I have stated above applies.

Thanks. Upvoted full.

Regards,
vm2904

You make a great point that in that we should judge the value of projects in the crypto sphere based on their utility. Looks like whatever Dan Larimer is involved like EOS is also a good bet. Of course this can change over time, but those with proven uses and applications will succeed in the long run.

You wonder how bitcoin has gotten so expensive with such high fees and slow transaction times. Perhaps Bitcoin Cash at a much cheaper valuation takes over eventually?

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I've been wondering about Bitcoin Cash as well. Overall, the cryptocurrency market is still quite small in the world of global finance. It will be interesting to see where things go from here. I'm a big fan of EOS as well.

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Bitcoin cash is on my list of valid investments, although I don't own many. I collected some in the fork, but have not bought any. As for EOS, see my other comment in this thread.

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I briefly studied EOS. I was very excited by the token at first because of Dan Larimer. He is quite a Satoshi! However after study, I didn't see the value link between the EOS token and the EOS operating system. As an investment it is on the back-burner until I re-read the white-paper. If you have thoughts as to what would make the EOS token attractive to investors, please share.

This is exactly the point I've often tried to express, but you put it so well:

Once a project starts actually doing the thing it claims to disrupt within a market vertical, we can no longer pretend it will be world-changing unless it actually is changing the world.

And as you say, there are just a few blockchains that are at that stage.

I have lost so many opportunities by focusing on the fundamentals and not understanding how the majority simply bandwagons based on hype. I have learned my lesson, but I still find it hard to understand how the hype-investor thinks and acts. It looks like the phenomenon will continue. I sold my ETH at $10, but looking at the popular news it seems like people are just starting to get interested in bitcoin, and Ethereum is the next big thing. It's a pain to be too much ahead of one's time.

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I also sold a lot of ETH at $7 after buying at $6 and watching it go to $11 only to come back down to $7. At the time, the chart for ETH looked like along term downtrend and with no cap on the coin, it seemed it would just keep going down. The crypto market... is weird. Maybe some day coins like BitShares and STEEM will take off and people will tell stories about how they sold STEEM at $1 or $2 or how they sold BitShares at $0.25 or $0.40.

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Me too. Fundamentals have been the reason I missed so many investments. I never bought Amazon because their p/e ratio was too high. I missed Tesla because they have no profits and negative cash flow. I never touched Twitter because I don't understand how their business model would make a profit, if they had to pay their staff with money instead of diluting paper. So many others went to the moon based on hype not fundamentals.

Maybe instead of reading books like "The intelligent investor" by Ben Graham, "What works on Wall Street" by O'Shaughnessy, and "Stocks for the long run", by Jeremy Siegel, I should be reading "Navigate the Noise - Investing in the new age of media and hype" by Richard Bernstein.

Where can I go to get stats on trade volume on BitShares? The only data I could find would suggest that BTS is lightly used, even less than EtherDelta. The problem I've encountered when actually trying to use these platforms is that they are hard to use: both from a UI/UX perspective and also because there just aren't many trades going on. I see big bid/ask spreads on most currency pairs, low trade volume, and very thin depth charts. The speed of graphene doesn't matter much if they can't get usage.

Perhaps that's why Dan decided to start EOS -- he can focus on developing the best platform, and others can struggle with the UI/UX and marketing challenges of building businesses on top of it.

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You can combine these two for a feel of what's going on there (they both use the BitShares blockchain):

https://coinmarketcap.com/exchanges/bitshares-asset-exchange/
https://coinmarketcap.com/exchanges/openledger/

$10M isn't much, but it's kind of a chicken or the egg problem. There isn't enough volume, so people don't use it. But because people don't use it, there isn't enough volume. I agree the UI/UX needs work, but there are some recent worker proposals that are being worked on to improve things there, so that's cool.

For the most part, if you know the price you want, you can get it at that price. The downside is, the market may have moved on from that price in the meantime.

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I have tried very hard to start using BitShares. It just seems way too difficult to figure out how to get there. Firstly I think you have to pass via some third party financial institution if you want to get fiat in. Secondly I can't understand the trading pairs available. I can't find bitcoin/dollars or bitcoin/tdollars. Thirdly, spreads seem high. Fourthly, the fee structure is incomprehensible.

I can't see how I would get dollars in and how I would get bitcoin - or whatever, out.

I am totally confused about the relationship between whatever token has to be used to buy bitcoin, and the USD. It does not seem to be a 1 to 1 relationship like t-dollars.

Dan is a genius, and I would like to follow and support him, but he needs a translator - from "genius tech" language to "end-user - I can't read instructions" language.

This came up in the Bitcoin altcoin debate the other day. I posted about what Tony vays had said. I personally think utility tokens are not bad, I think it's a good step forward. Where we can globally take part in owning something.. Tony basically thinks that every coin besides Bitcoin is useless.. looking at coin market cap, you see a lot of coins that offer no real benifits to bitcoin . Then you see coins like steem that is powering social media and now videos.. and nlc2 coin that already has a working in use fantasy sports platform.. bitshares that is the safest, decentralized exchange. All working and in use..

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Yeah, Tone's maximalist perspective takes away from his rationality, IMO.

These are great points, Luke. It's really surprising how BitShares and STEEM are "underperforming" in the markets. Perhaps speculators prefer the sharp rise and falls over usability. Since the price of both coins don't dramatically change overnight, not much buzz is generated on behalf of them.

It could be that the lack of marketing material contributes to the lack of adoption. Some people might not have the patience to read the whitepaper, being intimidated by technical terms. Bitcoin, Ethereum, etc are more accessible since people are riding the hype. They base their results on the price they gain in the short term instead of the long-term view of their investment.

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It may also be that the onboard ramp from fiat to BitShares/STEEM isn't very obvious and requires first buying BTC or ETH.

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Oh huh yeah, that's a big hurdle as well. BTC and ETH really established a good foothold there. Would be cool if EOS could sneak in there some day.

Hello again. ICO investing and longer-term investing are two different styles. I suspect crypto needs both.

In this space, I'm a longer-term investor. In the US options market, I'm in positions around a few days to a few weeks.

The key to getting good higher frequency trading is to be in very liquid markets.

If you want a real sense of scale, look at how much years in Forex currencies compared to all crypto combined. That will dwarf the scale of actual crypto to actual fiat.

I agree with whoever said the ICO crowd doesn't want 20%. However, that is about what I'm making on regular options trading.

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@lukestokes, not only have I resteemed, but I also just put a couple of reference links to this post in the root post I just made. I'm not sure how the proper etiquette is for that. Thanks for this root post. Maybe it'll drive more here too.

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I never made any money trading options. The market was bigger than me. The golden boys would always move the price at expiry to the best one for them, meaning worst one for me.

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I understand that feeling about the market movers. I now trade with the statistics on my side.

I rarely stay in until expiration. I trade to a specific target profit and have a limit exit. Otherwise, within a week of expiration, I'll roll or occasionally take a loss.

If you want to learn you could follow my HIT (How I Trade) posts and/or learn from tastytrade.

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Thanks for your link to options training posts. I note that you don't trade to expiry date (VERY WISE). I'm not sure I have the patience for something that can't be held for the long term. I try to make as few investment decisions as possible.

Steemit was a GateWayCrypto for me. If not for Steemit there was zero chance that I would be involved in Crypto. Zero disposable income is like that. Steemit is 'found money'. I can use what I make here to do things I'd never consider otherwise....like my boat.

One other thing.

Robots and Automation. Automation is expected to eliminate most jobs in the near future. Steemit is an example of what can be done to provide income for the jobless.

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Exactly right. I dunno if Universal Basic Income was the idea behind Steemit but it seems to be working out that way. The gubermnet (all of them) are stupid..lookit history. They are REActive. They're not the least bit ProActive. In other words they wait for the Hurricane to blow the town away then start thinking about what needs to be done...after everyone dies.

Same thing with automation.

100% agree. Many of these projects are competing and Bitshares already has a working, established, compliant product. Just wait for EOS....

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Thanks for the upgoat, Ash! I think that's one of my first. :)

Great post cheers..i am holding and still buying bts...bright future

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I sure hope so. It's a pretty amazing platform.

Nice points you made @lukestokes ... Markets are definitely not rational and thats why trading is profitable... But in the long run (whatever long is, my guess for bitcoin is that long is 5-8 years), rationality and logic will dictate its value (fair)... !

I think it was Graham (Warren’s Mentor, if I remember correctly) who said that its a game between two partners (You and Mr/Miss Market) and sometimes Market is optimistic, when thats the case you sell your share to the Market and sometimes Market is pessimistic, when thats the case you buy some share from Market... But ultimately both you and Market are heading (at least in Bitcoin) to make money, and if you do the exchanging of shares (with Mr/Miss Market), you will be making a lot of money :-))

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Yep, that makes sense to me. The whole be greedy while others are fearful and fearful while others are greedy approach.

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Yes and its very powerful too in the long run... If you start with 50-50 with {You, Mr.Market} as partners and every time it market increases by say x% you sell shares to Mr.Market (because he wants to buy) and everytime the market decrease by x% you buy shares from Mr. Market (because he wants to sell)... its very simple and do-able. If you have a good instrument (stock, currency, bitcoin) , ultimately it increases and you make many folds more than your partner (Mr.Market) :-)

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Aarcee: That mathematical formula (50-50) only works when the investment trades sideways. A trending investment will see profits destroyed. Try it on Apple over the last 20 years, or bitcoin over the last 9 years.

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@swissclive , lets try it out... How about Apple... ? You decide the x, what say ?

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Great for simplicity let's do
Apple vs cash,
Disney (DIS)
General Electric (GE)
Three stocks with very different behaviours over the last 24 months.

Can you crunch your strategy over the last 24 months? Happy to assume zero trading costs for then exercise

I agree. We need both speculators and long term investors to have a genuine economy. Just speculators is simply gambling and just long term investors means not enough risk taking.

anonymity seems to be a valuable utility to the community, it's what drove a lot of people to crypto to begin with. That's why I felt monero and Zcash were safe bets. As far as ICO's go, it's hard to be confident about anything.

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Yeah, I really want to invest in more private tokens. I don't have much there, at the moment. The funny thing about bitcoin is it never was anonymous, though it got marketed as such way too many times.

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Oh I know, it's always fun explaining that.

I really need to get off my duff and learn more about Bitshares. I keep reading glowing accounts of it.

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I've posted quite a few times about it if you're willing to scroll back through my blog. I hope they are helpful to you.

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I am looking for a beginners guide to Bitshares too. It's not user friendly. I will have a look through Lukestokes old posts to see what he has written on Bitshares.

Yea utility surely must be the first consideration unless you can afford to throw away your money. Or am I seeing it in a distorted way?
Love the Buffet quote

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You'd think it should be, but that doesn't appear to be the case based on marketcap values.

Absolutely! I totally believe that the utility, not only ads value. It gives the real value. Etrade -the stock broker is worth 12 billion dollars. Bitshares is worth 200 million. Steemit is worth 250 million and facebook is worth $500 billion. Facebook has about 1.3 billion users; that is 384 per user. Steemit has 171,000 accounts (Note: we don't know the number of Facebook accounts used in the last 30 days to compare with the correct steemit number.) which gives a value of $1300 for each account. Growth through is faster at Steemit. There are some good questions about proper value, but the value is still off in the distance that is about to be delivered.

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Growth through is faster at Steemit.

How do you come to that?

171,000 accounts

Where do you get that number? When I query SteemSQL, I get 376,149 accounts.

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I googled and saw a number that was 4 months old... Sorry. :-) What a great problem to have that numbers change so fast no one really knows what they are! Going with your 376K users the "average account" is worth $664 in market cap. And remember this is with very little marketing on Steemit.

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Account Growth. Every Day 1,000 to 2,000 new accounts are created on Steemit. Do basic Math. 365 days times 2,000 accounts is 730,000 users! if we take your 376K number that means we will almost be three times the size end of the year. Facebook is growing more along the lines of 17% a year. Check out these charts... https://steemit.com/steemit/@stephenkendal/steemit-as-the-average-number-of-daily-accounts-registered-for-june-breaks-2-000-per-day-at-2-032-i-am-happy-to-maintain-the

http://www.benphoster.com/facebook-user-growth-chart-2004-2010/

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At this point isn't a bit more useful to compare STEEM and SteemIt.com to Reddit? The gap between STEEM and Facebook in terms of number of users, valuation and time-since-inception seems large enough that the comparison isn't that useful (to my mind anyway).

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To do it right, we need to compare about 20 metrics on about 20 sites. Then we can draw some very general conclusions. I did an entire MBA course on stock evaluation. However that is overkill. If you take the top 30 crypto currencies and add up all their market caps. You get about 130 billion dollars. That would be the equivalent of someone buying every single bitcoin, steemit share, litecoin ect... now if you compare that to the market capitalization of Home Depot (180 billion); Visa (240 billion) or IBM (135 billion). Now you need to ask yourself what is growing faster and how much good can these technologies do to help us in the future. I would say the future benefits of all block chain tech is way more than the future benefits of one company.

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That really puts things in perspective. Yes, I'd agree. Blockchain tech > Home Depot.

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Yes, Redditt would be a better comparison. Two years ago Redditt was about 500 million; now it is estimated at 1.8 billion. It appears Reddit has about 100 times the traffic.

I think we need at most 1 coin-only-blockchain; Bitcoin. And I hope Bitshares will make it obsolete some day.

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Interesting. I'm okay with many competing currencies, I just want us to think about them rationally instead of getting stuck in the cycle of hype.

Great post and analysis. You pose some poignant points here! Thanks Luke! Resteemed! :)

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Thank you for sharing it, David.

Ripple is another great example. Bitshares may jump though as exchanges are bannes or regulated as well as the continual adoption of steemit.

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Ripple may be, but I still have a strong stigma against it as being a centralized banker coin. Maybe I should take another look?

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Another point (faux point as it turns out) that I thought stood against Ripple was an uncapped supply. Since one of the things that I found instantly attractive about Bitcoin was the capped supply this seemed like a major strike against Ripple.

As it turns out Ripple is capped and while the utility of XRP isn't something to get excited about as an individual it does seem very useful in the banking system for rapid cross border payments. While banks as they exist now may be going away as we develop new ways to store and transfer value that won't be happening overnight so it seems like there's a place for Ripple.

I found this Epicenter episode informative on the topic: https://epicenter.tv/episode/175/

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Yeah there's a lot of FUD about Ripple. I think if you do your own research from unbiased fact based thoughts and videos a lot of people who actually dig into the details are like well that's not at all what I heard Ripple was like.

With that said I haven't actually done that much digging myself, but I would say it may be worth taking another look at.

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I dug into the Ripple token and rapidly became less excited as I studied it. I think 99.9% have got the wrong end of the stick.

The trouble is that even if the Ripple system replaces SWIFT, banks won't need to hold more that a few dollars worth of Ripple each. Nobody else needs them, so the supply will exceed the utility.

Very informative , upvoted @lukestokes

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Globetrottergcc, I see you have made a lot of very short comments like the one above. It looks like you are trying to draw attention to yourself or to seek upvotes, as you comment adds little to the discussion. If you like an article, but have nothing meaningful to add, it is generally sufficient to upvote, without further comment.

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That was kinda self opinionated comment , do not judge people please on your own criteria , be open minded and liberal. You could say it in a better way like please try to add the meaningful comments rather than "drawing attention" flavor to it . Good Day!

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My opinion is probably the opinion of lots of people. It wasn't meant to hurt your feelings but to provide useful guidance so you don't get down voted or flagged. For your benefit, I will re-phrase the suggestion as follows: "If you like an article, an upvote is generally sufficient, unless you want to join in the discussion."

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I appreciate this time and have taken into consideration , thank you and stay blessed!

Big fan of bitshares as well. Thanks for sharing your insight. I look forward to reading more of your content!

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Thank you for reading!

@ashe-oro got you a $7.91 @minnowbooster upgoat, nice!
@ashe-oro got you a $7.91 @minnowbooster upgoat, nice! (Image: pixabay.com)


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Thanks for raising some interesting points, Luke.

I'm going to go out on a limb with this and look at it in the context of investing as a whole.

Clearly, alt coins and the crypto markets are subject to a lot of pure speculation but I wonder how much you can actually call it investing. It's a bit like commodities markets-- very volatile, rumor driven, fortunes made-- and lost-- daily.

When we add "utility" to an investment vehicle, it gets a lot less exciting, because now we have to look at "boring" things like fundamentals. Business models, actual product development and the like become more important than just a rah-rah party. And that kind of investment is also "boring" because it will just slowly triple in value over 12 months, rather than double overnight, and then cut in half the day after.

My point here being that when we start getting into "utility" we start inviting a new class of investor (rather than "speculator") into the market... someone who simply buys-and-holds based on long term prospects, rather than just trading in and out, six times a day.

Seems to me that pure speculators are critical of "utility" because (to them) it takes away from the purely high-flyer speculative aspect.

It's like people who trade in "pink sheet" OTC stocks have no interest in owning shares in Dell or Boeing.

Again, this is purely speculation!

cryptocurrency is the best to do in the future :-)

I have the same questions that you do. More than half of the coins out there do not have any utility to date (except for a few). Steem being the one farthest along with implementation. Veritasium would be a second if they get it together with the Jamaican stock exchange.

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I haven't looked into Veritasium yet, but that "if they just..." story is all too familiar. So many coins talk about how they have something just around the corner which is going to be their big home run and tell the world how valuable they are. So many coins don't deliver. Time will tell, I guess.

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Agreed. They are in Jamaica now.. but hey, that could be a lie for all i know. But that is the thing with these ETH tokens. Most will suck..but the ones that blow up will be huge.

Not sure if its fear, but its clear it start to look like shrodinger cat when it come to know if its utility value, some sort of stock option, or purely speculative like sport betting or poker lol

This lack of clarifucatio non the actual use and more formal framing to set the limit of use etc is going to be detrimental in near future.

As long as it stay in the vague potential of becoming anything, its easy to attract people, but when it will come down to actually laying down all the different case for different actors and regulators, its another story.

But it seem clear for the moment the profits are not made with classic scheme of capital growth throught income based on utility or service.

Only based on pseudo pyramidal scheme / greater fool game, and various even more dangerous scheme rather than anything else.

May I ask: Did you invest in both currencies? What do you think about EOS…?

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Yes, I've invested in all three. I've posted about EOS a number of times, but you may need to scroll back a bit through my blog to find them.

The comparison between the cryptocurrency markets today and the Internet dot-com bubble of 2000 is a good one.

I have been saying this a lot too and when the tide goes out most all of these cryptos will die like the hyped up websites of the dotcom bubble while Steem is going to become one of the top 3 and eventually #1 even over Bitcoin because once we use Steem there is no reason to use Bitcoin any more than there was a reason to use MySpace after switching to Facebook.

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It's a beautiful dream, but I still think in terms of network effect (payment processors, integration with exchanges, global distribution, wall street and silicon valley interest, professional developer engagement, etc) bitcoin is far superior to anything else and will be for quite some time. Yes, the technology may not be nearly as good, but we've seen examples before where the tech doesn't beat the network effect.

That said, I sure like the dream. Unfortunately, so far, when the whole cryptocurrency space gets beat down price wise, STEEM gets beat down right along with it. As Steemit brings in more users and converts them to cryptocurrency users and (hopefully) a healthy portion of those become cryptocurrency investors, we may someday create our own powerful network effect.

Nice post!

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Steemdoge, I see you have made a lot of very short comments like the one above. It looks like you are trying to draw attention to yourself or to seek upvotes, as you comment adds little to the discussion. If you like an article, but have nothing meaningful to add, it is generally sufficient to upvote, without further comment.

I learned about bitshares existence from this post. I like the premise that to have value long term something must be useful. However i would argue that Silver is way more useful than Gold and yet it does not even trade in proportion to its relative abundance.

Thanks again for the helpful post. Trying to catch up and learn what it's all about. Questions to follow.

moneyvane moneyvane tweeted @ 26 Sep 2014 - 15:49 UTC

"After all, you only find out who is swimming naked when the tide goes out." - Warren Buffet #investing #moneyvane http://t.co/qIRHb0B0j3

Disclaimer: I am just a bot trying to be helpful.