01-18-2018, 09:49 AM
(01-17-2018, 06:06 PM)fredtoast Wrote: I actually have a decent understanding of economic principles, but I have no idea how these crypto curriencies work.
Someday I need to take a little time to read up about it. But I just don't understand how you can make money from thin air with nothing of value.
If you consider them "money" then it is difficult to grasp, but if you consider them as a couple different things it's not so confusing. If you think of them as a store of wealth, which is how many have treated bitcoin then it makes some sense. If you consider them as vessels for exchanging wealth, think of them as relatively friction less and easy ways to transfer large sums of money quickly with little red tape, then they have value. If you consider them as a way for emerging country citizens to fight hyperinflation from their own country by easily being able to convert their local currency to something not affected by their own government, then it has value. If you consider the value of block chain technology and other related tech, then you can see the value some coins bring in tracking ownership.
I alluded to it earlier, but crypto currencies as currencies in the classical sense don't really make much sense. They have value in the same way many stocks that don't pay out dividends have value. A lot of stocks provide little monetary return other than being tied to a company. You can say stocks provide ownership in a company, however if you don't get a dividend and you don't have enough to equate to a controlling stake do you really have anything other than that tie? Crypto currently is basically speculative trading of a "commodity" probably more so than a currency. In the future the hope is that the tech is used in many other arenas as there is great value in a decentralized ledger that basically proves out a lineage. They have discussed crypto could be the future of stocks as it would cut down on almost all backroom paper work associated with an IPO and would make actual trading a lot easier.
We are probably still a decade away from crypto as a currency and even then it'll probably take a nation taking it on and building their own crypto currency. There are a lot of advantages to it, but like many things in it's infancy it'll take time to work through growing pains.
