This is fundamental to trading/speculating on anything.

Buying a stock/bond/asset comes with the intrinsic belief the value will increase. Being more specific, purchasing any speculative asset comes with the belief that the thing I am buying will increase in value relative to the thing I'm buying it.

The reverse is also true for selling a speculative asset.

Now that that is out of the way. Let's continue cherry picking as you've done and consider traders that specialize in short selling companies they deem as bad market actors. What do high profile short sellers do? They go on all sorts of media rants warning about companies/assets ect TO WARN PEOPLE AND INFORM THEM (legitimate or otherwise) for their own gain.

Cherry picking these ideas with respect to crypto is totally naive.

Only if you're speculating on currency.

Some people use BTC to pay for VPNs, drugs, or simply to get cash out of their country. There was a lot of speculation that the big spike in BTC a few years back was the Saudi royalty trying to move cash out before MBS cracked down on them.

99% of Crypto is speculation. 0.5% is darknet markets, 0.25% is crypto ransomware, 0.1% is Saudi princes and rich people moving money out of a country. Somewhere in the remaining fraction of a percentage is legit legal usage.

There are much better ways to move money out of a country than one with locked-down fiat gateways in every first-world country with a fully public ledger. It may for a few thousand dollars but when you're talking Saudi prince money there's much better ways. It's not even good for that lol.

Same with every asset, I would think.

Nope. Assets have a sale value and an ownership value.

Suppose a company makes $100,000 per year and this is expected to continue. How much would you pay for it?

Now, suppose it makes $100,000 per year, but for some reason once you have it, no one will buy it off you. How much would you pay for it?

You'd pay less in the second case, but not that much less. The company has a value which it gives to you for having ownership of it.

Meanwhile, bitcoin produces....$0 per year for owning it. The only value is in sale at a higher price. You have to bet on appreciation.

This is something fundamental people often misunderstand about, say, stocks. The price is set by supply and demand for the stock, but the value is determined by the cashflows. Usually price and value move at least somewhat in sync. But if stock markets went insane and valued everything at $0 for some reason, you'd still want to own companies.

> Now, suppose it makes $100,000 per year, but for some reason once you have it, no one will buy it off you. How much would you pay for it?

Unless the income-producing aspect of the business is dependent on you, there's always someone willing to buy something that produces money.

It was a hypothetical to clarify the issue. Suppose you were cursed by a genie and you could never sell an asset.

In such a world, the $100,000/yr business still has value to you. That was the point.

Hypothetical indeed. Hypothetically, ownership value should be close to sale value.

At the moment I rather see people buying stuff that they think other people might deem valuable in the future, e.g. motivation behind buying TSLA is similar to buying BTC.

The motivation may be the same but TSLA produces electric cars and BTC produces CO2 and crime.

I tend to be closed minded towards scams, yes.

If you still put your money down for the stock, the value isn't $0 anymore. It's whatever you value it.

It’s a hypothetical, where the whole world has gone mad except you. Nobody buys. So it has a price you would purchase at, but $0 sale value to you as there are no other buyers. The true value of an asset is separate from the price (which is $0 in this case as you can’t sell it)

A thought experiment to show the difference between price and value. Bitcoin currently has a price. No actual intrinsic value other than the hope of value in the future.

I think it does have intrinsic value - that value lies in allowing some people, in some areas, to circumvent tracking or avoid authorities. To those people, BTC brings value which cannot be had elsewhere. My personal belief is that this is what fuels BTC's value, and the rest is speculation (but then it's similar to stocks).

I don't think that whether it has this property (and value) is in question - the question is how much of BTC's price is fueled by that value.

Fair point. I shouldn’t discount it to zero. (Though in the above example I was arguing it has $0 value to you if you can’t sell it, unlike a company)

What about a company which grows every year but never pays dividends and can't be sold for more than $0? Would you want to buy it for $1? ( I prefer to use $1 because $0 has the problem of indifference )

Even if this company owns the whole world at the end, is it worth even $1?

Yes, because then I am entitled to voting rights so that I can force them to give me the money. Usually, voting rights are a tiny fraction of the stock value.

If I get non-voting shares that do not pay dividends, then these aren't shares, they're just useless scraps of paper. If the only utility I can get from them is being able to point out that I "technically" own the entire world, it is indeed useless.

Maybe I'm willing to pay a dollar for it but certainly not two.

That's a bit like saying what if 0=1. If the company owned the whole world you could launch legal action to make it sell a bit and pay out.

> You'd pay less in the second case, but not that much less.

Given the huge amounts of money that investors will invest in companies that make negative money every year, I think this is (perhaps unfortunately) not at all true in the real world.

> Same with every asset, I would think.

When you buy (e.g.) real estate you can get value out of it without thinking about selling it for a profit later. Especially if it's your primary residence.

Same with most vehicles: they depreciate over time, but there is utilitarian value in the asset. Unless it's Steve McQueen's Mustang or something.

Not every "asset" is about ROI.

That's the difference between assets in general, and investment vehicles, which are a very particular kind of asset regulated by the SEC.

Yes, but most investment vehicles are assets (or are eventually backed by assets).

Real estate, and the various loans and derivatives, all eventually end up at real, productive assets that you might want to own.

Stocks and the various index funds and derivatives, all eventually end up with ownership of a company. A company which, if profitable, can pay dividends back to the owners.

I'd argue that it's a much rarer class of investment vehicle which is purely speculative.

If you have a house you ever intend to sell, you will also try to make the neighborhood it is in sound more attractive, to increase its sale value, regardless of whether you can extract utility from it.

I bought my house to live in, but it has gone up. Many of the stocks I've invested in I purchased because they pay dividends, and I expect they will continue to in the future. As long as that is true, I don't care if the price of the stock increases much. I have a case of fine wine in my basement, most wine doesn't age well, but some do. I expect these will increase in price... But I'm planning to drink more than a few bottles.

Many other assets have at least some intrinsic value.

Not currency, unless you're a forex trader. And not if you're aiming to collect a dividend* or to exert control over a company.

*In the tech hysteria, it's easy to forget that this is where the fundamental value comes from.

Yes.

And that's why short-selling is so important.

Thanks for the compliment. It's pretty much the orthodox standard argument, so no stroke of genius from me.

Orthodox economics is severely underrated.

Oh, and bitcoin got a decent short-selling facility with the futures trading a while back.

(No clue why you are getting downvoted.)

aka "talking one's book"

So, It is a PYRAMID scheme?

No, it's a reverse funnel system.