I feel literally like Abe Simpson "I used to be with 'it', but then they changed what 'it' was. Now what I'm with isn’t 'it' anymore and what's 'it' seems weird and scary. It’ll happen to you!"
We used to buy things that had physical value, now we just buy memes.
I feel like this has just been a casino built with entertainment and memes from the last 10 years. No one wants the old school casino experience of smoke-filled rooms, classic table games, and shows any more. We just want to buy random tokens with questionable value, see a Shiba Inu dog show, and walk past a bunch of TV walls with Twitch streamers talking about how they got rich with some new coin on the way to buy legal weed.
The whole movement is really good at making you feel dumb for following safe and conservative career advice like "do something practical, save your money, and retire eventually (maybe)". Why sit through yet another technical interview when you could just buy the right stock/cryptocoin?
It reminds me a lot of Terror Management Theory. Sure, there are apex predators who are knowingly scamming and defrauding people, but how do I describe a coworker who is enthusiastic about the $1000 of Bitcoin he has?
Even a cursory, technically-minded dig in the garden shows that there's nothing at the center. Smart contracts require oracles. NFTs are addresses that depend on an external interface to make any sense of them. Blockchains are expensive public immutable databases...
I tend to filter a lot of these crowd behaviors through the lens of Terror Management Theory. In this case, convincing others that crypto has some true value might not only benefit investors financially, but also reinforce their identity as part of some important movement.
I think it's been a tragic waste of economic resources and brain power. Talk about "the smartest people of my generation spend their time figuring out how to make me click ads." If all of this energy had been pointed in the direction of innovating against the direct problem of abundance vs scarcity, it would have avoided becoming a joke. Otherwise, it's just a mimicry of the economic patterns that have dominated the West since its inception, and thus, not revolutionary in the least bit.
> Sure, there are apex predators who are knowingly scamming and defrauding people, but how do I describe a coworker who is enthusiastic about the $1000 of Bitcoin he has?
The English language has plenty of words, the ones that come to mind are: rube, mark, or sucker.
It's unfortunate, the cryptocurrency and blockchain space is so filled with scams and con artists that at this point, even if a very important and significant use of blockchain appeared, or a viable cryptocurrency emerged, the majority of reasonable people would dismiss it because the space is oversaturated with bullshit. And the true believers are either joining in on the scams or becoming victims, which are ultimately the only two choices once an ecosystem is as overrun as the crypto space is now.
The only difference between a rube and competent investor in a stock is when they enter and exit the market, and this goes for every stock, nothing is good forever.
The only difference between crypto and the stock market is that crypto has less impenetrable jargon, and everyone pretty much knows and excepts that it's all fucking crazy and anything can happen, as opposed to those who've somehow convinced others that they know what the stock market is going to do.
At this point, I wouldn't be too sure about saying anything to your coworker about that $1000 of Bitcoin. I saw people make posts like yours (and agreed with them!) When it was at $100, $500, $1k, $5k, $10k, and $20k. At that point it was pretty fucking obvious nobody knows what's going on and nobody has any basis for predicting anything about it long term, so the only rubes are those that have a strong convictions about what it's going to be like a year from now.
> The whole movement is really good at making you feel dumb for following safe and conservative career advice like "do something practical, save your money, and retire eventually (maybe)". Why sit through yet another technical interview when you could just buy the right stock/cryptocoin?
But wait, actually, why sit through yet another technical interview when you could just buy the right stock/cryptocoin?
It seems to me that a lot of would-be conservative, career-driven tech workers are discovering that they can make more money flipping jpegs and meme coins than writing code for a big company.
Meanwhile, people like us are doing the "real" work of... using machine learning to increase engagement and sell ads for crap people don't need? running A/B tests to see which button configuration causes more UGC? optimizing conversion funnels for ad campaigns?
I've come to the sincere belief that the people involved in SHIB or NFTs or any of that are actually contributing more to society than most software engineers that I know. They're trying out new ideas about property ownership and forming new communities around new values. They're doing something of questionable value, but the vast majority of tech workers are doing something of negative value.
Regardless of the topic, if your conclusion is that "No, it is the children who are wrong!", chances are you're missing the point.
> It seems to me that a lot of would-be conservative, career-driven tech workers are discovering that they can make more money flipping jpegs and meme coins than writing code for a big company.
To me it feels like selling snake oil. Things like NFTs do not seem to have any real value except to those who believe it has real value.
I do like your take on it that these engineers are exploring new outlets of engineering and that could have some positive externalities kind of like how car enthusiasts in the 50s' were able to build out incredible racing cars and racing series that improved engines quite dramatically
> We used to buy things that had physical value, now we just buy memes.
Money doesn't really have physical value, only speculative (you want it because you trust that someone else will want it in the future).
Shares in public companies don't really have physical value unless you own enough to change the management. Sure you 'own' that fraction of the company and their assets, but the managers of the company don't ever have to pay you out any of it. Almost all the value of a share for most people is in its speculative value.
Art generally doesn't really have physical value, the value is almost entirely in the story that goes with any specific piece. This isn't just true of modern art, being part of the story of the Mona Lisa is much more important than the aesthetic experience of looking at it (they let plebs do that for free!).
Education certainly isn't something with physical value. Sometimes it has utility value for what you can do with it, but more often it's just something that people want you to have because it distinguishes you from people who don't have it.
Insurance doesn't have physical value, it's more the value of feeling safe, which is a meme.
Entertainment is almost entirely memes and people have been paying to listen to music or watch drama for millenia.
Even the stuff that we 'used to buy' that was physical, like a car actually has a huge segment of its value that was meme based. You can tell by watching what companies advertise for. They rarely advertise for utility, they advertise for meme value.
Certainly monuments like cathedrals, huge stone circles, shrines etc were memetic as well as physical, and humans spent a phenomenal amount of effort on those things.
A huge amount of stuff that people spend money on has been primarily mimetic going back into prehistory.
I'm with you on physical value being a bad concept, but I still have to push back a bit
>Money doesn't really have physical value, only speculative (you want it because you trust that someone else will want it in the future).
And because you need it to pay your taxes in it
>Shares in public companies don't really have physical value unless you own enough to change the management. Sure you 'own' that fraction of the company and their assets, but the managers of the company don't ever have to pay you out any of it. Almost all the value of a share for most people is in its speculative value.
Nowadays the price depends mainly on that yes, but dividends are a thing, and legally (which is the only thing that matters in finance anyway since private property is also only legally a thing) you own that slice of the company and its assets. The price and the value are different
>Art generally doesn't really have physical value, the value is almost entirely in the story that goes with any specific piece. This isn't just true of modern art, being part of the story of the Mona Lisa is much more important than the aesthetic experience of looking at it (they let plebs do that for free!).
And in the tax avoidance schemes it enables
>Education certainly isn't something with physical value. Sometimes it has utility value for what you can do with it, but more often it's just something that people want you to have because it distinguishes you from people who don't have it.
Now we are getting more interesting, what's the difference between physical value and utility value? What's the difference between social value (it will make me desireable) or personal value (it will make me happy) and "physical" value?
>Insurance doesn't have physical value, it's more the value of feeling safe, which is a meme.
Only if you don't understand probabilities and risk management. Also, good luck buying a house without life insurance
Things have value because we need them (inelastic part of the supply-demand curve), things have a price because we want them (elastic part of the supply-demand curve).
> since private property is also only legally a thing
This is a particularly interesting thing to point out in this context - property ownership is a meme itself.
> Things have value because we need them (inelastic part of the supply-demand curve), things have a price because we want them (elastic part of the supply-demand curve).
Incidentally while it's an interesting distinction, I don't agree with your comment on need/value want/price. I value lots of things I don't need. Humans are creatures that value things, things that are valued are valuable.
> Only if you don't understand probabilities and risk management.
Yeah, you're probably right on that. I could maybe try to claim that probabilities and risk management are memes themselves...
Like I said to the child comment, I think we are aligned on value, I included subjective and emotional needs on this. I do think this distinction makes sense because the more something has value for you, the less elastic your personal price-demand curve becomes. And certain things we all have a demand-floor. And that's kind of the difference between price and value right? Value is the thing that's stays valuable and desirable even if it's not priced and can't be exchanged
> Incidentally while it's an interesting distinction, I don't agree with your comment on need/value want/price. I value lots of things I don't need. Humans are creatures that value things, things that are valued are valuable.
It sounds like there is a disagreement on definition of "need". Perhaps yours is closer to "will physically die if not present", and the parent poster's is "somewhere on Maslow's hierarchy of needs".
Is requiring life insurance something that is common for buying a house? As someone who just bought a house I was never asked if I have life insurance.
I'm from Ireland, and it was required for me to get a mortgage in order to buy an apartment.
It's basically mortgage protection insurance - This is a particular type of life assurance taken out for the term of the mortgage and designed to pay it off on the death of the borrower or joint borrower
By taking things to their extreme you end up grouping things together that in practice behaves very differently, that's not really a practical approach. Disagree with too many points to list but in general the asset list is more like "things that generate money" (shares/farms/rent), speculative assets. Then you added a more meta category that's not about assets.
I think maybe our disagreement is based on us talking about different categories. The category I'm looking at is not 'things that generate money', and I'm not taking things to an extreme here.
I'm much more talking about things that have value only because people think they have value. That's mimetic value. These things are valuable because the meme of them being valuable has infected society.
Like money, or art, or education (except in narrow practical fields) or entertainment or a notional (but rarely practical) ownership claim on a company, or intellectual property,
None of those things would have any value at all if people didn't think of them as valuable, or treat them as valuable, or respect them.
Notably, a farm does not fall into this category. It is a physical asset that produces other physical assets; that's utility value, not mimetic value. You can eat its output for food or burn it for energy.
The more meta stuff is about how even physical and utility value assets are often partially acquired based on mimetic elements. So people pay more for a car that makes them feel like an international spy than they do for a car that gets them from A to B, so the meme of feeling like an international spy has increased the value of the simple physical asset.
Well it was when you included shares into that category I got triggered I suppose. Although we're at an extreme point in time right now speculation wise the fundamentals still hold true that shares represent a way to partake in the revenue of a company (much like a farm which is why I included it). A company where dividends is an important part of the valuation will be valued differently if they stop paying dividends, that there's a delay is just a technical detail.
Well, in case you're referring to cryptocurrency, isn't that initial claims fraud case one of the good old kind?
Some things never change. It's crazy how much our (financial) world is built on fraud. The cases that are discovered and where the perpetrators get convicted are only the tip of the iceberg.
And then it will flip back again. We had a big crash in 2008 and there seems to be a lot of evidence that the lessons have already been forgotten and the same mistakes are being made again.
$SHIB actually does have cashflow, they built an exchange with decent volume and about $500mm in assets on it so far. Volume fees at any price flow to $SHIB token holders.
The - therefore - price multiple is still meme specific and can evaporate at any time
But I mean we would be having the same conversation if this was a $100mm marketcap coin, instead of a $36bn marketcap coin, but the criticism would be less true
so yeah just something to see, not exactly a counterpoint, just some additional peculiarity that makes you go “huh, well how about that”
Don't want to be grouped with some shiba fanatic but lots of misunderstandings in that paper (although always nice to hear arguments from both sides to avoid becoming a fanatic). The biggest root misunderstanding in the paper is comparing bitcoin to shares of a company instead of say usd. There's also a ton of final consumer use cases nowadays and don't really buy the negative sum game either, would be fun if he used the same logic on shares here for comparison but no surprise he doesn't.
> Don't want to be grouped with some shiba fanatic
> But I mean we would be having the same conversation if this was a $100mm marketcap coin, instead of a $36bn marketcap coin, but the criticism would be less true
apparently pointing out the limitations of a low-hanging fruit criticism makes one a fanatic with no discussion on the common enterprise generating revenue, just the association with the meme brand.
zero discussion on whether the observer caught or missed all of the alpha, zero discussion on whether there was any conflict or any interest in the underlying asset, zero verification of whether the aforementioned exchange product created actually had the $500mm in assets and growing or daily trade volume even though people - including a Brazilian University's professor in a comment to a US securities regulator - have been trying to compare crypto assets to equities or a commodity supported by cashflow for an entire decade.
the irony being that without the token nobody would have noticed this 4 month old exchange generating $30mm-$490mm daily volume existed - earning fees no matter what the nature of the volume is - but the existence of the token and accessible branding prompts otherwise intelligent people to shut their mind off to any discussion about it, not even considering to even look at the product. just call the person that did look, or at least someone else that would look, a fanatic. probably hyperbole, as they feel the need to blend in to elevate their own opinion without similar exclusion, but frustrating none the less.
and doubling down makes me look like a fanatic, well played, ser
historians: this is the state of crypto discussions in 2021, just want a couple people now, and more people in the future, to see that.
Exactly. Problem is Bitcoin was meant to be a currency. But it still cannot feasibly be a currency, so in practice people see it as an investment vehicle, which it's not supposed to be
Store of value proposition has never been stronger though which is the driving force behind this speculative wave. Simply the idea has never been more sound and that's trivially easy to understand to most.
Many cryptos, including SHIB, have revenue, which is the crux of that authors argument against bitcoin 3 years ago
People saw the criticism and created something else actually due to market forces
Its like wow there are so many good criticisms and you pick that one immediately after I gave you newer information that supersedes the main point of your old information?
Tangent: as a Money Stuff fan, one minor gripe I have is that Matt often links back to previous newsletters (as in the first link here), but to find what he's referring to you have to trawl through the entire day's items. One simple fix would be adding ids to the heading (<h2>) tags and linking to those. Not sure how much work it would be to tweak this in their CMS but it would add a lot of value.
> I don’t know! Capitalism is different now! It used to be that, if you were a struggling online lingerie retailer, you could try to sell more lingerie, or you could try to cut your costs of selling lingerie, or you could expand into some related apparel business lines, or you could shut down, I don't know, I’m sure there were more options, but if you went to an investment conference and said “I’m tired of lingerie let’s do electric cars” investors would be skeptical. But now sometimes you can be a struggling online lingerie retailer and get hit by Reddit lightning. And if that happens, you gotta seize the moment. “People are paying attention to us, we can raise money, only one choice here: electric cars.” (Honestly two choices: electric cars or crypto.) And off you go. Now you run an electric-car company. Congratulations.
i mean other than the hivemind of reddit making choices on who gets to play based on lulz, how is this all that different from private equity (chosen CFOs without a cause with private investor funds) or SPACs (chosen CFOs without a cause with public market funds)?
This isn't new. Back in the first dot-com boom, someone did an IPO for a strip club on Broadway in San Francisco, as "BOYSTOYS.COM INC", ticker symbol GRLZ. That failed. (The details are all in the SEC filings.) So they pivoted to trading in pollution credits. That failed. So they pivoted to selling some antifreeze product. That failed in 2020, and all the independent directors quit. They seem to be semi-defunct, not dissolved but not making SEC filings on time.
GlyEco, Inc. CIK#: 0000931799
formerly: ALTERNATIVE ENTERTAINMENT INC (filings through 1997-03-12)
formerly: BOYSTOYS COM INC (filings through 2009-08-13)
formerly: Environmental Credits Ltd (filings through 2011-11-10)
In dot com bubble mattress companies pivoted to ISPs. Back then though, the announcement is what caused the speculative fury and let them raise more capital by selling into liquidity.
What is new is that simply being on the most shorted stock list makes reddit try to blow up some hedge funds by pumping the shares a few hundred percent - forcing additional buys by the hedge fund - alltogether creating enough liquidity to actually rescue the company if they sale new shares directly into the market! Sometimes the companies are asleep at the wheel and miss it. It took Gamestop months to wake up. I told people they could do this, many doubted.
I highly recommend subscribing to Matt Levine's Money Stuff newsletter. Informative and entertaining at the same time! Though be warned that it can be depressing from certain perspective.
> It continues not to be my fault! I am sorry! I realize that people think I am having a mental breakdown in this column but I am actually doing fine; financial markets are having a bit of a mental breakdown.
Nice try Matt Levine, you’re never gonna stop my AMC diamond hands
