In that sense, crypto is exactly the same as forex, money markets, equities markets, futures markets, derivatives markets, etc. We haven't been coupling markets with labor for like 300 years now.
Forex yes, futures yes, derivatives yes - these are speculative or hedging instruments. Not investments. I've never heard anyone advocate people HODL /NQ futures in their investment account and borrow against them as an investment strategy. Let alone calling them "the future of money." But this is basically what crypto is.
Money market funds aren't investments, they're cash equivalents, but they still facilitate lending. They're the present of money.
Equities are positive-sum instruments where you purchase a fractional ownership stake in a business that employs people and uses the revenue from their business to return capital to investors in the form of dividends, buybacks or intrinsic value appreciation. Their performance is inherently tied to labor.
The idea that there's any viable technical reasoning behind TSLA trading as high as it is, or behind what happened with GME and AMC last year is simply fanciful. It's like you've never seen an IPO pump and dump. It's literally the exact same market behavior you saw with ICOs; side-note: it's even worsened now with the advent of SPACs.
Yeah, you can argue until the cows come home that "equities are positive-sum instruments where you purchase a fractional ownership stake in a business," but that doesn't mean that hedge funds won't treat them as speculative instruments, particularly around earnings calls. Or that hedge funds won't try to spin the narrative to justify their risky positions (e.g.: the short squeeze on GME).
Again, just to reiterate: the markets are almost completely decoupled from labor (for better or for worse). It's all speculation (to certain degrees).
Again you're conflating a bunch of unrelated concepts.
Equities may trade above a fair valuation - individually, or as a group. That doesn't mean they're not as a group positive-sum instruments. You may lose money on a positive-sum instrument. They're also not money, and never claimed to be.
You're forcing a narrative around short timeframes. Equity markets are tied to the performance of the business in the full course of time which is tied to labor.
Crypto like futures and options are zero-sum or negative-sum instruments if you include the rake. Every dollar in appreciation comes from a new investor. Every, single, one. That's the difference. It's just trading bags of air back and forth.
> Equity markets are tied to the performance of the business in the full course of time which is tied to labor.
They're not though, and they haven't been for centuries. I gave you 3 examples off the top of my head. Markets are tied to sentiment; let me refer you to the Keynesian beauty contest[1]. This is very basic economic theory.
> Crypto like futures and options are zero-sum or negative-sum instruments if you include the rake. Every dollar in appreciation comes from a new investor. Every, single, one. That's the difference.
There is no "rake" in crypto, so I'm not even sure what you mean by that. Second, every dollar in appreciation on a decentralized exchange (say, SushiSwap) is a result of the automated market maker's supply and demand response. This is functionally exactly the same as what happens with order books (like on the stock market) but it just happens to use liquidity pools to facilitate this (because volume is much lower). For every seller, there's a buyer, and for every buyer, there's a seller: that's how markets work. Third, crypto is actually not at all like options because whereas option contracts can expire worthless (e.g. they run out of time and can no longer be exercised), if you buy some poopcoin, even if it tanks, you'll still own said coin (kind of like a penny stock).
> It's just trading bags of air back and forth.
This might be true, but people trade all kinds of things I personally find dumb (Pokémon cards, rare sneakers, etc.). Looks like a lot of people see value in cryptocurrency, who am I to judge.
Markets are tied to sentiment in the short term, but to labor performance in the long term - this is the distinction I was trying to make. I'm just re-stating the adage that in the short term the market is a popularity content but in the long term it is a weighing machine. You called out AMC and GME. AMC was trading at like $8 in 2020. It spiked to $60, and its back down to $15. Which honestly I could make a case for since they took advantage of the speculative mania to clear a bunch of debt off their books.
Give GME a hot minute and the same thing will happen - it has already started. Peaked at $500 and is sitting at $98.50.
> There is no "rake" in crypto, so I'm not even sure what you mean by that.
There's a few different rakes. The overwhelming majority of crypto trading takes place on centralized exchanges where they take a commission on each trade. Off exchanges, in PoW currencies, new coins are issued which are then sold on these centralized exchanges to pay the bills. This exerts negative price pressure socializing the cost of running the network - another form of rake. In a PoS currency new tokens are issued to validators where non-stakers are diluted - another form of rake.
In each case (exchanges, miners, stakers) a commission is taken by the folks operating the game, which is exactly what a rake is in poker.
Expiry is not why options are the same as crypto. It's the zero-sum nature that's the same. Winners pay the losers, no new value is created in the options market. Ditto the crypto market.
> This might be true, but people trade all kinds of things I personally find dumb (Pokémon cards, rare sneakers, etc.). Looks like a lot of people see value in cryptocurrency, who am I to judge.
For sure, but Pokemon cards aren't claiming to be money and aren't legal tender in one of the poorest countries on earth. It's an issue due to scale, not due to its intrinsically being dumb, which to be clear, it also is. We cannot allow it to get to the point where its stupidity represents a systemic risk to the rest of us who choose not to treat Pokemon cards as money.
