I'm generally curious about this question because it popped in my mind when I read your comment but what about the situation where someone builds or buys a house in a dense forest in California?
Said house is destroyed in a fire, insurance can't pay everyone out (see Paradise fire) and then those same people end up begging others for support (Including GoFundMe) pages.
Didn't they gamble on having a house in a high risk area and lost? Why do we only bail out certain people and not feel bad about it?
Well presumably they have insurance, although I think the days of insurance companies offering insurance to just about anywhere in the western US are numbered, with the rapidly disappearing water and constant threat of wildfires. But people who bought LUNA didn't buy insurance.
But generally I agree with you, there are definitely tragic events that happen to people that get more sympathy than other types of tragic events, even if they're pretty similar ultimately.
But I'm also someone who "gambles" on nothing but "ponzi schemes", (i.e. I buy Bitcoin and Ethereum) according to HN. I don't have insurance though, if some black swan thing happened and I lost it all, then I don't have much recourse.
Crypto is far from the only thing where that's a possibility, though. I'd say three of the startups I worked for have been even more of a gamble than my crypto purchases (all three shut down a little more than a year after I joined and I never made a dime more than my kind of low salary, and they didn't offer a 401k so I missed out on a lot of financial accumulation and security there).
That is in no way "gambling" and is in no way analogous to cryptocurrency investments.
Everybody needs a home, and one way to have a home is to buy one. Investing one's savings in buying a home comes with the expected option that one can live in it indefinitely if one wants to. Fulfilling this expectation does not depend on others becoming homeless, nor on their home becoming worse, nor on others being unable to buy a home in the future.
On the other hand, nobody needs to invest in cryptocurrencies. Investing one's savings in cryptocurrencies is done on the expectation that they will increase in value at least until one can sell them at profit. Being able to do this depends on others losing out by comparison, inasmuch as one expects others to buy the same amount of currency at a greater price.
> Investing one's savings in buying a home comes with the expected option that one can live in it indefinitely if one wants to. Fulfilling this expectation does not depend on others becoming homeless, nor on their home becoming worse, nor on others being unable to buy a home in the future.
I don't think any of this is true. You buying a home deprives someone of said home and drives the expected price up. We have a homeless crisis in California because we are not building enough and everyone is treating housing like an investment ("It can only go up!", "This is an investment!").
Living in it indefinitely is also a pipe dream. You're paying taxes and fees that can increase or change at any moments notice if enough people agree. This requires the same consensus as fundamental algorithmic changes in cryptocurrencies. You can't bank of living somewhere "indefinitely" without agreeing that it's a gamble...nothing is guaranteed.
Regarding the "need" to invest in cryptocurrencies, I can kind of agree. Shelter is a need because it helps us survive more efficiently but one could argue investing/growing wealth should also make life easier to live if it works out.
You don't see a difference between people losing their homes, and people losing their money because they were greedy and bought some pictures of apes they thought would make them rich?
The tricky part is, a lot of flood-prone areas tend to also be very economically active overall. Lots of ports on the coasts or along riverbanks which need people to operate and deal with the economic activity of the area, but rivers do sometimes flood and hurricanes will push water inland.
I just wanted to share a counter example to those saying Bitcoin is a poor savings vehicle. I did something I believed in and happened to get a better result than I ever planned on. I am in it for digital sovereignty, and establishing an alternative to banks and inflationary fiat that is accessible to all. It going up in buying power on average is something I also do not really see as surprising given the deflationary nature, interest, and adoption.
When the traders walk away I will still be using Bitcoin as a way to store and transfer value p2p unless something with similar properties replaces it.
It is a poor savings vehicle. You got lucky. You are confirmation biasing yourself into thinking it's a good savings vehicle. This it tough love and for your long term well being you should acknowledge this.
You could say the exact same thing about the broader stock market volatility (read: downturn) we’re experiencing. How one can be considered gambling and the other not?
At least the crypto investors aren’t expecting a wholesale bailout at any point, unlike “sophisticated” institutional investors as we saw in 08…
>How one can be considered gambling and the other not?
Because stocks have inherent value in the form of dividends or the potential of future dividends (or the current/potential stock buybacks, which are mathematically similar).
I think this misconception must be the root of the whole issue.
Stocks appear to have inherent value if you don't look at the entire planetary economy as a system.
In reality dividends don't distinguish between productive innovation and wealth extraction.
Innovative dividends are derived from the use value of new goods and services which increase freedom of action for the majority of the population. Wealth extraction is derived from zero-sum movements of capital, typically benefiting rentiers at the expense of productive employees, decreasing majority freedom of action.
But even the first can create externalities - which are real physical cost which are not accounted for.
A house that burns down because of climate catastrophe is a real physical loss. A increase in the value of a house created by aggressive speculation is an imaginary gain that only exists because the people in the game believe in it.
Trad economics exists to hide these differences, and make a hallucinatory financial reality which seems more real than the physical world.
Crypto is an obvious symptom of this hallucinatory mindset. Not only are the tokens imaginary, but the environmental costs are catastrophic.
But the rest of the economy really isn't built on firmer ground.
The fact that there is wealth to extract implies that the ticket that allows you to control the extraction has value. The company has assets and the ticket gives you proportionate ownership of them and proportionate control of where they go.
>A house that burns down because of climate catastrophe is a real physical loss. A increase in the value of a house created by aggressive speculation is an imaginary gain that only exists because the people in the game believe in it.
And a house that is built creates real value by taking land, adding materials and labour, and creating something worth more than the sum of its parts.
I don't need to forgive all of the economic system's sins to explain why stocks have value.
> Stocks appear to have inherent value if you don't look at the entire planetary economy as a system
Stocks have value because companies have value. You can buy the whole company and have something with positive value. Buying every outstanding derivative nets out to zero. Buying every cryptocurrency leaves you with something worthless.
You’re arguing semantics. No one is arguing that dumping all your money into Bitcoin or PTON specifically is a good idea.
> One, I can buy a Peloton. People pay for Pelotons. Positive sum.
Yes and once Peloton runs out of people to sell overpriced bikes and treadmills to, the valuation will (hopefully) return to reality. Uber continues to lose money on every ride.
If you’re going down the “people pay for it” route, we could say that people also pay for NFTs of monkey pictures.
The only way to not gamble wealth is not to have it. Leaving cash in the bank is gambling that government won't inflate it away. Buying equities is gambling that market conditions won't change. Buying bonds is gambling that the returns will outpace inflation and that the bond seller won't default.
This is a false analogy between taking measured risks and gambling. Putting 100% of your assets into anything, particularly a cryptocurrency, is gambling.
Putting 100% of your assets into one thing is bad gambling. Putting your assets into diversified, positive-sum assets is good gambling. I can play semantic games too :)
> Putting your assets into diversified, positive-sum assets is good gambling. I can play semantic games too
Semantics means arguing over definitions, not misunderstanding them.
The difference between positive- and zero-sum systems is unambiguous. We can call participating in the latter, whether by trading cryptocurrencies or derivatives or playing slots, with an intent to profit gambling or wijiwogging or blurlippening, it doesn't matter, the expected outcome is the same.
>Semantics means arguing over definitions, not misunderstanding them.
Ah the semantics of semantics. If two people disagree on a definition, then there will be some belief that the counterparty "misunderstands" the definition. That goes hand in hand.
>The difference between positive- and zero-sum systems is unambiguous.
And uncontested.
>We can call participating in the latter, whether by trading cryptocurrencies or derivatives or playing slots, with an intent to profit gambling
Yes we can.
We can also call a well diversified portfolio of 'positive-sum' investments gambling. You are risking your money on the chance you'll have a favorable outcome. There is no riskless portfolio. You are forced to gamble if you keep your wealth, because there is always an element of chance regarding maintaining your wealth. The default, uninvested state, for most is to gamble inflation won't eat it away.
Again, semantics: 'Investments' are not required to be made on 'positive-sum' underlying assets. For instance, airlines may make an investment in oil futures (a zero sum contract) to hedge expenses that correlate with their fuel costs.
>Crypto and slot machines are not positive sum.
I think this the part where I link to a wikipedia page of a fallacy I don't understand/doesn't apply? /s
This is fine. But you acknowledge you gambled. If you'd lost, it would have been inappropriate to ask for others' sympathy or, worse, public support.