1. There's more government regulation and less manipulation.
2. New money is constantly flowing in, via 401K's and pensions. Most people aren't even aware they're invested in the stock market.
3. The government cares so much about the stock market doing good. Look at how Trump brags about the booming market. If it goes in a funk, the government will think of ways to prop it back up.
That said, without any of those 3 things, stocks are just as a gamble as bitcoin.
People say "past is not a predictor/indicator of the present", yet they love to say "stocks return 7-8% annually, and you should just invest in an index to enjoy such returns". Why? That's such as a huge assumption that everyone takes for granted.
> If it goes in a funk, the government will think of ways to prop it back up
I don't disagree with the second statement. I guess what you're saying is that there is manipulation (talking about government intervention in this case) but overwhelmingly in the "right" direction?
Well, you're leaving out something something about the company putting your money to use to increase efficiency or output something something and something something about dividends from the proceeds, none of which you have with cryptocurrencies. (Though it may be disputable whether those are truly the reasons behind the historical returns of stocks and thus good reasons to expect it to continue, even if you wouldn't guarantee the exact numbers, or if those are simply motivated reasons that may or may not be reliable future indicators...)
AKA buy stock at 100$ and sell it at 100$ does not mean you broke even. You could have gotten 10$ in dividends. Now that positive may be small and some people may lose money, but that's allowed as long as the expected returns end up positive.
Bitcoin's can't have a net positive return because they only way to add money into the system is via coin buyers. Further because of transaction costs it's inherently negative sum.
I'm not disagreeing with you. In fact I almost agree with you, but your argument fails for most stocks.
If every year your coin splits so now you have 2 coins then 4 etc no money was added. I can have 10^1000 in a database, but that's not new value.
https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ
Staking doesn't produce new coins. It pays dividends from transaction fees. I.e. actual economic activity.
Lets say I Buy '1,000' tokens including a 10 token payment for a transaction fee for 1$. Now A had 1,000 tokens and now has 1$, I have 990 tokens and another group get's 10 tokens. But, notice that other person(s) got tokens not money.
If I got to keep 1,000 tokens or someone else get's those 10 tokens nothing changes because nobody who has tokens got any money. The only way people with tokens get money is if they sell some number of tokens minus a fee to someone else. It does not matter of all 10 tokens go to a miner, or miners get 5 tokens an 5 go to 'investors' or what not.
It's still a (edit: negative sum game) and contracts don't change anything about this.
I apply, get eth, cashing out by selling it to someone else, then get hit by a buss or just ignore you.
Now, in what way can the system enforce that loan?
If you can get the eth from someone that gave me money then they are not going to give me money in the first place. If you say, sue someone in the real world that's fine. But, the smart contract did not actually do anything. If you say I need to put up eth as collateral then you did not give me a loan.
If they went to the work of creating digital contracts and didn't consider escrow, that seems to be a fairly significant omission.
Escrow accounts are fine if I am doing contracting work, but that are not a loan.
https://i.imgur.com/AltAcnB.jpg
Keep in mind this graph is logarithmic in scale.
If I take that same money and invest it in a business -- the business is going to take that money and create something new. Hopefully what it creates will be worth more than what you invested, but in any case your investment has changed the world in some way.
I think a cryptocurrency is probably something in between that, because your 'investment' is actually ultimately going to miners who will expand the network, so you are actually building something new in a sense by investing in cryptocurrency. However I'm not sure that building the bitcoin network out is a net positive for the world.
Only if you're buying at the IPO. Most of the time, you're just buying stock from another person and the company gets zilch. The service you're providing to the company is just better information about its ability to raise additional capital from selling equity.
For some cryptocurrencies, you are providing a service to the miners by adding liquidity and pricing information, but given the volume trading on crypto exchanges, there is simply not enough currency being mined for even a tiny fraction of it to be going directly to miners as a counterparty. For a currency like Ripple, that is completely pre-mined, you don't even have that.
However, over a long enough timeframe storage fees eat up the entire value of gold stored thus it's not a long term investment.
Also, if you 1 one bitcoin you can only sell less than 1 bitcoin from transaction fees. Remember, someone needs to spend real money maintain servers and that money is constantly being removed from the coin ecosystem.
If I own a house I get to use the house today and still have a house tomorrow. With a field I could grow crops and then still have a field next year.
Commodities are an interesting 3rd thing. But, closer to buying something from a wholesaler than an investment as they represent actual goods (ie Oil) that will be sent somewhere. Think of it like this, if you buy coffee contract you get coffee which can be sold off. However it's a physical thing and it's got a physical expiration date, if you keep it in a pile somewhere for 10 years you end up with dirt.
You could speculate that the utility created will increase the value of the coins you hold. However, unlike mining there is no connection between buying a coin and enabling other people to do these transactions.
gambol: A playful skipping or frolicking about.
The only way money enters the system is for someone to buy a coin, so having more tokens in no way makes something an investment.
Don't forget that investing in the stock market is still something of a gamble, because the return for everyone is not guaranteed to be greater than zero - a company can go bust leaving the shareholders with nothing.
PS: Berkshire Hathaway still returns money to shareholders via stock buybacks. Which preform similar functions the difference is simply related to taxes. They can and are likely to at some point issue dividends.
"Chances are" alone, is an assumption. How is that any different from your speculation on Bitcoin. The only difference is longevity of the window period, otherwise it's the same principle.
so one difference then is that stocks have a justification for their returns given the variance you experience.
Putting money into a company in return for a share of ownership is an investment. A lot of stock market shenanigans are little more than gambling. Gold and crypto-currencies for the most part are speculation.
Although it's not always clear with ICOs if any form of ownership is conferred or what the relationship might be between future profits and token gains.
But yes, in principle.
--edit-- to be clear, I'm not trying to say one class of thing is better than the others, just that to me the words have different meanings.
-Ben Graham, from chapter 1 of The Intelligent Investor
Well... we're just shoving a poor definition of investment off onto a poor definition of gamble. If potential drawdown could be considered part of the risk of 'investing' )or 'gambling') then Bitcoin is definitely more of a gamble.