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Comment by erikpukinskis | Hacker News Reader

Can you explain what you mean?

If the blockchain issues 1000 BTC to various miners who sell them to 1000 people for USD$1 each, and then some time later 100 of those people are able to sell their coins for USD$100, then the total amount of money that's been moved out of other investments is USD$11,000, but the total market cap of Bitcoin is USD$100,000 so can't I say that USD$89,000 was "generated"?

Although really none of that USD ever disappeared, it's ostensibly still going into USD denominated assets, so... well I don't know what to say about any of this.

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Crypto is not even zero sum, it's negative sum, because whilst the value is set by people trading to each other, real USD has to come out of the system every day to pay for the electricity to support it.

The reason it hasn't "generated" wealth and has merely "moved" it, is because it doesn't allow everyone to succeed. Say in your case, person A bought at $1 and sold at $100, so he is up $99. But someone else had to buy the bitcoin he sold, so that person is currently sitting at -$100. For one person to profit, another necessarily has to lose.

The price of bitcoin could increase almost indefinitely, since the whole "hodl" meme is about reducing the supply and reducing the float, which allows it to continue to pump upwards and for people to get rich on paper. But it will never be possible for all of them to actually cash out, there isn't enough real USD in the crypto economy to allow that.

It depends on what you mean by “generated”. Sure, in that scenario some people made money off of bitcoin. But did it actually generate anything of value?

Properly conceived, currency is a proxy for genuine economic value. Bitcoin mining generates nothing but bitcoins, which then are valuable because... other people say they’re valuable? I fail to see how this differs from a pyramid scheme.

So by the same token, would you say banks don’t generate any economic value?

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