Comment by jyu | Hacker News Reader

Comment by jyu | Hacker News Reader

Remember that there are people behind these decisions and they are largely rational actors. Someone at PayPal is getting a big promotion and bonus from pushing this deal. If crypto goes nowhere and they shut down this project, then it can be rationalized as "getting in too early" or some other "unforeseen externality" that happened, totally out of their control. But the promotion and risk taking executive will have solidified his/her position with headcount and other markers of success.

There are always things we don't know going on behind the scenes for these types of moves.

Remember when Marissa Mayer was poached from Google to run Yahoo, and the first big move she made in a series of bungles included buying Tumblr for $1.1bn. Then she termination the option for employees to wfh. Then was later revealed that she had consecutive bad performance reviews at Google and was not going to get further promotions there before she jumped ship.

Edit: I'm just bringing up Marissa Mayer as an example and maybe misremembering the specifics since this was 8 years ago at this point. There are plenty of other examples of executives doing weird stuff that seem nonsensical from the outside. Jamie Dimond proclaiming bitcoin is a fraud while consecutively JPM buys a hefty investment in bitcoin. Or Bill Ackmann crying on CNBC while financially positioned for the exact opposite.

Anything cryptocurrency related is very hot in the fintech investing space right now. Companies don’t necessarily think that crypto is going to supplant traditional currencies, but they do salivate over the unbelievably high fees that cryptocurrency business can charge their customers.

If you’re a stock brokerage, $0 trades are the cost of doing business these days. Meanwhile, companies like Coinbase are more than 60X more profitable than traditional exchanges simply because the industry hasn’t become a race to the bottom (yet). Bitcoin remains popular despite the fact that it costs $10 or more per transaction. There are huge opportunities for companies to come in and create ways to transact in Bitcoin-denominated transactions without touching the blockchain or L2 networks.

They’ll gladly collect exchange fees in both directions, because exchange fees are profitable whereas moving money around is not. As much as we hear about cryptocurrency upending the traditional banking system, having an environment where users have to deal with all of the complexities of managing, holding, exchanging, and transacting with crypto is a dream come true for financial companies who thrive on extracting a couple percent here and there at every friction point in the system.

> Bitcoin remains popular despite the fact that it costs $10 or more per transaction.

Indeed. In precisely the same way that the $10 service charge ATM’s in the lobby of a casino remain popular.

More like a $20 wire transfer fee.

I hadn't heard about the performance reviews and when I just Googled I saw results about her implementing performance reviews at Yahoo. Curious if you have more background on that?

For middle managers and above, lack of promotion for several consecutive years at a company with as many growth opportunities as Google speaks loudly.

I never worked there and was interested in her story so I dug a lot around that time and found bad reviews that have long suffered from link rot.

"But then, suddenly, her peers were promoted past her. Responsibility for the look and feel of Google’s entire suite of consumer-facing products, including the Google home page, was taken away from her. She was moved to a less important product: Google Maps. She was removed from a council of executives that met with Google’s CEO. To industry insiders, this sudden change was a demotion for Mayer." - The Unofficial Marissa Mayer Biography published in Business Insider https://www.businessinsider.com/marissa-mayer-biography-2013...

The specific criticisms from former coworkers begins around the middle of that long article.

That is a wild, painfully irrelevant analogy, even for HN. The amount of hate people have for crypto here knows no bounds.

Do you have a source on Marissa Mayer getting bad performance reviews? I wasn't able to find anything on that.

> Or Bill Ackmann crying on CNBC while financially positioned for the exact opposite.

No, he was positioned in exactly the way he said he was. He went on CNBC to warn about the dangers of the coronavirus, having already expressed this view in the market. It's his job as a hedge fund manager to do so.

Also, he won big on the credit default swap trade while losing massively as the market plummeted, the individual trade was massively profitable, but in aggregate it was just a hedge against the downturn.

Crypto has been around for 12 years and has gone from zero to well over $1 trillion mcap. I doubt it will go back to zero.

You misspelled “bitcoin” there. Bitcoin has existed for 12 years now and gone over 1 trillion dollars.

It's all artificial value.

If the actual money people paid was destroyed/transferred into Bitcoin instead of just transferred to whomever you bought it from, then the value would be real - but it's not.

> it’s all artificial value

The distinction between artificial and natural i.e. intrinsic value is completely arbitrary if you think it through. Where do you think comes the value of dollar bills from?

Of course, why things have value originates in their utility. But everybody has a different idea of utility. You don’t think Bitcoin is useful but others have a different value. That’s why they are investing despite the risk. Since Bitcoin’s market cap is nearing the $1T mark quite a lot of people seem to agree in its utility...

BTW: You might want to google “subjective theory of value” and “regression theorem” to get a better understanding of what’s going on. Spoiler alert: The concepts are fundamental to economic theory and have nothing to do with Cryptos.

"Since Bitcoin’s market cap is nearing the $1T mark quite a lot of people seem to agree in its utility..."

Speculation/gambling as primarily utility, sure. But there are better models that can compete on price and without the unavoidable pitfalls of Bitcoin that are too dangerous to society to have - and I'm not even going to bother to list a main example which gets ignored/unresponded to 100% of the time I ask.

Every time I hear about a cryptocurrency's "market cap" I think of https://signalvnoise.com/posts/1941-press-release-37signals-....

> 37signals is now a $100 billion dollar company, according to a group of investors who have agreed to purchase 0.000000001% of the company in exchange for $1.

Except for the fact that Bitcoin's current 24hr trading volume is in the billions.

Shuffling money around between my savings and checking accounts doesn't mean I wind up with more money.

Being able to unload a Bitcoin for $50k doesn't mean the market can withstand unloading a million at that price.

The market depth could handle couple million dollars without changing the price too much, but if you want to buy/sell large amounts, you'd go to OTC.

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