this post was submitted on 26 Aug 2024
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But it really doesn't work as a currency.
Real currencies represent debt, not value. You work a week and you're owed something for that work. You get currency that represents what you're owed. You're not meant to hold on to currency, it represents an incomplete transaction. When you spend the money you get the value of what you're owed.
Crypto currency depends on it having value. People holding onto it in the hopes of it increasing value. If people stop holding onto crypo-currency the value would crash and it would be useless.
It's not really feasible to take out a loan denominated in crypto currency. Sure it might be technically possible to make this happen but you'd be a fool to borrow crypto currency as if it increased in value (which it has to do to avoid crashing) you'd end up owing more value than you originally borrowed even before any kind of interest might be charged. There's a reason why central banks want slow by steady inflation: people can be confident that if they take out a loan they won't wind up owing more in value terms than they originally borrowed.
Crypto "currencies" simply aren't currencies because the nature of it being required that they have an increasing value to avoid crashing means they can't perform the basic functions of finance.
People buy crypto currency in the hopes that it will increase in value. Inevitably everyone who might possibly be interested in buying into crypto currency will have already bought into it. There's a finite number of people in the world. When that happens it will no longer be increasing in value and then what do the people that bought into it as an investment do? They sell. And the value crashes. This means is fails at the other requirement of a currency, a stable value.
It's a pyramid scheme and everyone knows it. The crypto guys are just trying to get in the last few pumps before they dump it entirely.
By your definition stocks are also a pyramid scheme and everyone knows it. The more people that buy it, the price goes up! Sell? The price crashes! What a revelation!
Nope. A stock is a share of a company. A company has assets and revenue. Stocks either provide dividends (which is a share of the profits) or will invest their profits into growing the company which increases it's value, which in turn increases the value of the share.
Certainly stocks can be over valued, and I'd say many of them are right now. But that aside there is a value in a share of company that isn't based solely on someone else valuing it hoping someone else will value it more.
You know very little about the stock market. You should read up on the OTC markets.