In fact, the reason Madoff got so large was b/c he was one of the few who convinced most early investors not to cash out.
Implying that smart money is 'being early to the Ponzi Scheme' is certainly an outlook on life, IDK if it's a particularly good one though.
Would you call Peloton's VC backers "ponzi schemers"?
Cryptocoins, not being part of a circular economy, must, by definition, keep attracting new money to pay for earlier investors. Sounds much like a pyramid.
A more apt analogy would be a public company that does not do any real economic activity and simply issues more shares to cover expenses. Cryptocoins cannot exist without the network running and the only way to cover those expenses is to attract new money without any product. While stock speculation is a zero sum game, cryptocoins are negative sum game. Quite a major difference in my book.
If you look at the revenues generated by OpenSea or Uniswap or Compound, it's not exactly an outlandish idea.
What does Ethereum contribute to GDP?
And that's why it's worse than MLMs, at least those pretend to be retailers.
The best thing for crypto as a currency is for Etherium to be worth in 10-20 years exactly what it is now factoring in inflation. The fact that this is horrible for "Crypto" because this means eth won't be giving the 10-100x returns, is exactly what's wrong with the whole thing.
Crypto currencies are like stock tickers. The price does not have to have any bearing on the actual value generated by the stock or the company it represents.
There is a speculative element to all markets, including the stock market. And I think you know that as well.
If you've got a non-voting non-dividend stock .. you might want to ask what you've actually got there.
Some tokens share revenue with token holders. GMX, for instance, distributes all of the nearly $2M daily fees it generates to holders of the GMX token. Goldfinch, which loans to real-world microfinance companies, also gives back its fees to Goldfinch token holders.
Some tokens are necessary for paying for transactions or any on-chain asset (most core blockchain tokens).
It's not as much hot air as it appears
How is that different from dApp?
Airbnb has no hotels
If these companies don't generate profits, then what assets are shareholders holding onto? The app? The algorithm? The design?
Then that's just IP. And if the asset is just the IP, how is that different from any blockchain dApp, which is just code?
I don't think you're making the point you think you're making. An unprofitable SaaS startup has no assets besides its code either.
First, stock buybacks are not tax exempt. If a firm earns $100 in profits and buys back $50 of shares, it still pays the corporate taxes on $100, not on $50. Unlike paying interest, corporations don't get to write off money spent on stock buybacks. So it doesn't affect their tax situation.
Second, for the investors in the company, the total aggregate amount of taxes is paid whether the investors are holding 10 stocks and get $1 per stock in dividends, or if they are holding 5 stocks and get $2 per stock in dividends. The number of shares outstanding does not raise or lower the ultimate value of the dividend stream, nor the tax obligation applied to the dividend stream.
What if a company never pays any dividends and just buys back stock? Then it's value is just the terminal liquidation value, and each time investors sell stock back to the company, that is a taxable event for them, probably taxed at the long term rate which is the same as the dividend tax rate, up until the company winds down, in which case the rest is taxed at the long term rate. The set of taxable events is the same as if the company had paid dividends, but the difference is that investors self-select as to who realizes the gain and who doesn't.
Really this is the difference when companies buy back stock -- some shareholders don't want to take any gains, while others do. The total gains are the same, and the total paid to the government is the same, and the time it's paid to the government is the same, but investors can sort themselves into those who want to to take the gain and those who don't. You get to decide when you want to take the gain, and this optionality has value for you. It's as if you could signal to the management -- don't pay out a dividend, re-invest the money that you would have paid out this quarter so that I'll get more later. That's basically what is going on for the individual investor, but for the government, they still get their quarterly taxes paid just in terms of capital gains by those who sell their shares.
