This Cryptocurrency Website Is Selling For More Money Than Facebook's

Tyler Durden's picture

Authored by Simon Black via SovereignMan.com,

What’s money worth if interest rates are negative?

Interest rates, after all, are the “price” of money.

When we borrow money from a bank and pay interest on the loan, it means that the money we’re borrowing has value. That –capital- has value.

Negative interest rates, on the other hand, suggest that capital is totally worthless.

This isn’t a philosophical exercise. These are the times we’re living in.

Despite a few tiny increases, interest rates worldwide are still near the lowest levels they’ve been in 5,000 years of human history.

Bankrupt governments across Europe who are already in debt up to their eyeballs have issued trillions of euros worth of new debt with negative yields.

And there have even been famous cases (also in Europe) in which bank depositors have had to PAY interest, while borrowers were BEING PAID to take out a mortgage.

Capitalism is defined by capital.

How does capitalism function when the cost of capital goes negative?

How does price discovery take place in a market where people (and governments) are literally being paid to borrow money?

I’m asking these questions because I honestly don’t know the answers.

Something is fundamentally broken in the market today.

Stripping capital of its value causes people to do stupid things.

How else could anyone explain that Argentina, a country in perpetual crisis that has defaulted on its debt eight times in the past century, sold billions of dollars worth of 100-year bonds last month to eager investors?

Or that Netflix, a company which consistently burns through billions of dollars of capital, was able to borrow over $1.5 billion at an interest rate of just 3.625%?

Again, this company lost $1.7 billion last year.

Plus they say they’ll lose another $2.5 billion in 2017, and that they don’t see this situation improving anytime soon.

In fact, Netflix’s most recent quarterly report states very plainly, “we expect to be FCF [free cash flow] negative for many years.”

Tesla, another serial value destroyer, is also tapping the debt markets.

That company is raising $1.5 billion to fund production of its low-priced Model 3.

That will bring the total amount of capital Tesla has raised since 2014 to nearly $8 billion.

Of course, Tesla needs to keep raising money because they burn through it so quickly.

Tesla loses $13,000 on every single car that it makes.

And the company has lost $1.6 billion in the past two quarters alone, not including the absurdly expensive Model 3 launch.

Then there’s Uber, a company ‘worth’ nearly $70 billion (and has raised around $14 billion in cash).

Yet the company loses nearly $3 billion every year.

And let’s not forget the mad dash for Bitcoin, which just hit yet another record high… or the even more high-flying market for ‘Initial Coin Offerings’, or ICOs.

ICOs are so white-hot that, earlier this summer, one company raised $153 million through the Ethereum blockchain in just THREE hours.

And of course there’s Ethereum itself, which is up 2,000% so far this year.

Perhaps most telling is that the domain Ethereum.com is available for sale for TEN MILLION DOLLARS.

 

Ironically the domain investing.com sold for just $2.45 million a few years ago.

 

Even Facebook’s fb.com sold for less— $8.5 million.

Now, I’m very much in favor of the crytpofinance movement.

But it’s clear that countless people are throwing money at an asset class that they don’t understand or know anything about.

I wonder how many retail investors who bought Bitcoin at its peak have ever read the original white paper… or have a clue how it works.

Or how many ethereum speculators understand a single line of code from the blockchain’s all-important ‘smart contract’ programming language?

People today are reckless with their money. They’re blindly throwing cash at anything that could produce a return.

This is the type of behavior that takes place when capital loses its value.

History is full of similar examples of capital losing value, including the famous episode of hyperinflation in Weimar Germany.

Hyperinflation hit Germany after the country printed paper money to finance its debt payments after World War I.

The government was printing so much money that they had to commission 130 different printing companies to run around the clock.

In 1914, at the beginning of the Great War, the exchange rate of the German mark to the US dollar was 4.2 to 1.

In 1923, the rate jumped to 4.2 trillion to one. The German mark was essentially worthless.

The currency lost value so rapidly, waiters would have to jump on tables to announce price changes every half hour.

Workers would bring wheelbarrows to work to collect their wages… then immediately leave to spend the money before it lost its value.

The barter system set in, with craftsmen offering their services for food.

Children would make arts and crafts with money, adults would burn the worthless paper to light their stove.

I doubt many people are setting money on fire to heat their homes today.

But they might as well be.

With so many investors throwing their capital into phenomenally pitiful investments that consistently lose money with no end in sight, or bonds which guarantee negative rates of return, the end result is the same... That money is being set on fire.

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LawsofPhysics's picture

Capitalism also requires a respect for capital and consequences for bad management (i.e. you go broke motherfucker and fuck off, NO BAILOUTS).

TheReplacement's picture

Lenin, "The Capitalists will sell us the rope with which we will hang them."

(((The Bankers))),  'We will print the rope with which we will hang the capitalists.'

mtl4's picture

An ideal capitalist system assumes no politics which is what eventually collapses it in the longterm due to corruption and collusion.......getting paid to borrow money is so rediculous only a politician would try and justify why it might be sustainable.

Stuck on Zero's picture

Capital is really cheap for Wall Street. For the rest of us it is very dear.

True Blue's picture

Fiats aren't capital; it is a poor substitute via legislative authority, which invariably causes huge distortions as things of value are traded for something intrinsically valueless.

Herd Redirection Committee's picture

There was no central bank in 'Wealth of Nations'...

shizzledizzle's picture

Who the fuck downvoted you... Ben Bernanke?!

HRClinton's picture

We are witnessing the rebirth of Feudalism - Global Feudalism - where there us one set of laws for the Commoners, the unwashed Masses, and another for the new Aristocrats. 

Look at the Elite of Finance who get bailouts and token fines for crimes, and the Elite of Politics who do not get prosecuted (Clintons et al). They all thumb their noses at "Justice fur all" and "Bad choices have consequences".

Yet WE are supposed to be patient, law abiding and patriotic?  WE are supposed to carry the burden, to pay, to stay the course?

Are you fucking kidding me?  Burn the fucker down!  Time to get out the rope, pitchforks and guillotines, and storm the Bastille that DC has become.  DC, the biblical Harlot of the World. I hope that the Norks EMP us.  We deserve it, if there is any justice in the world. 

opport.knocks's picture

I see you read my book: "From Feudalism to Franchising: The modern history of indentured servitude"

GunnerySgtHartman's picture

Central bank destruction of pricing mechanisms also results in people doing stupid things.

Jballsquared's picture

There are thousands of people who made ten million or more on ethereum in the last six months. That's cheap. Money is being replaced. The CB archaic structure is being replaced. Yes most of the cryptos will die worthless like the Lucents of the bandwidth mania days. But when the smoke clears we will have peer to peer digital currency with far less extortion from the controlllers of the monetary system we are stuck with today. If you understood it and thought it was brilliant, it wouldn't be revolutionary. You're the stupid public who always misses the boat.

TheReplacement's picture

The fact that Bitcoin and Ethereum are on top and not something like Monero pretty much points to a similar conclusion as you make but it is perhaps too late already for anyone to be saved.

Herd Redirection Committee's picture

Buy now or be priced out forever!

LawsofPhysics's picture

Bullshit.  The producers of the world that deliver energy (electricity, food, etc.) are not lining up to accept any sort of digital bullshit. That will not and cannot happen until the herd is significantly trimmed, that's just the MATH and laws of physics behind almost 8 BILLION people competing for the real resources required for a decent standard of living.

Real producers buy real input commodities/chemicals and materials on a MASSIVE scale and must perform real work to deliver their products. NONE of the commodity providers that can deliver the REQUIRED materials on that large a scale are accepting crypto currencies.  ALL fiat will die, including digital horseshit. The FAITH factor is no different you stupid fuck. Especially WHEN THE POWER and/or INTERNET is turned off.

After the herd is sufficiently culled, who the fuck knows, but YES, the central planners would love a SINGLE digital currency.  Remind us, how many crypto currencies are there now and what prevents more from being developed? Something that can be created in infinity will have no value (just like all the bullshit paper fiat).

Tapeworm's picture

 You didn't mention that there are thousands of safecrackers (hackers) that have all of the time needed to figure out a way to crack the code. If not hat, to intervene in the information chain to capture your "money".

 Yes, I do know that the chain is too complex to crack by a central attack. The inflow of commands to your account are monitored by Big Brother. Your reception of information from the blockchain is also recorded.

 Who are you going to call when some entity figures out how to control it? Blah, blah, blah, et cetera.

Fahq Yuhaad's picture

I sometimes wonder-- if I had paid a few 100000 USD for some Shitcoins or Ethereum now residing on my USB stick, to become rich beyond my wildest dreams. Plug it in to make a transaction -- error message.  What then? These things are run by software developers. They can do what they damn well like with your "coins".

https://blog.plan99.net/the-resolution-of-the-bitcoin-experiment-dabb302...

-------------

"Bitcoin development was captured by a bank-funded corporation called Blockstream who literally believe that the more expensive and difficult to transact Bitcoin is, the more valuable it will be (because they apparently think that cost and difficulty of use are the defining characteristics of gold)."

https://www.reddit.com/r/btc/comments/6gek0z/average_bitcoin_transaction...

Herd Redirection Committee's picture

Exactly.  What recourse would an average person have exactly?   A chain is only as strong as its WEAKEST link.  And if that is the password to your email account, what is to stop someone from calling your ISP and having your password reset (there is a Youtube video of this type of 'social engineering').

booboo's picture

Layoff the Crypto Koolaid Jr. the Central Banks are going to stomp anything that threatens their monopoly into a mud hole. There may very well be a crypto currency when the smoke clears but it will have Janet Yellens crypto face on it. Book it... You clowns are zealots hiding out on your mountain top cabin waving guns at the Feds and we all know how this ends. Every crypto currency could go to zero and the productive capacity measured in real labor would amount to three hundred U.S. and that is why they will unflinchingly bury it because you will have lost nothing but hope.

 

Jballsquared's picture

There are around six billion human services that don't even have a bank account. Yes the banks will adopt blockchajn and the rest. But the banks are fucked already, they let the gov run mad with the grandkids checkbook when those hundreds of trillions of digital debts hit the fan it's over for them anyway. Yes your gold will be good then, but so will crypto and that can actually be put to use in a global economy atop a failed financial system. Book it.

Rick Cerone's picture

Las Vegas casino's depend on cryptocurrency gambling these days!

Trump's main contribution to the economy.

LOL!!!!!

_ConanTheLibertarian_'s picture

C-R-Y-P-T-O  B-U-B-B-L-E

thedespised's picture

I-N-V-A-L-I-D A-S-S-E-S-S-M-E-N-T

wisebastard's picture

is this like the sale of Saudi Aramco at the all time highs....

HRH Feant2's picture

Crazy times. None of it makes sense. The prices people are paying for companies that openly admit they are losing money and will continue to lose money over time. ICOs like VERI that are nothing but a reconstituted coin that had previously failed and was revived by none other than Reggie Middleton via Utube and his website hosted by Go Daddy. You can't make this insanity up. If you tried to sell me a book with this crap in it I would laugh and say it "too far fetched to be believable."

Am I the only sane person left? Sometimes it seems that way.

Fahq Yuhaad's picture

Some might even remember Reggie's innumerable posts to short Apple. All you can do is eat the shit sandwich as long as the "best before" date on the shrink wrapper hasn't expired.

sirsmokum's picture

Whats broken? Your carefully crafted hood-wink system that took you decades and more than one destroyed generation to make?

 

Good.

Fah_Q_Fed's picture

wasting your breath...it's all broken

adr's picture

There will be a Crytocoin for everything. Want sex with your wife? buy HumpCoin. Your E-Cig wil need SmokeCoin to work. Just as long ans it runs on the Etheruem network, the Jews who created it will be happy.

People don't realize that the Cryptocoins are a dry run to fund the creation of the One World Currency where the administrators of the network will extract a portion of every purchase worldwide.

You will use your RothCoin and love it.

jlmac's picture

Actually people don't realize they've been living the ultimate scam for over a century with fiat.  It's now like your snuggle pillow.   Lets you pay your mortgate and car payment.   Has you enslaved to debt for your lifetime.   Created out of nothing.    You really can't see any difference between Bitcoin and humpcoin?   

explosivo's picture

You keep using the word "money". I don't think you really understand what this word means. 

adr's picture

You used to be arrested for selling something worthless to people and taking their money. Now you get rewarded with a couple hundred million dollars.

More and more ICOs every day that are supposed to issue tokens that get you something in the future that may never exist. In other words, A COMPLETE SCAM.

People who say you can't fault others for making money are imbeciles. We either live in a world of moral code or we don't. If you think scamming people for money is OK, then I think shooting someone I don't like is perfectly acceptable. The asshole scam artist panhandler, I should be allowed to run him down with my car. If there are no ethics to guide society, then everything must be acceptable.

You want the wild west of cryptos where anyone can sell you a coin with no rules, then you should accept the guy who robs you blind when he says there are no rules.

Fahq Yuhaad's picture

But my thumb drive has tripled in value in the last month! I will be rich beyond my wildest dreams!

mofinance's picture

Your either angry because you lost half of your portfolio to a crypto currency or your just kicking yourself because you did not get in Bitcoin earlier, either way. Crypto currencies have value. It's like the stock market there are pump and dumps everyday. Do your research and choose your alt coins wisely. 

rf80412's picture

Speculative investing, and specifically putting yourself in position to rent seek off of future growth.  Debt is an asset to lenders, so if they have to pay you to borrow, it's money well spent.

cryptoe's picture

Gold investors who are bashing crypto are going to have a revelation in 8-12 weeks when physically backed gold crypto tokens start coming online.

Twee Surgeon's picture

Wait till they see my Tulip Bulbs for Crypto deal !

jlmac's picture

Wait to they see the end game of fiat and rejoice!

Dickweed Wang's picture

Physically backed PM crypto's (outside of those set up by a country) are completely unworkable until there is some kind of world-wide infrastructure in place to allow the conversion from gold to crypto form and back easily.  Until someone comes up with a way for the man on the street to take gold in for a certain number of crypto tokens, or visa versa, it just won't work.  This has to be done in person - shipping or mailing your PM's to some place to be converted into tokens is completely unrealistic.  PM backed cryptos set up by some company somewhere are nothing like the decentralized cryptos such as Bitcoin and are ripe for fraud and other abuse.

TradingTroll's picture

Physically backed???

You might as well say the gold backing the crypto is in a trust run by James Comey and Hillary Clinton

larrythelogger's picture

Where can I actually USE a Bitcoin to purchase something I need? The ZH list of companies that accept Bitcoin is obsolete. Some of those on the list, like Rakuten, Braintree, no longer accept Bitcoin. I get it that some kind of "trusted" currency needs to replace the fiats like USD, Euro, Yuan, etc but I can't go to my local farmer's market, my tractor dealer, the local grocery store and pay with Bitcoin and I need stuff like gas for my car right now, not some day when Bitcoin is accepted by everyone. If it's useful for international contracts, overseas payments on employee type peer to peer things, that's great; be warm and be fed but they're not practical as a currency now for me.

I hear some predict Bitcoin will go to 10K in Feb, 2018. Since I won't be investing in it, it will definitely go that high but I still don't understand why it has such a high value nor why it will go to 10Kby Feb, 2018.

Tapeworm's picture

They are a heck of vehicle for speculation.   PM is  not freely exchangeable but it  can be done. It is quoted on any computer or telephone. It has crude advantages because it's untraceable excepting changing for scrip. It is unaffected by hackers or EMP.

You can use a big spoon to hammer yourself a ring if it comes to that. Before that situation, crypto's will be long erased.

Rick Cerone's picture

Trump's economic policy is based on USDT/BTC.

Disgruntled Goat's picture

And all of Hillary's policies are based on LGBT/BLM

Rick Cerone's picture

Save your duality for morons.

HRClinton's picture

At least there are "old fashioned" things like Price Discovery, Consequences, and decentralized Free Markets with crypto - for now. 

If you can't handle that, then you best stick with the constant IV drip under the Status Quo. 

Pick one and live with it.

Herd Redirection Committee's picture

ZH just had an article a few days ago, detailing HUGE spoofing of BTC orders on Bitfinex.