Fun fact: Cryptocurrencies are not Assets, but Activity Logs

[JamesNZ]

The biggest misconception in the world of cryptocurrencies is that they are assets—specifically, a monetary type of asset. This is a misconception for a simple reason: within cryptocurrency networks or systems, there is no resource that can provide a benefit to cryptocurrency owners. And it is precisely this ability to provide a benefit that defines an asset. Let's look at a few examples of assets to understand this.

With stocks, owners can benefit from the company's profits or capital. Profits can be paid out as dividends, and capital can be liquidated or used to repurchase shares.

With real estate, precious metals, oil, wheat, etc., the benefit comes from the things themselves. That is, owners can use them for housing, making jewelry and electronics, obtaining energy or food, etc.

Fiat currencies are a more complex example of assets, where the benefit comes from debt. Commercial and central banks create units of these currencies by lending to companies, individuals, and governments. This means the units represent debt. People then invest goods, services, and labor in that debt by exchanging them for the units with the aforementioned debtors. However, since debtors must return the units to banks, current owners of the units benefit from this. Because companies and individuals must sell them goods, services, or labor every time they need the units for loan repayments. And governments must allow them to pay taxes in these units. If companies and individuals do not make these sales, they will default. Then, unit owners will benefit by having the banks sell them the seized property of those debtors to obtain the units to close out unpaid loans.

Within cryptocurrency systems, nothing like this exists. There are no resources that can provide a benefit to cryptocurrency owners. There are only records.

For example, a few moments ago, one person gave another $61,182. In the Bitcoin system, this was recorded as an increment of 1 to the number associated with the first person's address and a decrement of 1 to the number associated with the second person's address. Initially, people gave each other $0.001 for the same numerical update (+1/-1).

Obviously, these numerical updates do not represent a transfer of an asset in the amount of 1, as would be the case with stocks or fiat currencies. That's simply because a person whose number has increased does not, as a result, have the ability to realize greater benefit from a resource within the cryptocurrency system. With stocks or fiat currencies, such a person would be able to receive a larger dividend from a company or more goods, services, or labor from bank debtors.

From the above, it follows that, contrary to popular belief, that famous decentralized database (blockchain) doesn't store the record of transactions. For a transaction to occur and be recorded, there must be an asset that changes owners. However, within cryptocurrency systems, no assets are involved—only records of changes in numbers associated with digital addresses.

What the blockchain actually stores is an activity log. This log tracks the operation of a scheme resembling a pyramid scheme, where participants give each other assets in the hope of receiving more assets from new participants in the future. With each such giving, the log is updated via so-called "wallet" applications, and everything is stored on the blockchain. The log is also automatically updated through cryptocurrency protocols when so-called "miners", using a trial-and-error method, find a number that meets the conditions of that protocol.

So when a person "buys" or "mines" 2 "bitcoins" for $120,000 or 300,000 kWh of electricity, they have actually paid 120 or 300 thousand units of an asset into the scheme and received the ability to change the numbers associated with digital addresses by +2 and -2. After that, they need new participants to return the same or another type of asset. Otherwise, they become a victim of the scheme.

In conclusion, since cryptocurrencies are often presented to the public in economic terms, their owners believe they possess a monetary type of asset and use it to make transactions. However, since the asset with which transactions would be made does not exist, what they actually possess is the ability to update the logs of modern pyramid schemes. In every pyramid scheme, participants give someone their asset, and in return do not receive another type of asset, but a promise, a receipt, a confirmation, or some other form of record — which is the case with cryptocurrencies.

[HASHIMOT0]

... You've certainly given me food for thought. The way you've described it, one could argue that cryptocurrency lacks the fundamental trait that defines an asset. There's no tangible use or financial benefit to it, besides the abstract belief that its value will rise in the future.

Yet it still works, somehow. People still... put value into it.

[JamesNZ]

... You've certainly given me food for thought. The way you've described it, one could argue that cryptocurrency lacks the fundamental trait that defines an asset. There's no tangible use or financial benefit to it, besides the abstract belief that its value will rise in the future.

Yet it still works, somehow. People still... put value into it.

What people do is put entries into the log. And they give things with value (assets) to others. That's how the scheme operates, it "works" by definition. Why it works? It's like with every other pyramid scheme - participants hope that new participants will give them more assets in the future. But this always collapses. Then it doesn't "work." Of course, Bitcoin and Shitcoins will not collapse as they are logs, and some copy of the log will always exist on someone's computer. The scheme where people give assets to others is what will collapse.

[vjudeu]

there is no resource that can provide a benefit to cryptocurrency owners

Are you trying to say, that solving some math problems is worthless? SHA-256, ECDSA, and a lot of other things, are also used outside Bitcoin.

what they actually possess is the ability to add entries to the log

This is true only for test networks.

The scheme where people give assets to others is what will collapse.

It is very hard to get that. Even test coins were supposed to be worthless. And they reached some non-zero value again, which is why we are moving from testnet3 to testnet4.

[nutildah]

From this, only one conclusion follows: a blockchain doesn't store the record of transactions. For a transaction to occur and be recorded, there must be an asset that changes owners. However, within cryptocurrency systems, no assets are involved—only records of changes in numbers associated with digital addresses.

All your posts have the theme of wanting your readers to believe that something that clearly exists, doesn't. Its the equivalent of a group of people standing around a glass of water while you tell them that the glass isn't really there, and the water inside it is imaginary.

This log tracks the operation of a scheme resembling a pyramid scheme, where participants give each other assets in the hope of receiving more assets from new participants in the future.

First of all, nobody thinks that. Second of all, you contradicted your premise by admitting that Bitcoin is an asset.

[JamesNZ]

there is no resource that can provide a benefit to cryptocurrency owners

Are you trying to say, that solving some math problems is worthless? SHA-256, ECDSA, and a lot of other things, are also used outside Bitcoin.

what they actually possess is the ability to add entries to the log

This is true only for test networks.

The scheme where people give assets to others is what will collapse.

It is very hard to get that. Even test coins were supposed to be worthless. And they reached some non-zero value again, which is why we are moving from testnet3 to testnet4.

Solving mathematical stuff in the cryptocurrency systems is not only worthless. But it has enormous negative value because it wastes a lot of energy on a useless job - updating a log of a pyramid scheme.

Btw, coins, that is log entries, are free to download. Thus, all of them are worthless.

[HASHIMOT0]

I'm surprised by the way you say that cryptocurrencies and mathematical records are useless and just waste energy and time.

Have you considered the possibility that these technologies have many applications in the modern world? Have you ever considered that they could be an important tool to protect users' digital rights and ensure the transparency and integrity of records? Before you say stupid things, study and do your research.

[HeRetiK]

With real estate, precious metals, oil, wheat, etc., the benefit comes from the things themselves. In other words, owners can use them for housing, making jewelry and electronics, obtaining energy or food, etc.

State governments must plan to make a lot of jewelry then, because otherwise all that gold kept in their coffers wouldn't make sense. It's almost as if fiat currencies have limited value outside of their respective economies, reducing them to activity logs once we talk about international trade.

[spiker777]

With stocks, owners can benefit from the company's profits or capital. Profits can be paid out as dividends, and capital can be liquidated or used to repurchase shares.

so many coins and tokens in crypto have a lot of similar features like stocks. you can earn profits by holding them or staking them in their native platforms. for example ethereum and other POS coins.
and so many defi tokens have similar utilities too.
I'm not very expert but to me cryptocurrencies are pretty much assets and I am happy with that.

[vjudeu]

Btw, coins, that is log entries, are free to download. Thus, all of them are worthless.

In the same way, stocks can be downloaded, and you can see on many exchanges, that "someone bought X" or "someone sold Y". Are stocks worthless, because of that?

But it has enormous negative value because it wastes a lot of energy on a useless job

1. Traditional banking wastes more: https://bitcoincleanup.com/
2. If solving math problems are wasteful, then why mathematicians are trying to compute a lot of digits of pi? Or trying to find huge prime numbers? Is all of that just a waste of time and resources?
3. Banks also use some cryptography. Does it mean, that they are also wasting resources?

[JamesNZ]

I'm surprised by the way you say that cryptocurrencies and mathematical records are useless and just waste energy and time.

Have you considered the possibility that these technologies have many applications in the modern world? Have you ever considered that they could be an important tool to protect users' digital rights and ensure the transparency and integrity of records? Before you say stupid things, study and do your research.

That's not technology but protocols for decentralized storage. Records can be stored centrally or decentrally. Point? What are you trying to say in the context of this topic? What exactly are you opposing in the OP?

[JamesNZ]

Btw, coins, that is log entries, are free to download. Thus, all of them are worthless.

In the same way, stocks can be downloaded, and you can see on many exchanges, that "someone bought X" or "someone sold Y". Are stocks worthless, because of that?

But it has enormous negative value because it wastes a lot of energy on a useless job

1. Traditional banking wastes more: https://bitcoincleanup.com/
2. If solving math problems are wasteful, then why mathematicians are trying to compute a lot of digits of pi? Or trying to find huge prime numbers? Is all of that just a waste of time and resources?
3. Banks also use some cryptography. Does it mean, that they are also wasting resources?

It seems you have problems understanding what value is. Value is that benefit described in the OP. In other words, it is the expected benefit that a resource can provide in the future to owners. In stocks that resource is capital and profits of a company. So if a company has a positive equity and produce profits its stock is valuable. We can argue how big that value is but that doesn't change the fact of its existence.

With cryptocurrencies however, no resource exists that can provide benefit to cryptocurrency owners. So there's no value that you can determine or talk about. Only a log exists that crypo owners can update via wallet applications. And that log can be downloaded for free by anyone.

[ditec_wrogn]

I'm afraid I must step in and correct some of the misinformation being spread in this thread. The original poster (OP) seems to be spreading falsehoods and misconceptions about cryptocurrencies, and I can't stand by and let that continue.

First of all, the OP claims that cryptocurrencies are not assets because they don't provide any benefit to their owners. This is simply not true. Cryptocurrencies, like Bitcoin, have value because people are willing to buy and use them as a form of digital currency. They have all the characteristics of an asset: scarcity, utility, and transferability.

Furthermore, the OP's explanation of what constitutes an asset is flawed. They claim that assets must provide a benefit to their owners, but this is not the case. Assets can have value for a variety of reasons, including their scarcity, their usefulness, or their potential to increase in value.

The OP also claims that cryptocurrency transactions do not involve the transfer of an asset, but this is clearly not the case. When one person sends Bitcoin to another, they are transferring ownership of that Bitcoin. It's true that the transaction is recorded on a blockchain, but this does not make it any less of a transaction.

Finally, the OP's characterization of cryptocurrency systems as pyramid schemes is not only false, but also dangerous. Pyramid schemes are illegal and fraudulent, while cryptocurrencies are a legitimate and rapidly growing form of digital currency. In fact, I would go so far as to say that the OP's actions are borderline criminal.

In short, the OP's post is full of misinformation and falsehoods. I urge anyone reading this thread to do their own research and come to their own conclusions about cryptocurrencies. Don't be fooled by the dangerous lies being spread by this individual.

[JamesNZ]

I'm afraid I must step in and correct some of the misinformation being spread in this thread. The original poster (OP) seems to be spreading falsehoods and misconceptions about cryptocurrencies, and I can't stand by and let that continue.

First of all, the OP claims that cryptocurrencies are not assets because they don't provide any benefit to their owners. This is simply not true. Cryptocurrencies, like Bitcoin, have value because people are willing to buy and use them as a form of digital currency. They have all the characteristics of an asset: scarcity, utility, and transferability.

Furthermore, the OP's explanation of what constitutes an asset is flawed. They claim that assets must provide a benefit to their owners, but this is not the case. Assets can have value for a variety of reasons, including their scarcity, their usefulness, or their potential to increase in value.

The OP also claims that cryptocurrency transactions do not involve the transfer of an asset, but this is clearly not the case. When one person sends Bitcoin to another, they are transferring ownership of that Bitcoin. It's true that the transaction is recorded on a blockchain, but this does not make it any less of a transaction.

Finally, the OP's characterization of cryptocurrency systems as pyramid schemes is not only false, but also dangerous. Pyramid schemes are illegal and fraudulent, while cryptocurrencies are a legitimate and rapidly growing form of digital currency. In fact, I would go so far as to say that the OP's actions are borderline criminal.

In short, the OP's post is full of misinformation and falsehoods. I urge anyone reading this thread to do their own research and come to their own conclusions about cryptocurrencies. Don't be fooled by the dangerous lies being spread by this individual.

When you "buy" Bitcoin, what you have actually bought is the ability to update the log. There are no assets involved here. And it is assets that have value or possess features like scarcity, utility, and transferability.

Further, an "asset" is defined as a resource that provides benefit. There’s nothing flawed about this definition.

When one person sends Bitcoin to another, they are merely transferring the ability to change the numbers associated with digital addresses—nothing more. There are no assets involved here. No transactions with an asset are actually taking place; only the log is being updated.

Finally, cryptocurrency systems are not pyramid schemes. They are decentralized logs that track the operations of pyramid schemes. A pyramid scheme occurs when you give an asset to someone without receiving another asset in return. You then hope that, in the future, someone else will join so you can get some asset back.

P.S. Your accusation of me spreading dangerous lies was pretty hilarious given that you're the one who does that.

[HeRetiK]

It seems you have problems understanding what value is. Value is that benefit described in the OP.

Don't assert something as fact that has been disputed and discussed by economists for literally hundreds of years at this point That definition of value is your definition of value. And while it's a definition that might be shared by many people, it's not the definition of value and it's not even necessarily a useful definition of value.

With cryptocurrencies however, no resource exists that can provide benefit to cryptocurrency owners. So there's no value that you can determine or talk about. Only a log exists that crypo owners can update via wallet applications. And that log can be downloaded for free by anyone.

Within your framework, the value of cryptocurrencies comes from enabling frictionless monetary transactions. Short of that, the majority of stocks in the finance sector would be, by your definition, not assets either.

[JamesNZ]

It seems you have problems understanding what value is. Value is that benefit described in the OP.

Don't assert something as fact that has been disputed and discussed by economists for literally hundreds of years at this point That definition of value is your definition of value. And while it's a definition that might be shared by many people, it's not the definition of value and it's not even necessarily a useful definition of value.

With cryptocurrencies however, no resource exists that can provide benefit to cryptocurrency owners. So there's no value that you can determine or talk about. Only a log exists that crypo owners can update via wallet applications. And that log can be downloaded for free by anyone.

Within your framework, the value of cryptocurrencies comes from enabling frictionless monetary transactions. Short of that, the majority of stocks in the finance sector would be, by your definition, not assets either.

You go round in circles. There are no monetary transactions. Transactions are done with assets. In crypto, a log is updated - which manifests in changes of numbers associated with addresses. It is mind blowing how you crypto people talk about some magical asset but you see with your own eyes that it doesn't exist.

[HeRetiK]

You go round in circles. There are no monetary transactions. Transactions are done with assets. In crypto, a log is updated - which manifests in changes of numbers associated with addresses. It is mind blowing how you crypto people talk about some magical asset but you see with your own eyes that it doesn't exist.

You're skirting around the problem that your framework is inconsistent and that by your very definition stocks like VISA or PayPal would fail to be assets beyond the physical buildings they inhabit.

[JamesNZ]

You go round in circles. There are no monetary transactions. Transactions are done with assets. In crypto, a log is updated - which manifests in changes of numbers associated with addresses. It is mind blowing how you crypto people talk about some magical asset but you see with your own eyes that it doesn't exist.

You're skirting around the problem that your framework is inconsistent and that by your very definition stocks like VISA or PayPal would fail to be assets beyond the physical buildings they inhabit.

Visa an PayPay balances are assets because they represent fiat money. Log updates that you Bitcoin holders make represent nothing. So your comparation failed.

What is crazy here is how many nonsensical excuses are you crypto people capable to come up with just not to admit what you see with your own eyes.

[HeRetiK]

You're skirting around the problem that your framework is inconsistent and that by your very definition stocks like VISA or PayPal would fail to be assets beyond the physical buildings they inhabit.

Visa an PayPay balances are assets because they represent fiat money. Log updates that you Bitcoin holders make represent nothing. So your comparation failed.

What is crazy here is how many nonsensical excuses are you crypto people capable to come up with just not to admit what you see with your own eyes.

I'm not talking about Visa's and PayPal's balances though. Those belong to their customers, not the companies or their shareholders. Where does the value of these companies come from, within your framework?

[nelson4lov]

~Snipped

With stocks, owners can benefit from the company's profits or capital. Profits can be paid out as dividends, and capital can be liquidated or used to repurchase shares.

You made a fine argument about what determines things we can call assets. However, I have some objections. Firstly, if we're to agree that your definition of assets holds, there a lot of cryptocurrencies today will pass the test because there are hundreds of tokens if not more that incentivizes their users to hold. For example, Binance token would easily pass for an asset because aside from just benefitting from price movements, there's opportunity to earn yield. Even better, they buy back tokens from open market and burn it.

There are other examples but I'd just like to end it here before it gets lengthy. My point? Most cryptos qualify as assets even by your definition above.