President-elect Trump launched his own cryptocurrency overnight and swiftly appeared to make more than $25 billion on paper for himself and his companies.
Why it matters: The stunning launch of $TRUMP caught the entire industry off-guard, and speaks to both his personal influence and the ascendancy of cryptocurrency in his administration.
- It also speaks to the nature of the crypto industry that someone could have $25 billion worth of something that literally did not exist 24 hours previously.
That’s not how markets work…
it’s how crypto markets do. Since anonymity is a feature, any transactions will increase its value due to it being “used” more
No, because that would be an infinite money glitch, everyone would be rich… (that uses crypto).
It’s actually very simple basic market-economics, and independently of anonymity, you buy, you’ll drive the price up, you’ll sell, you’ll drive the price down. It’s slightly more complicated, because it involves makers (they set the price at which to sell or buy) and takers (which take the offer by the maker) and psychology (e.g. promotion on youtube to drive the price up) and obviously increasingly algorithms. But in general it’s still demand and supply, anonymity doesn’t have anything to do here apart from being more prone to scams. Take Monero as example one of the most anonym cryptos but still fairly stable (in crypto terms).
So to drive the price up, you either have to have some kind of good promotion (which at the end is just money from someone else), or a lot of money yourself.
the value of a cryptocurrency is based on its perceived value. Perceived value is based on market activity. If I keep sending money to myself it just shows up as market activity, with nobody being able to tell i sent money to myself.
gdp works this way too btw. I sell you $1 worth of stuff, you sell me $1 of stuff, nobody is any richer but gdp went up by $2. Except we can filter this kind of abuse out because it’s not anonymous.
But GDP is not the price of an asset, it’s a metric to measure the economic activity.
Is it really that hard to understand? The price is dictated by markets… Like with stock and other speculative assets. It’s a little bit wilder, possibly due to anonymity and wild promotion on various platforms (like youtube) etc. But in it’s essence it’s still a market…
the price of an asset (when the asset is the currency itself) is based on its economic activity. You said so yourself. The price is dictated by markets. By how much is bought and sold on markets. That is the definition of economic activity. Which part of that do you not understand?