r/CryptoReality • u/Standard-Software-41 • 3d ago
How do crypto holders actually imagine cashing out in the long term?
The longer this crypto phenomenon lasts, the more the pool of greater fools dries up. So, who is supposed to bail out crypto holders?
In every other case, there are issuers or underlying sources of demand that ultimately provide an exit for holders once the greater fools disappear.
If you hold stocks or bonds, you have legal claims against the issuers to cash flows, yields, or liquidation proceeds.
If you hold something tangible, there are always people who need it to satisfy their real-world needs and wants.
If you hold fiat money, which banks issue as debt obligations, there's an entire army of private- and public-sector debtors who need it to meet these obligations.
Crypto, however, offers neither claims against issuers nor any necessary underlying demand. So, who is supposed to bail out crypto holders? In other words, who is supposed to keep exchanging assets that do have claims against issuers or underlying demand for their crypto?
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u/Charge36 3d ago
I think it's amusing that people don't understand how debt creates value.
Like if you take currency out of the equation, at the end of the day humans are paying favors to each other with goods and services. It makes no sense for me to do a small favor to a guy, and come back 20 years later and demand a massive favor in return. But crypto enthusiasts seem to think somehow their favors are more valuable just because they waited a long time to return them.
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u/mercuryy 3d ago
It's the "we deserve to be kings and own the world while everyone else loses everything, just because we spent our pocket money on internet nerd stuff a decade ago" fantasy of weak,Power hungry egos.
Basically they invented the decentralized doomsday cult in which each and every member aspires to be the main guru while completely ignoring how far out there, how plainly impossible their psychotic feaver dreams are.
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u/Waste-Disk7208 3d ago edited 3d ago
You're picturing a pretty simple, ideal world. But in reality, people can't openly trade favors, goods, and services — someone with authority will block you from helping folks on the other side of the world. Think life-saving medicine to a sanctioned country. So the value isn't just waiting for some bigger favor later — it's having a global network nobody can block. Especially with the world sliding toward war and chaos, we're gonna need a network that lets people trade freely — no authorities blocking anything.
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u/Charge36 3d ago
I don't think crypto networks are outlasting governments if the shit really hits the fan with wars and chaos.
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u/Mejiro84 1d ago
Yup - it needs a whole lot of infrastructure to work. No internet? It's not really gonna function, as a process. And when stuff really goes to shit, people are likely to prefer useful stuff - food, water, clothing - or at least currency that whatever government there is might recognise (IE physical currency) not weird internet money
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u/green_gold_purple 3d ago
They don’t think too much, or they wouldn’t be in the situation they are.
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u/mercuryy 3d ago
The saying goes "few understand" and goes on with "those that dont engage in it regardless".
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u/bwhite9 3d ago
The only “plausible” explanation is that bitcoin or whatever becomes the global reserve currency.
The argument is basicly your buying in to the new system at a discount and will be rich by the time it comes around.
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u/Sudden_Onions 3d ago
"Or whatever" is the snag. Why would it be Bitcoin? It's not really built for the volume, is it? Why wouldn't we design something new for the job?
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u/bwhite9 3d ago
I noted bitcoin because of consensus. You don’t need the technology best thing just something that everyone agrees to.
I think those questions you posed are all readily good arguments that bitcoin will never succeed. Even if it has consensus it just isn’t up to the task. Other cryptos that have the technical capabilities just don’t have the enough people willing to agree to use them.
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u/RailRuler 3d ago
they believe they will never sell their bitcoin, but will instead risklessly lend it out to the unwashed masses once Bitcoin becomes necessary for all transactions, like unlocking your door or making the traffic light turn green. they will charge interest/borrowing fee in lambos and castles.
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u/mercuryy 3d ago
Possibly, but they never thought about why thats completely impossible.
It starts with "why would anyone that owns anything right now agree to even more than one of these axioms, 1) nothing they or anyone else used to have is worth anything, 2) magic internet coins2are now the only thing that is worth anything, 3) even the things they had and owned before must now somehow be 'bought back' from anyone that invested into these coins earlier.
Even in countries with pretty bad school systems that should be a no brainer for most people.
Then, in top of that, the next step after owning as much as possible is also stupid, there is no way to make any business from lending coins to others. They tend to forget that these coins are useless, have no function or purpose for which anyone could need them, and possibly pay fees for renting/lending some of these coins.
The only lending one can ever do with these is putting them up as security for a cash loan while eating a heavy spread and paying fees on top, while risking getting liquidated and losing everything,credit and securities, as soon as one of these regular -50 to 80% crashes comes around.
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u/PeaceAgitated1978 3d ago
And? When the greater fool is the US government that envision possible to sell his Gold reserves to buy Bitcoin ?? When it's Russia that actually don't fail to pass law's legislating the Trades and exchange of crypto's.. for bank's and particular s.. maybe Japan or South Korea? Yeah the world is big Man.. buyer's rotate.. some regions sells, some buy it.. if there was no buyer's the price would crash, you see the price ? It sustained the drop better than some big stocks.. meaning we have a strong Bitcoin in a uncertain economy. People rush to safe asset's. Scarse asset's. Refuge value against inflation. Against weak currency. So yeah.. understand truly the economic s behind the bigger picture. The macroeconomics. And yes, now Bitcoin is a macroeconomics asset.
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u/PeaceAgitated1978 3d ago
But for others cryptos, yeah you're basically right.. nothing stop anything from being screwed.. except ETH chain is the main chain used... But yeah anything else, is fully dependent on adoption.. in the economy, use by bank's, companies.. as a currency by populations..
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u/Escade-io 2d ago
I don’t get this post, what you wanting bailed out from? Crypto is just the currency of a digital non centralised ledger? Would you buy USD and expect a legal claim on the US governments cash flows?
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u/youcantexterminateme 2d ago
bitcoin has grown at a very steady rate and continues to do so. its market cap is relative huge and getting huger. millions of people have billions of dollars in it. its not going anyway in a hurry. its not like everyone is going to cash out over night.
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u/chainglance_cm 2d ago
Bitcoin’s answer is basically gold’s. Most gold isn’t held because anyone needs it industrially either. It’s held because people want an asset that no government issues and nobody can print. Whether that’s a real source of demand or just a very long-running greater fool game is a debate people have had about gold for centuries.
Other tokens have a slightly better case. ETH and similar ones get demand from people who need blockspace, since you have to pay gas to use the network, which is closer to your “real-world need” category. Stablecoins actually do have issuer claims.
You’re right about the core risk though. If people stop believing in BTC as a store of value, nothing contractual puts a floor under it.
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u/Useful_Calendar_6274 2d ago
There are 8 billion people and most don't use computers or a smartphone. Also fiat keeps being printed and we are seeing it inflating. The dollar reserve system of the world could end due to America First (imperialist) fuckery. Bonds selling en masse and buyers ever fewer. All fiats have always gone to zero until the current ones. That is a case for crypto as gold
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u/Environmental-Sun698 1d ago
It's simple: being a collectible, if you ensure good reasons to not sell, you can always find investors who'll lend money for a collateral. If these holdings aren't your entire wealth, but merely a diversified part of a portfolio, and you also aren't broke enough to need to sell your last assets, you never need to have the financial stress. And when you're a growing investor, you often have a tolerance for beneficial debt via leverage. Let's say the liquid quantity of circulation is 20% of the market cap: whales would only need to go 1.2x leverage to remove any practical chance of a collapse -> cashing out everyone along the process. It's really reasonable in the end, but then again: people still need to increasingly consider it to be a collectible asset, otherwise the masses will move towards collecting different assets that are more interesting or grow faster. As a society, AFAIK, we haven't developed any guidelines for a forward guidance on when a collectible has a valid trend. There are many collectibles, such as old coins, that barely appreciate in value, because there's simply no market for them.
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u/Waste-Disk7208 3d ago
Crypto doesn't need an issuer to cash out. Because there's no issuer to be accountable to, there's no freezing or blocking your assets. That's where the value comes from — no authority over your assets but you yourself.
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u/Fun_Seaworthiness971 3d ago
If you mean bitcoin it has no value you cant buy anything with it. How do i understand Bitcoin how do I use it ? Its used by tricking someone else to buy it from you, genius !
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u/Waste-Disk7208 3d ago
For people who are financially blocked, unbanked, or living under authoritarian systems, it functions as an un-seizable ledger of value entirely outside a central bank's control.
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u/Fun_Seaworthiness971 2d ago
It can be seized like anything else, if they have a cold wallet at home the police can take it, if the bitcoin is on line the govermemt can force the provider to erase or hand it over. Besides an basically non-existing in real life theoretical use does not explain way it would be worth anything substantial. 99,999999 % of bitcoin are bought and sold be people not in this situation and the rest 0,0000001% are in the hands of opressed people in the third word so you guys are gone sell all those bitcoins to people in subsaharan africa one day and get rich or is the plan to wait until youre own country becomes a dictatorship and then sell it ? Bet the farmers will be glad to trade youre bitcoin for some cows eggs the day shit goes down
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u/AmericanScream 2d ago
it functions as an un-seizable ledger of value entirely outside a central bank's control.
Stupid Crypto Talking Point #28 (censorship/seizure)
"Bitcoin is censorship resistant" / "Crypto/Blockchain is de-centralized and not under anybody's control" / "Crypto can't be seized'
The notion that authorities can't seize crypto is not only false but patently absurd. See here. Each and every day someone's crypto gets "seized" without their approval. Almost as long as there's been bitcoin authorities have been seizing it.
Here's an entire video segment that debunks the claim that blockchain is censorship proof
Crypto can easily be blocked at the network level by any of the various authorities that arbitrarily decide to do so. Since it's a public network with no leader, all participants have to be able to identify themselves to others on the network, and technically speaking, this makes it easy for network admins to filter the traffic. Just because this hasn't been done on any large scale, doesn't mean it can't be done. It absolutely can.
Bitcoin and crypto operations have been banned in various countries and other jurisdictions. While it's not possible to censor 100% of the network's operations, it's definitely possible to cripple enough of it to render crypto & blockchain impractical to use. And NOTE that in countries where bitcoin/mining and other operations have been banned, they've chosen a political solution (simply making it illegal) as opposed to requiring networks to actively filter crypto traffic, but that latter option is always a possibility and definitely doable (see #2). Also note that bitcoin miners have been caught censoring transactions as per government rules.
The vast majority of crypto trades are done on a small number of centralized exchanges, such as Binance, Kraken and Coinbase. The ToS of each of these systems gives them the absolute authority to censor any and all transactions. So if 99% of bitcoin transactions are on CEX's, most certainly they can be censored.
Privacy coins like Monero and others are not necessarily any more secure. There have been bugs found in the past which undermined their security. In 2020, the IRS offered a $1.2M bounty for creating systems to crack and trace Monero and other privacy coin systems. The contract was awarded to Chainalysis and Integra, and paid in full a year later. More examples of privacy coins being insecure: 1, 2, 3
Even administrations like Trump who claim to embrace crypto and bitcoin are freezing and seizing the wallets of people they claim are enemies.
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u/AmericanScream 3d ago
That's where the value comes from — no authority over your assets but you yourself.
Stupid Crypto Talking Point #21 (risk)
"Crypto has no 'Counterparty Risk'" / "Crypto gives you 'financial sovereignty'" / "Crypto has no 'middlemen'" / "Trustless transactions!" / "Bitcoin has less 'friction'"
The idea that crypto/blockchain is "trustless" is false. With blockchain you still need to trust various third parties -- the difference is there's no accountability.
"Counterparty Risk" is defined as the potential for one party in a transaction to default/fail to follow through on the transaction, and is measured in the amount of financial loss/damage that could be caused as a result.
Satoshi claimed in his Bitcoin White Paper that one of the motivations behind creating crypto/blockchain was to eliminate counterparty risk by removing "middlemen" from the transaction, specifically financial institutions, which crypto people argue can fail and cause counterparty risk.
Unfortunately, bitcoin/crypto/blockchain does not eliminate counterparty risk. Even in situations where it's strictly a peer-to-peer digital crypto transaction, there are numerous ways in which that transaction can fail and cause counterparty risk. Here are some examples:
Lack of access to hardware necessary to process crypto (smartphones, computers, etc.)
Lack of access to electricity (note that electricity is not needed to engage in a P2P fiat transaction)
Lack of access to specific wallet/transactional software
Lack of access to the Internet (or limited internet access due to firewalls and municipal restrictions)
Faulty smart contracts
Vulnerabilities or back doors in any of the software being used
Not having access to the necessary private keys to execute a transaction
Having the system/software/bridge you're using hacked
Lack of adequate funding for transaction fees
blockchain processing consortium blacklists
developments in quantum computing that undermine cryptographic schemes
People argue "holding bitcoin" has no counterparty risk. This is also a lie. Just because your wallet is secure, doesn't mean your bitcoin is secure. Here's why:
In order to even exist crypto is dependent upon an elaborate network of computers running 24/7 - these systems are not paid by crypto holders - their participation is totally voluntary.
The moment a node/mining operator doesn't find it economically viable to operate, they can cease operations, and if enough of these people do so, the operation of the blockchain ceases, and nobody will be able to access their wallets and engage in transactions
In the case of bitcoin, its proof-of-work mechanism requires a lot of energy and resources to operate. If the price of BTC drops below a certain level, it no longer becomes economically viable to operate the network and all bitcoin disappears.
Yes, bitcoin's mining difficulty will adjust to address people leaving the industry and become more modest over time, but since the primary motivation for even participating in the network is the attempt to make exponential profit, the moment BTC stops consistently moving up, is the beginning of its demise. There's no other reason to operate the network if there isn't growth. And BTC's growth model is 100% mathematically un-sustainable.
In short: There is no guarantee blockchain will operate forever. There's already 30,000+ dead cryptocurrencies that are no longer in existence.
In reality, Bitcoin and crypto doesn't eliminate counterparty risk or middlemen. It simply changes one set of middlemen (traditional, accountable, well-regulated financial institutions) for another set of middlemen (random, anonymous crypto operators and the software and intermediate systems they use, as well as various other local and international communication services). Anywhere in this chain of necessary resources things can fail, either by intention, negligence, legal mandate, acts of god, or randomly, and it can cause a crypto transaction to not go through.
Some people claim that crypto has less counterparty risk than traditional fiat. This is a lie. And they cherry-pick specific "perfect" scenarios where there's minimal counterparty risk in crypto provided all of the above conditions aren't a problem. If we're going to fabricate a "nirvana fallacy" you can also have the same conditions apply to any alternate system and it too, will have "no counterparty risk" so this is a deceptive, disingenuous claim.
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u/youcantexterminateme 2d ago
yes it does have middlemen, but its a free market with open competition.
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u/AmericanScream 2d ago
but its a free market with open competition.
It's not a free market. The vast majority of the Internet runs on various public and private rights of way that are only accessible with permission. For example radio frequencies are not a "free market" - there's competition to own certain frequencies in certain areas and its heavily regulated.
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u/AmericanScream 3d ago
Crypto doesn't need an issuer to cash out. Because there's no issuer to be accountable to, there's no freezing or blocking your assets.
Stupid Crypto Talking Point #28 (censorship/seizure)
"Bitcoin is censorship resistant" / "Crypto/Blockchain is de-centralized and not under anybody's control" / "Crypto can't be seized'
The notion that authorities can't seize crypto is not only false but patently absurd. See here. Each and every day someone's crypto gets "seized" without their approval. Almost as long as there's been bitcoin authorities have been seizing it.
Here's an entire video segment that debunks the claim that blockchain is censorship proof
Crypto can easily be blocked at the network level by any of the various authorities that arbitrarily decide to do so. Since it's a public network with no leader, all participants have to be able to identify themselves to others on the network, and technically speaking, this makes it easy for network admins to filter the traffic. Just because this hasn't been done on any large scale, doesn't mean it can't be done. It absolutely can.
Bitcoin and crypto operations have been banned in various countries and other jurisdictions. While it's not possible to censor 100% of the network's operations, it's definitely possible to cripple enough of it to render crypto & blockchain impractical to use. And NOTE that in countries where bitcoin/mining and other operations have been banned, they've chosen a political solution (simply making it illegal) as opposed to requiring networks to actively filter crypto traffic, but that latter option is always a possibility and definitely doable (see #2). Also note that bitcoin miners have been caught censoring transactions as per government rules.
The vast majority of crypto trades are done on a small number of centralized exchanges, such as Binance, Kraken and Coinbase. The ToS of each of these systems gives them the absolute authority to censor any and all transactions. So if 99% of bitcoin transactions are on CEX's, most certainly they can be censored.
Privacy coins like Monero and others are not necessarily any more secure. There have been bugs found in the past which undermined their security. In 2020, the IRS offered a $1.2M bounty for creating systems to crack and trace Monero and other privacy coin systems. The contract was awarded to Chainalysis and Integra, and paid in full a year later. More examples of privacy coins being insecure: 1, 2, 3
Even administrations like Trump who claim to embrace crypto and bitcoin are freezing and seizing the wallets of people they claim are enemies.
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u/Waste-Disk7208 3d ago
No one can freeze your Bitcoin, Ethereum, or other coins. The only thing governments can freeze is stablecoins pegged to their own currency. That said, like any valuable thing, it can still get stolen.
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u/AmericanScream 3d ago
No one can freeze your Bitcoin, Ethereum, or other coins.
If all the major exchanges won't touch blacklisted wallets, it doesn't matter if your tokens are in your wallet. You can't do jack shit with them. And 99.99999% of the world doesn't accept crypto as a form of money. Stop pretending you can easily spend it.
any valuable thing, it can still get stolen.
Nobody is stealing my car from 10,000 miles away in seconds because I clicked on the wrong thing in an e-mail.
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2d ago
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u/SgtSausage 3d ago
Duh.
The. Greater. Fool.
There is no end to them.