Moshe Joshua

@moshejoshua

Relativity Roulette

If you believe your equity, currency, or crypto is worth anything real, think again. At present, the only thing your security, cash, and tokens allow you to do is play a game called Relativity Roulette.

Here’s how the game works: you and I and six of our friends form a circle. We’re each sitting in front of open laptops. Some of us are wearing suits like investment bankers, while the rest are dressed in college sweats and graphic tees. The important thing is that one of us possesses an object of inflatable value. Objects of inflatable value are things like stocks or currency: the only two securities of the entire global money-pie that do not expire and do not decay. But for the purpose of our game today, let’s pretend we’re playing with a balloon.

To start the game, I sell my balloon to you for some amount of dollars. When it’s your turn, you convince the friend on your right that the balloon is actually worth more money than the amount you just paid for it, and you sell her the balloon for that higher amount. When it’s her turn, she sells the same balloon to the person on her right for yet an even higher price — and on and on it goes.

I may land up buying back the same balloon at the end of our circle, and magically we’ve all profited from the exercise. On the surface, this game might seem innocent. But in reality, Relativity Roulette is dangerous to play.

That’s because inflatable objects possess zero intrinsic value.

They don’t expire — they just continue existing, actualizing value only by relating to other items of relative value, like dollars.

Items of our world can only have intrinsic value if (a) they expire, since decay erodes the value of a thing to zero, or (b) can be redeemed at a known price. Either way its value is ‘intrinsically’ known at all times, with an exit point of certainty.

For those items that expire, we call this a Zero Sum Game. If we can project when that decay might be complete — when an item might finally lose its value entirely — we can wind the clock forwards to calculate how much value an item is going to give its owner over the course of its finite lifetime. We call this a ‘curve.’

Time is the only constant against which we can determine the value of an intrinsically valuable object, meaning we can relate its value directly to time. We can evaluate the intrinsic worth of a car because we can determine when it will decay to a single, worthless molecule.

Objects of inflatable value, however, never decay. Thus, they retain value only by relating to other items of inflatable value in something of a never-ending loop. So in buying and selling items of inflatable value, you’re not actually buying or selling anything — you’re just playing Relativity Roulette.

Players of Relativity Roulette: beware.

The reason that Relativity Roulette is so dangerous is the value proposition of the balloon (read stock) that we’re standing around our circle trading is relative only to the amount of dollars that were paid to purchase it originally. This means its price can only ever go up, can only ever inflate, creating an ever-expanding bubble.

And as we all know, bubbles inevitably pop.

When this happens, the entire group loses. And usually, they lose big.

There is nothing wrong with playing Relativity Roulette. People have been playing it by way of the stock market for decades. But those who play can get burned — especially the person still holding onto their inflatable object at the moment its relative value drops.

When it comes to cryptocurrency, Relativity Roulette will continue being the only game owners can play until the world finds a way to bestow their tokens with intrinsic value.

Bitcoin might look like a viable purchasing option online on Amazon and other e-commerce sites, where the price is listed in both dollars and bitcoins. However, since the base-currency is valued in dollars, and the Bitcoin listed-price is ever fluctuating to its relative dollar value, the truth is that it’s just another exercise of conversions and currency circulation. In this manner, cryptocurrencies will not realize any intrinsic and/or utilitistic value until (a) they become the base-currency themselves, or (b) they become redeemable 1–1 for compliant legal-tender (ie: Stable Coin).

Right now, though, no such reality exists. Coins today are only valuing themselves against other coins and other currencies, creating more volatility and more incoherence. And as long as that’s the case, their utility will remain limited to only being a value-storage option, whose relative value price ping-pongs as a volatile video game to be gambled on. Great for trading. Bad for commerce.

If you are an owner of cryptocurrency, it’s important you are aware of the dangers of the game you’re playing.

If you are, by all means: play at your own risk.

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