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“Play-to-Earn” and Bullshit Jobs (paulbutler.org)
1222 points by paulgb on Dec 28, 2021 | hide | past | favorite | 670 comments



In the late 2000s, as a teenager, I was gifted a Runescape account. This account had level 80+ woodcutting, allowing one to chop magic trees - which would produce the most expensive lumber in the game. It took a staggering number of real hours to achieve this skill level, we're talking several hundred hours minimum.

At some point I had realized that there were different sketchy websites that would buy and sell the in-game currency, gold pieces or GP. It was something like $10 to 1M GP. I could chop enough magic logs in about 4-6 hours to make $10.

I had a breakthrough. What if I wrote a macro to record my cursor and clicks during my route from the 'bank' (where you can deposit any amount of any material) to the nearby respawning magic tree forest?

Weeks went by and I had passive income. Runescape eventually introduced the Grand Exchange, a literal in-game stock market that allowed power users like me to sell much larger quantities of certain items instantly, across all Runescape servers (referred to as Worlds) simultaneously. This required a standardized pricing mechanism, like an order book, where prices of any item would fluctuate based on buy and sell orders.

Suddenly, I now could see a +-10% change on the value of my digital assets, on which my passive income was built.

I could go on; Runescape in fact taught me much about economics. What's extraordinary is selling Runescape gold led me to Bitcoin, and I've watched cryptocurrency for nearly a decade, seeing trends from a MMO propagate throughout the world. It seems human nature to innovate and stagnate, and the more immediate our collective feedback loops, the quicker these cycles are.


I know a lot of people have fond memories of this kind of thing, but from a designer perspective, is it good that a game is so boring that players are willing to pay real-world money to skip parts of it? Runescape set up a system that was so grind-heavy that players broke server rules and wrote automated scripts to grind for them, and other players gave them money to do that. Because the minute-to-minute gameplay of Runescape was bad; people were willing to pay $10 of real money to remove 4-6 hours of gameplay from the game.

Well frankly, that's 4-6 hours of gameplay should never have been in the game in the first place. Players should not feel bored playing your game for that long, certainly not bored enough to pay money to get out of it.

I have no doubt that learning how to exploit these systems was really fun for people, because learning how to exploit systems and build macros and read economic signals and avoid detection from a company is genuinely really interesting, fascinating work. It's just a shame that the only way Runescape could (inadvertently) enable that experience for people was to make a crappy grind process for an even larger portion of their playerbase.

I can't get away from thinking of the experience 58x14 is describing is a failure of game design. 58x14 has fond memories of this because they were playing an entirely different much more exciting hacking game than the crappy grind that Runescape's designers had built and intended for the majority of their playerbase.

And I think that perspective is worth keeping when we look at play-to-earn games. These are boring games, and some people are doing some fun economics stuff on top of them. That doesn't make the core gameplay any less boring though, and the fun economics stuff only works because a lot of other players are having a miserable time with the intended mechanics. I don't like praising a design ethos that says that a nontrivial portion of your players will be bored and will pay someone else to play the game for them.


I believe this is what happens with any open world MMO. There's no storyline to finish, there's no ending, and game devs have incentives to keep players playing forever (the more hours a player plays, the more likely he will spend more money).

There's only two ways to keep players playing: new content and/or grinding mechanics.

Grinding mechanics are way, way easier to create. You can even reuse sprites and just change names - a lv10 tree, a lv50 tree, a lv100 tree. Real content is hard to do, requires imagination, development, testing.

So most open world games will have a high grinding/content ratio. But, as lame as it sounds, some people do like it. I'm guilty of playing a RuneScape-like game for mobile (Ancients Reborn). Things are slow and you need hours and hours to raise skills but, even though it's arguably boring, I find it relaxing. And there's pvp and talking to fellow players to keep it fun. So, in the end, I agree with you it sucks to have a game some players pay to not play it and others have fun cheating it, and it's a cheap design choice, but there are some people find it relaxing to watch a little toon chop down a magic tree.


Now you've made me wonder: those hours I spent mesmerised by watching the colourful display of Windows 95 defragging the disc, would I have paid a monthly subscription for it? What if they'd added achievements, or leveling up? "Congratulations! Your wizard can now restructure directory chains!"



Apparently the original idle game (according to wikipedia at least) although modern idle games are probably influenced by Cookie Clicker and others as well.

I've occasionally been tempted to play Idle Champions which seems similar.


I'm pretty into the idle/incremental game concept, though they're rarely implemented to my taste.

It's difficult to quantify what makes a good one, but my favorite is Universal Paperclips.

https://www.decisionproblem.com/paperclips/index2.html


Man, this is great, I've just wasted 30 minutes playing this.


Thankfully it can wrap up in about 5 hours (as you may've discovered), unlike some of them...


The old #idlerpg was fun, in a historic sense (reading the log). I wonder when that got written. Anybody remember? Google doesn't.


Idle Champions is fun but the numerical scaling on that game is whacky. It only takes like a month before you're doing 1 googol (1^100) damage and little dwarves or gnolls or rats or whatever drop a similar amount of gold. They say it's to differentiate effectively between linear and exponential scaling, but the end result is just whacky.

It's the only game I've ever played where your damage output is most effectively measured by the size of its exponent


I once defragged a drive multiple times, which promptly killed it, so I'm not sure how turning it into a game would have turned out.


Hmm, that's a pretty powerful proof-of-work mechanic you've got there. "DefragCoin", anyone? Now we just need a way to achieve unilateral consensus about whether a given HDD is dead...

(/s)


I've seen people watching mesmerized as a Roomba vacuumed the floor. A time saving device indeed!


Don’t forget to prep the floors before every run!


Prep the floors?


Floors need to be tidy for the robots to do their work (no clothes on the ground). There might be places that are difficult for the robot to clean without help - chairs might need to be put out of their way. In my home I put a plank to make a step smaller, if I don't, it can't go to the bathroom.


One guilty individual here o/


>There's only two ways to keep players playing: new content and/or grinding mechanics.

You neglected what's by far the funnest and most important and user-retaining aspect of open world MMOs: player-to-player interaction - be it friendly, neutral, or hostile.

The absolute most enjoyable open world MMOs I've played had essentially no content. Players forged their own content in the form of geopolitics, war, economics, and copious communication (propaganda and shittalking, largely). They felt like a completely unplanned, natural simulation of militaristic human societies from hundreds or thousands of years ago. Probably not ideal in real life, but very fun for a game.

I'm convinced the best MMOs to come out over the next 20 years will have very little content and very sparse grinding mechanics. The magic is the emergent game and meta-game that springs forth from the bonding and strife between gargantuan numbers of human agents.


> I'm convinced the best MMOs to come out over the next 20 years will have very little content and very sparse grinding mechanics.

Current open world survival games use grind as a main mechanism for driving emergent game-play and creating player differentiation/conflict, so I don't see it ending completely. Game designers have gotten much better at making grind that isn't actively unfun though.


> The absolute most enjoyable open world MMOs I've played had essentially no content. Players forged their own content in the form of geopolitics, war, economics, and copious communication (propaganda and shittalking, largely). They felt like a completely unplanned, natural simulation of militaristic human societies from hundreds or thousands of years ago. Probably not ideal in real life, but very fun for a game.

What MMO was that? This sounds like a MUSH (a kind of text only roleplay server which is a couterpart of the more combat-focused MUDs)


It sounds a bit like EVE Online, which is also an MMO where the base game is really just a foundation for everything else that happens.


Eve had a huge grind situation at least when I played it 10 odd years ago. You need to skill up, make isks, buy fancy ships and blow em up. I guess you could putter around in a tiny beginner ship - but considering there wasn’t much dog fighting skills involved, it was lame. You could build a corp - again need isks.


> But, as lame as it sounds, some people do like it. I'm guilty of playing a RuneScape-like game for mobile (Ancients Reborn). Things are slow and you need hours and hours to raise skills but, even though it's arguably boring, I find it relaxing.

To be clear, I don't think that part is lame at all. That part is great. I'm all for relaxing repetitive games.

But I don't think that is what happens for all of the players in a game with pay-to-skip mechanics, and I think when we talk about the positive aspects of a game like Runescape, we're kind of engaging in a little bit of wishful thinking about how universal that experience was for all of its players. If a game is genuinely optimizing for creating a relaxing repetitive experience, then it (and 3rd parties around it) probably shouldn't also be monetizing getting rid of that experience.

Runescape grinding in theory was a relaxing, great experience for some people. I'm very happy for those people, but in practice, enough people obviously hated the grind enough that they were paying for bots. I am less concerned about the people who genuinely enjoyed chopping down trees, and more concerned about the obvious subset of players who were somehow feeling trapped by the game into spending real-world money to avoid something that was obviously unpleasant for them.

Willing theraputic, relaxing, repetitive grind is great. Hard to monetize with microtransactions though, and when I look at the play-to-earn model more broadly, that model literally doesn't work if people enjoy the grind. The only way the money comes into the game is the grind isn't theraputic or relaxing, a nontrivial chunk of the playerbase has to hate that process or else nobody makes money.

The healthy, relaxing, kind of best-case scenario grind you describe is the opposite of what a play-to-earn game designer wants; those designers have a strong incentive not to allow their games to have enjoyable grinding, because the whole point is that they expect the majority of their players to pay money buying resources from other players. That monetization model only works if people aren't enjoying the grind.


>Grinding mechanics are way, way easier to create. You can even reuse sprites and just change names - a lv10 tree, a lv50 tree, a lv100 tree. Real content is hard to do, requires imagination, development, testing.

Reuse of content in new context doesn’t have to be a boring clone.

Disney would regularly reuse animations of characters between animated films to save money. It did not necessarily take away from the wrapping content’s best moments or overall entertainment value.

For example dancing reveries and other sequences in Robin Hood used rotoscoping heavily. [1]

There’s no doubt the reuse was cheap but in some ways that allowed the designers to focus on new characters and scenes.

[1] https://www.businessinsider.com/disney-reuses-animation-2015...


> even though it's arguably boring, I find it relaxing

Fishing in Final Fantasy XIV is boring yet strangely relaxing, and in many cases doesn't even require looking at the screen.


There's something fundamentally satisfying to the human psyche about understanding a set of rules and optimizing actions against them. I think it hits that 'feeling smarter than something' nerve.

We've probably lost some potentially fantastic physicists to MMOs.


This is the hard part about "value creation." Is something that makes someone happier--even if others see that same thing as pointless waste--value?

We don't all want the same things and people want things we don't want, but this also allows us to trade and have both parties come out ahead from their own perspectives.

So there's always a tension between whether people should even be allowed to want some things or they should be forbidden due to being bad or wasteful in some capacity.

But I do think there's a special kind of irony to be complaining about the BS of someone getting money for moving bits and pixels around in a blog post on the internet frequented by a bunch of people, many of whom move bits and pixels around for a living.


> There's only two ways to keep players playing: new content and/or grinding mechanics.

I'd argue that PvP is a third option. Though that does impose its own requirements to do justice and ensure longevity.


Chess (and most competitive games/sports/simulators) has almost 0 content from "the devs". The rest is UGC/PVP challenges. Endless replay value, endless opportunities to practice and study for an advantage, no forced grind.


While I personally agree with your view that gameplay should always be actually fun, I think that misses the magic of games for a significant population of gamers.

Is most of your real day-to-day life truly "fun" in a game-like sense? Most people would say "no", X hours in a day is a lot of time to be consistently having fun, yet a lot of people would still describe their lives as "rewarding" and therefore worthwhile. In fact, the harder your life is, the more rewarding it can be.

These games aim to be "rewarding" and therefore worthwhile. In many ways, these types of games offer an alternative world and life that's more rewarding than reality. The parallels with real life are direct and intentional: "grinding" is like real work that earns you fungible profit that you can then trade to skip other types of work that you don't like to do. This is a proven loop of reward in reality and it works in games too, being consistently "fun" isn't the only way for a game to satisfy players. I can't speak to Axie Infinity which seems like it's not even well developed to that extent, but for other games in the field these grinds aren't exactly a failure of design, they're effective at constructing a life-like reward system that doesn't solely rely on "fun".

Of course the elephant in the room is that this "reward" is artificial, hence the whole article about this being a bullshit job. I personally avoid these types of games (basically all MMOs) for this reason and I don't see how web3 makes any of it better. But I find it hard to criticize it objectively. I think real life is bullshit anyway, so the cheap imitation of life that these games offer isn't always completely worse. I can see why many people willingly buy into it.


I used to play WOW until I realised what I was doing. I still remember the day I quit because I was supposed to show up for some massive raid and just didn’t. I have not logged in since.

The whole MMO and Freemium space is a bit grim if you ask me since you are essentially manipulating the feelings of players with no worthwhile rewards.

I think this is why I have gravitated heavily to board games. You meet up once a week or so. Play against real humans. No grind. And they can help sharpen your thinking.


I can't stand this kind of thing, but I do enjoy a lot of games that basically punish you until you develop enough skill to beat them. This is its own form of "grinding," I suppose, but one I find much more rewarding than essentially being rewarded for the number of hours I'm willing to do monotonous tasks.


The distinction is that you would never pay someone to learn how to beat the Orphan of Kos for you; the pleasure is in getting your ass kicked to the point where you throw the controller across the room, only to pick it up again a couple hours later. That's exactly the experience these Bullshit Games aren't creating.


I don't think it's true that nobody would pay to learn it. A friend made significant money as a dota tutor, and there's whole sites full of people selling tutoring time https://www.superprof.com/lessons/gaming/united-states/. Similarly, people pay for cheats/unlocks/walkthroughs.


Metafy is a big one too. But notably people are largely willing to pay if the game is played competitively. For single-player games, not so much.


That's true for a lot of players but the problem is that like any real-life skill, many players will hit a low ceiling of mastery in certain skills for whatever reason. Regardless of whether they're unwilling or unable, these low-skill players will not feel rewarded by the game. That's a problem if you're targeting a broad audience of players (which tends to be the most profitable strategy).


> I think that misses the magic of games for a significant population of gamers.

I don't doubt that some people are enjoying this, and I think that's great; meditative games are fine. But I've never played a meditative game and been tempted to pay real money to turn it off.

I think there's a little bit of wishful, optimistic projection about player intention that happens during these conversations, because if everyone playing the games felt the way you describe, then the monetization model wouldn't work.

We have games that have chores in them (Animal Crossing springs to mind). And we have repetitive games. And we have MMOs where people like to grind. None of that is a failure of design. But what you notice is that in the best instances of these games where people actually like the grind, they pay money to play the game, not to stop playing it. When a player is earning $10 every 4-6 hours by automating chopping logs, that's a sign that some of your playerbase isn't enjoying what's happening to them. They're sending the clearest possible economic signal they can that the grind isn't a positive or rewarding experience for them.

We can talk about the people who do enjoy the grind or get something out of it, but I feel like we're all kind of lying to ourselves if we say that's the primary experience happening with the vast majority of players. Games wouldn't make money from microtransactions unless a nontrivial portion of their playerbase thought it was valuable to skip gameplay. You won't make very much money giving players ways to skip gameplay unless you're confident that a nontrivial portion of your playerbase won't find that gameplay rewarding.


> When a player is earning $10 every 4-6 hours by automating chopping logs, that's a sign that some of your playerbase isn't enjoying what's happening to them. They're sending the clearest possible economic signal they can that the grind isn't a positive or rewarding experience for them.

Unfortunately, in the scope of Runescape, this misses the point in a big way. Runescape has a robust economy where every action can be measured in gold and experience per hour (when played efficiently). Someone might be buying magic logs for gold because cutting them down is a poor choice for them from an opportunity cost perspective (i.e. they can make more gold per hour via other activities their character has access to).

Zooming out, the system is actually incredible if you get a chance to analyze it a bit more. For the hardest of the hardcore players, there's a resource called CrystalMathLabs[0] that shows exactly how much time and gold it costs to max your character. And the devs are constantly optimizing new content around these "max efficiency" rates.

0: https://crystalmathlabs.com/tracker/suppliescalc.php


> Runescape has a robust economy where every action can be measured in gold and experience per hour (when played efficiently). Someone might be buying magic logs for gold because cutting them down is a poor choice for them from an opportunity cost perspective (i.e. they can make more gold per hour via other activities their character has access to).

I don't think this holds up when real-world money enters the equation. I don't think this can be accurately descriped as player optimization or class specialization if people are paying real money to skip it.

> they can make more gold per hour via other activities their character has access to

If this was actually true, no real-world money would be entering the system, because all of the players would be making enough gold in-game via those other activities to pay for the logs. If they're being forced to spend real-world money, then the other activities they're engaged with are not giving them enough gold to sustainably fund themselves in-game.

The problem isn't having an in-game economy, in-game economies are great. The problem is people paying to get rid of gameplay. People who do that are signaling very clearly that they believe there is monetary value in removing a section of gameplay from the game. Designers should pay attention to that signal.

----

I don't doubt that there are people legitimately having fun playing Runecraft. But it can't be everyone, or else people would not pay $10 to remove less than a day's worth of grind.


Like I mentioned earlier: it's not just about fun/enjoyment, it's about being rewarded by the game. In both real life and games, people will overcome challenges they don't enjoy because it is rewarding in a way that isn't necessarily just "fun". Eliminating a day's worth of grind in real life is surely very rewarding as well but it's very difficult and rare to do. In a game like eg Runescape, such an impactful and rewarding feat is rather achievable, it only costs $10 and almost everyone can afford it. If you don't have $10 to spare then you can achieve it with time. The grind is just a challenge to overcome, and that doesn't have to be fun but challenges are often rewarding to overcome.


> such an impactful and rewarding feat is rather achievable, it only costs $10 and almost everyone can afford it.

There are a ton of problems bundled up in this sentence, but I'm not sure I have time to unpack all of them.

But this is not an attitude that I think a game designer should ever have. I don't think we should be building experiences that boil down to teaching players that spending money is the equivalent of overcoming a challenge, I think players should be extremely suspicious of any game or experience that has that attitude towards challenge. Spending money is not the same thing as achieving something or earning a reward, I think it's really bad for us to encourage that kind of equivalency in a player's mind.


Well ok, that's just like your opinion, man. Like I said in my original comment, I avoid it personally but I find it hard to criticize objectively. Like so many things these games do, it's just a cheap imitation of real life where this stuff is everywhere. People can and do spend to overcome challenges in real life all the time while the proles meagerly grind away, there's so many meatspace mechanics like this but it takes a lot more than $10. Since many people will never achieve that kind of substantial wealth in their entire lives, these games offer a fake world where they can. Using fantasy worlds to escape the shitty reality we live in is such an old & boring concept.

Meh, it's a free country and games like Runescape are a known quantity that players can choose. I would say that if you want to change minds then make your case, but clearly you don't have the time to do that.


>They're sending the clearest possible economic signal they can that the grind isn't a positive or rewarding experience for them.

For them, personally. There's a good deal of microtransactions where the person spending the money still wants everyone else to have to grind for it. MMO's tend to breed a lot of prestige-seeking behavior.


> There's a good deal of microtransactions where the person spending the money still wants everyone else to have to grind for it.

I'm not sure that having a system that's unpleasant for a portion of the playerbase and letting people pay to pretend that they've gone through it is all that better.

I've commented to the same effect elsewhere, but public prestige systems that can be paid to be bypassed are sort of self-defeating. They only work if a very small portion of the playerbase is cheating, which... I still don't think it's good design to set up gameplay incentives or monetization around a minority of the playerbase pretending to the majority of the other players that they've legitimately earned something.


> Of course the elephant in the room is that this "reward" is artificial

It's only artificial in a sense that it's one level deeper than our current economy (and is smaller and subject to the whims of the developers), but in the grand scheme of the universe our current economy is just as artificial.


The real economy keeps us fed and clothed and sheltered and alive, so I'd call it very much real.


These games aim to be "rewarding" and therefore worthwhile. In many ways, these types of games offer an alternative world and life that's more rewarding than reality.

You could look at the existence of these games as a triumph of capitalism. We have raised productivity to such heights that the real world does not provide enough grind to sate the need for reward, so people literally invent fictional realities to create more opportunities for grinding your way to a reward.

What is missing here is purpose. The reward could be more than just meaningless progress in the game. For example, why couldn’t you have a game were the grind is designing tailored-for-one phone cases, which then get printed and shipped in the real world. People could be ordering an NFT-backed guaranteed unique phone case, and many people would be willing to pay real money for that.

That these games have a grind that amounts to meaningless work disconnected to physical reality seems like a failure of imagination and a waste of opportunity.


The reason grinding exists is also economic in nature: the "consumer value for money" equation is often reduced to maximizing hours of playtime. This has led to extremely padded gameplay all throughout when we compare to arcade games, which are premised on "operator value of time" and therefore always endeavor to shuttle players in and out of their session in a few minutes.

The other day I visited the local pinball joint and the old EM game I was playing got stuck counting up the 3000 point bonus during gameplay. I cradled the ball on the right flipper, thinking "hmm, how interesting!" One of the staff came over and apoplectically remarked "If you don't continue play I am going to have to turn the game off", and when I did as instructed, showed great distress at how I had managed to roll over the score and accumulate two free credits, but also appreciated that he had gotten a bit closer to the mysterious issue of the game repeatedly ending up with 9 credits.

I see the impact of NFTs as a pendulum swing towards "item value in context", which has no particular relationship to time or even defined scarcity, but would instead favor broad reusability across numerous contexts. P2E is just the early mimicry every new model has to go through before getting to the good parts, in the same way that early console games took a few years to start relaxing the constraints of arcades in earnest.

I think a much more likely early candidate for interesting NFT gaming will be small collectable games, derived from the procedural arts scene. Scarcity sets individual prices within a collectables market, but the value of the collection as a whole is determined by other modes of context. There's no need to squeeze or stretch the gameplay loop or make it addictive or insert monetizing gates; every instance can be exactly designed to be "ideal" on its own. Instead the game has to cater to speculative interests, which is a whole other set of trade-offs and can even favor characteristic flaws. For some reason I have not yet seen the "pay to lose" NFT game, but to me it seems blindingly obvious that being able to lose in an interesting way will command speculative interest.


Grinding is boring but it's also extremely satisfying when you finally achieve your desired level. It feels like a real achievement, and it lets you show off to other players because they know how much time you had to spend. If it was also fun, it wouldn't be as impressive. In that way it's sort of like Proof of Work in Bitcoin. If it wasn't a total waste (that is, if the work itself produced something useful that was worth something) then it wouldn't do its job as a disincentive to cheat the system because you're not actually wasting anything by doing the work.


> It feels like a real achievement

I've mentioned this elsewhere, but if people can pay money to skip something, then I don't think doing it is a public/social achievement. At best, it's a personal achievement, which could hold value for some people. But you're not really signaling anything publicly by going through a grind if someone else can pay to skip it.

This is also why I'm kind of skeptical of NFT games as being about "earning" something in-game, or about showing off status. Why should anyone care about or respect someone for having an asset in a game that can just be bought?


You can buy your way into a prestigious school. I don't see how some people paying to skip the work denies the achievement of those who don't skip it.


> You can buy your way into a prestigious school.

And is that something our society encourages? Are we rooting for prestigious schools to offer more pay-to-enter mechanisms like that, do we have a contingent of teachers arguing that this is the future of schooling? Or do a lot of people get really mad about those bribery scandals, and do those prestigious schools actually loose a small amount of social prestige in the public eye whenever a new scandal comes out?

People aren't happy with Harvard when they engage in nepotism, no one goes around calling that a bold new innovative model for college admissions.

Of course, paying money or hacking your way through an experience doesn't rob other people of the intrinsic personal achievement of doing something hard, and it doesn't mean their experience was less meaningful. But common shortcuts certainly make all of these achievements less valuable as a social signal, which is something that NFT-based games claim that they can provide.

In your earlier comment you write:

> it lets you show off to other players because they know how much time you had to spend

But no, it doesn't, because those other players don't know if you legitimately got the achievement/asset, they have no idea how much time you spent on it. If you personally find it rewarding to get that asset then great, but in a play-to-earn game or a game with tradable NFT assets, most of the achievements that are publicly displayed by players won't have been earned, so you're not really socially/publicly showing off anything to other players unless you're also adding a text box underneath them saying "don't worry, I did actually earn this."


Ok I see your point now and I agree. If there is no way for others to distinguish between grinding and pay-to-win then social signaling ceases to be a motive and you're only left with personal satisfaction.


> In that way it's sort of like Proof of Work in Bitcoin.

It’s not sort of like PoW, it is basically exactly the same. People play games for fun, but they also play for status. Status, like Bitcoin, has a hard supply cap so there is no limit to the amount of energy that individuals might expend in pursuit of it.


Runescape never intended folks to hit that high a level. Two brothers made the game and they just kind of filled the endgame levels never expecting anyone to reach it. Later, they added more and more content to fill those later levels. So it also suprised them I guess.


> is it good that a game is so boring that players are willing to pay real-world money to skip parts of it?

The things that people are willing to spend money on in games are usually interesting for people for the exact reason that those things are scarce. So it is, from my experience, all about showing off.

Saying this as someone who exploited a lot of games and made some large passive income from that, "back in the days". I'd say 95% of -- "end-customers" (as opposed to resellers which you need if you move a lot,) bought stuff just to show off.

So if those things were readily available and didn't require grinding, people wouldn't desire them. It's almost a bit of a paradox, I guess.


It’s a bit disheartening when you look at how many people deal with the numbness ever present in their lives by playing games that mete out little rewards in easily quantifiable bits. This is not what humans need, or, if we’re honest, want.


Isn't this the same as many of us do even outside of games?


Yeah, but we're not in the matrix yet, so optimizing for real life has other beneficial side effects.


I wouldn't think of a game like Runescape as one thing, but more of a collection of many things.

What you pay for is the ability to skip the parts of the game you don't like, so you can focus on the parts of the game you do like. Ideally everyone would like everything you make, but that feels more like a naive way of thinking than to worry about people wanting to skip parts of your game.

As long as "pay to skip" doesn't become "pay to win", I'd say a game is probably fine, overall, if people are enjoying substantial portions of that game, even if they're not enjoying all of it.


It's odd that this doesn't come up in other media or other experiences, right? The closest analogy I can think of is unskippable advertising.

We never have a movie series where people pay extra money to remove scenes. You never go to a restaurant where the owner forces you to eat carrots before you can have your main meal, even though some diners might like carrots. It's basically just games and advertising where we have this model that consumers should either be forced to endure a part of the experience they dislike or that they should pay us money to give them the stuff that they directly do like.

Like, imagine if you were watching a show on Netflix, and you tried to skip a filler episode or fast-forward through a gory section, and Netflix wouldn't let you continue the series until you either watched that content in its entirety or paid them 99 cents.


>We never have a movie series where people pay extra money to remove scenes.

Star Wars fans keep asking though.


:) Okay, that's a fair point. The Lucas estate/Disney continue to be kind of weird about this.


I don’t know if it is possible to have “pay to skip” not become “pay to win” in an MMO.

The whole point of an MMO is that your character progresses and gets better as they do more things in the game. If you are paying to skip something that makes your character better, your character will be better than if you didn’t pay to skip that.

If what you are skipping is not making your character better, you wouldn’t be doing it in the first place.

MMOs are be definition pay to win. You either pay with time or pay with money.


People getting around games ToS' will always be a thing - since Runescape is the example being used, it is expressly banned to both purchase and sell gold coins. This is not a problem exclusive to MMOs, it's a problem with any game with a leveling system, currency, or items that are tradable between players.

Examples: FIFA packs, Runescape/MMO gold, League of Legends accounts/boosts (names as well) , Valorant accounts/boosts, CS:GO items (names, accounts and boosts as well), Neopets items and gift boxes, Diablo 3 boosts/accounts, and on and on...


Then maybe it's fine to be "pay to win"? Seems like millions of people are enjoying their time spent, and are willing to spend more time to continue to win.

Who are we to judge?


The presence of aggregate societal harm tends to be the motivator for other regulation around otherwise voluntary behavior such as gambling. So if that harm can be demonstrated then there may be a case for legislating if companies can offer such games and on what terms they can do so.


People play games for all sorts of personal reasons. “Boring” gameplay is apparently in demand. If you don’t like that kind of game, don’t play it. If you don’t understand how anyone else could possibly spend time on it, then maybe you should open your mind and talk to some of these people to try and understand what is undoubtedly a much more complex phenomenon than you believe it to be.


This is ignoring the reality that people are paying to get rid of this gameplay. I do understand why people like boring games, I've sunk my own share of time into therapeutic experiences like Animal Crossing, and even a few pure idle games. I've grinded out 100% soul collections in old Castlevania games. That kind of repetitive action and optimization can be personally rewarding and emotionally satisfying. And I've no doubt that some players of these games genuinely enjoy the minute-to-minute process of chopping logs.

But you're just kidding yourself if you say that's the primary thing going on here. If people enjoyed the grind, they wouldn't pay to remove it. The difference between grinding in a game like Castlevania and grinding in a game like Runescape is that there's not a Castlevania real-world monetary economy based entirely around shortening the game.

We can't really seriously say that everyone playing Runescape enjoyed the grind if there was enough demand for gameplay automation to make botting a reliable income source.


I agree with most of this including pay-to-earn, more worryingly there are other types of to-earn being floated like learn-to-earn. It’s almost like people are rushing headlong into dystopia and ignoring all the downsides of extrinsic rewards.

That said a successful game like this will always have a non-trivial part of the player base willing to pay to skip parts of the game. They want the success now not later and aren’t willing to work for it. Even if the journey is actually fun. Most games take this quite seriously though and work against gold farming and cheating as it ruins the experience they set out to make.

Where it becomes evil is when you set out to make it horrible intentionally so a bigger part of the player base has to pay to remove it and continue playing.


I agree with you ideologically but challenge this statement:

> [that] gameplay should never have been in the game

How many millions of hours of 'pointless' content are uploaded weekly that people watch? No one is forced to play this game, or to pay for it. Why should it not exist? If game developers create something that people play, is that not a success from their perspective?

This quickly becomes a philosophical conversation. As others mentioned, how much of life is the boring, grind-y parts? How many of us on HN find clever ways to circumvent, augment, automate the grind? Is it immoral to create profitable, addictive systems of human engagement? Does 'good' game design have a quantifiable definition?


There is a valid conversation to be had about whether art needs to be edifying. However, I think we're talking about an entirely different level of exploitation when we talk about making something so unpleasant that people are willing to pay to get rid of it.

Millions of hours of pointless content gets uploaded to Youtube, but if people choose to watch it, fine. That's a conversation about edification and people choosing to waste their own time. What we have here instead is a system where people are signaling with real money that the experience is unpleasant for them. We're not talking about deciding what's best for people against their will or forcing art to have emotional/intellectual value, we're talking about building an experience that's monetized around players openly signaling that they dislike what we're doing to them.

Not that the deeper conversation you bring up about addiction or "junk-food" stimulation doesn't have value, but I think exploiting pay-to-skip mechanics is a more obvious form of exploitation that's just on another level of harmful. The comparison here isn't giving people junk food or hooking them on useless Youtube videos -- the comparison is the ads that roll in front of those videos. It's giving someone a meal and putting something gross in it, and then forcing them to pay you to remove it or to pick it out themselves. It's taking something that people want, and then breaking it or obscuring it, making it so cumbersome to get at that valuable core that the act of playing the game is no longer satisfying to the player.


That’s a very romantic view of the goals of game design. For a live service game the metrics to hit are mainly retention and monetization. Whether something is subjectively fun doesn’t really come into the picture


If this was 100% true for all live service games, then they would all resemble casino games; a lot do, but some don’t.


Which ones don't?


> is it good that a game is so boring that players are willing to pay real-world money to skip parts of it?

If you're designing a free to play game and want to make money from it, this is not just good, it's a design goal -- as long as the developer is the one making the real world money.

Clash of Clans perfected this model over 10 years ago:

https://gyrovague.com/tag/clash-of-clans/


> I can't get away from thinking of the experience 58x14 is describing is a failure of game design. 58x14 has fond memories of this because they were playing an entirely different much more exciting hacking game than the crappy grind that Runescape's designers had built and intended for the majority of their playerbase.

I can’t stop myself from reading this as an argument about the real world :) The grinding pricess certainly gets boring sometimes so we begin hacking a more exciting game on top of it for sure ;)


I have to say that many of my fondest memories from all kinds of systems; games, work, play, all of my favorite times were when I was finding an unscratched edge in a model. There’s something superlative about finding a hack, a way to obtain something that the designer of the game did not intend. The feeling of “I know your game better than you do” is something I shall never forget.

Those fleeting moments where you have a temporary advantage gained without malfeasance but with pure cunning and skill (or cleverness if we’re being bold), those are the happiest times in my life.

Finding the little edges where things just don’t quite add up, shining a light on them, and wielding them as your own; that’s the stuff from which real hackers are made.


You make it sound so posh but there is other, much more real face to all this - breaking the game for everybody else. You are basically having fun at the expense of literally everyone else involved.

Sure, you achieve it by being clever, and theoretically you report your finding to creators and don't abuse your position of power, but thats not what usually happened.

Behavior like this is the core reason why I don't play online games of any type anymore - the idea of proper fun looks distantly different to this constant 'finding metagame' for which I have less polite names. Plus its a waste of life and ones talents but thats another topic.


> … from a designer perspective, is it good that a game is so boring that players are willing to pay real-world money to skip parts of it?

This was addressed brilliantly in a South Park episode, “Freemium Isn’t Free.” In it, a character, Stan, blows a ton of money advancing a by-design boring game. The game is revealed to be a sham to bleed players of cash. It likens addicted gamers to alcoholics. This mock commercial appears in the ep:

https://www.youtube.com/watch?v=-_n5nbx0Z9s


In my experience, plenty of people will want to skip even the most fun game experiences to get to the farming/grinding endgame just to watch their numbers and loot collection expand.


> I know a lot of people have fond memories of this kind of thing, but from a designer perspective, is it good that a game is so boring that players are willing to pay real-world money to skip parts of it?

From a business perspective, you're allowing for engagement despite different time valuations by player personas. The savvy game designer would not only encourage this, it would develop a way to capture a portion of the proceeds.


> is it good that a game is so boring that players are willing to pay real-world money to skip parts of it?

The difference between now and then is that people had to go to third parties; nowadays the game developer themselves will sell you the skip. Or a chance to gamble at a boost.

Some of these mechanics are "compelling", in a very visceral sense - they compel people to spend time or money, in a way that isn't quite describable as fun. And yet creating an obsession and a goal and providing a way to grind or spend to that goal is popular.


> And yet creating an obsession and a goal and providing a way to grind or spend to that goal is popular.

Now that the veneer of such "games" is dropping away to reveal that they've just been casinos all along, the bright side is that society might finally find the gumption to start taking gaming addiction as seriously as gambling addiction.


You mean, take it not seriously at all, and exploited by the government (lottery) to rip off its own citizens?

Sports gambling via apps is getting huge and deregulated and advertised on major TV broadcast networks.


It depends on where you are. In many places sports gambling is starting to be cracked down on.

Plus having a single state owned lottery is better than 1000 shady companies competing, and lottery revenues can even be used for state budgets.


At a certain point these look less like games, and more like status symbols being pursued. I suspect that this explains much more of the economic and social aspect of things like Runescape more than trying to think of them like a game.


This kind of grinding is probably the part I enjoy most about games. It's almost meditative. I usually play games to kill time anyways. I guess that's why I enjoyed games like FF8, WoW, and Maple Story.


If people care enough to exploit your game or buy items in your game economy, your game is a success. If it was truly boring, they wouldn't bother.


your game should so funny that they cannot give up it, but it is so boring result in they want to pay money for skipping it. this is business model.


Nitpicks because this game was my childhood. I totally support your sentiment though.

> It took a staggering number of real hours to achieve this skill level

* 97 logs (30 minutes)

* 293 oaks (1 hr)

* 714 willows (2.5 hr)

* 19,246 maple (very inefficient compared to willow cutting rate - 60 hour). If you did yews it would be many hundreds of hours.

About 70 hours done inefficiently.

> What if I wrote a macro

Macros were fine but easily detected due to the repeated patterns. Botting in general was the wild west in this game from about 2008 - ~2014. Interesting how botting numbers drastically inflated player counts and engagement and the company Jagex became a private equity darling getting bought and sold several times, its almost like they had an incentive to keep the practice going.

> Economics

Absolutely. I learned devops managing really inefficient gold farms that got free servers from the Azure promotions when Microsoft cloud launched.


> Botting in general was the wild west in this game from about 2008 - ~2014.

There’s a weird, secret history around Runescape botting that I really hope gets told in full one day.

Essentially, the biggest and best botting client from the 2008-2011 era was Powerbot, later rebranded RSBot. It was written and managed mostly by some CS student from the UK, who went by the handle Jacmob, and used some bytecode editing + reflection to bind game objects directly, meaning that it allowed full interactivity with the underlying game, rather than just a simple image recognition and mouse control framework.

During this era, Jagex (makers of Runescape) made some big efforts to combat the botting. They started using obfuscators to make reverse engineering the bytecode harder, and reworked the handling of all String objects internally to mask them. There were more efforts, of varying success, but without fail, this one guy would have the botting client (and by extension, the whole botting ecosystem) back online in a week or so.

Flash forward to 2011, and Jacmob starts teasing something big for his RSBot 4.0 release: a “web-walking” API that would allow script writers to input any two positions on the world map, and have the botting client find them a path there, navigating through buildings, portals, teleports along the way. This was going to be an absolute game changer - script writing required insane attention to detail, trial and error, and tedium to navigate the world map in a slightly-randomized/hard-to-detect way. And yet a week or so before the big release… boom, another big effort comes from Jagex to stop the injection clients: the Great Bot Nuke of 2011.

This was different from the prior attempts by Jagex. Radio silence from Jacmob and the RSBot team, which was weird given the pending release. As the dust settled over the following weeks, it comes out that Jacmob, King of the botting community, has become Mod Jacmob, employee of Jagex, with very little fanfare both then and ever since. RSBot 4.0 was not to be.

Jacmob left the company several years later, but led their efforts through 2014 to combat botting, with great success. There’s very little information publicly available, but I strongly suspect he was using the obvious strategies of looking at probability distributions for click positioning on game objects and delays between certain behaviors to spot automation.

Jagex’s operations have grown much sloppier after his departure, but the scene has never returned to its former glory pre-2011. One nerdy, talented, quiet figure was responsible for so much of the Runescape community’s development - and yet you’d never know it without having been there yourself. Quite a world we live in.

(@Jacmob, if happen to read this - can I interview you pls <3?)

Edit: this is all from memory, I’m probably bungling the details in quite a few places.


For those interested, here is a pretty well produced video on the situation:

https://youtu.be/4ELRFROUf64

One thing that was left out in your summary is how jacmob was hired: Shortly after the Bot Nuke he showed up at the annual convention of Jagex and showed off his (still working) new Bot to the one of the heads of Jagex, who ended up hiring him.


OH MY GOD. Thank you, sincerely, for the link!!

I left out the hiring story because it sounds so apocryphal I was sure I’d made it up or was embellishing my memories. So much niche drama I’d completely forgotten about.


The Youtuber Colonello also has a lot of good videos on this topic


The key to a lot of bots isn't making them smart so they can grind all day - that is usually the easy bit - but making them dumb so they look like humans.

When I wrote a bot to grind Star Wars Galaxies for me I coded a ton of mistakes into it so it would click on the wrong buttons, miss the buttons completely, just generally do daft stuff. It looked human. Except for the fact it was grinding 24x7. I guess they never checked for that.


I think I was banned during that wave in 2011 and only just recently got back into RS.

Back in the day I couldn't be bothered to gather the resources myself.

Now I'm the bot, but somehow I'm (sometimes) happier fishing sharks than being IRL...


There was also a lot of other history outside of Jacmob...

There was iBot by Ruler Eric who got sued in Florida court by Jagex, with Jagex winning. iBot started of as a color bot, then eventually completely transformed into byte code editing.

Before Powerbot/RSBot, there was Arga, and before that, Aryan. IIRC Arga was the first bytecode editing bot, and Aryan was just a modified RuneScape client.

There was also a C++ Chinese bot used amongst all the Chinese farmers during the Arga days IIRC. This bot apparently working at the packet level (this is what AutoRune did back in the RSC days) and had super low resource usage. However had access to this bot definitely had a huge leg up to any other offerings.

Scar always existed, the forums exploded with activity inbetween the bot nukes (Aryan dying, etc.). I also remember SRL, and the horrible Pascal that came with it. All the random event solvers (e.g. magic box weren't open source -- they were hidden behind a compiled DLL that shipped with SRL).

Weird history, but I'm still in contact with a lot of people from the scene I've met 10+ years later.


So glad you shared this story. Runescape was my childhood as well. Would love to hear from Jacmob if he ever sees this.


This is great, thanks for sharing!


>Absolutely. I learned devops managing really inefficient gold farms that got free servers from the Azure promotions when Microsoft cloud launched.

I mined cpuminer cryptocoins on azure free servers about this time. I got banned fast but still made a few 100s of dollars (which is basically a million to a 16 or 17 year old like me).


Delightful, I very nearly stopped my stream of consciousness to check the numbers, I wondered if anyone else would. It seems many of us share nostalgia around RS.


When I get really bored I create a new account for fun. I normally realize it’s a waste of time and stop after about 6 hours of clicking trees or ores lol. However it’s always cool to see it’s still there and normally changes quite a bit every time I go back to it. Skills go to 120 nowadays for example!


You should look into the Old School Runescape game mode. Someone just made a really captivating series limiting his character to just one region of the game: https://www.youtube.com/watch?v=rk5XuqLrf3U&list=PLWiMc19-qa...


Macros are what got me into programming. I wanna write a blog on it if no one else has done it yet but you had different tiers of it in between 2005-2007:

AutoRune: top-tier -- This was the absolute best RuneScape classic bot but you had to pay $15 a month for an auth code to use it, which is extremely expensive for a school-aged kid. One of its killer features was that you could run the game in headless mode with no graphics so your PC would not be overloaded due to running too many expensive Java applet graphics processes.

If I recall correctly it had its own intuitive scripting language. Some of these scripts were extremely coordinated: you could have several accounts mine ore, another account transfer it, and another account to manage smithing it in an orchestrated fashion.

If you were into player-versus-player, RS Classic had this unintended concept of "having catch" on someone based on your player ID on the server. Essentially if your player ID on the server was lower than your opponent's, then in a fight it would be significantly easier to chase them until they were dead. Catching a player took some well timed clicks and coordination. AutoRune (and the other bots I'll talk about) exposed this player ID to you so you could log out and in until you received a player ID that was sufficiently advantageous enough for you.

Even more scary was that it had an autocatcher that made it effectively impossible for another player to escape you in PVP so that you didn't need to learn the proper catching technique.

There were also free to use but less powerful bots like IT-bot (scriptable with Java) and Runebot (IIRC only allowed you to autotrain).

Fatigue and CAPTCHAs defeated by crowd sourcing with Sleepwalker -- To deter bots, RuneScape implemented a concept called "fatigue" where your character would supposedly get tired after harvesting items or gaining a certain number of experience points and you would be forced to use your sleeping bag to rest. When you rested, you would have to solve a CAPTCHA to wake up. I am still amazed with the level of coordination that happened here: someone built a tool called SleepWalker where you would write CAPTCHAs for other people and gain points. Each point you wrote for someone else became a word that you were allowed to have someone complete a CAPTCHA for you. You were also able to pay money to avoid writing CAPTCHAs yourself, and Sleepwalker was smart enough to integrate with whatever bot you were using. Eventually the more sophisticated bots like AutoRune and IT-bot implemented their own OCR so SleepWalker became something only used by people who couldn't afford OCR, but I'm still amazed by the community coordination here.

Now, these bots interacted with the RuneScape world by sending server side commands so you would never need to actually click on anything in the world to watch your character do things. The problem here is that these methods were comparatively easy to detect so Jagex would periodically ban players caught cheating. This is where SCAR comes in.

SCAR = Shit Compared to AutoRune -- SCAR was a less sophisticated but extremely effective botting tool that relied only on clicking colors. You wrote scripts in Pascal (of all things!) to do the tasks you wanted like mine ore or kill chickens and it did this by clicking predefined pixel colors with the timings you specified. To do it properly, it calibrated your in-game compass to align properly so the pixel clicking would work. It also implemented its own timing and color jitter so that the simulated clicks would appear to be from a human and not a bot. There were also scripts that would handle cases where a mod would message you and ask if you were a bot and it would respond with 'noope im not a bot, gtg bye!'.

All the characters I automated with the API-based bots ended up banned, but I'm pretty sure the one that I used SCAR on never got banned. The clicking approach became extensible when RS Classic became RS2, and I'm sure AutoRune continued into the future too but this is where I became too busy with school to keep up with all this.

Anyway, RuneScape automation is near and dear to my heart and got me started in CS so I love talking about this haha.


The ecosystem around SCAR was really impressive, and with just enough drama to keep everyone interested as well. Basic color clicking in SCAR was a concept but not enough to make really sophisticated bots or to keep up with attempts at detecting repeated behavior. The mods caught on to exact pixel finding, abrupt mouse movements, and other stuff that a typical SCAR script would generate. The botting community developed the SCAR Resource Library (SRL) to generalize common operations in a way that would be undetectable (findObject, moveMouse, etc.), all with a sufficient amount randomness baked in. With this library you could write some _very impressive_ bots even though it all boiled down to pixel finding and clicking at some level. Over time there was some disagreement over the development of SCAR (it was closed source and had a single developer), and the SRL community rebranded to SRL Resource Library (SRL) as the first attempt to move away from SCAR as the only home for this pixel-finding-based library of advanced botting functionality. Some maintainers of SRL then introduced there own client as an open source alternative to SCAR called Simba.

I have had a 10 year career now developing software for the biggest companies on the planet, but to this day a lot of the most complex and robust code I've ever written was as a teenager in SCAR. Good memories. Would love to see some wiki history of this written up somewhere.


In my early 20s I played an MMO called Asherons Call. I discovered a vendor in one high level area that would sell bows for less than a specific vendor in a low level area would buy them, netting you a small margin per bow.

Being a programmer I wrote a script that used two different teleport skills (lifestone and portal recall I think?) and a bit of movement and clicking based on pixel (Color) matching to deal with latency, tweaking it over time, and started printing in game money. I would come home from work to a backpack full of D notes (unit of currency I adapted my script to convert).

Then I would sell these D notes on eBay. Did this for a few months. First month I made over 7k USD (I shit you not). 2nd month about 3.5k, maybe 1k third month, so basically the market collapsed and I moved on (to other fun exploits… once you’ve been bitten by the exploit bug…).

In retrospect I regret it.

I’m a total hypocrite saying this, but I think this sort of crap has ruined MMOs, and gotten far more advanced and efficient over the years.

The fun I had in AC before I started doing this stuff is something I wish more people could experience, but I suspect has been lost.


> I think this sort of crap has ruined MMOs

Once you start allowing (or failing to prevent) real world transactions from altering the play of the game, which is really hard to do while still allowing any sort of item/money transfer between players, some subset of the player base will view their effort as devalued. Some other part of the player base will be delighted that while they don't necessarily have the time to put into the game, they can still get help progressing. There are of course the fringes of those that devote themselves to supporting this market or exploiting the market to support their power fantasies (which of course include flexing that power on other players).

There are valid uses for that market though, such as those aforementioned players that don't have time but would like to not be stuck for inordinate amounts of time at certain power levels. Basically, the same reason some games have difficulty levels. Some people want the challenge, others just want to experience the game.

> In retrospect I regret it.

It's sort of like allowing yourself to use a cheat in a game the first time through. If you take away a significant portion of the challenge when that's one of the things you're there for, the game can become much less fun. Other times, it just becomes a game within a game where you're playing market trader or whatever, which is fun while money/resources are still scarce, but then less fun after they aren't because of your wealth, and then you return to the main game to find it's less fun too.


> and gotten far more advanced

In some cases advanced is debatable . Chinese prisoners forced to farm wow gold...

https://blogs.scientificamerican.com/observations/chinese-pr...


Similar to your story, I learned how to program by writing Runescape botting scripts.

Fast forward to today, and my hobby tech project for the past few months has been building a OSRS market-intel website for trading on the Grand Exchange. Great toy market that eliminates a lot of the complexity of “real-world” economics. Funny how outsized that damn game’s influence has been on the world.


RS was the perfect game for me and dramatically changed my life. Started when I was 12, played for YEARS slowly getting better.

Discovered staking and scamming at the duel arena. Invented a new scam and made bils. Made a sizeable chunk over a couple years (enough to pay all my bills in college and a LOT of beer money). Got into botting with some friends, made a little money doing that too.

My experience with RS led me to an interest in economics, and I'm now an accounting PhD student about to graduate. My bro got into coding bots, and is now an SWE doing high level work.

I love the game to pieces, and it isn't because I made money playing.


> Discovered staking and scamming at the duel arena. Invented a new scam and made bils. Made a sizeable chunk over a couple years (enough to pay all my bills in college and a LOT of beer money)

Do you feel any remorse or regret about scamming people out of thousands of dollars? I am a bit surprised that you are bragging about this sort of unethical\illegal behavior on an account directly tied to your real world identity.


Scamming in games is part of the game. Eve, Runescape, Path of Exile, Ultima Online, etc. These all add friction to trade and uncertainty to in game interactions and allow people to attempt to carve out a scammer career in the game. If it is allowed by the rules of the game then it is part of the game. A part of which players ought to be wary.

In Ultima and Eve various groups kept/keep tabs on the scammers and criminals. In Path of Exile, there is a group called The Forbidden Trove that helps the community reduce the risk of being scammed, along with providing dedicated high-reliability traders to get extra income by showing their reliable non-scammy behavior over a long period of time. These are all interesting interactions and systems that developers could totally short circuit with other design choices, but have chosen not to.

On the other hand, being scammed definitely sucks.


RuneScape was so famous for player scams it's a miracle anyone was willing to open the trading window at all.


Very similar story here.. I had a few party hats in Runescape which made the whole NFT thing and to a lesser extent Bitcoin so much easier to understand.


I still don't get it. We already sold digital assets so why do we need NFTs or Blockchain? What does it add here?


Party hats served no purpose whatsoever in the game except as a status symbol (arguably even!). Yet, was worth a lot of money in the game (and a god sum in real life for a high schooler)

Humans are emotional animals, utility is a very poor approximation of value.


A somewhat hard to erase record of which url "belongs" to whom. That, and it gives them the appearance of having some high tech magical properties that will lead to an explosion in value, helping to justify asking prices to the marks.


NFTs are the equivalent of decentralized RS party hats.


Except instead of a fixed (or decreasing as people slowly accidentally lose or leave the game with them in their bank) amount anyone can make a new (ugly as hell) party hat any time.

Oh and the party hat could just disappear leaving you with a receipt saying you own... something no one can see any more.


You need NFTs to have something to trade with your cryptocurrencies. And you need cryptocurrencies to trade NFTs.


Yeah. It’s for those don’t wanna buy drugs.


Anyone interested in some nostalgia?

Long ago there was an MMO called Ultima Online. At one point gold on there reached the point that it was more expensive than the Italian lira. This was in a kooky time in 1999 when everything was at a peak. Here's the old article.

The NYT just wasn't having it.

THE WAY WE LIVE NOW THE NEW ECONOMY Money for Nothing A new breed of Internet profiteers is spinning virtual gold into hard currency. By JOHN COOK

Fixer-upper w/moat: The real market for imaginary property in Ultima is booming. enjamin Schriefer and Michael Gmeinwieser make money the new-fashioned way: they sell stuff that doesn't exist. And their customers, who pay them in cold, hard cash, don't mind one bit.

https://archive.nytimes.com/www.nytimes.com/library/magazine...


I remember castles in Ultima Online going for thousands of dollars around then on eBay. I think an 800pt Grandmaster build character went for a couple hundred dollars to $1k depending on the skill set.

I knew someone at the time who bought a brand new sports car with all the money they made off Ultima Online.

I honestly miss the game, had a blast playing it back in the day.


Here's a story about The Sims Online I posted a few years ago, in which I described making a maze solving bot to quickly and automatically generate millions of Simoleons, and an ad-hoc solution to the delivery problem:

https://news.ycombinator.com/item?id=11730181

I wrote a bot for The Sims Online that manufactured Simoleons, then repurposed it to catalog and describe objects in the game for you with a speech synthesizer. TSO had some ham-fisted money making multi player games that forced players to interact with each other in exchange for Simoleons.

One of them was a maze solving game for two players, where one player is lost in the maze and can see the local walls around them, and the other player can see an overall map of the maze without the player's position, and has to guide them around and figure out where they are and how to guide them out by asking them what they see and telling them which direction to move.

That required a lot of work for two people to do manually, so there was a big reward, but it was trivial and fun to solve mazes programmatically! (Plus it made cool bleeping and kaching sounds as it solved the mazes and printed money!)

I would run two TSO clients at the same time, logged into different accounts in different windows. The bot attached to both of them, then screen scraped pixels and injected events to repeatedly solve mazes by moving the player around until it identified where they were, solving for the shortest path, and bringing them straight home quickly by machine-gun clicking on the arrow buttons.

My housemate had a good eBay reputation, so as an experiment, we tried selling Simoleons on eBay for real currency via PayPal.

I could generate arbitrarily huge amount of virtual currency quite quickly. The bottleneck was selling it, and the problem was customer service.

The problem was that many of the customers were pouty temperamental 15-year-olds using their parent's eBay accounts, who would give scathing eBay reviews if their order wasn't delivered instantly, or they suffered some imagined slight.

And the other problem was that TSO just wasn't designed to make it easy to transfer large amounts of Simoleons from player to player.

You couldn't just "wire" somebody an arbitrary amount of cash via in-game email -- you had to show up on their lot and meet them at a specific real time, and suspiciously hand it over to them $1000 at a time.

There was another better way to transfer cash more efficiently than handing it over grand by grand, and that was with tip jars: You could fill a tip jar with $5000 using the pie menu with a couple of mouse clicks, and then the user could empty it the same way.

So when I had to deliver our first million Simoleons, I came up with a system where I'd go to the lot of the customer and meet them, then ask them to line up a bunch of tip jars in a row. I would then use bot macros to fill each tip jar one by one with $5000, while the customer would quickly empty them as I filled them up, and then we'd go back to the beginning of the row and start all over again, until we'd transferred the entire million Simoleons, in only 200 $5000 hand=>jar=>hand transactions instead of 1000 $1000 hand=>hand transactions.

One time when we were making a big delivery of cash, running the gauntlet of tip jars in our customer's living room (which I admit looked pretty fishy), and their housemate came home, saw what was happening, and wisely sussed up the situation that there was some kind of deal going down, that she wanted in on.

So she put her own tip jar down at the end of her housemate's row of tip jars, and I blithely deposited $5000 into her tip jar several times, which she immediately snapped up.

When I realized what happened, instead of contracting The Sims Mafia to do a hit on her, I congratulated her for her loose morals and ingenuity. It was such a great hack, and I totally fell for it, and had more Simoleons than I knew what to do with anyway. It's all about good customer service!

It was a fun experiment, but other bots and offshore farmers were starting to work the system too, and customer service and delivery problems made it not worth continuing.

So the unemployed Sims bot wouldn't feel bored, I retrained it into a more practical assistive utility called "Simplifier", which knew how to recognize and navigate the Sims user interface to show, scroll through, and enumerate all the many items, wallpapers, floor tiles, etc, in the catalog.

Simplifier demo starts at 3:15: https://youtu.be/Imu1v3GecB8?t=3m15s

It took snapshots of the icons, and read the text off the screen to capture the title, price and description (it was all in a bitmap Comic Sans font, so it was easy for a bot to recognize, if not for your eyes to read), and made a searchable illustrated database of all your built-in and downloaded content.

Simplifier addressed the problem that many players would download thousands of objects from web sites, or make their own custom objects with tools like Transmogrifier and RugOMatic (shown earlier in the demo video), but it was impossible to search or keep track of them through The Sims interface.

And it was useful for Sims web site publishers to make illustrated catalogs of their own objects.

You could also operate it in manual mode, where you press and hold on an icon in the catalog, and it reads the object description to you with a speech synthesizer.

That was useful for kids learning to read, old farts with bad eyesight, and snobby designers who hate Comic Sans, who would enjoy having the object descriptions read to them.

Schneier on Security: Virtual Mafia in Online Worlds:

https://www.schneier.com/blog/archives/2009/11/virtual_mafia...

Randy Farmer and Bryce Glass: Building Web Reputation Systems: The Dollhouse Mafia, or "Don't Display Negative Karma"

http://buildingreputation.com/writings/2009/10/the_dollhouse...


Surprised to see you're downvoted. I found this intriguing, and mirrors many of my experiences with the logistics of selling virtual goods.


Yes but games now actively have to fight this or they become a Money transfer agent and then you have to comply with anti money laundering laws.

I think that Bitcoin and Ethereum tie a lot of things together that make them weaker but are great technological achievements. Eventually governments will regulate them properly and the whole environmental impact needs at least a layer two solution.


If you haven't already read it (or, heck, even if you have), I _strongly_ suspect you'd have a blast with Neal Stephenson's _REAMDE_: https://en.wikipedia.org/wiki/Reamde


Wow, thanks for the recommendation, I've added it to my reading list!


I wonder if we’ll have politicians and political philosophers in the near future who will credit MMO games for awakening their keen eye on societal issues.

MMO worlds and their economies taught many how the basics of our economy works. As a kid you got exposed to virtual versions of negative aspects of free markets that went against the meritocratic ethos of the game. (Especially if you were one of the kids not permitted to use money to buy virtual currency.)


I wonder the same. Played MMOs growing up. Got scolded a lot for wasting time on video games.

But I look back now and realize a lot of my foundational knowledge on economics, programming, networking, teamwork, came from MMORPGS. They are social games where you deal with people - and that is a valuable experience.

Unfortunately modern MMO’s are very asocial games and I don’t think much can be learned from them.


From https://medium.com/loom-network/blockchain-games-the-biggest...:

> "I happily played World of Warcraft during 2007–2010, but one day Blizzard removed the damage component from my beloved warlock’s Siphon Life spell.

> I cried myself to sleep, and on that day I realized what horrors centralized services can bring. I soon decided to quit."

— Vitalik Buterin, Creator of Ethereum


> It took a staggering number of real hours to achieve this [woodcutting] level, we're talking several hundred hours minimum.

[laughs in agility]

Anyway I agree with Runescape teaching some real world skills. Runescape (and some other multiplayer games) also taught me about scams and I think trained me to be skeptical whenever something seems too good to be true. For a really basic example, that opportunity to double your BTC that Elon Musk is always offering his followers is literally the gp doubling scam, the most common Runescape scam from 2 decades ago.


> For a really basic example, that opportunity to double your BTC that Elon Musk is always offering his followers is literally the gp doubling scam, the most common Runescape scam from 2 decades ago.

Isn't this kind of thing illegal with real assets?


I'm fairly sure all scams are illegal regardless of the asset because a scam is by definition fraud which is illegal.


I traded custom scripts on a IRC channel. People would pay me with party hats and Santa hats which were some of the most ridiculously priced assets in the game.

The macro client even had a captcha queue where other miners could earn credits by filling out the captchas other players were getting and then use the credits to have other people fill out their captcha. This way you could leave it running all night as long as you did your part . You would get a captcha if you did the same thing for too long


I'm hoping the rest of the story was you putting some of your magic tree earnings into a few hundred Bitcoins when they cost pennies, and you are now a Runescape multi-millionaire.


Seems like it taught you a lot about finance, which is different from economics.


how did you find btc via rs?


Others in this thread mentioned similar patterns of acquiring and selling virtual assets. PayPal was a common money transfer platform and eBay was a common marketplace (before they banned the sale of digital items).

I stopped using PayPal for... a number of reasons, and BTC was a functional alternative.


A thought exercise you should undertake if you're thinking about / talking about crypto/NFT/web3-related projects: If the financial instrument that underlies the project were to stop going up in value XX% per month, would you still be interested in the project?

I do this a lot because I've made the conscious (and perhaps financially foolish) choice to stay away from everything crypto/blockchain related (for now, at least). So I have some perspective in being able to ask myself "Why is this interesting?" without any emotional-financial attachment. I do this little exercise every time I read about some new brain-twisting scheme to move money around and capture some of the XX%/month rise.

Play-to-earn seems to fit the same mold: You can talk all you want about how play-to-earn is "the new new" and how it's helping people out of poverty and changing the dymanics of gaming and yadda yadda yadda. But just ask yourself: If the money music stopped tomorrow, would you play the game?

Is there a "there" there without an underlying token that's gone up XX% in the last N months and everyone hopes will still go up XX% in the next N months?

It sounds like the answer, at least when it comes to Axie Infinity, is no. It doesn't sound fun. It doesn't sound compelling. It DOES sound like an opportunity for people to extract money from the crypto system that's fundamentally based on the assumption that the crypto system will continue rising in value forever.


> Is there a there there without an underlying token that's gone up XX% in the last N months and everyone hopes will still go up XX% in the next N months?

Alternatively, even simpler: where is the money coming from? A bunch of people playing a game are a closed system, and no value is created by playing the game. If the only reason why players are earning money from this game is because more people are continually buying into the game and entering that system, that sounds more like a pyramid scheme than anything.


This is what people don't seem to understand about BitCoin. It is cashflow negative, Money has to keep coming in to keep the price up due to paying miners. It is totally fine if you think BTC is better than the USD or Gold for whatever reason. But Bitcoin is still cashflow negative. You have to keep pumping money into it to keep up its value. Where is that money going to come from? Is it coming from Tether? Is it coming from people looking to make quick money? And when BTC hits 1M/coin, then what? You still need more money coming in to keep it above 1M.


Bitcoin has a use case for money laundering, tax evasion, evading China's exchange controls, and drugs. That market turned out to be larger than expected.


Interesting it’s like meta money laundering. It allows regular folks to make money off the illegal economy.

In some ways this was the extra profits banks made off illegal activities but that was largely held within the bank, not available to normies.


Is it regular folks, though? I imagine it's mostly big whales who are probably also doing shady stuff, too. We're talking about people doing money laundering, so financially savvy.

Few outside people get rich off the mafia.


My random lawyer is buying crypto. So they get to have their value increase as all the shenanigans goes on.


Gold has a usecase for jewelry, manufacturing electronics, dentistry and glassmaking. Yet not even the sum of these applications can justify its market cap of $11.73T, so the difference must come from speculation. I suspect the same is true for Bitcoin.


The difference is that gold has useful applications which act as a floor for pricing and moderate fluctuations. Gold bugs can still lose their shirts speculating but a normal buyer knows the value will never be zero.

Bitcoin is in contrast a pure fiat currency with very weak backing. Nobody has a need for it which can’t be satisfied at least as well by alternatives and it requires a very expensive always-on network to perform transactions. The floor is zero and liquidity is a very real concern.


>Nobody has a need for it which can’t be satisfied at least as well by alternatives

Have you ever tried to send more than $5k, $10k or $20k before? You basically can't with your bank without having to go through a bunch of hurdles or time delays. I can easily do that with bitcoin.

Legit, real need for it that can't be satisfied with alternatives.

In addition the bank is often closed on weekends, and doesn't service you into the night. My bank site "shuts down" at night. Sorry, but my ability to use my money isn't limiting by your waking hours.


I have, actually, and it wasn't hard. It did require a out-of-band confirmation which I considered a good thing since I rarely make transactions that large and never in a case which can't wait until the next business day.

That is, of course, the flip side of that convenience: if you ever make a mistake with your Bitcoin wallet, it's gone with no recourse. Good luck!


I did, without any issues nor delays.

I also dont know what bank you have but I can operate it any day through my app.

And your ability to use your "money" is still limited to having access to some wallet application, internet connection, your keys and chain fees.

Yup, I pay 0 to wire money, but I have fees for blockchains.


I can and I have. I needed to fill out a PDF (digitally) and ask the recipient for their IBAN etc., but they're both magically long strings so that's equivalent to needing someone's wallet address.

After that it was a matter of uploading the form and getting confirmation in a couple days, which I'm gladly willing to accept for peace of mind when it comes to large transfers.

> In addition the bank is often closed on weekends, and doesn't service you into the night. My bank site "shuts down" at night. Sorry, but my ability to use my money isn't limiting by your waking hours.

Odd, banking apps are open 24/7 here and if it's an in-bank transfer it's instantaneous.


And how do I send money to pay a bill with pre-existing systems?

Pay a third party like Venmo, Square, etc a fee, or use my banks (also horribly designed and bad UX system) to send the money slower than watching paint dry. I'd rather pay the Bitcoin Miners that fee than a third party or even by bank.


> And how do I send money to pay a bill with pre-existing systems? > > Pay a third party like Venmo, Square, etc a fee, or use my banks (also horribly designed and bad UX system) to send the money slower than watching paint dry. I'd rather pay the Bitcoin Miners that fee than a third party or even by bank.

Don't forget giving them cash or a check, or a credit card, as billions of people do every day. Fees are a fair point but that's purely a cost and timeliness question: Bitcoin historically has been slower and more expensive but it certainly could be useful as a competitor to horrible companies like Paypal if it can keep the costs down and transaction times low, not to mention scaling the system by 7+ orders of magnitude.

The catch, of course, is that this is not the path to world domination which features prominently in the sales pitch. That caps the maximum value at the percentage Visa, Paypal, etc. charge and if Bitcoin ever matured into serious competition, the credit card companies have plenty of margin to cut.


Apps here (Israel) -- local Venmo alternatives & banking apps -- are as smooth as Bitcoin apps if not more. In addition, all local Venmo alternatives have 0 fees and 0 signup cost (they're all operated by banks due to financial regulations but have 100% interoperability with any bank & credit card).


Now that Monero exists, not really.


The only coin that's actually stable, because it's the only one that has any actual purpose.


Yeah speculation would ruin the black market.


It must be safe to do tax evasion, money laundering, and drugs with a system that is transparent and traceable till the beginning of its existence.


But it's infinitely pseudonymous, and can be easily piped into more obscure systems.


It’s safe to launder money through banks too. And people do.


This is the only correct answer.


[flagged]


If your argument hinges on the premise that being either a police officer or a politician makes someone either a paragon of morality or wholly incapable of committing crimes, then I'm afraid I have some bad news for you.


My argument hinges upon the fact that Mr Nagle has been waging a FUD campaign for some time without much contest here, through leveraging his reputation. It's become tiresome, very few LEO support his concerns at this point, yet he continues unchallenged. It's mostly cherrypicking and well below the quality of his other posts.

All of us who've been around enough know what FUD campaigns look like on well-managed Internet forums. I am middle-aged and find this worthy of countering as it appears obsessive. Younger technologists are constantly having their efforts defamed needlessly on this leading technology forum with nothing being added to the conversation.


> Younger technologists are constantly having their efforts defamed needlessly on this leading technology forum with nothing being added to the conversation.

Speaking of nothing being added to the conversation, it’s somewhat conspicuous that you are attacking the source rather than engaging with the argument. His criticisms are valid and shared by many technologists of all ages and skill levels, surely you can explain why they’re mistaken — for example, you could point to extensive use of Bitcoin in a legitimate non-speculative economy. You’ve been promoting it for many years, surely you must have examples?


Indeed I have, appearing later in this thread due to how it became organized by moderation. Digital assets aided in stopping a predatory crime this year. If this kind of usage doesn't satisfy as a rebuttal to a negative parent post containing no supporting information, you may want to examine the fact that this entire thread is meant to explore some technologist's fear-based need to publicly associate digital assets with crime alone, in this forum especially. Emotionally-driven posts meant specifically to steam-roll any and all positive discussion by simply shouting "But Crime!"

Tracking the making of negative generalized statements using FUD techniques is something I have been involved in algorithmically tracking professionally and am countering not in the pursuit of karma or sycophantic agreement but simple public commons maintenance. (The data was often used to identify FUD campaigns of short sellers in finance forums and resulting sentiment analysis feeds are available via subscription through financial data providers.) These comments never mention the continual reigning supremacy of the US dollar for crime, ever, and never provide any evidence that bitcoin has a higher crime usage ratio than the dollar with less prosecutability. This is because law enforcement generally haven't advanced that position while enforcing and in earlier posts I've explained my extensive experience in detail as to how and why they haven't. There has been no direct engagement with this factual information.

In my view some on this forum are intent on spreading classical FUD on the subject and countering FUD is an occupation for some. After a decade of particularly questionable behavior coming from the technology sector involving unfathomable amounts of US dollars, we run the risk of portraying an image of incumbent ideological corruption instead of supporting meaningful technological discussion. This slide has been happening for years IMO and it saddens me. Younger technologists have considerably less opportunity than we did, not more, and the frontier is much smaller. Ruthless negativism doesn't serve them.


> Digital assets aided in stopping a predatory crime this year.

I saw you make that claim but that's too vague to evaluate whereas what Nagle described has been well covered for many years and even the Bitcoin salespeople rarely argue that it's commonplace. Even with the extra two paragraphs you added later there's no way to know what this meant, what fraction of the total Bitcoin usage it accounted for, etc.

> These comments never mention the continual reigning supremacy of the US dollar for crime, ever, and never provide any evidence that bitcoin has a higher crime usage ratio than the dollar with less prosecutability.

This is incorrect, and the need for the counterfactual narrative is telling: this comes up frequently and it's usually mentioned in the context of the larger economy. Nobody says that the U.S. dollar isn't used by criminals but it's trivially easy to show enormous amounts of real, non-criminal economic activity — nobody thinks, say, drug cartels are tiny but there's no serious argument that they're anywhere near a majority of the legal economy. If you want to address this claim, try highlighting examples of real economic activity using Bitcoin — real businesses which are not selling Bitcoin. If USD (or just Visa/Mastercard, Paypal, etc.) activity suddenly halted, a ton of people would be unable to engage in their daily business — can you provide any examples of similar Bitcoin dependencies?

> Younger technologists have considerably less opportunity than we did, not more, and the frontier is much smaller. Ruthless negativism doesn't serve them.

I agree that the landscape isn't as good as it used to be but I don't think it's helpful to steer people into false hopes, either. Bitcoin has an inherent conflict of interest built-in since all of the people who've poured money into it for the last decade will have to write that off if they can't find buyers. That lack of utility is the real problem and calling it FUD won't solve it.


I agree with most of your points. If something as real-life meaningful as the stopping of a predatory crime does not satisfy you as a legitimate usage example against people claiming there is essentially none, I'm at a loss and am unsure of what we're actually discussing.

As you may imagine, it's impossible for me to provide the 1,000 page+ documentation trail of an in-progress federal investigation here in order to refute a comment. I understand that my sincerity may be questioned and there's nothing I can do about that.


I'm sorry but as an observer to this thread: there is nothing even remotely compelling to your argument. 'stopping a predatory crime' - one instance? That you can't refer to? Not compelling.

In fact, the sheer number of predatory scams being performed using crypto would surely outweigh the alleged single incident in which Bitcoin had a positive influence?

Your inability to meet any other requests for evidence (businesses that legitimately use and depend on btc) is downright damning.

I hold btc, but every booster simply fails to demonstrate any actual utility for Bitcoin beyond being a speculative vehicle.


I do not hold any meaningful amount of btc. I am not selling bitcoin, I am countering FUD. there is not a single example of my intent in this thread being promotion or marketing. I'm pointing out classical FUD techniques on a public technology forum, not making an argument. There is zero desire to compel you. Your proclamation of damnation is noted here for posterity.

I'm specifically refusing the demand that it's my responsibility to provide evidence of commercial btc usage in order to highlight FUD tactics. The alleged story I mention is likely to receive media exposure in Q3 2022, and it's largely but not completely up to the target.

In your opinion the anecdotal story of aiding in the stopping of a predatory crime is not compelling and does not demonstrate meaningful utility. If you think every human agrees with you that is not compelling, I believe that is an extraordinary statement on your part.

The common hostile attitude here on the subject is what's being captured and addressed, and my response to it is what I'm specifically capturing in my comment history for posterity. It has utility.


>as it appears obsessive

Do you see the irony here?


That's a political publicity stunt, and does not counter any of the points made by the parent


Help me understand. Are you saying that former LEO are well-served from a PR standpoint by attaching themselves to the "points" you're holding are clearly evidenced by the parent post?


The parent post argues that cryptocurrency is most useful, in practice, for illegal activities. It does not argue that this is how it's perceived by the general public, by the NYC municipal government, or by Eric Adams. The perception is that it's a sexy new technology of the future, whereas the reality is that it's mostly a playground for "investors", fraudsters, and criminals.


I understand your point of view, but you haven't even attempted to qualify it.

I can tell you that I helped stop a predatory crime that was being committed using US dollars this year, partially by using digital assets defensively. Defamatory general statements about the target and digital assets had been made in the past in this case, and it backfired on the perpetrators- horribly, in the federal jurisdiction.

Could you take a moment to consider why unqualified generalizations like yours could concern some? In the past, the perpetrators had attempted to capitalize on the perception you are asserting as reality. The possibility of resultant ankle bracelets or worse for them is high, due generally to record keeping and time stamps.

The reality of this technology is that it solved the technical problems associated with Internet native asset classes. The rest is editorializing.


Yes, especially the ones that become politicians.


OK, I think I get it better. I'm not disagreeing and sincerely appreciate the cynicism, but you're saying the guy who ran on a relatively classic tough-on-crime platform is also appealing to some kind of criminal subclass of NYC voter who prefers bitcoin to cash for their locally committed crimes and also appreciates tough-on-crime platforms for everything else?

Perhaps... or maybe the reputation for crime that some people are intent on projecting onto bitcoin is not particularly accurate to the realities of currencies used most frequently in the commission of criminal activity.


(To help qualify my perspective and insistence... I was involved in stopping a long term predatory crime this year where digital assets were used to help protect the victim against perpetrators using dollars. As you might imagine, having clear records of transactions is likely to be more helpful to the targets than the perpetrators in these cases.)


You can use local heavies to protect yourself from bullies. That doesn't mean those heavies won't commit crimes in their spare time.


To be clear, I'm talking about the bookkeeping element of an in-progress federal investigation involving theft of corporate equity and corporate tax fraud. The target was legally disabled.


Isn't the same true of gold?

The gold supply is inflating at about the same rate as bitcoin right now, but has enough incoming cash flows to keep the priced propped up enough to maintain a $10 trillion market cap. Obviously some of that incoming cash flow is for actually generative industrial use cases, but it's a minority, https://www.statista.com/statistics/299609/gold-demand-by-in.... The lion's share of incoming money flow is for jewelry, long term savings/investment, and central bank holdings, and you could argue that most of the jewelry use case only exists because it's a good store of value, since we can easily make jewelry that looks as pretty for much cheaper than the real thing.

So, since most of the cashflows into gold are just people holding long term with the expectation that there will still be people wanting to buy it for investment purposes in the future, and this scheme has worked incredibly well for 5000 years, why couldn't the same be true of bitcoin?


You need to pay the miners just to be able to transact with Bitcoin. Gold on the contrary, you can just hand it over to someone else.


It's way more expensive to store and transport gold than bitcoin, although it depends on the amount. You also have to price in the protection provided by local authorities that protect your property, in addition to your own security measures.


You need men with guns to move gold between banks, which themselves are protected by men with guns.


Bitcoin is unlikely to have a 5,000 year lifespan because unlike gold it can be obsoleted.


Gold has already been obsoleted by fiat money because it's too expensive and slow to transact with in the modern world.

Bitcoin won't necessarily have the same problem, because it's an information protocol. Protocols can be updated and improved. Even if the main chain ossifies and can't be improved, bitcoin tokens are already being moved to alternative blockchains (sidechains) via 2 way pegs.


It’s likely after some number of years, most people will have lost their Bitcoins and there won’t be many left in circulation.


I think that would be a very amusing outcome. the rate of accidents can't be held at 0 so the supply of Bitcoin can only decrease in the long term.

However, is there any reason the network couldn't decide to, say, subdivide Satoshis even further to allow the remaining supply to become more tradeable? If the changes are slow enough over time it doesn't seem like there's a limit to how far that could go.


!remindme 100 years


How is that different at all from fiat currencies? Every electronic transaction you make, like credit card or money transfers, has fees. Central banks have to keep pumping money into the economy so we can have the same nominal amount of cash in the system(albeit with lower value, because inflation).

So, my question is, is fiat currency cashflow positive? How?


No money doesn't have positive cashflow, that is why it is a stupid investment.


We devalue currency by 2% per year so people have an incentive to work = keep pumping. That work creates goods and services in the process.

The problem with Bitcoin is that if it goes up in value the additional time spent mining is ultimately a waste of time.


I live brazil and earn in BRL. In the USD/BRL pair, the dollar price keeps increasing when you look at the historical data. Does that mean that holding USD is enough and investing these dollars to make more dollars is ultimately a waste of time?


I use ACH and Venmo all the time for no fees. Do you mean the tiny electricity fee that they pay on my behalf of maybe $0.01? Sure seems like a great deal compared to the multiple dollars (sometimes over $50) charged by Bitcoin and friends


You aren't talking about the intrinsic value of Bitcoin. You are talking about it's value relative to USD. These are completely different things.

Bitcoin has intrinsic value outside of the fiat system. It can be used entirely independent of fiat. Whether that will become common is another matter, but the value of Bitcoin does not have to depend solely on it's value relative to USD.


As long as miners can't pay the power company with their mining rewards, bitcoin can't exist outside the fiat system. The mining reward denominated in the currency the miner has to pay their electricity bill in MUST be higher than the electricity cost to mine the reward, otherwise the miners go bankrupt.


Capital-intensive industrial-scale miners might go bankrupt, but the origin of Bitcoin (starting from the whitepaper) imagined an ecosystem powered by effectively spare CPU cycles, where the marginal cost of electricity wasn't a big factor.

The beauty of the design lies in the balance of the incentives -- if electricity is too expensive, then sure miners will drop out, which lowers the hashrate and thus the security of the ecosystem, but remember that if electricity is expensive for honest miners than it will also be expensive for attackers. And if somehow there is an asymmetry where attackers have access to cheaper electricity than other honest miners, well it's likely in their economic interest to simply become miners themselves rather than attackers...

Bitcoin can easily exist at a minimal survival level that is effectively outside the fiat system for all practical intents and purposes, by leeching off free or near-zero cost electricity (I mean, nobody cares about the electricity bill for "folding@home"). In that kind of mode, it may not have industrial scale and you might not want to transact trillions of fiat-dollars worth of value through it, but it can easily exist.


From my understanding that's not exactly how Bitcoin mining works. It scales based on the amount of miners. So if the situation is as you described (value relative to USD tanks - which I find very unlikely due to inflationary nature of fiat) people would stop mining which would decrease the difficulty of mining causing it to use less electricity.

There are however miners using nearly free sources of electricity such as flared gas wells, solar, etc... If Tesla accepts Bitcoin/Doge for solar panels then you may have a system independent of fiat.

I'm just saying it's possible, not that I think it will necessarily happen. Like I mentioned I think BTC's value relative to USD will increase over time due to fiat's inflationary nature (Fed is targeting 2-3% inflation).


> people would stop mining which would decrease the difficulty of mining causing it to use less electricity.

This is true, but then you have a bunch of costly mining ASICs sitting idle. The bitcoin network does not pay miners out of the goodness of its heart but because it needs a very high hash rate to defend against double spend attacks. Guess what those unused ASICs might be very effective at? A prolonged fall in mining power caused by a falling BTC price is a death sentence for bitcoin as it would lead to massive attacks by opportunists renting hashing power to double spend their coins. You can already see this in many smaller coins.

> nearly free sources of electricity such as flared gas wells, solar, etc

Those may be cheaper than regular power, but they are not free. Taking solar as an example, you need to invest capital to buy the solar panels and they have a finite lifespan. Cost divided by lifespan gives you the running cost in $/year. Similar things are true for flared gas wells; you still need to capture the energy somehow and generators are not free.

> If Tesla accepts Bitcoin/Doge for solar panels then you may have a system independent of fiat.

This just moves the problem by one degree of separation. Unless Tesla can buy solar panels for bitcoin, they will need to sell crypto for fiat to buy their inputs. This goes all the way down the supply chain down to the real-world miners who dig up the ores for the solar panels and even they will need to pay their taxes, which you cannot do in bitcoin.

> I think BTC's value relative to USD will increase over time due to fiat's inflationary nature (Fed is targeting 2-3% inflation).

Perhaps. I suppose that this will depend on how much the maintenance costs in electricity and miner ASIC replacement costs as a percentage of total bitcoin market cap per year. If these costs are higher than 2-3% per year, bitcoin will see a net outflow of fiat as running costs and can only rise in price if new users continuously flow in (and of course, only ~7 billion potential users exist).

Also, it might be interesting to read up on why central banks universally target a low but nonzero inflation. There is a ton of established theory about why this is desirable and none of it is based on "let's screw taxpayers". Throwing that away will basically guarantee that crypto will never be very useful to pay your bills with.


That's a really interesting scenario. But I'd imagine if double-spends became a persistent threat, they'd just hard fork to a slightly different hashing algorithm. That would brick all the pre-existing ASICs.

In the 2018 bear market, BTC lost 82% of its market value peak-to-trough. Double spend attacks by dark ASICs didn't become a factor then. So most likely you'd have to see BTC fall by 95% or more before this became a threat.


>>> This goes all the way down the supply chain down to the real-world miners who dig up the ores for the solar panels and even they will need to pay their taxes, which you cannot do in bitcoin.

Unless more countries follow El Salvador's example, and accept cryptocurrencies as legal tender. If El Salvador hadn't banned metals mining in 2017, you could the guys digging up ores with BTC today.


I can't pay my hydro bills with shares of a private company either or japanese yen either, it doesn't mean those things have no intrinsic value.


The difference is that you can pay someone with JPY and that's the whole transaction. When you pay someone in BTC, you also have to pay the power company with something. The system is an inherently leaky bucket.


> When you pay someone in BTC, you also have to pay the power company with something. The system is an inherently leaky bucket.

The same holds for, say, transactions in US dollars. Here, you also pay your bank or your credit card company.


That's not a fundamental property of fiat money. There is no fee for exchanging cash.


The "fee" for fiat is inflation. Your money is regularly losing value even if you do not transact it. Not to mention cash transactions as you describe are on the decline and do not represent the majority of transactions that happen in the U.S.

I'm not saying this is a bad thing by any means, in some ways it is a good thing. Just stating that it exists.


Does cash just grow on trees? No, it is printed by a government that employs thousands of agents who have to make sure that no one is counterfeiting those bills. The fact that I can hand someone a $20 and walk away with my bag of groceries is the tip of a massive iceberg of regulatory and enforcement mechanisms.


no one said that. you're paying in some fiat, right?


> Bitcoin has intrinsic value outside of the fiat system.

Not really, because even though the number of Bitcoins is limited, the number of cryptocurrencies is not. In any application that uses Bitcoin, you can substitute Litecoin, Dogecoin, or most other altcoins/shitcoins in existence, and there would be zero difference.

In fact, Bitcoin's only advantage over those coins is extrinsic--it has more longevity, better brand recognition, and a lot of large players interested in making it seem (relatively) legitimate.

Contrast this to when people talk about gold having an intrinsic value, as you can't just replace gold with silver or copper when e.g. manufacturing electronics.


> even though the number of Bitcoins is limited, the number of cryptocurrencies is not.

There will only ever be a single dominant SHA-2 PoW cryptocurrency, because mining power can be expended on only a single chain. Doesn’t matter how many new genesis blocks are minted, this is a natural monopoly and Bitcoin clearly is the monopolist.


Bitcoin being the "dominant" cryptocurrency doesn't seem to change any of the parent commenters points, right? Those regarding intrinsic vs extrinsic value?


Bitcoin itself does not because its low transaction speed makes it unusable for real world applications. Second, why use something in a financial transaction whose value can fluctuate 10-20% a day? That's not a stable currency.

So for all intents and purposes, Bitcoin is an unstable investment product.


Money doesn't have an intrinsic value. Money is just an accounting system, it is a balance sheet. People used physical gold as tokens or entries in that balance sheet.

Ultimately you are depending on another human who is actually doing work. This is why the credit theory of money is so appealing.

Money has value indirectly because someone obligated himself to give you value equal to the money created. When you add up debts and credits then you end up with nothing because money is just an agreement and not a commodity.


I don't think it is a meaningful distinction. Money itself might not have value, but the miners and nodes are providing value by ensuring the integrity and security of the blockchain.

But more to the point, when I said "intrinsic value" I meant value relative to goods/services. Where as when I used "extrinsic value" I meant relative to other "money" such as fiat. Maybe it was a poor choice of words.


> This is what people don't seem to understand about BitCoin. It is cashflow negative, Money has to keep coming in

Pretty sure a sizable portion of Bitcoin holders understand and know that. They don't hold Bitcoin as a form of bespoke investment to be exchanged for money at some point in the future. They hold it because they believe it is sound and incorruptible money.

And as long as they (not any additional people!) continue to believe that, it will hold value.

It is to be seen if they are right or wrong, but they know how cash flow works.


Is this Peter Pan? If you just believe in the power of BTC it will never go down in value?


I don't think Bitcoin is doing particularly well as a currency, but can you name one currency that will not go down in value if people stop believing in it?


Yes. The key realization is all forms of wealth preservation are the same. We value things because other people value them (once we have our basic needs met).


that's a strawman of the parent comment's argument. and yes, if enough people believe something, it takes on real significance. e.g. enough people believe in the full faith and credit of the US Gov that backs their printed paper with numbers on it, so it takes on real significance.


I must admit I don't understand why it is "cashflow negative". I'm not invested in any crypto, but I have thought about it, and my casual thoughts have come to the opposite conclusion. The higher the price of a cryptocurrency, the greater the interest in mining and investing. It seems like a positive feedback loop to me. Why is it not?


For Proof-of-Work coins, the miners need significant amounts of electricity. Electricity is not free, so maintaining the network costs a significant amount of money. This money is "reimbursed" to them through mining rewards, but since electricity companies typically can't be paid in cryptocurrencies the miners will need to sell (a part of) their mining reward to pay the power bill. This means that there is always a money outflow proportional to the hashrate, which somehow has to be made up from money inflows from users.

A cryptocurrency without users putting in "new" money will slowly bleed out through electricity costs. This will become even more "fun" in the future as all coins will eventually be mined and the ginormous electricity bill will need to be paid through transaction fees alone. This is one of the main reasons Proof-of-Stake is getting so much research btw, since it should use way less electricity.

(The above is true for most currencies btw, even dollars and euros bleed out money because they have to pay mints and central bankers. The difference with those is that there will always be demand for (say) dollars because US citizens MUST pay their taxes in dollars. If they don't, a number of measures up to and including prison can be taken against them. Bitcoin has no such backstop since nobody ever NEEDS a bitcoin to pay off someone. Ransomware is a rare exception)


Is ransomware that rare an occurrence? I could see ransomware being the taxes of web3.


If ransomware ever becomes big enough to rival the cumulative tax bill of a nation state, you can bet that combating it would get a lot more priority. Spec ops teams raiding office buildings in foreign nations type priority.

Countries are very protective of their cash flows.


Imagine if you had the option of buying a piece of gold or a piece of land with good irrigation and good soil. You can plant vegetables on the land and sell those vegetables for other people to eat. Therefor your investment is generating profit and "cashflow". Gold on the other hand just sits there, and you may want to keep it in a safe at a bank and the bank will charge you a fee for storage making it negative cashflow.

The price of gold or land or BTC can go UP or Down, but that depends on market demand of that asset. The nice thing about owning the farm is that even if the value of land goes down you can still sell your vegetables or eat them to stay alive.


Your gold analogy might actually help me make my point. When the California gold rush was happening people went nuts trying to mine for it. Eventually the mining slowed, presumably because the cost to mine it started to exceed the value of it. Bitcoin claims to be this way (you may have known this; I had to look it up), stating that mining will halt at 21 million Bitcoins. But didn't Bitcoin already fork in the past? And won't there always be a new cryptocurrency to fall in love with? Unlike gold, when Bitcoin mining wanes someone can just invent "gold plus" with a few keystrokes and then here we go again. The feedback loop may not be confined to a single cryptocurrency but I still don't understand how it will ever end.


Yes, I agree, this can go on forever. "DeFi", "web3", and then something else


> Imagine if you had the option of buying a piece of gold or a piece of land with good irrigation and good soil.

Why imagine? Both of these things can be purchased in the real world. And yet we see that some people purchase farmland, and others purchase bars of gold. Why is that?

Turns out, people called economists have been pondering such questions for hundreds of years and have developed quite sophisticated and nuanced theories about how humans create, assign, and transact value.

Anyways, thanks for the lesson on “cashflow” but you might want to pick up an economics textbook, you might learn something.


You may want to look up how often these "quite sophisticated and nuanced theories" are accurate.

https://www.economist.com/economic-and-financial-indicators/...


Where’s the value added coming from though, and how far are you from there? If crypto enables someone to dodge taxes, sell drugs, or wire remittances with less overhead, that’s a potential value add [arguably, with externalities]. For how many of such activities do we need byzantine consensus, i.e. can they stay competitive in the long term with solutions built on tradfi & SQL? How much of these gains can be captured from sidelines by, essentially, exchange rate traders? Positive feedback loops without a sustainable value proposition will pop sooner or later.


This negates the idea that bitcoin or it's ilk could replace USD.

Crypto technologies are interesting to me because of their great potential for good (defi) and bad (dystopian black mirror gold farms, dyson sphere fueling crpto mine, etc).


Someone building a Dyson Sphere just to power a crypto mining rig is an awesome concept for a short story or sci-fi RPG adventure (such as Traveller).


This is addressed in the original white paper. In a world where BTC is valued at 1M USD/coin you’d also expect a decent amount of day to day usage. Miners could still make decent profits based on transaction fees just from confirming blocks even once the Coinbase rewards stop. I’m not saying that’s currently the case, but that is the design. Also if miners are making a profit off let’s say $40k/coin and the price goes down to 30, yet there’s still a profit for some miners, how exactly does that become unsustainable?


Miners could make a profit at $1/coin. The issue is that profit comes from somewhere. And that somewhere is new money being put into BTC. Hence, BTC is negative cashflow.


Help me here. All databases are negative cashflow. They only 'cost', don't generate 'revenue' by themselves. This is true of ACH mechanism to transfer funds from one bank account to another. Does that make USD negative cashflow? Does the cost of maintaining this ACH system affect the price of USD v/s GBP?

The value provided by a database such as BTC is that it provides a record of 'who owns what at what point of time in history'. I can argue separately about why the 'immutability' of this database itself is a value created by Bitcoin, for which holders can be willing to pay premium for.

Miners earn profit if Operating Costs > $ value of (Transaction Fees + BTC mined). Over a long enough timeline, Fees + BTC mined will ~~ operating costs of the rig. If not, more miners will continue to see economic opportunity, and keep joining the miner pool till that equation is balanced.

The other source of BTC value going up need not be more demand for it, let's say over next 12 months. The ~6% inflation could show up there too.

What am I missing?


The energy waste is designed to go up as each individual Bitcoin goes up in value.


Profit comes when their operating costs are less than the take home from any transaction fees and Coinbase rewards they’ve collected in the same period. It’s not a direct function of liquidity entering the system. It’s true that rising prices from new cash flow means more profit for miners, but that doesn’t imply the opposite. The price could stay constant for the next 100 years and miners that have found a way to remain profitable within that price point would be fine.


Miners have real expenses: electricity, depreciation, etc. Miners also generarte revenue, $45 million per day is a reasonable estimate [1]. This revenue is extracted from the Bitcoin system through both transaction fees and inflation (creating new Bitcoins), but these are sold in portion to pay real expenses, with presumably some profit.

We can estimate 300k transactions per day, which implies about $150 revenue per transaction. Miner revenue is your cost: it is what they extract from the Bitcoin system.

One Bitcoin transaction costs on the order of $150. It's really expensive.

1: https://www.blockchain.com/charts/miners-revenue


If the price stays constant for 100 years where is the money coming from to pay for those NVIDIA cards that the miners are using?


> In a world where BTC is valued at 1M USD/coin you’d also expect a decent amount of day to day usage.

Citation needed.

(I don’t see why this should be true at all. If anything I’d intuitively think the opposite: If gold were $1MM/oz I don’t think people would be using it to buy groceries… Unless you’re directly talking about hyperinflation where $1MM isn’t worth a loaf of bread any more.)


is the day to day usage of bitcoin currently increasing in proportion to coin price? it seems entirely possible that the price could get very high solely as a speculative investment. in which case, you would still need additional investment money coming in


Just about every project is cashflow negative. Most projects start Worthing $0 and rises to another number later on


> Money has to keep coming in to keep the price up due to paying miners

This is incoherent. It's hard to refute this because it's not even on the right page.

Demand for Bitcoin comes from demand for money (to transact, to store wealth, etc.).

It sounds like you're trying to model it using some idea of how equity pricing works - is that accurate?


All assets ( BTC, Stocks, Gold ) are priced on supply and demand. If demand goes down for BTC the price will go down.

It doesn't matter if the fed prints money or not BTC needs a constant infusion of new investment to keep the price up. Unlike a company with positive cash flow who could buyback shares and never get any new investors and still keep the price up.


> If demand goes down for BTC the price will go down.

Indeed. What may be missing from your model is that demand for BTC comes not just from people buying it, but from people holding it.

> BTC needs a constant infusion of new investment to keep the price up.

No it doesn't. Why do you say this? Where the market clears has essentially nothing to do with "new investment".


Stop and think about what you are saying. If everyone in the world stopped buying TVs and instead held onto their current TVs the demand for TVs would go to zero. What would the market price of TVs be when there is zero demand?

How do you think BTC miners pay for the graphics cards and electricity? NVIDIA doesn't take BTC as a form of payment. So money is constantly leaving the BTC network to pay for electricity and graphics cards. The only way that happens is if money is also coming into the BTC network


Every sale is also a purchase. The market price of something is precisely the equilibrium price at which inflows and outflow are matched. Think hard about this.


Holding isn't demand. Holding just reduces supply.

Miners need to sell BTC to cover their operating costs, so there's constant sell pressure. To maintain the same price, you need equivalent buy pressure. Hence the need for "a constant infusion of new investment".


This is the most crucial question about everything crypto-related.

Because it turns out every crypto market is a negative-sum game. If you invest, you are guaranteed to lose on average. If you do happen to win, your gains are coming out of the pocket of someone else who lost even more.

The price of the token in question doesn't enter into this at all. It can rise, fall, anything. It is still a negative-sum game, but some people have not yet realised that they lost.


>It is still a negative-sum game, but some people have not yet realised that they lost.

And some people have not lost at all. As a lifelong poker player, the calculus is very much the same. A poker game where rake is taken out is a negative-sum game. But that doesn't mean that every player loses, even if they play forever. There will be more net losses than net wins, but these are not evenly distributed.


That's a pyramid scheme and/or gambling. You're relying on many marks to lose money to make money.

There's a reason we regulate or ban that.


Yeah, that's gambler thinking.

In reality, you're going to lose money.


As long as there are 2 or 3 guys like you sitting at the poker table its very difficult to lose!


> Because it turns out every crypto market is a negative-sum game.

[Citation needed]

You can't just hand wave and assume this to be true. If the world's major investors decide that crypto represents a store of value, then that's a positive-sum game for crypto. If stablecoins transacted on smart contract chains generate demand for Ethereum to pay for the network transaction fees, then that's a positive-sum game for crypto. If new enterprises start raising capital through DeFi and DAOs instead of traditional capital markets, that's a positive-sum game.


What major investors decide has no bearing on it. Mathematically, it is now, has always been, and will always remain a negative-sum game. This cannot change, it is part of what bitcoin is and how it functions economically.

It is a negative-sum game, no matter how hard you wished it were not.


If crypto is a store of value and its value goes up who exactly is working longer hours to create that additional value?


If the game were actually fun, there could be money coming in from players who value the fun more than making money. Axie may have an element to this, but I hear it's not fun. The term for these players is "whales." They are willing to spend a lot for fast progression and domination. A game which pays Filipinos may have money coming in from a well-off player in China. There could be schemes where whales hire Filipinos to grind for loot and gold. However, it's hard to see a situation where a game could pay for development and support thousands of grinders. It would be interesting to see how big the MMORPG grinding economy is. That might give us an idea of how many people these games might support.


One day a trillionaire will build a blockchain game built around proof of humanity. You will have to spend 1 hour solving a problem that can only be solved by humans but verified by a machine to earn $4 an hour. World hunger solved :)


Where the money was coming from when Facebook, Google, Youtube, Twitter etc were really good places that were free to use? They all were working to "make the world a better place" and not making money as they were burning billions each year, challenging the traditional and profitable companies. With Amazon prices were amazing, you had unlimited rights and not only buying but also selling was great. Bezos was worth quite a much but his company never made any profit up until a few years back.

The news business was destroyed in the process, just as the retail and once the establishment lost its ground the money began poring in. From 90's up to late 2000's the internet was amazing as everything was paid by people who were about to reap their investment back a decade later.

My point is, following the money is tricky. Maybe we are at the verge of another change where the costs are payed by crypto bros who will be splitting countries and starting wars once they are done growing the landscape.


> Where the money was coming from when Facebook, Google, Youtube, Twitter etc were really good places that were free to use?

I don’t think this is very mysterious. It’s coming from investors who are spending money in the expectation of future profits as the business scales and reaches greater efficiencies and increases monetization.

In the case of this cryptocurrency there’s no obvious point where these tokens suddenly become useful. People only buy them because somebody else will be willing to buy them later (which, of course, relies on ever-increasing amounts of money entering the system). With a stock you are at least theoretically anchored to real world value, since you can buy out a company with stocks and then liquidate the company’s assets.


All these coins and projects have a mission statement and high level overview on how they think it will be useful in the future. It's up to you to believe them but they do have a proposal.

The stocks are more opaque in that regard, they are required to publish some declaration and financial disclosure but explaining why you need to invest in that company stock often comes down to CEO's appearing in the press. Countless internet ventures died in the process.


> All these coins and projects have a mission statement and high level overview on how they think it will be useful in the future.

The thing I like about Dogecoin is that it's at least honest: it's not selling itself as anything more than a token with a price that will go up if more people buy it.


> Where the money was coming from when Facebook, Google, Youtube, Twitter etc were really good places that were free to use? They all were working to "make the world a better place" and not making money as they were burning billions each year, challenging the traditional and profitable companies.

But they were visibly creating value. Seeing what my friends are up to and organising parties together is pleasant. Being able to find what you want on the internet in 1 second rather than 30 minutes is an obvious improvement to your life. So even if they weren't profitable in the short term, you could see that there was legitimate money to be made.


There are no closed systems, and players playing a game does create value. It's almost the only important aspect of software's value - users. Anyone can write some garbage software, or hire people to do it, not anyone can make things people will want to use.


> There are no closed systems

This single fact destroys most arguments about almost anything, but especially in economics


Money doesn't have to come from anywhere. Sometimes new value is created and the money is brand new. This is how GDP grows.

In the case of BTC, it's pretty clear that a huge portion of the market cap didn't come from anywhere. It's new capital. That doesn't mean it can't go to 0 and vanish overnight. But it does mean that play to earn games don't always need money coming in to pay out.


Fiat is created by banks - by originating loans. A bank does not actually need to have that money to create the loan - it is not transferred from somewhere else, it is just that the bank's balance sheet expands. There are rules on how much a bank is allowed to create, as you might imagine.

The BTC system does not create money - you can follow the creation of a coin system to its eventual destruction and discover that exactly the same amount of fiat went into it as came out (less mining). In fact, at any moment in time, the same also holds! If you buy $100 of BTC, somebody somewhere has just sold $100 BTC. No money is ever created or destroyed. Of course (if you were a lunatic), you could get a loan to buy BTC, and so money would be created, but by the banking system, not BTC, and it would go straight to whoever you bought BTC from.

As soon as people decide they don't want to put money in, then no money can come out. You will know this because the 'price' of BTC will be zero.


I completely agree with you, but I’m wondering if you could help me debate the counter argument: “The same is true of stocks, if people decide to stop putting money in, no money comes out”

It comes up whenever I make a point similar to yours above, and I haven’t had a good answer for it


Stocks represent a share of a productive asset - the (presumably successful) underlying business. That business includes capital goods and other assets having intrinsic value themselves, and also the value created by organising them together. The profits can be distributed as dividends, or used to grow the asset (buy more machines or whatever).

Of course speculation muddies the waters, but you can see how important annual accounts etc are - to ensure the business really has the value it is being ascribed.


Right. So exactly the same is true of stocks when it comes to trading existing stock. The key difference is the creation of stock - IPOs. The company uses that money they get from the IPO and invests it into the business, which results in profits, which they give out as dividends. There's no such mechanism in cryptocurrency.

Unfortunately the other side has a good response to this - if the dollar value of buybacks+dividends exceeds the dollar value of IPO's, then you end up with the same problem that Bitcoin is in, where it's a net loss system. That seems to be the case[0]. This is not a well known fact.

Ultimately this comes down to the fact that we don't have a stable velocity of dollars, and an unstable velocity that results in more dollars chasing less more goods produces speculative bubbles that must eventually crash and create recessions.

All investments, including all currency, whether it be stocks or gold or bitcoin or dollars, is inherently valueless. The only time you can calculate the value is when you actually are extracting utility. You can then work back from that to determine who produced that value.

[0, Figure 5/Figure 8]: https://www.yardeni.com/pub/buybackdiv.pdf


Regarding stable velocity. If we had negative interest we would have it. Then all that monetary expansion nonsense could be over and we could get on with our lives without cursing some evil businessmen for being morally reprehensible so we have a scapegoat.


I don't know what the natural interest rate such as to get a stable velocity, and it would not be static but would change with changes in the economy, but I don't think it would be negative unless we were already deep within a recession.

And do be so quick, there's always another issue to simplify! Can we get base 12? Can we get a carbon tax? A land value tax? Voting reform? I can go on all day here...


Your description of banks is correct. Your description of BTC is wrong. You're missing an important fact. The price of BTC can, and does, change. When it changes, the market value of all BTC changes. If the value of all BTC goes up, new value (not money) has been created.

Also, lots of people take loans to buy BTC. This is called "leverage".


Ah but a change in the price of BTC does not in fact create any value - it just means that that $100 now corresponds to less BTC. You can profit from that fluctuation, by being on the right side of the cash exchange at two separate points in time. Somebody else will be on the wrong side of that exchange (well, in aggregate anyway - there will be many somebodies on either side) and will suffer a corresponding loss.

Since BTC is intrinsically worthless, any 'price' that might be ascribed to it is meaningless (aside from the profit/loss action described above).


The same (incorrect) reasoning applies to literally anything you don't physically use including USD, equities, gold, land, etc.


USD is useful because you can pay taxes with it, equities represent an income stream as dividends from a (presumably) successful business, gold can make jewellery etc, land can be rented out.

Even the supposed utility of BTC - as a money transfer mechanism - does not require the price to be anything other that not zero.


If I have all the ice cream in the world and it spoils in a week because I cannot eat all of it then it is not that wrong to say that its utility to me is zero.

By the way his argument is that any absolute value ascribed to a currency is arbitrary or rather that there is no correct number.


more that BTC is of course not a currency, because it is not backed by a state entity. I can't pay taxes with it.


> You will know this because the 'price' of BTC will be zero.

To be exact in this scenario, the 'price' of BTC will still be the price of the last trade in cryto exchanges. The trading volume however, will be 0, and there will no demand on the bid/ask. Hence you're stuck with BTC you can't offload.


It's not just a closed system, it's zero sum. It's only possible to cash out for a profit if there are more people willing to buy in.

Some of the anti-bitcoin crowd tried to make the term "Nakomoto Scheme" a thing, and clearly failed. The basic idea is that things like Axie Infinity have some of the aspects of a ponzi scheme, without the central organization and coordination that makes an actual ponzi scheme illegal. While there isn't a central operator paying out old investors with new investors money, anyone currently invested can only cash out if new people join. This begins to look a bit like a decentralized ponzi, with everyone currently invested in it motivated to evangelize it and convert new people in order to ensure the fresh supply of new buyers to keep the price up and/or let them cash out.


Probably a Ponzi, not a pyramid, scheme, no?


I did a report on this game for a client a few months back -- the amount of daily earnings a player can expect has crashed significantly over the past few months, and it's only gotten worse ever since.

https://twitter.com/larsiusprime/status/1459191090100244483


That's pretty impressive. What do you know what caused the May 2021 spike? what is your feel of how 'sustainable' the whole eco-system of this game is..


The May Spike: they migrated off of Ethereum and on to their own private blockchain, Ronin, on April 28th, which massively lowered transaction costs and increased transaction speeds. You see this pattern a lot with blockchain games, they migrate off Ethereum onto a proof-of-stake L2 or even L1 and you get a surge.

Sustainability: The entire eco-system is not sustainable at all. The game's revenue model is dependent not on the size of the user base but on the pace of user growth. The majority of their players are "scholars" and are being paid to play the game. They've effectively turned their users into liabilities rather than assets, and Axies themselves and SLP are caught in an inflationary spiral.

If you look at official communications the founders themselves have essentially written off the existing "1.0" version of the game and are promising people that the land-based gameplay and "Battles v2" are going to fix everything.

We analyzed the major issues with their future plans here: https://naavik.co/business-breakdowns/axie-infinity/#whats-n...

There's several problems with Battles v2:

- Their stated plan (as of the report) is to feed more users into the crypto version of the game, which doesn't fix the unsustainable treadmill

- Their original plan was to get Battles v2 onto iOS, Android, and Steam, but many of those platforms have cracked down on Crypto games lately and Axie could have a hard time getting approved for release in App stores

There's even more problems with land-based gameplay:

- There is a finite amount of land

- Land grants resource bonuses and the ability to deploy user-generated minigames

- If you don't have land you will have to pay a landlord to access its benefits

- Land goes for extremely high prices (and will thus have very high rents)

This is an extremely puzzling model for a User Generated Content platform. Land speculators will buy all the land and charge rent to the people who actually want to create value. There is no limitation to the number of "slots" available for publishing on Steam or app stores. Given that I have to make an experience that will only run on Axie's platform, why would I invest the time to do that just to pay rent to a virtual middle-man for the privilege of creating value for Sky Mavis?

Basically, they're headed for a land shortage / housing crisis, which is something we've also observed in the 30 year history of MMO's. Anytime you have a game with true "land like assets" you get these shortages and perverse incentives, with scalpers hoarding productive assets they can use as leverage, and it leads to a sort of recession. It has eerie parallels to the real-world housing crisis we're living through right now!

https://www.gamedeveloper.com/business/digital-real-estate-a...

Sky Mavis could realize this and try to change things so that there's a lot of communal land available, or just make more land on demand, or any number of other things. But they're caught in a trap. They promised all these land investors that new land wouldn't be created and that land would be this excellent investment that lets them collect value from all the people building on Axie in the future, kind of like snapping up domain names in the early days of the internet. So, Sky Mavis has to choose between opening the doors for landless peasants, or protecting the land values of landed aristocrats. Either choice will cause problems for them.


Agree with this reasoning - NFTs seem like they clearly have little to no real value and I think the people buying them understand that and are just doing speculation (and we know how that ends up). BTC/ETH are a little harder to gauge because they market themselves as alternative currencies rather than a product in-and-of-itself, but I still get the same fear that it's entirely based on sentiment and nothing in the real world. One article (or Elon tweet) could cause it all to drop overnight.

The USD might fall the same way, but it'd be slower and would require real-world change to happen instead of people just deciding not to use something anymore, and it's so tied up in the global currency exchange that we'd have way bigger problems to worry about than "my investment account lost all it's money". I'm pretty risk averse so I get that other people would want to play that game, I'm just not much of a gambler.

Ethereum seems slightly better than Bitcoin for the reasons you stated as well - ETH could drop to almost zero value and smart contracts would still be cool, but ultimately I'm into the tech. Feels a lot like having a lot of reddit karma to me - it's cool to the people that think it's cool, but doesn't mean much outside of that, unless you can convince someone that does think it's cool to take your fake assets and trade them for "real" assets.


> A thought exercise you should undertake if you're thinking about / talking about crypto/NFT/web3-related projects: If the financial instrument that underlies the project were to stop going up in value XX% per month, would you still be interested in the project?

There are hundreds of ways for that answer to be yes, and this is what is attracting so many builders to the space and why it builds so fast.

Many crypto enthusiasts and the skeptics that surround them are looking at linear bets. Put in X capital, receive X+Y% of capital back, or lose X-Y%. Although very popular approach, it is basically the tip of the iceberg of what's going on.

You can start with no capital and earn the crypto. You can earn lots of it. The price of what you earn can stay flat. The price of what you earn can decrease and you still come out ahead, because you are earning a lot. Not different than earning shares at a FAANG (or NAAAM these days?), except in crypto the earning is is waaaay faster than FAANG vesting periods, and every project has waaaay more upside without wasting decades of your life praying for exit liquidity at a private startup.

So the basis of your question is really project dependent. If I found a way to earn Axie SLP, NFTs, or Axie tokens fast, I wouldn't care about the exchange rate of any of those (unless the dilution outpaced the point of earning) and I think you - and many others - are missing that.

A lot of people stand up smart contract products that accept existing assets as deposit, and take a few basis points of the assets upon deposit or withdrawal, and thats the whole business model. They all do different things thats usually solving an interest or need for the people with the other assets. Completely passive income. I've even seen code that will accept an asset, take the cut, and immediately exchange the cut for a stablevalue asset, all initiated and paid for by the user that made the deposit.

There are many non-linear earning opportunities in this space. Many rival what the largest tech companies offer, even if the exchange rates of the things earned stayed flat. So the calculus is pretty clear: smugly exploit yourself for an ad conglomerate, or directly earn and build in this other even faster moving economy.


> If the financial instrument that underlies the project were to stop going up in value XX% per month, would you still be interested in the project?

I use this yard stick when reviewing all of my tech investments. Providing real value with interesting technological innovations is why ETH outperformed every other alt-coin, just like why Amazon and Google survived the dotcom bust. It seems fundamentally unfair to ask this question specifically of “crypto/NFT/web-3” when it applies equally to all assets and projects.


Bingo. If you couldn't sell at profit, would you ever buy anything crypto-related? That's what I tell any new crypto speculator.


I agree with your point that the operative word here is "earn", and not "play".

To play the devil's advocate: many crypto developers continue to build in the space (or have done it in the past) despite large drawdowns in token prices (denominated in USD). Would that constitute a sufficient signal that "there is something real there", distinct from the question of "is the valuation too high"?


I'd say no.

This might just as well be an "emperor's new clothes" situation, in which a significant number of people are either deluded in thinking there is something of value or heavily invested in making others believe so. Neither of which means there is actually anything "real" there.

Shared delusions are a thing.


Nah, it's just that the target audience ("investors") won't care about the few bucks.


What finclout does differently here is that there is a clearly defined regulated external incoming stream from Proof of Stake treasuries. That avoids that the project needs to rely on a scammy "need to purchase" and in addition with more people overall reward volume increases as well.


I know that there were many people who stayed interested through 4 years of bear market


If the SP500 stopped going up in value would you still be interested in the project?


Yes. The stocks in the SP500 sometimes go down in value, sometimes in the aggregate for a long time. Individually some of them go down forever.

If a stock goes down in value and it still pays a dividend it becomes more valuable for this. Setting that aside all stocks have a not very senior claim on assets. As the stock goes down sometimes it is worth less than the assets it has a claim to. At that point its better to buy up a controlling interest and sell the assets. Thats what private equity does. So yes I am interested when the value goes down.


I would expect it to pay dividends or do stockbuybacks until no more shares are publicly traded.


Surely you see how hypocritical and ponzi that is.


>would you still be interested in the project?

Sure, my fear is that my average peer won't be though. Even if I can see the technical merits...if all my peers are just in it for that quick buck this is going to end badly


Is there any difference why anyone would invest in the stock market? Of course people asset prices to inflate. Isn’t that the whole point of investing in anything?


Actually, originally no; stocks paid dividends.


Ok, fair. But that was when again? How is this relevant today, when people hate crypto and think stocks are ok?


Ethereum also pays dividends in the form of staking rewards.

About 7% today, and most likely going to 10%+ post-merge. That makes the yield on Ethereum significantly higher than the majority of stocks in developed markets.


Stocks pay out their dividends in fiat currency, not additional shares.


The analogy would work if Ethereum staking rewards were inflationary. But post-EIP 1559, there's a zero-to-negative net issuance of Ethereum on an ongoing basis. After the merge, the entirety of that (plus MEV bribery) goes to stakers/validators.

In this sense, Ethereum's yields are more like a stock buyback than a stock dividend. To transact on-chain, end-users and traders have to pay ETH to validators. To acquire ETH they have to bid on it using fiat. ETH issuance to stakers isn't inflationary, because its counter-balanced by end-user demand to transact on-chain.

Just the same, as a stock buyback doesn't involve any direct payout of fiat currency to existing shareholders. But it takes the revenue generated by the underlying company, and translates that into a deflationary bid to the stock.


But Web3/Crypto/NFT is so much more than the financial incentives. It's much more about culture, belonging, tribalism (the good version) and the endless opportunity space of what I would call a resource. Digital assets that behave as if they are physical.

I have been involved in crypto since the beginning and the least interesting things for me is about the value. It's just a savings account. All the fun stuff is what we build on top of that.


I hope web3/crypto/NFTs are what will finally make us realize that money is essentially meaningless, so that we can forget the concept of monetary value altogether in the long term.


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