12 sats \ 1 reply \ @nerd2ninja OP 12 Jul 2022 \ parent \ on: If You Aren't Trying to be Money, Why Do You Need a Coin? bitcoin
Yes, I acknowledge that the 1% have been using stocks as a store of value and as a sort of money for a while now. However, if these coins are in fact stocks are you claim and therefore securities, they should register with the SEC
There are benefits for investors who buy regulated stocks:
https://www.investor.gov/introduction-investing/investing-basics/role-sec/laws-govern-securities-industry
I have a huge issue with what is known in the traditional world as "an increase in the total capital stock"
Info: https://www.investopedia.com/terms/c/capitalstock.asp
https://www.investopedia.com/ask/answers/050415/why-increase-capital-stock-companys-balance-sheet-bad-sign-stockholders.asp#:~:text=Disadvantages%20of%20Increasing%20Capital%20Stock,making%20the%20shares%20less%20valuable.
(I posted this before but I wanted to make sure you knew I read your post.)
You are right to have an issue with increase in capital stock as it is an inflation tax on the shareholders to the benefit of the company. This sentiment I share but I bring up stocks and expansion of stock only as a parallel to illustrate the similarities of securities with government fiat, and vice-versa. My point isn't necessarily that the upper echelon use stocks as a currency, its that companies have been engaging in and benefiting from money creation for a very long time. I noticed this a long time ago when I first learned how the federal reserve works, and that stocks are not much different than the debt notes issued by the government.
A stock, a bond and a fiat money have many similarities where the specific terms and conditions vary between the instruments, they serve very similar functions. Bitcoin is unique such that it also serves as an asset class but more akin to a physical possession than a fiduciary instrument.
| Security | Bond | Fiat | Bitcoin | |
|---|---|---|---|---|
| Creation | Issuance by company bylaws | Two-party debt contract | Debt contract contract | Proof of work |
| Profit for holder | Dividend | Interest | Taxes | None/Deflation |
| Redeemability | Upon company buyback | Upon maturity | Payable for all debts | Exchangeable for value |
| Exchange forum | Stock Market | Bond Market | Open Market | Open Market |
| Holder rights | One vote per share | Contract law, court enforced repayment or rights to collateral | Government decree | Universal veritability of possession |
| Value Measurement | Viability of company and potential profitability | Credit risk, face value, relative interest rate and maturity level | Merchantability for goods | The sum of all present value liquidity divided by 21M |
| Sources of Risk | Lack of company performance, loss of stock price, changes in profitability | Debtor fails to service debt, changes in interest rates, loss of collateral value | Run on banks, changes in tax revenue, loss of confidence of value | Loss |
The problem with shitcoins, particularly ones with a centralized govenance and issuance model, is they are more like corporate paper than they are like a security. Separate from this topic, I propose that companies should move to a blockchain or NFT model of stock issuance (either with a shitcoin or somehow with bitcoin like liquid) to improve exchangability of the instruments and to reduce regulatory burden on both the company and the shareholder.
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