Chronos Talks: Personal Finance


#1

Hi guys,

I’ve started up a new YouTube channel on the topic of personal finance (and whatever else that might come to mind). It seems that society doesn’t always do a good job giving people the basics on how to handle finances, although the crypto community in general does a bit better – after all, crypto is a form of money. Anyway, this video series is a way for me to bring some of my own thoughts to the table.

Here are the first two episodes:

Episode 1: Debt is a Fire
Episode 2: Venn Diagram of Debt

Here’s a direct link to the YouTube Channel: Chronos Talks

Enjoy!


#2

Nice. POS coins always have an investment component in them due to minting rewards?


#3

Actually, I disagree with this, and I think it’s a common misperception. To understand this, you have to think about what 1 PPC represents.

Imagine there are a million PPC in existence, and you own 100 of them. So, you own 0.01% of the entire supply. This is your “stake” in the network. After a year of minting, you own 101 PPC due to the minting rewards. However, the total supply has grown, too, because of other people minting! In fact, in the case of PPC it will have grown more than 1%, because of PoW mining rewards. So in the end, you own a smaller fraction of the network.

I think a good way to measure your ownership of a cryptocurrency is by proportion to the entire coin supply. That’s why PPC minting doesn’t actually increase your overall wealth.


#4

Just like with stocks in company. Very few people understand this.


#5

I think for a first order approximation this is correct. That was what I said in https://bitcointalk.org/index.php?topic=458726.msg6243759#msg6243759 . I think that is a good answer to my simple question.

But to analyze further, minting is work. It keeps a POS network running, making it possible to transact amoung other things, hence creates value. It’s like buying stocks or deposit money to earn interest – your money pays someone to work to create value, and you are expected to be rewarded due to that. If the central bank never prints more money, the money you invest, although having the same percentage of all money in circulation, will increase its value.
Since POS is much more efficient than POW so is more likely to survive in the long term, it’s not unreasonable to expect investing POS coins will get a positive return (if one believes in cryptocoin economy at all).


#6

I am having a hard time seeing “starting a business” lumped into the same category as consumables. A car is guaranteed to go down in value. The money spent on a vacation will be completely gone when it’s completed. A shopping spree has little to no redeeming financial value. These expenditures are simply not on the same moral plane as a business startup, where there exists a non-zero probability that more money might come out than goes in.

It’s smart to start a business that you feel passionate about because you will need that energy and enthusiasm to sustain you during the inevitable bad times associated with fear, uncertainty, and doubt. I have started two businesses and I can assure you that the vast majority of the time, very little fun is involved.

I started a real estate investment business about 20 years ago. Yes, a business that I had to ledger on 1040 Schedule E. I didn’t love it in the way the video suggests; it was a calculated move to take advantage of the powerful leverage that debt provides. I’m happy it worked out, but I never enjoyed the stress of owning and managing rental property. And if it hadn’t worked out, I’m certain I would have grown to despise real estate.

My current startup is in the tech area where invention and innovation are being applied to an area where I have professional expertise. I believe in the technology and hope it will be successful, but I also realize it’s statistically more likely to fail. I’m working long hours, the overwhelming majority of which have nothing to do with the interesting or fun technical issues. These hours are spent on the necessary evils that must be addressed to give the business a chance of gaining some traction. Ask anyone besides an attorney if the lengthy patent process is fun.

Getting into debt to pursue some sort of hobby belongs in the third category. But putting a startup in there is a not correct.


#7

Good thoughts, [member=30870]sportscliche[/member]. You clearly approach your businesses as you should, in the “investment” category. I can tell, because they are no fun for you! :wink: I have many friends who talk about starting their business, but it is really just a hobby. That’s why I put it in both “invest” and “consume” areas, because it could be either one depending on your motivations and approach. It’s similar to how “school” can be on either end of the spectrum.

Good points! Perhaps you’d like to post your perspective in a comment on the YouTube channel. 8)


#8

There’s an incorrect underlying assumption here, that doing work and creating value will mean you receive a return. That’s not necessarily true. Imagine if I started a lemonade stand and always gave away my product for free. I am doing work and creating value, but I won’t make any money.

Same with minting: it makes the network possible, but the transaction fees are destroyed, and supply is diluted by PoW rewards, so it may or may not lead to returns. I’m not saying that it won’t, but simply that it’s not a logically deducible outcome or guarantee.

It may be that running a PPC node in the distant future is actually money-losing, because of the infrastructure costs not being compensated by the minting rewards. Of course, I don’t know this for sure, but it’s possible, especially for people who own fewer peercoins. After all, the minting reward is a direct function of how much PPC you own, so there will always be a threshold below which it’s not worth the cost to mint.


#9

Next episode is out! What is the biggest cost to owning a car? It’s not what you would expect. Find out below.

Episode 3: One Weird Car Cost