The argument that cryptos are not  backed by cashflows and hence have no intrinsic value has been countered by the logic that not all assets need to have an intrinsic value – it can have a transactional value i.e, what price other buyers are willing to pay as in art, for example. In this really short read, Seth Godin extends that logic to speculation i.e, relying on being able to sell out to the greater fool is akin to a luxury good – the price is not so much explained by the utility value of the good but how others perceive your status as a result of its ownership.
“A luxury good is one where the price paid is much higher than the apparent utility it offers. We pay extra precisely because it’s not a good value. The utility lies in how we and our peers think about it. The scarcity and bling of a luxury good are used to increase our status (in our own eyes and those in our cohort).
And so, a top-end Mercedes isn’t much better at being a car than a Hyundai is, it simply costs more.
As engineering has improved and knock-offs have increased, though, the two-hundred-year tradition of physical luxury goods is fading away.
One thing that’s taking its place is speculation.
An NFT has zero utility. It’s simply an entry in the blockchain that shows ownership of something that anyone could see for free.
But that in itself is a sort of luxury.
There are now hundreds of digital NFTs each worth more than a million dollars each. Just like Reddit stocks, they change in value dramatically, they come with a story and they’re fun to talk about with your friends and peers.
And one day, every one of them will be owned by someone who is unable to sell it at a profit.
Speculation is a great hobby if you can afford it, but it shouldn’t be confused with investment.”

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