But dividends are zero-sum. The shareholder gets the money, the corporate entity loses it. The value created is the value created by the company's business operations, which is independent of whether any of the profits are ever distributed as dividends.
By analogy, it would be the value of the currency as a currency, i.e. to facilitate productive financial transactions that would not otherwise occur. The reason non-speculators would ultimately want to have any.
Nah the corporation is the rock - they aren't a market participant so them paying you and your friends a dividend isn't a net loss in the market for rocks. Instead simply holding rocks and not trading them is still generating money for the market participants.
Bitcoin doesn't generate intrinsic value from a business operation - it's just a digital version of a rock. There's no money for it to pay out. Therefore you have to limit the example to the exchange which gives it value, which again is a zero-sum game in a way that traditional markets for business and government equity and bonds is not.
> Nah the corporation is the rock - they aren't a market participant so them paying you and your friends a dividend isn't a net loss in the market for rocks.
Except that it makes the rocks not worth as much.
You had a corporation with a million dollar business and a million dollars in cash. It pays out the million dollars in cash as dividends. Now the rockholders have a million dollars in rocks and a million dollars in cash, when they used to have two million dollars in rocks. Their rocks decline in value by the amount of cash no longer inside the corporation.
> Bitcoin doesn't generate intrinsic value from a business operation
Sure it does.
Bob wants to buy something from El Salvador, the merchant in El Salvador wants payment in Bitcoin, so Bob has to buy some Bitcoin in order to pay the merchant. The more Bobs there are, the more valuable Bitcoin is as a currency, and the more the person holding the rock can get for the rock.
You, the holder of rocks, get the increase in business value as "rock price appreciation" rather than dividends, but you still get it.
Except that it makes the rocks not worth as much.You had a corporation with a million dollar business and a million dollars in cash. It pays out the million dollars in cash as dividends. Now the rockholders have a million dollars in rocks and a million dollars in cash, when they used to have two million dollars in rocks. Their rocks decline in value by the amount of cash no longer inside the corporation.
Nope, that is not the way it works. When you have ownership of a company (by holding stocks), the company can pay out a dividend and the price of the stock does not go down. On the contrary, the price of the stock may go up because the company has proven that it generates cash and will pay this cash out to shareholders periodically.
This is why companies viewed as assets have “intrinsic value” and something like BTC does not. If I own stock in a company that pays out dividends and the stock does go down, at least I still get money in the form of dividends. I can be assured that if the dividends continue (not a given), then the price of the underlying stock will “correct” to match the intrinsic value of the company over time.
Contrast that with BTC - I have no real way of knowing the “real” value of BTC. If the price goes down, then it may stay down forever as there is no way of accurately pricing it based on some real-world metric. It produces nothing, therefore this is why some people say it is not a good asset to own.
One thing I'd say is the volatility. Imagine Bitcoin as a global payment mechanism for the world. It's capped sure(21m) but volatile. You're buying something in El Salvador and someone/someones in the world make the price crash. By the time you reach for your phone in pocket to make the payment (say) and begin to pay, your item now costs double of what it should have costed. How does that work?
Corporations change. They employ people to innovate and labor. They aren't the same thing over time. But that BTC you own just sits there doing nothing. It does not change. The innovation and labor of employees drives up the value of a corporations.
Many stocks do not pay out dividends. Tech stocks from Amazon, Facebook, and Alphabet are great examples. The riches that these employees received through their rising stock prices has nothing to do with market expectations of dividends.
Dividends are distributed profits, and these companies all have made profits. They just didn't distribute them among shareholders. Distributing or not distributing profits is irrelevant as far as shareholders are concerned, since being the owners of the company they own the profits either way.
The important thing that differentiates shares and bonds from other assets such as commodities and virtual currencies, is that the former produce income (in the form of profits or interest) while the latter don't.
Dividends mean that the "rocks" you hold spit out a few pennies magically every so often. While fewer stocks today pay a dividend, many still do.
For holding bonds you get the coupon payment, which again is like your rocks spitting out pennies every so often.
In the real world, companies and governments are paying you to hold their rocks.
That's why the stock market/bond market isn't zero-sum.