I would probably lump my money in my existing Wealthfront account. I invest <5% of my disposable income in various cryptocurrencies, I view them as volatile commodities.
Very much so, I've had a few coworkers ask about Bitcoin and if they should invest (because they've seen me use my lunch money). I say, it's an interesting subject just like maybe a slot machine that has a theme you like such as Game of Thrones. I do the same with some company stocks that look promising _and_ I enjoy following but again - not viewing these as a true investment.
I would love to strike gold, but it's complete gambling at this point and I'm likely not putting in enough to see life changing dividends. I never would recommend someone to invest in Bitcoin but if they have extra money and are looking to gamble in an interesting way go for it.
If the bubble bursts the right place to invest would be bitcoin itself. Whether you like it or not BTC is here to stay and most likely going to be the next currency.
A lot of people hate BTC on this forum cause they feel they missed out.
I do hate bitcoin and for exactly that reason. But I'm conflicted about it - if I could make a huge amount of money and know, for a fact, that it was caused by me being in the right place to take money off people who actually earned it... is this a bad thing to do?
It's a confidence trick - is it bad to be a con artist? Or is relieving the gullible of their hard earned cash a noble pastime? There certainly isn't any actual value being created.
But if a bunch of greedy bastards wanted to pay off my mortgage, I can't see I'd have a problem with it.
I came here to say this. Knowing the difference between an investment and a gamble is my most important rule in money management. There is nothing wrong with gambling-just know when and to what extent you are doing it.
Invest in Butter and Corn, when the Bitcoin Bubble inevitably bursts Popcorn will be in high demand.
I think it would not be a bad idea to just follow investment advice; take a well performing index or ETF and stick to that. Maybe invest some into bitcoin again after the bubble has burst and it has a closer to reality value.
The world needs a censorship-resistant digital vault to store wealth. Bitcoin is basically a very cheap "Swiss bank account as a service" for the world's unbanked.
Some use cases I can think off the top of my head:
(1) You are from Syria and need to flee war and escape into Europe – however bank transfers into Europe are almost impossible if you are a common Syrian. Bitcoin allows you to take your wealth with you, in your brain, as you escape across the border, by just memorising your twelve word private key.
(2) You are from Venezuela or Zimbabwe – The government has issued capital controls and is devaluing currency by the day. You transfer your wealth into Bitcoin in order to offset capital erosion due to hyper-inflation. When the situation stabilises, you transfer your Bitcoin back into fiat.
(3) You are Saudi billionaire Al-Waleed bin Talal. The government freezes all your assets in a political coup. If you have a portion of your wealth in Bitcoin, you could protect them from government expropriation and anonymously transfer them to associates or family members abroad.
I truly believe that Bitcoin will serve the unbanked of the world. We're not there yet, but these are very early days for crypto.
Sorry for the long winded response, I get excited when talking about BTC.
I don't think "invest" is the right word when talking about speculation.
Your points 1 & 2 are decent, and your lead-in is okay. But I counter with the following: bin Talal is an out and out criminal, and may be partly responsible for 9/11 and other heinous crimes, we'll see. You really want people like that having some escape mechanism? He's probably going to lose his head anyways, so Bitcoin isn't going to help him any.
I'm sure I don't understand the needs of the unbanked. There may be a good use for Bitcoin there. However, "unbanked" people may not be cognitively capable of using Bitcoin, we'll see.
The world does need censorship resistance, I'm with you there. You may not like what happens with that resistance--it could become a far left or far right genocide. I'm thinking the Federal Reserve already has a monopoly on that level of killing power.
In the end, I don't think Bitcoin will end up being the thing that solves any real problems. People who are "unbanked" have very little in the way of money. A reform of the banking system itself is in order and long overdue (e.g. they have been sticking customers with crazy fees for decades and need to stop). Banking reform would solve the problem better than some janky cryptocurrency ever will.
How does the rising transaction fees on the BTC network effect these people? I could easily see a scenario soon where both 1 and 2 might have to pay 50% of the money they are trying to save in fees to the network.
I mean a transaction today can cost $3-4 USD. With valuation rising, and the network automatically paying out less per block, we could soon see a flooded network that is asking for $10-15 for a transaction. Is this an impediment from it becoming a large scale value store?
What if there's a reason why its bubble bursts? Perhaps a single party manages to have >51% hash power for a long time.
Or Bitcoin exchanges get outlawed in several important countries.
Or fees keep rising to $50 or higher per transaction.
These developments could make Bitcoin (mostly) unusable and thus worthless. Would you still buy more?
Since BTC is paired with the blooming crypto markets and platforms of services they provide, it would be easier to blow out a spark in a gently accelerating hurricane of gasoline fumes and powdered creamer. It's not a bubble, it is the pin pricking the paradigm.
But the issue is this: hypothetically, let's say on Nov 12 I fled from country X and put my life savings (let's call it $5800) into one bitcoin valued at that. I put it in a hardware wallet, I transferred it electronically to another wallet, or perhaps I wrote the private key down someplace. Then, on Nov 27 my wealth is suddenly $9700. That's great. But how can I be sure it won't be down to $3000?
At least jewelry and watches are a relatively stable store of wealth.
There's a 'no one knows' stigma hanging around the cryptocurrencies. It's risky enough risking an escape from Syria, without adding a risk that traders are going to suddenly sell en-masse before you withdraw the funds.
Something like 20-25% of Syrians have internet access. I saw a 40% figure for Venezuela and a 15% figure for Zimbabwe. Many internet-literate people are not comfortable with bitcoin; how would you get a meaningful number of people who have never used the Internet comfortable putting their family's net worth in some arcane instrument with a reputation for use in money laundering and crime?
Why would a person with low wealth invest their life savings into a highly volatile, recently developed instrument, when they can just buy jewelry, gold, etc
For the latter use case fewer objections readily come to mind, but this supports the reputation as a tool for those who are barred from capital markets due to illegal activity (whether real or politically contrived illegal activity)
In due time. Commercial transactions will occur first, business to business.
Consumer applications (like Coinbase) will emerge to support the local population who can use it via smartphone and not need to understand public/private key encryption etc.
how would you get a meaningful number of people who have never used the Internet
They use the Internet; they just call it by a different name: Whatsapp, Facebook, Instagram...
Why would a person with low wealth invest their life savings into a highly volatile, recently developed instrument, when they can just buy jewelry, gold, etc
Those stats are for internet users including people who use the apps you mention. Further, Syria has a history of internet censorship and even large outages. I'd imagine people in Syria don't trust the internet, much less a tool from a western company like coinbase that offers a way to store an instrument that is completely foreign to someone who doesnt use the internet
All of finance is built on trust. Trust in enforcement of securities and property laws, trust that banks or debtors won't disappear overnight, trust that counterparties will not disappear, trust that someone won't lie to you and take your money, and trust that, when the above inevitably happen, there exists a set of institutions that can protect you
You may trust blockchain more than a bank, but you are the minority by a massive massive margin. The reality is that banks, while not perfect, are accountable. They are run by people whose jobs depend on them not totally screwing up. And despite the bad / shady things that banks do, overall they do a pretty good job at maintaining a stable financial system
With bitcoin and other decentralized systems, there is no accountability. You must rely on the perfection of the technology. It will break, and when it does, there is no legal system to protect you and no bank that will reimburse you for fraudulent charges
You may not care about this, but 99% of the world does
I spent some of mine on hobby electronics parts the last time it was about $400 per BTC. Not even mad. Just doing my part in the currency's use for goods.
Bitcoin is just pure speculation at this point. Like gold, Bitcoin's value comes from the fact that more and more people are interested in buying it. Unlike stocks, it does not generate real money through dividends. For every person that got rich with Bitcoin, some other unlucky guy will lose the very same amount of money. When the bubble will burst, it will be zero sum game.
Index-based ETFs should be the way to go for casual investors. Put some money in half-a-dozen index funds from the US, EU and Asia, and you'll get a low-fee, relatively stable and 7% average yearly ROI.
I'm not sure if this is true--in Wall Street, too, there is a seller for every buyer. Every time someone gets a killer deal on some stock, someone else got equally ripped off. As far as I can tell, the distinction between BTC and stocks is trivial--the price of both is driven by supply and demand.
The accounting isn’t zero sum with stocks in that capital is supposed to beget more capital through value creation. That’s the intrinsic value of company shares. So, while there might be a winner and a loser, the world still ends up with more ‘wealth’.
After the IPO, all bets are off. It's just traders, machines, and ego's trading exchanging among each other.
Once upon a time, having a share of a company always meant you were getting a share of their revenue (dividends). Now, it's primarily hoping there's a bigger fool. Which 99% of the time there is because a lot of us put money into the stock market without consciously investing (ie. 401ks)
Ripple. Its more stable and is being adopted by financial institutions (AMEX being one of the biggest so far). I honestly think it'll be the first widely used crypto. Its a little different from Bitcoin, but I think it'll do well in the long run.
A little. Transaction validation is distributed amongst validators installed at organizations across the world. I think there's around 58 or so now, but they're pushing to have a lot more. And they're eventually going to have it where none of them are controlled at all by Ripple (the company). They've listed MIT and Microsoft as organizations already running validators, as well as a number of foreign companies I've never heard of (WorldLink, Telindus-Proximus Group, Bahnhof, and AT TOKYO?).
So yes, its a little more centralized than Bitcoin, but everything I read really gives me the impression that they're handling things in the right way, so as to have a balance between network performance and distributed safety, without any one person/group being able to manipulate the ledger. So there'll never be any mining farms that can throw their weight around.
If anyone is really curious, do your research and I think you'll find the tech to be pretty interesting.
The idea pitched for Stellar is very feel-good, but there are a number of drawbacks. First of all, the creator is a little sketchy. The way he acted when he bailed on Ripple and set up Stellar was very childish. Second, the non-profit status is questionable. There are a lot of unknown people that stand to gain a lot of money if the currency increases in value. They claim to give away a lot of their currency, but very few people actually claim it, so in the end, the company itself gets to claim it (and set the stage for a profit down the road). They did get IBM to throw their name in to the mix, but even IBM said this was temporary.
I don't know. I just don't get a good feeling from them.
Related question: If the Bitcoin bubble bursts, will capital exit the cryptocurrency space, taking other currencies down with it (my hunch) or will another coin, ETH or Litecoin (or another), replace it?
Ethereum, the flippening will happen and when it does it will happen fast. Ether transfers in seconds for a fraction of a penny, it's a better cryptocurrency that bitcoin and that's not even its billing. It has far more utility and will use far less energy with a hybrid Proof of Stake/Proof of Work and eventual Proof of Stake consensus. So much more in the works, Ethereum's brightest days are ahead. All that while bitcoin squabbling brings it low, fork after fork after fork. It stands as an amazing proof of concept does bitcoin, but in a short number of years it will be in a museum.
The thing to keep in mind is that if the Bitcoin bubble bursts, then Bitcoin will go down for sure. However, the altcoins will probably recover for a year or two after the crash. The most drastic thing that would happen is that all the altcoins would be valued against something other than BTC, and the market would adjust accordingly.
At the time of this writing, I have investments in BTC, LTC, XMR (Monero), ARK, and RDD (ReddCoin). While BTC does represent around half of my total crypto investment, I wouldn't be completely screwed since one of the alts would probably take its place. I could see either Monero or one of the Bitcoin forks taking over in that scenario.
So, answering the question, I'd still invest in crypto. But I wouldn't invest in Bitcoin directly anymore.
47 comments
[ 0.20 ms ] story [ 98.2 ms ] threadIn terms of real investment ETFs and - to a lesser extent - individual company shares are still the way to go.
I would love to strike gold, but it's complete gambling at this point and I'm likely not putting in enough to see life changing dividends. I never would recommend someone to invest in Bitcoin but if they have extra money and are looking to gamble in an interesting way go for it.
A lot of people hate BTC on this forum cause they feel they missed out.
It's a confidence trick - is it bad to be a con artist? Or is relieving the gullible of their hard earned cash a noble pastime? There certainly isn't any actual value being created.
But if a bunch of greedy bastards wanted to pay off my mortgage, I can't see I'd have a problem with it.
I think it would not be a bad idea to just follow investment advice; take a well performing index or ETF and stick to that. Maybe invest some into bitcoin again after the bubble has burst and it has a closer to reality value.
The world needs a censorship-resistant digital vault to store wealth. Bitcoin is basically a very cheap "Swiss bank account as a service" for the world's unbanked.
Some use cases I can think off the top of my head:
(1) You are from Syria and need to flee war and escape into Europe – however bank transfers into Europe are almost impossible if you are a common Syrian. Bitcoin allows you to take your wealth with you, in your brain, as you escape across the border, by just memorising your twelve word private key.
(2) You are from Venezuela or Zimbabwe – The government has issued capital controls and is devaluing currency by the day. You transfer your wealth into Bitcoin in order to offset capital erosion due to hyper-inflation. When the situation stabilises, you transfer your Bitcoin back into fiat.
(3) You are Saudi billionaire Al-Waleed bin Talal. The government freezes all your assets in a political coup. If you have a portion of your wealth in Bitcoin, you could protect them from government expropriation and anonymously transfer them to associates or family members abroad.
I truly believe that Bitcoin will serve the unbanked of the world. We're not there yet, but these are very early days for crypto.
Sorry for the long winded response, I get excited when talking about BTC.
Your points 1 & 2 are decent, and your lead-in is okay. But I counter with the following: bin Talal is an out and out criminal, and may be partly responsible for 9/11 and other heinous crimes, we'll see. You really want people like that having some escape mechanism? He's probably going to lose his head anyways, so Bitcoin isn't going to help him any.
I'm sure I don't understand the needs of the unbanked. There may be a good use for Bitcoin there. However, "unbanked" people may not be cognitively capable of using Bitcoin, we'll see.
The world does need censorship resistance, I'm with you there. You may not like what happens with that resistance--it could become a far left or far right genocide. I'm thinking the Federal Reserve already has a monopoly on that level of killing power.
In the end, I don't think Bitcoin will end up being the thing that solves any real problems. People who are "unbanked" have very little in the way of money. A reform of the banking system itself is in order and long overdue (e.g. they have been sticking customers with crazy fees for decades and need to stop). Banking reform would solve the problem better than some janky cryptocurrency ever will.
I mean a transaction today can cost $3-4 USD. With valuation rising, and the network automatically paying out less per block, we could soon see a flooded network that is asking for $10-15 for a transaction. Is this an impediment from it becoming a large scale value store?
These developments could make Bitcoin (mostly) unusable and thus worthless. Would you still buy more?
In the case of a correction your cases 1 and 2 could end up very poorly off indeed.
BTC as a store of value has some brittle pieces. I'm not as confident in the current direction.
At least jewelry and watches are a relatively stable store of wealth.
There's a 'no one knows' stigma hanging around the cryptocurrencies. It's risky enough risking an escape from Syria, without adding a risk that traders are going to suddenly sell en-masse before you withdraw the funds.
Why would a person with low wealth invest their life savings into a highly volatile, recently developed instrument, when they can just buy jewelry, gold, etc
For the latter use case fewer objections readily come to mind, but this supports the reputation as a tool for those who are barred from capital markets due to illegal activity (whether real or politically contrived illegal activity)
Consumer applications (like Coinbase) will emerge to support the local population who can use it via smartphone and not need to understand public/private key encryption etc.
how would you get a meaningful number of people who have never used the Internet
They use the Internet; they just call it by a different name: Whatsapp, Facebook, Instagram...
Why would a person with low wealth invest their life savings into a highly volatile, recently developed instrument, when they can just buy jewelry, gold, etc
Gold, jewelry, etc can be stolen or lost.
All of finance is built on trust. Trust in enforcement of securities and property laws, trust that banks or debtors won't disappear overnight, trust that counterparties will not disappear, trust that someone won't lie to you and take your money, and trust that, when the above inevitably happen, there exists a set of institutions that can protect you
You may trust blockchain more than a bank, but you are the minority by a massive massive margin. The reality is that banks, while not perfect, are accountable. They are run by people whose jobs depend on them not totally screwing up. And despite the bad / shady things that banks do, overall they do a pretty good job at maintaining a stable financial system
With bitcoin and other decentralized systems, there is no accountability. You must rely on the perfection of the technology. It will break, and when it does, there is no legal system to protect you and no bank that will reimburse you for fraudulent charges
You may not care about this, but 99% of the world does
There is already a lack of legal systems and order. You have ISIS roaming around cutting people's heads off.
Obviously you have a different set of priorities when you're running for your life.
Index-based ETFs should be the way to go for casual investors. Put some money in half-a-dozen index funds from the US, EU and Asia, and you'll get a low-fee, relatively stable and 7% average yearly ROI.
After the IPO, all bets are off. It's just traders, machines, and ego's trading exchanging among each other.
Once upon a time, having a share of a company always meant you were getting a share of their revenue (dividends). Now, it's primarily hoping there's a bigger fool. Which 99% of the time there is because a lot of us put money into the stock market without consciously investing (ie. 401ks)
So yes, its a little more centralized than Bitcoin, but everything I read really gives me the impression that they're handling things in the right way, so as to have a balance between network performance and distributed safety, without any one person/group being able to manipulate the ledger. So there'll never be any mining farms that can throw their weight around.
If anyone is really curious, do your research and I think you'll find the tech to be pretty interesting.
I don't know. I just don't get a good feeling from them.
If the transaction cost keeps going up, well, that value diminishes, doesn't it?
At the time of this writing, I have investments in BTC, LTC, XMR (Monero), ARK, and RDD (ReddCoin). While BTC does represent around half of my total crypto investment, I wouldn't be completely screwed since one of the alts would probably take its place. I could see either Monero or one of the Bitcoin forks taking over in that scenario.
So, answering the question, I'd still invest in crypto. But I wouldn't invest in Bitcoin directly anymore.