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As one of the btc nouveaux rich, help me understand something I see reoccurring among my other btc-rich friends. Generally, when you're up big (and in some case

As one of the btc nouveaux rich, help me understand something I see reoccurring among my other btc-rich friends. Generally, when you're up big (and in some cases extremely wealthy), you diversify your investments in order to preserver your wealth. However, almost without exception my btc friends are such believers that they are holding on for the ride forever. Is it just that the risk-averse were initially drawn to btc as a speculative vehicle? Or is it a matter of principle to hold forever?

SilasX 9y ago
I've seen the same -- I know someone who got in early to BTC, then moved it all into Ethereum early, such that he has enough to comfortably retire today. But he won't cash any of it in except for a small amount each month to live on, while he lives rent free with others. When I explain the logic of hedging and mitigating risk and locking in gains, he was insistent that the right strategy is to hold because it's going to go up some more, and he doesn't need the money now for any of his current objectives. Come to think of it, I should at least consider that he's making it up, but I've met him several time and he's well versed in crypto and way ahead of the curve in learning about this stuff. Who knows?
- random023987 9y ago
  > Come to think of it, I should at least consider that he's making it up, but I've met him several time and he's well versed in crypto and way ahead of the curve in learning about this stuff. Who knows? If you poll people after a presidential election, a higher percentage of people claim to have voted for the winning candidate than voted for the winning candidate. It's a lot easier to be well-versed in crypto and claim you won some big bets, than it is to be well-versed in crypto and actually have won enough big bets to "comfortably retire". The former requires hindsight, and the latter requires immense luck and timing.
- prawn 9y ago
  Would he have to be well-versed to have enough BTC to retire? Surely you could just get on board the hype train at the right station, when it was cheap enough to buy a few, and maybe at the urging of a colleague, and go from there. None of the few people I know with BTC are especially well-versed in it.
- spectrum1234 9y ago
  This isn't that terrible. However its much much less risk and at worst only tiny bit less upside to put 34% in Ethereum, 33% in Bitcoin, and 33% in a basket of all else possible.
  - seanp2k2 9y ago
    I'd suggest S&P index funds for the remaining third. If it's FU money already, taking out a third and putting into a known-decent investment because you don't need it right now should be a good way to ensure that you can actually retire whenever you'd like to.
aparadja 9y ago
I think the parent comment is just a hypothetical situation, and blhack isn't actually a bitcoin millionaire.
- blhack 9y ago
  Just to clarify, yeah. Definitely not a bitcoin millionaire.
- deleted 9y ago
  [deleted]
modeless 9y ago
Personally, I'm not "extremely wealthy", but I'm certainly holding a larger percentage of my net worth in bitcoin than is prudent. However, I sold enough to make back my initial investment long ago; if it crashes to zero tomorrow I won't be ruined. I'm not holding bitcoins as a matter of principle. I have a number in mind, and if I hit it I will have enough money to retire at 35. At that point I plan to sell ~90% of my bitcoins. I could sell some now, and make a significant amount of money. But I already have plenty of money saved; a little more isn't going to change my life. For my bitcoin investment it's FU money or bust, and any amount I sell now just lowers the chances that I'll ever get to FU money.
- spraak 9y ago
  Wow, I'd love some advice on getting there. I've found myself in cycles of debt for the past many years.
woodman 9y ago
> ... initially drawn to btc as a speculative vehicle? Or is it a matter of principle to hold forever? I got involved with btc when it was in the single digits, the crowd was very different then - cryptoanarchists. So your call to "diversify your investments" sounds to me much more like "diversify your politics", which is obviously a silly thing to tell somebody - especially somebody whose politics is any anarcho flavor. While I can only speak for myself, I do think this is true for many others: I was already living pretty comfortably and a few million isn't enough of appreciably change one's quality of life as a software developer.
- ringaroundthetx 9y ago
  As someone that deals with political parties and regulatory regimes in many countries at once, diversify your political isn't silly at all. Or at least I feel like being unsubscribed from one countries politics has only given me advantages, even if it is less common to not be married to a political flavor.
  - woodman 9y ago
    > ...diversify your political isn't silly at all. It is, as most political differences are rooted in mutually exclusive ideas. If you are advocating for simply being open to considering alternative positions and measuring them against your own present position - then I agree with you, that is nice. But I would describe that as "diversify your politics", I'd describe that as being intellectually honest.
    - vkou 9y ago
      One way to diversify your politics is to get in bed with multiple mutually exclusive political parties. That way, no matter who wins, you'll have friends in high places.
    - ringaroundthetx 9y ago
      > It is, as most political differences are rooted in mutually exclusive ideas. The reason I disagree is because I get to be exposed to these mutually exclusive interpretations in several different countries. My lack of indoctrination and context gives me an additional perspective based on the present, which primarily reveals an inefficiency that gives me an advantage. For example, the first mutually exclusive topic that came to mind was ..... some extremely polarizing human rights topic you feel passionately about? I bank on you spending all of your energy on that while I try to get a say in the 900 other things lawmakers - or the agencies they delegated authority to - actually do.
deleted 9y ago
[deleted]
panarky 9y ago
> is it a matter of principle to hold forever? There was a reply to this, now deleted: > this is a pretty common (and self-destructive) phenomenon amongst unsophisticated investors On the contrary, it's much more common for unsophisticated investors to sell their winners too early. Dumb money is more emotional. Dumb money is risk averse and can't tolerate losses, so holds on to losers forever. Dumb money harvests winners after a 50% or 100% gain and reinvests in losers. Smart money is coldly rational instead of emotional. Smart money isn't afraid of small losses. Smart money sells losers quickly and takes many small losses. Smart money holds one or two winners for a long time for 1000% and 10000% gains. I'm sure some long-term bitcoin holders are ideological, but most are coldly rational smart money.
- nosuchthing 9y ago
  No. Smart money understands why something is valuable and to what extent along with weighing the alternatives. Dumb money invests emotionally without comprehending why a thing is traded for other things.
splintercell 9y ago
> As one of the btc nouveaux rich, help me understand something I see reoccurring among my other btc-rich friends. Generally, when you're up big (and in some cases extremely wealthy), you diversify your investments in order to preserver your wealth. However, almost without exception my btc friends are such believers that they are holding on for the ride forever. That's the idea. However, you have to understand that if say SNAP stocks made someone rich, then diversifying makes sense, but if you got rich by some investment in some company Cayman Islands (but with a real business model), then you wouldn't just bring back the money or part of it purely for the sake of diversification. In other words, diversification away from bitcoin isn't in the same boat as diversifying away from real estate or some stock. From your friend's perspective, if they sell $100K worth of bitcoin, then is it possible that they might end getting on the radar of the govt and could be on hook for more than $100K? In addition to that, bitcoiners also believe that bitcoin hasn't reached it's peak, so when it reaches it's peak, they wouldn't have to sell their bitcoins (because every business would accept bitcoin). You don't even have to go to 'every business' part. Even if half of the businesses accept bitcoin, then they don't need to sell their bitcoins. Finally, if your nouveaux rich friends expect a Venezuala style situation, then, holding it further is the rational choice from their perspective.
- matt_wulfeck 9y ago
  > From your friend's perspective, if they sell $100K worth of bitcoin, then is it possible that they might end getting on the radar of the govt and could be on hook for more than $100K? You really have to be on the radar if you plan on reasonably enjoying that kind of wealth. There are plenty of legit ways of minimizing the tax burden of that kind of investment. Calling the top and bottom is a fools game. Diversification simply helps protect an entire asset class/sector from ruining you.
  - splintercell 9y ago
    If you currently hold bitcoins which you mined, then they are a highly liquid assets because tomorrow you could flee the country and still have this wealth go with you. now I don't think most people think that they need to flee the country any time soon, but either way, it ISN'T the same thing as diversifying your non-crypto assets. I am merely trying to explain to whomsoever wants to know why these people won't sell their crypto even to diversification, please don't start yelling at me.
deleted 9y ago
[deleted]

SilasX 9y ago

I've seen the same -- I know someone who got in early to BTC, then moved it all into Ethereum early, such that he has enough to comfortably retire today. But he won't cash any of it in except for a small amount each month to live on, while he lives rent free with others. When I explain the logic of hedging and mitigating risk and locking in gains, he was insistent that the right strategy is to hold because it's going to go up some more, and he doesn't need the money now for any of his current objectives. Come to think of it, I should at least consider that he's making it up, but I've met him several time and he's well versed in crypto and way ahead of the curve in learning about this stuff. Who knows?

random023987 9y ago
> Come to think of it, I should at least consider that he's making it up, but I've met him several time and he's well versed in crypto and way ahead of the curve in learning about this stuff. Who knows? If you poll people after a presidential election, a higher percentage of people claim to have voted for the winning candidate than voted for the winning candidate. It's a lot easier to be well-versed in crypto and claim you won some big bets, than it is to be well-versed in crypto and actually have won enough big bets to "comfortably retire". The former requires hindsight, and the latter requires immense luck and timing.
prawn 9y ago
Would he have to be well-versed to have enough BTC to retire? Surely you could just get on board the hype train at the right station, when it was cheap enough to buy a few, and maybe at the urging of a colleague, and go from there. None of the few people I know with BTC are especially well-versed in it.
spectrum1234 9y ago
This isn't that terrible. However its much much less risk and at worst only tiny bit less upside to put 34% in Ethereum, 33% in Bitcoin, and 33% in a basket of all else possible.
- seanp2k2 9y ago
  I'd suggest S&P index funds for the remaining third. If it's FU money already, taking out a third and putting into a known-decent investment because you don't need it right now should be a good way to ensure that you can actually retire whenever you'd like to.

aparadja 9y ago

I think the parent comment is just a hypothetical situation, and blhack isn't actually a bitcoin millionaire.

blhack 9y ago
Just to clarify, yeah. Definitely not a bitcoin millionaire.
deleted 9y ago
[deleted]

modeless 9y ago

Personally, I'm not "extremely wealthy", but I'm certainly holding a larger percentage of my net worth in bitcoin than is prudent. However, I sold enough to make back my initial investment long ago; if it crashes to zero tomorrow I won't be ruined. I'm not holding bitcoins as a matter of principle. I have a number in mind, and if I hit it I will have enough money to retire at 35. At that point I plan to sell ~90% of my bitcoins. I could sell some now, and make a significant amount of money. But I already have plenty of money saved; a little more isn't going to change my life. For my bitcoin investment it's FU money or bust, and any amount I sell now just lowers the chances that I'll ever get to FU money.

spraak 9y ago
Wow, I'd love some advice on getting there. I've found myself in cycles of debt for the past many years.

woodman 9y ago

> ... initially drawn to btc as a speculative vehicle? Or is it a matter of principle to hold forever? I got involved with btc when it was in the single digits, the crowd was very different then - cryptoanarchists. So your call to "diversify your investments" sounds to me much more like "diversify your politics", which is obviously a silly thing to tell somebody - especially somebody whose politics is any anarcho flavor. While I can only speak for myself, I do think this is true for many others: I was already living pretty comfortably and a few million isn't enough of appreciably change one's quality of life as a software developer.

ringaroundthetx 9y ago
As someone that deals with political parties and regulatory regimes in many countries at once, diversify your political isn't silly at all. Or at least I feel like being unsubscribed from one countries politics has only given me advantages, even if it is less common to not be married to a political flavor.
- woodman 9y ago
  > ...diversify your political isn't silly at all. It is, as most political differences are rooted in mutually exclusive ideas. If you are advocating for simply being open to considering alternative positions and measuring them against your own present position - then I agree with you, that is nice. But I would describe that as "diversify your politics", I'd describe that as being intellectually honest.
  - vkou 9y ago
    One way to diversify your politics is to get in bed with multiple mutually exclusive political parties. That way, no matter who wins, you'll have friends in high places.
  - ringaroundthetx 9y ago
    > It is, as most political differences are rooted in mutually exclusive ideas. The reason I disagree is because I get to be exposed to these mutually exclusive interpretations in several different countries. My lack of indoctrination and context gives me an additional perspective based on the present, which primarily reveals an inefficiency that gives me an advantage. For example, the first mutually exclusive topic that came to mind was ..... some extremely polarizing human rights topic you feel passionately about? I bank on you spending all of your energy on that while I try to get a say in the 900 other things lawmakers - or the agencies they delegated authority to - actually do.

deleted 9y ago

[deleted]

panarky 9y ago

> is it a matter of principle to hold forever? There was a reply to this, now deleted: > this is a pretty common (and self-destructive) phenomenon amongst unsophisticated investors On the contrary, it's much more common for unsophisticated investors to sell their winners too early. Dumb money is more emotional. Dumb money is risk averse and can't tolerate losses, so holds on to losers forever. Dumb money harvests winners after a 50% or 100% gain and reinvests in losers. Smart money is coldly rational instead of emotional. Smart money isn't afraid of small losses. Smart money sells losers quickly and takes many small losses. Smart money holds one or two winners for a long time for 1000% and 10000% gains. I'm sure some long-term bitcoin holders are ideological, but most are coldly rational smart money.

nosuchthing 9y ago
No. Smart money understands why something is valuable and to what extent along with weighing the alternatives. Dumb money invests emotionally without comprehending why a thing is traded for other things.

splintercell 9y ago

> As one of the btc nouveaux rich, help me understand something I see reoccurring among my other btc-rich friends. Generally, when you're up big (and in some cases extremely wealthy), you diversify your investments in order to preserver your wealth. However, almost without exception my btc friends are such believers that they are holding on for the ride forever. That's the idea. However, you have to understand that if say SNAP stocks made someone rich, then diversifying makes sense, but if you got rich by some investment in some company Cayman Islands (but with a real business model), then you wouldn't just bring back the money or part of it purely for the sake of diversification. In other words, diversification away from bitcoin isn't in the same boat as diversifying away from real estate or some stock. From your friend's perspective, if they sell $100K worth of bitcoin, then is it possible that they might end getting on the radar of the govt and could be on hook for more than $100K? In addition to that, bitcoiners also believe that bitcoin hasn't reached it's peak, so when it reaches it's peak, they wouldn't have to sell their bitcoins (because every business would accept bitcoin). You don't even have to go to 'every business' part. Even if half of the businesses accept bitcoin, then they don't need to sell their bitcoins. Finally, if your nouveaux rich friends expect a Venezuala style situation, then, holding it further is the rational choice from their perspective.

matt_wulfeck 9y ago
> From your friend's perspective, if they sell $100K worth of bitcoin, then is it possible that they might end getting on the radar of the govt and could be on hook for more than $100K? You really have to be on the radar if you plan on reasonably enjoying that kind of wealth. There are plenty of legit ways of minimizing the tax burden of that kind of investment. Calling the top and bottom is a fools game. Diversification simply helps protect an entire asset class/sector from ruining you.
- splintercell 9y ago
  If you currently hold bitcoins which you mined, then they are a highly liquid assets because tomorrow you could flee the country and still have this wealth go with you. now I don't think most people think that they need to flee the country any time soon, but either way, it ISN'T the same thing as diversifying your non-crypto assets. I am merely trying to explain to whomsoever wants to know why these people won't sell their crypto even to diversification, please don't start yelling at me.

deleted 9y ago

[deleted]