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I didn’t downvote it, but it’s so obvious as to be unhelpful. Who needs to be reminded that an asset isn’t worth its price until it’s liquidated? It’s self-evid

I didn’t downvote it, but it’s so obvious as to be unhelpful. Who needs to be reminded that an asset isn’t worth its price until it’s liquidated? It’s self-evident, and yet you have it following every time someone mentions returns on BTC. You have it at least twice here on this thread, in fact.

kbenson 9y ago
How self-evident it is is highly dependent on your experience with investing. That's a lot of people here, but by no means all.
mrep 9y ago
For most assets, you can generally assume it will be close to what it currently is priced at. btc is different in that regard because holding onto it for a week or even a day can easily cause it's value to double or half. That's why its different because while you think you have that much money, by the time you actually get around to selling it, the price can be radically different
- nihonde 9y ago
  Some assets are more volitile than others. I feel that we are moving backwards here in terms of restating obvious and extremely basic principles. Anyway, I’m not at all convinced that BTC is different in kind relative to, say, normal FX trading. The spreads do tend to be higher, though. What’s far more interesting to me is BTC’s resilience as an asset in spite of massive, demonstrable (and frankly, predictable and preventable) failures like MtGox. Edit: Think about shares held in a startup. Those are insanely volitile. Does anyone need to reminded that they aren’t rich until they convert their shares into cash?
  - xapata 9y ago
    Yes, people sometimes need to be reminded that illiquid assets are difficult to evaluate.
- totalZero 9y ago
  > For most assets, you can generally assume it will be close to what it currently is priced at. True with some caveats. This statement assumes no forward rate. If the risk-free rate is high, then the future price should generally be expected to appreciate. This statement also requires some assumptions about the probability distribution of future price changes. Let's take a common example of a multi-modal distribution: court decisions. Imagine companies XYZ and ABC are engaged in a patent dispute. Both companies profit greatly from the production and sale of doodads, and (for the sake of example) we have been told that exactly one company will need to cease doodad production as a result of the decision. The company that ceases production should trade down as a result of its lost future profits, and the other company should trade up. In this case, even though the current prices may be E[XYZ] and E[ABC], the future price is going to be markedly different for both.
vkou 9y ago
Most assets can be liquidated with far less trouble then BTC. The counterparty risk with selling BTC is through the roof - just ask Mt. Gox's creditors.
FooHentai 9y ago
>Who needs to be reminded that an asset isn’t worth its price until it’s liquidated? Mom & pop class investors who characteristically are the ones left holding the bag when a bubble pops.
- dmichulke 9y ago
  Exactly the type of people who read HN then! Wait...
  - QAPereo 9y ago
    Be honest, the only thing you might know is who you think comments. You know literally nothing about who just reads the site, none of us do.
    - dmichulke 9y ago
      You're right. We don't. Still I don't think general advice like "Until you successfully cash out, you’ve made nothing." is appropriate. It's like "Don't spend more than you have" - it's true but if people didn't learn it by their 30s, chances are low they learn it by mentioning it once more. But my specific disliking is elicited by the fact that this looks like virtue signalling. If you're uniquely interested in educating moms and dads, write your general investment advice in the forums they like to frequent. Or write a blog post. If you didn't do that by now, maybe you're only concerned with showing that you're concerned without actually doing anything more effective about it. Note this is just my interpretation based on what I read and it might be wrong.
  - FooHentai 9y ago
    There are absolutely mom & dad class investors among HN's reader base. It doesn't literally mean 'stay at home mom and dad that owns a corner store'.
deleted 9y ago
[deleted]
freehunter 9y ago
>but it’s so obvious as to be unhelpful You'd be surprised at the number of people who would proclaim "I'm rich!" and then the stock market tanks before they sell. It is obvious, yes, but only if you actually give it a moment of thought. Many people don't.
arisAlexis 9y ago
bitcoin is not just an asset. hardcore supporters believe you need never cash out. all other money will cash in instead. takes some time to grasp it
- QAPereo 9y ago
  Easy to grasp, but it takes a heavy dose of KoolAid or a desperate need to satisfy existing ideologies to believe.
- nihonde 9y ago
  All currencies are assets intended to be exchanged for other assets. Go read the original Bitcoin whitepaper. It’s all about enabling transactions—not hoarding an mountain of coins like some kind of mythological dragon. Whether or not bitcoin is converted to other currencies during a transaction is irrelevant.

kbenson 9y ago

How self-evident it is is highly dependent on your experience with investing. That's a lot of people here, but by no means all.

mrep 9y ago

For most assets, you can generally assume it will be close to what it currently is priced at. btc is different in that regard because holding onto it for a week or even a day can easily cause it's value to double or half. That's why its different because while you think you have that much money, by the time you actually get around to selling it, the price can be radically different

nihonde 9y ago
Some assets are more volitile than others. I feel that we are moving backwards here in terms of restating obvious and extremely basic principles. Anyway, I’m not at all convinced that BTC is different in kind relative to, say, normal FX trading. The spreads do tend to be higher, though. What’s far more interesting to me is BTC’s resilience as an asset in spite of massive, demonstrable (and frankly, predictable and preventable) failures like MtGox. Edit: Think about shares held in a startup. Those are insanely volitile. Does anyone need to reminded that they aren’t rich until they convert their shares into cash?
- xapata 9y ago
  Yes, people sometimes need to be reminded that illiquid assets are difficult to evaluate.
totalZero 9y ago
> For most assets, you can generally assume it will be close to what it currently is priced at. True with some caveats. This statement assumes no forward rate. If the risk-free rate is high, then the future price should generally be expected to appreciate. This statement also requires some assumptions about the probability distribution of future price changes. Let's take a common example of a multi-modal distribution: court decisions. Imagine companies XYZ and ABC are engaged in a patent dispute. Both companies profit greatly from the production and sale of doodads, and (for the sake of example) we have been told that exactly one company will need to cease doodad production as a result of the decision. The company that ceases production should trade down as a result of its lost future profits, and the other company should trade up. In this case, even though the current prices may be E[XYZ] and E[ABC], the future price is going to be markedly different for both.

vkou 9y ago

Most assets can be liquidated with far less trouble then BTC. The counterparty risk with selling BTC is through the roof - just ask Mt. Gox's creditors.

FooHentai 9y ago

>Who needs to be reminded that an asset isn’t worth its price until it’s liquidated? Mom & pop class investors who characteristically are the ones left holding the bag when a bubble pops.

dmichulke 9y ago
Exactly the type of people who read HN then! Wait...
- QAPereo 9y ago
  Be honest, the only thing you might know is who you think comments. You know literally nothing about who just reads the site, none of us do.
  - dmichulke 9y ago
    You're right. We don't. Still I don't think general advice like "Until you successfully cash out, you’ve made nothing." is appropriate. It's like "Don't spend more than you have" - it's true but if people didn't learn it by their 30s, chances are low they learn it by mentioning it once more. But my specific disliking is elicited by the fact that this looks like virtue signalling. If you're uniquely interested in educating moms and dads, write your general investment advice in the forums they like to frequent. Or write a blog post. If you didn't do that by now, maybe you're only concerned with showing that you're concerned without actually doing anything more effective about it. Note this is just my interpretation based on what I read and it might be wrong.
- FooHentai 9y ago
  There are absolutely mom & dad class investors among HN's reader base. It doesn't literally mean 'stay at home mom and dad that owns a corner store'.

deleted 9y ago

[deleted]

freehunter 9y ago

>but it’s so obvious as to be unhelpful You'd be surprised at the number of people who would proclaim "I'm rich!" and then the stock market tanks before they sell. It is obvious, yes, but only if you actually give it a moment of thought. Many people don't.

arisAlexis 9y ago

bitcoin is not just an asset. hardcore supporters believe you need never cash out. all other money will cash in instead. takes some time to grasp it

QAPereo 9y ago
Easy to grasp, but it takes a heavy dose of KoolAid or a desperate need to satisfy existing ideologies to believe.
nihonde 9y ago
All currencies are assets intended to be exchanged for other assets. Go read the original Bitcoin whitepaper. It’s all about enabling transactions—not hoarding an mountain of coins like some kind of mythological dragon. Whether or not bitcoin is converted to other currencies during a transaction is irrelevant.