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After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors
- slashink 8y ago22 years ago https://www.nytimes.com/1996/03/03/business/investing-it-the-talk-of-cyberspace-is-iomega-losing-its-zip.html https://www.nytimes.com/1996/03/03/business/investing-it-the...
- hkmurakami 8y agoJust going to say that I loved my Zip drive!
- raverbashing 8y agoTrue! Before USB drives they were great at the job. And my unit wasn't affected by the click of death apparently.
- deleted 8y ago[deleted]
- charlesdm 8y ago22 year ago, in 1996, 5 years before the dot-com bubble burst
- entropie 8y agoMinidisc, anyone? I still do not really understand why this wasnt more successful (at least by the time CDs existed/were used)
- smacktoward 8y agoWhy MiniDisc wasn't more successful, or why Iomega wasn't more successful? For Iomega, it was because of terrible quality control, leading to fiascos like the Zip drive "click of death" (see https://en.wikipedia.org/wiki/Click_of_death#Iomega_Zip_drives https://en.wikipedia.org/wiki/Click_of_death#Iomega_Zip_driv...). A storage vendor whose products develop a reputation for frequent, catastrophic data loss isn't going to stick around long. For MiniDisc, it was because MD didn't offer a clear leap up from what you could get from compact discs, and because Sony couldn't help but be Sony and go off and develop their own system while everyone else in the industry was using a different one (DCC: https://en.wikipedia.org/wiki/Digital_Compact_Cassette https://en.wikipedia.org/wiki/Digital_Compact_Cassette).
- _Codemonkeyism 8y agoFor the majority of people this is obviously true, but my MD was so much better than my Discman. I could record MDs and it was rock stable, while the Discman (even the later models with buffer) would jump all the time. Would have loved to own DAT, but was too expensive.
- cm2187 8y agoFor zip drives, also because it became cheaper and faster to burn a CD, then came usb keys.
- _Codemonkeyism 8y agoStill have my minidisc somewhere, loved it. Though I think my latest was from Sharp and I could record, not from Sony.
- paulpauper 8y agothat must suck..to have the misfortune of buying that stock instead of AOL, Cisco, Oracle, Intel, Dell, Microsoft..anything else would have been better. It goes to show how you can lose money even i n a boom if have bad luck, but also a good reason to diversify. .
- apo 8y agoEvery Bitcoin market decline brings out stories like this. Here's one from 2013 that's worse than anything in the NYT article: https://www.reddit.com/r/Bitcoin/comments/1r88vl/need_advice_on_inheritance_arbitrage_family_etc/ https://www.reddit.com/r/Bitcoin/comments/1r88vl/need_advice...
- furbyhat 8y agoThat poster is the definition of "gambling loser" I have no doubt he would have spent/lost the money on other things regardless. Juicy quote: "As of today, over the past 7 months I have lost a total of $410,000. The inheritance was supposed to be split between my younger sister and I, giving us each $375,00 + half of the house (not worth much, rural area, etc)." So if he just held for 4 more years... he would have turned their investment of 500k (even with 200k losses down from 700k) around to about 5 million dollars today. This is what happens when you do not have patience and speculate on things you do not understand.
- prolikewh0a 8y agoHoly moly, I hope that was just some elaborate troll.
- ribosometronome 8y agoHe got himeslf in over his head with arbitrage. Hindsight is always 20/20, but if he had waited a bit, he could have turned that into what... a 10 million profit?
- nipponese 8y agoCorrected title: After the Bitcoin Boom: Hard Lessons for n00b crypto Investors
- whoisjuan 8y agoThat doesn't even make sense. Anyone that is attempting to invest in crypto is a noob, even the ones that claim to be 'experts'. Nobody had any type of signaling to predict a price deflation for any of the crypto assets. The hard lesson is about timing, not about expertise.
- 21 8y agoNot really. If you had experience trading other financial markets it was way easier. Because the crypto markets are still quite small, they are very inefficient, thus it's much easier to make money here than in the stock market for example.
- antidesitter 8y ago> Anyone that is attempting to invest in crypto is a noob Undoubtedly many are, probably even a majority. But what makes you say everyone is? To me the probability of that is close to zero.
- lesss365 8y agoSignals were given. The RSI and stochastic RSI both gave loud signals that a reversal was going to take place when it did.
- cubano 8y agoAs a day trader for about 5 years, I could (and did) almost perfectly guess the price runups after breakouts, and knew 20k was sell time...it was a super easy chart to read in fact. All the moves were textbook.
- lowdest 8y agoNot 100% true. It's a small market full of inexperienced investors. It's easy enough to play it as such and come out a winner. For example, all the price movements are exaggerated because novice investors lack emotional control -- they get too greedy when the price is going up (magnifying the upward trend) then sell in a panic when the trend starts to reverse. I often make better returns in a sideways crypto market than buy-and-hold gives me in the stock market.
- 21 8y agoNothing new. When you see ads in the subway to buy cryptocurrencies, and you have people buying cheaper coins because they don't realize they can buy a fraction of a bitcoin, this happens. There is no fast way to get rich if you are dumb.
- CPLX 8y agoWe still have reality television right?
- 21 8y agoYou are not wrong: https://www.bloomberg.com/news/articles/2018-07-26/love-island-fame-is-more-lucrative-than-an-oxbridge-education https://www.bloomberg.com/news/articles/2018-07-26/love-isla...
- hyprCoin 8y agoLooking through the communities around these 'cheaper coins', these people are not the dumb. The dumb people are busy with either no investment (paycheck to paycheck) or inactive investments (401k in index funds), not building their vision of the future on risky alts. It might work too, mostly it's software engineers.
- granshaw 8y agoThe moment for me is when a Jack in the Box TV commercial mentioned Bitcoin
- evancox100 8y agoWhere do they find these people? Is this what a lot of "ordinary" people do? Take out tens of thousands of dollars in loans to invest in cryptocurrency? Are the people profiled in the article a representative sample? Or are we hearing about the worst cases only because they are so notable and out of the ordinary? Will this post ever stop asking questions?? Stories like these are full of anecdote and short on facts, it's hard for me to know what to make of them.
- 21 8y agoI work in a software firm. Last autumn half of my team was "investing" in cryptos. People who never traded before, who didn't knew what a bid or an ask was, and who complained to me that exchange interfaces were terribly complicated. Some of them were mulling breaking their 401k (or whatever the term is) so that they could invest the money here. In January they were saying to me "it's not a loss if you don't sell, right?" Literally 0 financial education.
- hyprCoin 8y agoWhat's the problem here? That software devs were investing in a potential future? That they were getting wrapped up in hype? I bet these new investors learned quite a bit about markets and will be a little more knowledgeful when it comes to negotiating equity.
- gammateam 8y ago> People who never traded before, who didn't knew what a bid or an ask was and the more amazing thing to me was that they also didn't even want to know the markets were moving too fast to learn anything, too fast to learn about the history, too fast to put any asset under scrutiny because there is another shiny new thing to trade with a cool name and interesting founding team or as the ZCash employees and fans are programmed to say "the math is interesting and the cryptographers are highly regarded so--" THAT HAS NOTHING TO DO WITH THE CRYPTOCURRENCY TRADERS
- guildenstern 8y agoSpend any time on the crypto currency subreddits and you’ll find dozens of people who took out >$20k loans to buy cryptocurrency. There are people still doing it. My co-working office space was filled with people in December talking non-stop about buying crypto currency, although all the crypto currency traders are long gone now. I don’t think people losing tens of thousands are the norm but absolutely there is a never ending list of people who’ve lost most of what they put in, whether that was hundreds or low thousands.
- hluska 8y ago> Now, eight months later, the $23,000 he invested in several digital tokens is worth about $4,000, and he is clearheaded about what happened. > “I got too caught up in the fear of missing out and trying to make a quick buck,” he said last week. “The losses have pretty much left me financially ruined.” I think it's distasteful to criticize the decisions that lead to someone's downfall, but maybe someone will read this and take heed for the future. If losing $19,000 will genuinely leave you financially ruined, cryptocurrency is way too high risk of an asset to get involved in. I feel bad for him and hope nobody ends up in the same spot.
- pfortuny 8y agoYep. Axiom 1: whatever you invest can disappear... So easily forgotten.
- rm_-rf_slash 8y agoMy personal take on that is: don’t invest money you can’t afford to lose.
- umanwizard 8y agoCash can lose value too. Look at Turkey now.
- daxorid 8y agoMoreover, cash is guaranteed to lose value. The mandate of global central banks has moved from "price stability" to "2% inflation".
- aaronbrethorst 8y agoThink of it as gambling instead of investing, and you'll probably do better. Relatedly, if you work for a company where a meaningful fraction of your compensation is in the form of stock, that is also gambling.
- bluecalm 8y ago
- cm2187 8y agoTo be honest with bitcoin currently still over $6,000 there is a lot more pain to come.
- techopoly 8y agoI'm with you there -- I just don't see the actual value as being worth that much. Stocks, bonds, commodities, government-backed currencies, they all have clear value other than their speculative value assigned by the current craze of the time. Bitcoin of course has some value, but $6,000 for one unit is certainly inflated. And what's worse, its value fluctuations make it unlikely to be used for what it was designed for: paying for things. At least with a stock you are a part owner of the company, and you get the rights inherent with that.
- oleganza 8y agoBitcoin has been through at least 3-4 major "run ups" already. Those who do not look at the log chart think that "this time it's different" and Bitcoin will surely die for good. Later it'll crash from $250K to $50K and then it will certainly be the end. 2011: $1->$30->$3. 2012: $5->$15->$10. 2013: $10->$270->$80. 2013-14: $100->$1100->$250. 2016-2018: $500->$20000->$6000 (so far).
- fru2013 8y agoPast performance is not indicative of future results.
- 21 8y agoThen why do people say "invest in the stock market for the long run by buying an index fund?"
- GhostVII 8y agoBecause over time, stocks tend to increase in value, because you are investing in a company that is producing something of value. You have a reason to believe that stocks will increase in value over a long period of time, other than just historical information.
- RivieraKid 8y agoInvestors? More like speculators, gamblers... Most people buy crypto because they believe the price will rise and they will be able to sell at profit. Investing is when you buy something that generates profits or utility, for example a share of a company or a house.
- systematical 8y agoIsn't that what my 401k is? Sure I get matching contributions from my employer, but I am hoping it keeps rising and that I can sell later for a profit when I retire. Maybe I'm oversimplifying that, but how is that any different?
- kimsk112 8y agoBecause companies exist to create revenue and grow. Revenue means dividend and R&D investment, hence, people spend more to buy those shares because company values are higher. For Cryptocurrencies, you just expect someone else will pay more than you do, but there is no obvious reason why it should be that way forever.
- waterphone 8y agoThe assets in your 401k (if invested in the market, especially if invested in broad market index funds to be highly diversified) actually have value beyond simply being a speculative asset. They're shares in businesses with a lot of motivations to make a profit, and they're going to continue doing their best to do so, and you benefit from that as a shareholder. Cryptocurrency is largely a bubble of speculation and get-rich-quick hype with not much actual utility for most people beyond a lot of claims that don't ever really pan out.
- coygui 8y agoWhen everyone starts talking about cryptocurrencies, one should stop investing. A variant from a stock market quote.
- rootusrootus 8y agoYeah, last year when my 76 year old mother asked me about bitcoin, I knew the bubble was about to pop. I've never been a bitcoin gambler myself, and I told my mom to stay the hell away as well. That continues to be my advice. I still think it looks like a big well-constructed scam designed to pull vast amounts of money from starry-eyed naive people and transfer it to a very small number of sharks.
- paulpauper 8y agothat is not a reliable indicator though. I remember a lot of non-tech people talking about bitcoin in 2013. Even at $100-250/coin it was getting a lot of media coverage.
- coygui 8y agoIt raised up to $1000 at that time and followed by a great drop to 100-ish and stay that level... but I don't know why it went up so much this year.
- deleted 8y ago[deleted]
- beefield 8y agoI don't like that gambling (on an obviously ponzi like scheme) is called investing.
- rootusrootus 8y agoThat started a long time ago. Buying stocks that pay no income is also referred to as investing, even though it is more accurately gambling as well. At least with stocks there is something with a more convincing value proposition.
- bluecalm 8y agoC'mon, some stocks don't pay anything because there are better ways invest their profit. You still own equity in something tangible and generating value most of the time.
- rootusrootus 8y agoSure, but you are gambling that their reinvestment will raise their stock value in the long run so that eventually you will make money. It's still a gamble, though.
- bluecalm 8y agoIt's an investment. You buy equity in something that produces value. Paying dividends or not is a non issue. Sure there is risk but it's different than buying lottery tickets or imaginary internet money. Conflating the two in the eyes of the public was great success of crypto currency pump and dumpers.
- mothsonasloth 8y agoGod willing, I look forward to the next NYT article posted here about Crypto in 4 years time about another bubble
- chx 8y ago> After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors After the Bitcoin Boom: Hard Lessons for Crypto"currency" gamblers. FTFY.
- s3xham 8y agoLiquidated enough bitcoin in February of this year to payoff my mortgage. Owe a significant amount in taxes next year. Token investment from 2013 paid off, was time to exit based on articles like this. Never shilled or advised others to "invest" because the best time to sell is when everyone else is buying and I understand how pyramid schemes work. Got took for a ride in every major ponzi, scam, etc prior to 2014 seeking interest... greed. Hello, hi! HN - I know you don't like the bitcoins.
- Animats 8y agoIt's zero sum. All those losers are needed to power the boom.
- rb808 8y agoI'm so glad to see naive investors learning that cryptos are a scam. Now they can get back to real investments like social media apps and cloud computing.
- NickM 8y agoIsn't this kind of thing the whole reason we have accredited investor laws? This might be an unpopular opinion, but if we want to protect people from themselves, maybe we should stop banning people from investing in private equity and start worrying more about exotic stuff like crypto. It seems utterly absurd to me that I'm not allowed to buy a single share of Uber or SpaceX, while sinking my life savings into whatever obscure cryptocurrency I choose is perfectly legal.
- tptacek 8y agoI'm unclear on why we wouldn't just ban both things. The reason you can't buy a share of Uber or SpaceX is, effectively, that those companies don't want your money. Both could easily do a public offering and admit you as a shareholder, but choose not to. Further clarity: I'm "accredited", and I don't think I can buy a share of either company either.
- nathan_f77 8y agoThat's not the only reason you can't buy a share of Uber or SpaceX. There are probably hundreds of employees who would jump at the chance to sell some of their vested shares. There are some secondary markets where you have to be an accredited investor, but most startups will block the transaction. P.S. I think it would be a very good idea to buy some Uber shares before their IPO. Maybe try EquityZen [1]. [1] https://equityzen.com/trending/uber/ https://equityzen.com/trending/uber/
- deleted 8y ago[deleted]
- jondubois 8y agoYes, the whole startup-to-corporate-acquisition-or-ipo funnel is an elaborate fraud and even the government is in on it. It's why many people invested in crypto in the first place.
- NickM 8y agoThey could do public offerings, but that comes with a lot of legal and regulatory requirements and expenses, accounting rules, disclosure rules, etc. etc. Not all of those things are necessarily bad; ostensibly they are there to protect public investors, but they do sometimes discourage companies from going public that might otherwise want to do so. But sure, maybe Uber and SpaceX aren't the best examples. Not sure if I'd even necessarily invest in either of them myself, but I thought they made for relatable examples. For a more real-world case, I'd love to be able to invest some money with the solar funds run by Wunder Capital, and that seems a lot safer than crypto, but that's off-limits to people like me as well.
- cryptothrow 8y agoI appreciate being the opposite of this story. Bought into an ICO five years ago, forgot about it, remembered early last year, diversified into more tokens but had a feeling to pull out when BTC was $18k. Sold 95% of my entire portfolio.
- GreeniFi 8y agoJust out of curiosity, how does it make you feel knowing your gains were at the expense of not very fortunate or rich people losing out around the world - unprotected because of the newness of the “investment” type - by investment laws. I made a modest return on a bitcoin investment, felt shit about it, and donated all the return to charity.
- sdf43543t345 8y agoNobody had a gun to the buyers/sellers head. Everyone knows what they are getting into, and markets are a zero-sum game. I have no ethical issues with making profit from trading. I'm sorry that you were not able to take the win. Maybe you should not play games?
- GreeniFi 8y agoYou’re right, no-one got their guns out. But that isn’t how confidence tricks tend to work. I think the reality for a lot of the losers -globally - is that they were kind of desperate, desperate enough to believe that there was some immediate answer to their cash needs. I started off believing in the crypto dream, but last year started to realise it was not what I thought it was.
- segmondy 8y agoAny activity that simply involves spending money and not enough sweat equity is not an investment but rather speculation. Doesn't matter if you are buying stocks or real estate, and most definitely so with all cryptocurrencies especially when you are not mining.
- Havoc 8y agoMade the opposite mistake. Called this a bubble way to early (Like $1 per coin) territory and refused to put money into it. Pretty spectacular fail right there. Currently trying to apply the above life lesson to investing in weed companies. It's a bit more difficult though since they have more plausible substance so it's more murky in a way.
- s73v3r_ 8y agoIt would be really nice if we could get financial literacy and basic investing taught in high school.