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Bitcoin: Be prepared to lose all your money, FCA warns consumers
- trident5000 6y agoI find this hilarious when many European banks have lost 98% of their market caps and individual stocks have just as much volatility in many cases. Maybe the investor warnings should be more even.
- bichiliad 6y agoYou're not wrong about stock volatility, but I think the point that there aren't any mechanisms for safety at all are fairly valid still: "Investors who are out of pocket will not be able to rely on the Financial Ombudsman Service to settle complaints or order compensation from offending firms. Consumers are also unlikely to be covered under the Financial Services Compensation Scheme, which covers losses up to £85,000 on fully regulated accounts and investment products including pensions." You also can't, say, sue BitCoin for securities fraud (or, more realistically, be part of a class-action lawsuit) like you could against a company that you own stock in[0]. Again, I'm not trying to say that stocks are "safe", but it's also true that you have more protections investing in them than you do with Bitcoin (at least for now). [0]:https://www.bloomberg.com/opinion/articles/2019-06-26/everything-everywhere-is-securities-fraud https://www.bloomberg.com/opinion/articles/2019-06-26/everyt...
- trident5000 6y agoI see what you're saying but this is still a bit ridiculous. You sue a company when malpractice occurs, that is not possible with btc. It simply exists. Its like saying you dont have investor protections when you buy oil or corn (unless we are talking about the exchange, and by the article I'm not sure what they're getting at).
- grey-area 6y agoHere are some possibilities for malpractice with Bitcoin: Exchanges lying about transactions, pricing, Exchanges refusing to allow or unable to allow extracting wealth stored in bitcoin, Exchanges front-running, Exchanges stealing money, 51% attack by miners, Governments expropriating wealth 10 years later claiming back taxes for undeclared earnings, Developers changing the rules of the currency (which are encoded in the client) and persuading enough to go along with it, Currencies which the price of Bitcoin is closely tethered to lying about their reserves... I could go on, but the entire edifice is built on confidence, and once that confidence evaporates for a second time, it's going to be very hard to recover. There is a lot of risk investing in bitcoin, it is nothing like commodities, that's just the latest identity have dreamed up for it after it completely failed to live up to the hype of the previous identities first as a currency outwith government control, then as a distributed trust-free database, then as a foundational layer for myriad apps, and finally as a 'commodity' which nobody actually uses (unlike other speculative commodities like oil or corn which usually have a use value which the current value fluctuates around). You do in fact have lots of protection when you buy other commodities, in the form of rules against cornering the market, rules against fraud, insurance, regulators etc. Look up the silver corner or similar episodes for what happens when markets in commodities are completely unregulated, as we see in the Bitcoin market at the moment.
- trident5000 6y agoTheres a lot of inaccuracies in here and it just kind of looks like things being thrown at a wall and hoping they stick. For instance front running is done by HFT in the equity markets so I see a double standard there. "exchanges lying about transactions" - what? 51% attack by miners, do you actually know what that is? What the impact is and how much it would cost to carry and sustain that? Nursie: Oh sure, I thought he was talking about like your trades on the exchanges being misrepresented or something. Weve known about the wash trading for probably 6 years now. Theres aggregators that eliminate the wash trading volumes. Its mostly asian exchanges that are competing for business. theres still a lot of organic volume. Yup theres going to be bad actors that occurs all over finance.
- SoSoRoCoCo 6y ago> when many European banks have lost 98% of their market caps I can't find a single source for this claim. All Eurobank market caps look fine, even in COVID, for the past 5 years. Can you explain this statement?
- jcfrei 6y agoParent is probably alluding to market caps before the great financial crisis. So about 14 years back.
- afavour 6y agoBut individual deposits were guaranteed were they not?
- baobabKoodaa 6y agoThe parent example is alluding to owning stock in the banks, not holding individual deposits at those banks.
- yreg 6y agoErste Group is where it was 5 years ago (and 40% off all time high). Maybe the parent poster is just overexaggerating?
- trident5000 6y agoDeutsche Bank: a high of $146, it now trades at $11. AIG went from $1,913 to $40. HSBC 75% loss, Barclays 85% loss. All across the world its the same story.
- danhak 6y agoWhy are you comparing individual stocks to a currency?
- dsomers 6y agoBecause this ‘currency’ is volatile like a small cap stock. This is the thing I always get a runaround about from Bitcoin advocates. Some say it’s a great currency, some say it’s a great investment. Well, by definition if it’s good at one thing, it’s bad a the other. Investments should provide good long term appreciation, and currency should be stable ideally not fluctuating in the double digit percentages in a given year. Bitcoin, you’re a fun experiment, but what’s the point of your existence?
- prionassembly 6y agoBitcoin hopes to be a currency, but isn't one. People who have bought e.g. a pizza with bitcoin are examples of what NOT to do with Bitcoin. The very fact that Bitcoin holders expect it to rise in value makes it unsuitable as a medium of exchange.
- melenaboija 6y agoI guess for the same reason you implicitly compare BTC to USD or EUR, it needs to be compared to something to give it a value as it does not have an underlying one
- WhoCaresLies 6y agobuy bitcoin then, go ahead, you can buy everything with bitcoin right?
- prionassembly 6y agoIf it appreciates indefinitely in value, yes. I have a huge box full of precious photography film. Slide stock, Kodak Portra, beautiful B&W by Ilford... I should store it in a freezer but that would make holding costs high, and there's a going market for good and bad film at any condition (there's CVS-brand film on ebay)... These rolls have the capacity to produce beautiful imagery in my incapable hands, and I know them to have great value -- my 120 format Portras smoke anything in your digital quiver when it comes to displaying beautiful people in outdoor-sized frames. I can pretty much sell a handful of Ilfords in 2-3 weeks and buy my wife a nice steak dinner. Is it money?
- WhoCaresLies 6y agogo ahead then, why people want the approval of random people on the internet that is what's weird with bitcoin weirdos, just buy and stfu, PLEASE
- RivieraKid 6y agoBitcoin has essentially no intrinsic value. If people only used it as a currency, not as a speculative "investment", the price would be orders of magnitude lower. Stocks are much "safer" because the intrinsic value is often similar to the market price. Gold and some stocks (Tesla) are somewhere in between. They have intrinsic value but people also buy it speculatively so the price is way higher than the intrinsic value.
- trident5000 6y agoPeople use Bitcoin as a form of gold 2.0. Thats why the MC is where it is. Nobody in their right mind is making a cash flow case for btc unless you include lending which actually makes a decent return.
- RivieraKid 6y agoIt's true that people use it as gold 2.0 and it's the bull case. But, the value is approximately 100% speculative. If people for some reason decided they will only use it for transactions and not as investment, most of the value would disappear.
- pfisch 6y agoIsn't that basically true for any neutral store of value(Silver, Gold)?
- mcintyre1994 6y agoAt least in the UK bank deposits up to £85,000 are protected by a government scheme, so you can't lose all your money. I expect the FCA would offer the same "be prepared to lose all your money" advice to anyone who wanted to invest in a single stock too.
- matsemann 6y agoIn Europe one got MIFID II and MiFIR a few years back that makes it so that everyone wishing to buy certain investment stuff have to pass a small knowledge test beforehand or show that they have understand the risks etc. So here this goes for most financial instruments and not just Bitcoin. I'm allowed to buy mutual funds at my trader, but in order to buy options I have to complete this tutorial to unlock that, for instance.
- Blikkentrekker 6y agoI've seen many claim that mathematically the stock market is more of a game of chance than a poker tournament, yet the latter is what is most often covered under gambling laws and the former is not.
- basdftrewq 6y agoBitcoin, always crashes: https://m.youtube.com/watch?v=XbZ8zDpX2Mg https://m.youtube.com/watch?v=XbZ8zDpX2Mg
- 0xmarcin 6y agoWhen I open this link in iPhone safari I get a strange popup about downloading 3887 something? Strange...
- andai 6y agoSame. Probably server messing up MIME type.
- farseer 6y agoIs it fair game and legal to break into a wallet via cryptographic means alone? I mean without hacking someone's computer/storage to steal the private key that is. I understand this is not realistic right now, but might be if someone has discovered new math or physics for example.
- carterschonwald 6y agoSince the only proof of owner ship is private key material. Yes. And in fact this has been done and demonstrated for certain ethereum or other systems. edit: certain elliptical curve crypto systems use randomness as part of the encipherment process. If two uses of the same key have low quality randomness/no randomness, solving for the private key material essentially becomes a slightly tedious high school algebra math problem. heres a paper from last year where they did such an analysis, found some weak keys, and then saw that those wallets had already been hacked/drained! (possibly by someone who did similar work, for profit rather than science) https://eprint.iacr.org/2019/023 https://eprint.iacr.org/2019/023
- Cthulhu_ 6y agoTheoretically it could probably be labeled as hacking and / or theft in a court of law. Practically, you'd never find out who did it unless they admitted to it, happen to live in the same country, etc etc etc. I think the saying "it's only a crime if you get caught" is applicable in this case. That said, you can get charged with tax evasion if you have crypto without reporting it. If they find out that is. I have some crypto stashed on an exchange, so I'm expecting them to report to my tax office at some point.
- stinkytaco 6y agoThis could really be said for any currency speculation. I expect crypto attracts more of this than other investment vehicles, but currency speculation and forex trading are insanely risky.
- cableshaft 6y agoThis is just: "Don't invest what you aren't prepared to lose," which has been the advice for Bitcoin and other cryptocurrencies for a decade at this point. The headline makes it sound like they're threatening legal action or some sort of regulation, at least to me.
- SoSoRoCoCo 6y agoI got that vibe as well. It could be a hint at an incoming regulation sweep.
- bena 6y agoThat's good advice for investing in general.
- vsareto 6y agoIt's not really though. That amount of risk aversion would keep people out of the market who would be better served by keeping it in a lazy portfolio for extended amounts of time.
- bena 6y agoSo, it's not money they're counting on. If they lose it, it won't collapse their life. There's a difference between "would like to not lose" and "can't lose". I would like to not lose my investments. I can't lose rent.
- oefrha 6y agoYeah that was my reading of the title, and I highly doubt this nothingburger article would be upvoted to one of the top spots without the clickbait title. Flagged for waste of time. (I’m not a cryptocurrency fan, and have a grand total of a couple hundred bucks in crypto. Well, maybe a grand now, I don’t know.)
- anthony_romeo 6y agoTrue, but it's a good reminder given that: - There are a lot of economic instabilities in the world right now (e.g. COVID, lockdowns) increasing poverty. - Bitcoin increased by up to 400% in the past year, and about an order of magnitude since its lows in 2019. There's obviously a temptation to invest more and more when the value keeps going up -- desperation latching onto volatility -- which can cause increase hardship to those who fail to adequately acknowledge the risk. Those who invested in Bitcoin yesterday lost 25% of their value today.
- coldcode 6y agoI was going to buy a bitcoin at 6K but thought it risky. Now I feel dumb.
- wpietri 6y agoYou were right. It was risky. It's even more risky now. Hindsight is a terrible way to value assets.
- Reedx 6y ago> It's even more risky now How so? The bigger it gets and the longer it lasts, the more it's derisked. It was more risky 10 years ago (i.e., odds of going to 0, finding a critical problem, lack of adoption, would've been easier for governments to ban it).
- wpietri 6y agoFor approximately the same reason it's more dangerous to climb on the roof of a hundred-story building than a one-story building: there's much farther to fall. I also think its price has become thoroughly decoupled from actual use value. Back in the day one could plausibly (if optimistically) argue that it was going to become the new cash, the new credit/debit transaction. But it has obviously failed at being the digital cash it set out to be. (With the exception of the untraceable envelope/briefcase of cash popular with criminals of various sorts.) There's also now a much richer market manipulation apparatus. That increases risk directly, but also indirectly via increased regulatory interest. Tether, for example, is under heavy investigation.
- jetpackjoe 6y agoI sold my bitcoin at 6k when I lost my job. IDK how I feel.
- Max_aaa 6y agoFeel good that you were able to extract 6K or so of value from it. If you held it until it busted, you would feed dumb.
- dartharva 6y agoThe headline makes it look as if the regulators are out to ban crypto trading or liquidating (be prepared to lose all your money?!)
- tebbers 6y agoIn London they are advertising bitcoin on the side of buses and in the Underground with the slogan 'when you see bitcoin on the side of a bus, it's time to buy'. I thought that was outrageous and actually was a sign to sell. I mentioned this to a foreign exchange trader friend and we even finished each other's sentence with the above!
- agumonkey 6y agoIt's a sad possibility that people are actively getting newcomers to join the game at the worst of times.
- benibela 6y agoI bought some millibitcoins in 2018, at almost the worst time Last week it has become my best investment so far Although now I wonder if I should sell them
- agumonkey 6y agoYes long term it's no biggie, the thing is, as a newcomer, good luck sitting on big losses when you never experienced that before.
- rootsudo 6y agoOr the best!
- agumonkey 6y agoTotally depends on the psychology. To some speculator buying at 40k will be the best move of your life.
- thekyle 6y agoThere is a relevant quote apparently from the 1920s. "Taxi drivers told you what to buy. The shoeshine boy could give you a summary of the day's financial news as he worked with rag and polish. An old beggar who regularly patrolled the street in front of my office now gave me tips and, I suppose, spent the money I and others gave him in the market. My cook had a brokerage account and followed the ticker closely. Her paper profits were quickly blown away in the gale of 1929." https://archive.fortune.com/magazines/fortune/fortune_archive/1996/04/15/211503/index.htm https://archive.fortune.com/magazines/fortune/fortune_archiv...
- nabla9 6y agoBitcoin speculation is an almost pure Keynesian beauty contest. https://en.wikipedia.org/wiki/Keynesian_beauty_contest https://en.wikipedia.org/wiki/Keynesian_beauty_contest As long as most people think everyone else thinks BTC is the prettiest girl, it can have substantial value and the sky is the limit. It's a pure speculation asset. You don't need bitcoins to pay taxes. The value has a very weak link anchored to anything in the real economy (limited number of coins and the energy is meaningless nominal detail in this context).
- eloff 6y agoI don't think fiat currency has terribly much more going for it, in terms of intrinsic value, other than you do need it day to day because there aren't alternatives for buying things and paying your taxes. If here in Canada the US dollar became legal tender and I could use it for all my transactions, would the Canadian dollar hold its value? I don't think so.
- anonymouse008 6y agoAt least the 'pretty girl' in this example can point guns when she's a fiat - so she definitely gets a few bonus points for that.
- eloff 6y agoDoes that benefit the currency of Canada at all? I don't think so. Maybe with the US currency, but that's also special because it's currently the reserve currency of the world.
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- nabla9 6y agoLiquidity matters. Cash is king because it's the most liquid asset. You can sell $100s million dollars worth USD/EUR/JPY/GBP in a day without affecting the price those currencies. Bitcoin is the polar opposite of liquidity. Bitcoin markets are notoriously thin. If you try to by or sell large amounts the price either collapses or skyrockets. Bitcoin is like water tower where you can move water level (price) up or down by adding or removing 10-20 cubic meters of water. Fiat money is like a big lake or a sea. You can take or put 100 cubic meters per second and it's not visibly moving. Once BTC price rises to the level that enough people feel rich and start buying things, the price will drop suddenly. Panic hits the markets and the price drops like a stone.
- NicoJuicy 6y agoI sold when unknowledgeable people talked about it and acted like they knew how it worked. It was ~ 18 k then. I didn't leave much on the table.
- janmo 6y agoConsumers should be prepared to “lose all their money” if they invest in products that promise high returns from cryptoassets such as bitcoin, the City watchdog has warned. The HN title is misleading, it is more a warning against all the Bitconnect like ponzi scams that will popup and promise huge return by mining or trading Bitcoin.
- isthispermanent 6y agoWhat a click-baity title. This isn't worthy of the front page of HN
- permo-w 6y agoThis is incredibly frustrating, as, just before this massive spike in bitcoin’s value, I bought a significant amount of BTC using Coinbase. They took my money, then retroactively made it look like my (brand new) account had exactly the amount of debt that I had paid in, and now my account was at 0. I sent in 2 support tickets and received no reply, so I resorted to a chargeback, presumably forfeiting any right to the BTC I purchased. Just to add salt to the wounds, I now constantly see adverts for Coinbase Avoid Coinbase like the Covid
- deleted 6y ago[deleted]
- kolbe 6y agoYou should be prepared to lose all your money in any investment. This PSA is a pretty lame scare tactic. Sure, BTC seems riskier than say AAPL stock, but both can go to zero. So, a PSA like this one seems like propaganda more than level-headed investment protips.
- lupinglade 6y agoSo much riskier, though.
- cubano 6y agoI have 0.75BTC locked away in an encrypted distributed Android wallet that I am unable to remember the password for. I received this BTC from an amazing soul here on HN (again, THANK YOU so much for that blessing if you are reading this!) who, after I wrote up a blog post about how I was arrested without any probable cause in Las Vegas, so very generously sent it to me after asking if it could "be of use?." BTW, the end result of the bullshit arrest was I was released with time served and the felony possession charge dropped due to the improper nature of the arrest, which was all caught on the officers bodycam. So at the time I read the email, I was literally walking down Fremont Ave. wondering where I was going to sleep that night (remember I had just been released from Clark County Detention Center) as my 34 nights in jail had made me lose everything I owned in the weekly place I had been renting. I was asked for a wallet address, so I quickly jumped on the playstore and dl'ed the first app with a good rating and was highly "secure". At the time I thought he or she would send me $50-$100 TOPS, so imagine my surprise when 0.75 (at the time worth like $600) plopped into my wallet. I must have fat-fingered the password entry, and of course I couldn't remember the 12-word phrase that the app author pleaded with me to "write-down and store in a safe, secure place"..no matter I thought at the time because of course there must be a password-reset email/text thing. right? RIGHT? Well, no. Alas, no happy ending here...I lost my very interesting and well-paying remote LAMP-development job working for a fast-growing company that was focused on lowering the overall cost to everyday people of filling drug prescriptions ( I know the irony of it all has not been lost on me ). The owner was someone I really respected and was smart enough to know his systems needed a total re-design for security and performance reasons, and to be honest years later I still have not recovered, work-wise and economically, from that night I was illegally (not my opinion, the actual criminal court finding and its' legal outcome) arrest. I still hate the feeling I get in the pit of my stomach I get when I think of the bind I put him in...ugghhhhhhh. So anyway...I still have the wallet safely stored away on an unencrypted USB (kind of late for that) that is physically locked away. I did contact the app author and fortunately for me, his app code was FOSS on github and I have the archive. Another fortunate item here is that I know I only used lowercase letters and the password was 12 char long. At approx. $30k in value, it's getting to the point where a concerted effort at cracking the damn thing is in order...however, I am personally very optimistic on the FV of BTC in particular and think I will hold off my attempts at cracking it until 1BTC=$100kUSD. Finally...the main reason I wrote this up this long post was to ask the community if anyone here knows of any reputable services that crack wallets such as mine for a reasonable fee and that I can feel secure that they will not just steal the BTC if they do manage to open it?
- Jimmc414 6y agoThese HN bitcoin threads sure do garner a disproportionate amount of downvotes. My opinion and advice would be to stop listening to opinions and advice on Bitcoin do your own research and follow the money. https://bitinfocharts.com/bitcoin/explorer https://bitinfocharts.com/bitcoin/explorer
- Triv888 6y agoYou can easily loose most of your money in stocks too... I just made $1k in stocks and $10k in crypto though...
- EVa5I7bHFq9mnYK 6y agoWith dollars or pounds you are GUARANTEED to lose all your money, if you hold it long enough.