6 ms·

Well but how do you get the money to buy any bitcoin in the first place ? You don't invest in crypto currencies, you join early enough to sell to the next leve

by xwolfi 6y ago

Well but how do you get the money to buy any bitcoin in the first place ? You don't invest in crypto currencies, you join early enough to sell to the next level of the pyramid you convince via social media post :s But well you're right to say people should balance portfolio, I however don't see the value of the lottery, it's like paying taxes twice, with no chance of winning ever. At least bitcoin slowly loses value, a lottery ticket will lost its entire value a few days after purchase in 99.9999% of cases

tcoff91 6y ago
Bitcoin slowly loses value? Even those who bought the very top in 2017 have more than doubled their money if they didn't sell. Bitcoin, when it does lose value, loses it very quickly but on longer time horizons nobody has ever lost money by holding bitcoin for 3+ years. That being said, buying at current levels is extraordinarily risky and more equivalent to gambling than anything else. The expected ROI of the lottery is so low though It's hard to take someone seriously that mentions playing the lottery as an actual smart financial move.
- np- 6y ago
  People doubled their money on paper in unrealized gains. But since Bitcoin is being sold as a store of value and not as a medium of exchange nowadays, if you want to realize that value you need to sell. Where's that cash coming from? Other buyers, i.e. the next layer of suckers as indicated in OP's post. And if enough people decide to sell, then those doubled/tripled/etc values aren't going to last very long. Note I'm not saying that it's not possible to win in this system - clearly some people will, at the expense of many others. Perhaps it's my own ignorance, but I genuinely struggle to see how this isn't a zero sum game.
  - ZephyrBlu 6y ago
    The stock market is zero sum as well... When one person wins, another loses. Are people buying Google, Facebook and Amazon stock suckers as well?
    - Animats 6y ago
      Stocks have dividends. The value of a stock is the present value of all future dividends. Otherwise you're hoping to find a greater fool.
      - tcoff91 6y ago
        More and more companies are moving away from dividends to buy backs so for many stocks you have to sell to realize profits.
        Animats 6y ago
        Yes, because stock buybacks reward management with options. Dividends do not. Many countries don't allow a company to buy its own stock.
        tcoff91 6y ago
        Stock buybacks are more tax advantageous to investors than dividends. The price goes up and you sell some shares and pay long term capital gains if you’ve held for more than a year. This is cheaper than paying income tax on dividends.
      - Galanwe 6y ago
        > The value of a stock is the present value of all future dividend That is an idea from the 70s. Not many people would agree that there is an actual fair value for a stock anymore, much less that it is driven solely by accrued future dividends.
        Animats 6y ago
        After a while, reality comes back to bite you.
        georgeecollins 6y ago
        >> That is an idea from the 70s. No, that is an idea from economics predating the 1970s. Did you mean the 1870s? It predates that. You can value a stock however you like. Good luck, I wish you well.
  - kragen 6y ago
    Same's true of gold, silver, or cash-settled fresh bacon index futures. Consequently such commodities tend to have long-run zero returns, or returns that just equal the per-capita GDP growth rate, depending on how you look at it. I've watched people lose fortunes at that poker table. The fresh bacon index is maybe less exposed to this kind of thing because, unless the world mass-converts to Judaism or something, someone will pay to eat bacon, so there's a floor on how low the value can go. But gold? Industrial use of gold is minuscule compared to speculative gold trading. Today GC trades at US$1773 per troy ounce, which is 10% down from a few months ago, late 02020, and 100% up from 02008. In 02001 it was barely above US$200. It could drop to US$200 again, and everyone who bought today and held will have lost 80% of what they invested. That can happen with fresh bacon, too. What's different with gold is that, if enough people decide to sell, it could drop to US$20. It could drop to US$2. Or it could rise to US$20000. We have more history about gold: it's been a precious metal for many millennia and a widespread currency for the last three. So it's a lot less likely for it to lose 99% or 99.9% of its value like that, or go up 100× (though, as I said, it's gone up very close to 10× in a mere score of years.) People — and, especially, central banks and governments — invest in gold because they dont think it's likely for that to happen, and because it doesn't have the secular inflationary tendency that fiat currencies do. It may bounce up and down by a factor of 10 in a couple of decades, but in 01687 it was probably also within that same factor-of-10 band. They're not looking for an expectation of profit when they seek a "store of value". They're just looking to reduce the risk of indigency.

by xwolfi 6y ago

tcoff91 6y ago

Bitcoin slowly loses value? Even those who bought the very top in 2017 have more than doubled their money if they didn't sell. Bitcoin, when it does lose value, loses it very quickly but on longer time horizons nobody has ever lost money by holding bitcoin for 3+ years. That being said, buying at current levels is extraordinarily risky and more equivalent to gambling than anything else. The expected ROI of the lottery is so low though It's hard to take someone seriously that mentions playing the lottery as an actual smart financial move.

np- 6y ago
People doubled their money on paper in unrealized gains. But since Bitcoin is being sold as a store of value and not as a medium of exchange nowadays, if you want to realize that value you need to sell. Where's that cash coming from? Other buyers, i.e. the next layer of suckers as indicated in OP's post. And if enough people decide to sell, then those doubled/tripled/etc values aren't going to last very long. Note I'm not saying that it's not possible to win in this system - clearly some people will, at the expense of many others. Perhaps it's my own ignorance, but I genuinely struggle to see how this isn't a zero sum game.
- ZephyrBlu 6y ago
  The stock market is zero sum as well... When one person wins, another loses. Are people buying Google, Facebook and Amazon stock suckers as well?
  - Animats 6y ago
    Stocks have dividends. The value of a stock is the present value of all future dividends. Otherwise you're hoping to find a greater fool.
    - tcoff91 6y ago
      More and more companies are moving away from dividends to buy backs so for many stocks you have to sell to realize profits.
      - Animats 6y ago
        Yes, because stock buybacks reward management with options. Dividends do not. Many countries don't allow a company to buy its own stock.
        tcoff91 6y ago
        Stock buybacks are more tax advantageous to investors than dividends. The price goes up and you sell some shares and pay long term capital gains if you’ve held for more than a year. This is cheaper than paying income tax on dividends.
    - Galanwe 6y ago
      > The value of a stock is the present value of all future dividend That is an idea from the 70s. Not many people would agree that there is an actual fair value for a stock anymore, much less that it is driven solely by accrued future dividends.
      - Animats 6y ago
        After a while, reality comes back to bite you.
      - georgeecollins 6y ago
        >> That is an idea from the 70s. No, that is an idea from economics predating the 1970s. Did you mean the 1870s? It predates that. You can value a stock however you like. Good luck, I wish you well.
- kragen 6y ago
  Same's true of gold, silver, or cash-settled fresh bacon index futures. Consequently such commodities tend to have long-run zero returns, or returns that just equal the per-capita GDP growth rate, depending on how you look at it. I've watched people lose fortunes at that poker table. The fresh bacon index is maybe less exposed to this kind of thing because, unless the world mass-converts to Judaism or something, someone will pay to eat bacon, so there's a floor on how low the value can go. But gold? Industrial use of gold is minuscule compared to speculative gold trading. Today GC trades at US$1773 per troy ounce, which is 10% down from a few months ago, late 02020, and 100% up from 02008. In 02001 it was barely above US$200. It could drop to US$200 again, and everyone who bought today and held will have lost 80% of what they invested. That can happen with fresh bacon, too. What's different with gold is that, if enough people decide to sell, it could drop to US$20. It could drop to US$2. Or it could rise to US$20000. We have more history about gold: it's been a precious metal for many millennia and a widespread currency for the last three. So it's a lot less likely for it to lose 99% or 99.9% of its value like that, or go up 100× (though, as I said, it's gone up very close to 10× in a mere score of years.) People — and, especially, central banks and governments — invest in gold because they dont think it's likely for that to happen, and because it doesn't have the secular inflationary tendency that fiat currencies do. It may bounce up and down by a factor of 10 in a couple of decades, but in 01687 it was probably also within that same factor-of-10 band. They're not looking for an expectation of profit when they seek a "store of value". They're just looking to reduce the risk of indigency.