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I know it is tempting to compare the current price when estimating losses. But really, you cannot do that. I had 2.5M dogecoin that was also stolen. But I don't

I know it is tempting to compare the current price when estimating losses. But really, you cannot do that. I had 2.5M dogecoin that was also stolen. But I don't use the peak valuation (~$1.25M) or the current price (~$0.63M) because that implies I would have singled out the peak or held until now. I really only lost my buy in ~$1,500. It makes for a good story to lose a house, but it is better for your sanity to base your losses in actual line items.

IgorPartola 5y ago
This. If in 2012 you bought a pizza with 1 BTC and now feel silly, don’t. You also bought pizzas for $20 which you could instead have converted to BTC and held until now had you only had a working crystal ball.
- koolba 5y ago
  > You also bought pizzas for $20 which you could instead have converted to BTC and held until now had you only had a working crystal ball. My favorite spin on this is computing the present value of buying AMZN instead of whatever I was ordering from Amazon.
  - enos_feedler 5y ago
    Is there a script for this? :)
- arp242 5y ago
  This is kind of the emotional mechanism behind a lot of crypto investment. It's not intentional, and it's kind of sneaky, but with the strong fluctuations and chance of "hitting it big" there's always the "what if..." feeling. As someone who doesn't care much for crypto (in its current form anyway) and was never involved in it at all, even I have this to some degree as I was aware of it very early on (when it was still interesting, instead of what it's become now). This is probably a big reason why there are so many "amateur" investors compared to more traditional investments/trading.
  - judge2020 5y ago
    This is probably a big reason for why many cryptocurrencies have a high value as well. Nobody actually uses these things to trade for goods and services (well, maybe for drugs), everyone just expects the USD price to maintain or go up and values it based off of what they think they can get in USD in 5, 10 or maybe even 100 years.
- FreeSpeech 5y ago
  They should feel silly. It's not the market value of the spent Bitcoin ($20), but the opportunity cost (~$34k).
  - sellyme 5y ago
    As the comment you're replying to points out, that same opportunity cost applies to literally any non-essential ~$20 purchase they made with any currency in that time period.
    - FreeSpeech 5y ago
      Similar to the Monty Hall problem [1], the mistake you're making is calculating the opportunity cost at the time of sale, rather than within the context of perspective. Opportunity cost is dynamic, not static. If I approached you in 2012 with two envelopes, one with $20 worth of US bank notes, one with $20 worth of Bitcoin, you'd most likely take the cash. If I approach you again in 2021 with the same envelopes (unopened) from 2012, only a fool would take the cash. Speculative assets would not exist if your theory held water. [1] https://en.wikipedia.org/wiki/Monty_Hall_problem https://en.wikipedia.org/wiki/Monty_Hall_problem
      - sellyme 5y ago
        The critical difference between spending BTC on a pizza and the Monty Hall problem is that you only receive additional information once you no longer have any option to change your mind. If Monty Hall asked you if you wanted to change doors before opening one the problem would not be much of a problem.
        FreeSpeech 5y ago
        Except the OP was (almost certainly) in possession of $20 USD in 2012. The opportunity cost of buying that Pizza with Bitcoin rather fiat totals ~$34k at the time of comment.
        5y ago
FreeSpeech 5y ago
For the same reason you shouldn't use peak valuation when estimating losses, you shouldn't use buy in value either. Your loss is 2.5M × market rate at the time of loss.
- hervature 5y ago
  Accounting 101: ------ Credit,Debit $1500,2.5M Doge 2.5M Doge,0 Bankrupt ------ The business lost $1500
  - FreeSpeech 5y ago
    You bought a house 20 years ago for $200k. Today, it is valued at $2M. What's your insurance payout if it burns down tomorrow?
    - hervature 5y ago
      I didn't buy insurance
      - FreeSpeech 5y ago
        If it isn't obvious, your simplified accounting excludes opportunity cost. Actualised losses are much higher (otherwise insurance companies would be marketing the same logic).
        hervature 5y ago
        The fact you keep changing your answer should be evidence to yourself that you are on the wrong side of the argument. The entire point of my comment is that you are supposed to exclude opportunity cost. Did you lose $1M last year because you forgot to convert your cash to <insert any asset that increased wildly in the last year>?
    - nomoreplease 5y ago
      Easy answer: you get The value that you insured it for (either replacement cost or actual cash value with depreciation). You definitely wouldn’t insure it for 2M because those premiums would be stupid
menzoic 5y ago
Mostly agree. The true lost value is the amount you would've sold the coins at, but that's impossible to know. For most people its safe to assume they would've sold the coins during the first price jump years ago so its still less than peak valuation but probably more than purchase value. For more savvy investors who would take profits and hold the rest, the story could be different. The worse case is people who forgot they had coins years after purchase and went to retrieve them only to find that they've been stolen or permanantly lost. In that case you would lose the current values worth. I was in a similar situation with ETH stores on a laptop I donated to my sister years ago but luckily it was still stored on a partitioned drive and I was able to retrieve it.

IgorPartola 5y ago

This. If in 2012 you bought a pizza with 1 BTC and now feel silly, don’t. You also bought pizzas for $20 which you could instead have converted to BTC and held until now had you only had a working crystal ball.

koolba 5y ago
> You also bought pizzas for $20 which you could instead have converted to BTC and held until now had you only had a working crystal ball. My favorite spin on this is computing the present value of buying AMZN instead of whatever I was ordering from Amazon.
- enos_feedler 5y ago
  Is there a script for this? :)
arp242 5y ago
This is kind of the emotional mechanism behind a lot of crypto investment. It's not intentional, and it's kind of sneaky, but with the strong fluctuations and chance of "hitting it big" there's always the "what if..." feeling. As someone who doesn't care much for crypto (in its current form anyway) and was never involved in it at all, even I have this to some degree as I was aware of it very early on (when it was still interesting, instead of what it's become now). This is probably a big reason why there are so many "amateur" investors compared to more traditional investments/trading.
- judge2020 5y ago
  This is probably a big reason for why many cryptocurrencies have a high value as well. Nobody actually uses these things to trade for goods and services (well, maybe for drugs), everyone just expects the USD price to maintain or go up and values it based off of what they think they can get in USD in 5, 10 or maybe even 100 years.
FreeSpeech 5y ago
They should feel silly. It's not the market value of the spent Bitcoin ($20), but the opportunity cost (~$34k).
- sellyme 5y ago
  As the comment you're replying to points out, that same opportunity cost applies to literally any non-essential ~$20 purchase they made with any currency in that time period.
  - FreeSpeech 5y ago
    Similar to the Monty Hall problem [1], the mistake you're making is calculating the opportunity cost at the time of sale, rather than within the context of perspective. Opportunity cost is dynamic, not static. If I approached you in 2012 with two envelopes, one with $20 worth of US bank notes, one with $20 worth of Bitcoin, you'd most likely take the cash. If I approach you again in 2021 with the same envelopes (unopened) from 2012, only a fool would take the cash. Speculative assets would not exist if your theory held water. [1] https://en.wikipedia.org/wiki/Monty_Hall_problem https://en.wikipedia.org/wiki/Monty_Hall_problem
    - sellyme 5y ago
      The critical difference between spending BTC on a pizza and the Monty Hall problem is that you only receive additional information once you no longer have any option to change your mind. If Monty Hall asked you if you wanted to change doors before opening one the problem would not be much of a problem.
      - FreeSpeech 5y ago
        Except the OP was (almost certainly) in possession of $20 USD in 2012. The opportunity cost of buying that Pizza with Bitcoin rather fiat totals ~$34k at the time of comment.
        5y ago

FreeSpeech 5y ago

For the same reason you shouldn't use peak valuation when estimating losses, you shouldn't use buy in value either. Your loss is 2.5M × market rate at the time of loss.

hervature 5y ago
Accounting 101: ------ Credit,Debit $1500,2.5M Doge 2.5M Doge,0 Bankrupt ------ The business lost $1500
- FreeSpeech 5y ago
  You bought a house 20 years ago for $200k. Today, it is valued at $2M. What's your insurance payout if it burns down tomorrow?
  - hervature 5y ago
    I didn't buy insurance
    - FreeSpeech 5y ago
      If it isn't obvious, your simplified accounting excludes opportunity cost. Actualised losses are much higher (otherwise insurance companies would be marketing the same logic).
      - hervature 5y ago
        The fact you keep changing your answer should be evidence to yourself that you are on the wrong side of the argument. The entire point of my comment is that you are supposed to exclude opportunity cost. Did you lose $1M last year because you forgot to convert your cash to <insert any asset that increased wildly in the last year>?
  - nomoreplease 5y ago
    Easy answer: you get The value that you insured it for (either replacement cost or actual cash value with depreciation). You definitely wouldn’t insure it for 2M because those premiums would be stupid

menzoic 5y ago

Mostly agree. The true lost value is the amount you would've sold the coins at, but that's impossible to know. For most people its safe to assume they would've sold the coins during the first price jump years ago so its still less than peak valuation but probably more than purchase value. For more savvy investors who would take profits and hold the rest, the story could be different. The worse case is people who forgot they had coins years after purchase and went to retrieve them only to find that they've been stolen or permanantly lost. In that case you would lose the current values worth. I was in a similar situation with ETH stores on a laptop I donated to my sister years ago but luckily it was still stored on a partitioned drive and I was able to retrieve it.