3 ms·

Is anyone using crypto as a hedge seriously dumb enough not to diversify their holdings?

kube-system 4y ago
Yes, more than one person has lost their life savings investing in garbage coins. But if I can’t trust cryptocurrencies either, I might as well use a bank.
- notch656a 4y ago
  I mean it sounds as if you can't trust either one on an individualized basis, but it may be more pragmatic to diversify your hedge with different coins than diversify 20 different bank accounts which all suffer under a broken national framework.
- delabay 4y ago
  Using a bank in Lebanon is the same as losing your life savings
  - kube-system 4y ago
    If we can judge banks by the worst of them, then we can judge crypto by the worst of them. As for me, if my US FDIC insured bank fails, I’ve got bigger problems than money.
    - notch656a 4y ago
      Western banks will likely never fail in the way banks can fail in a place like Lebanon. In a situation where all US banks are falling flat, the fed will just happily print money to fulfill the FDIC insurance and you'll be left with some great toilet paper.
kebman 4y ago
You can't effectively "diversify" by buying other cryptos. To truly diversify, you have to buy completely different assets. Assets that aren't crypto, but in completely different sectors, such as - oh, IDK - the sugar industry, or car manufacturers, government bonds, even gold. Crypto is extremely high risk, especially if you venture outside Bitcoin. But to many it's far more accessible than even the stock market.
- notch656a 4y ago
  >You can't effectively "diversify" by buying other cryptos. To truly diversify, you have to buy completely different assets. The context was crypto. I was talking about diversifying your crypto, surely the readers here aren't as pedantically naive as to confuse diversifying crypto holdings with a fully diversified basket of different products. And of course owning different coins is diversification: owning multiple assets instead of just one is practically textbook example of increasing diversification.
  - kebman 4y ago
    I'm aware that "the context was crypto." Except when that's the context, non-savvy people need to learn what "diversification" really means, and it's not buying other cryptos, which is just a horrible euphemism for speculation. But if that's what you're really claiming, then—no matter the "context"—you're just scamming them into buying something that is far less "safe" than Bitcoin. Bitcoin of course being the "safest" crypto, since it's so ubiquitous, and because no one person really controls it. Not so even for Ethereum, even though it's the next best thing to "diversify" into (read: speculate on) in regards to crypto. I think the casual reader needs to know that distinction, lest they get a nasty surprise such as—oh IDK—Bitcoin dumping 80%. Because if it does, then all the other cryptos will most likely dump 95% or more. Or worse, go to zero like the "safe bet" Luna. And so much for "diversification!" It's like that due how all crypto coins are high risk assets that are all highly correlated to Bitcoin. And so the correct wording for buying other cryptos should never be "diversification" but speculation.
    - notch656a 4y ago
      Use whatever words you like. The entire world except yourself considers splitting assets to multiple (still correlated, but not quite 100% correlated) as increasing diversification. You can speculate with diversification :) >you're just scamming them into buying something If you want to consider me a "scammer" for thinking maybe to not put 100% of your crytpo money in UST, or whatever shitcoin was used as an example above, so be it. Y'all are the ones that mentioned specific coins, not me, I don't even understand what you think I'm selling to "scam" people on. I don't even hold any crypto to sell right now, I'm not sure what benefit I could possibly have from advocating that someone consider diversifying their holdings.

Yes, more than one person has lost their life savings investing in garbage coins. But if I can’t trust cryptocurrencies either, I might as well use a bank.

notch656a 4y ago
I mean it sounds as if you can't trust either one on an individualized basis, but it may be more pragmatic to diversify your hedge with different coins than diversify 20 different bank accounts which all suffer under a broken national framework.
delabay 4y ago
Using a bank in Lebanon is the same as losing your life savings
- kube-system 4y ago
  If we can judge banks by the worst of them, then we can judge crypto by the worst of them. As for me, if my US FDIC insured bank fails, I’ve got bigger problems than money.
  - notch656a 4y ago
    Western banks will likely never fail in the way banks can fail in a place like Lebanon. In a situation where all US banks are falling flat, the fed will just happily print money to fulfill the FDIC insurance and you'll be left with some great toilet paper.

kebman 4y ago

You can't effectively "diversify" by buying other cryptos. To truly diversify, you have to buy completely different assets. Assets that aren't crypto, but in completely different sectors, such as - oh, IDK - the sugar industry, or car manufacturers, government bonds, even gold. Crypto is extremely high risk, especially if you venture outside Bitcoin. But to many it's far more accessible than even the stock market.

notch656a 4y ago
>You can't effectively "diversify" by buying other cryptos. To truly diversify, you have to buy completely different assets. The context was crypto. I was talking about diversifying your crypto, surely the readers here aren't as pedantically naive as to confuse diversifying crypto holdings with a fully diversified basket of different products. And of course owning different coins is diversification: owning multiple assets instead of just one is practically textbook example of increasing diversification.
- kebman 4y ago
  I'm aware that "the context was crypto." Except when that's the context, non-savvy people need to learn what "diversification" really means, and it's not buying other cryptos, which is just a horrible euphemism for speculation. But if that's what you're really claiming, then—no matter the "context"—you're just scamming them into buying something that is far less "safe" than Bitcoin. Bitcoin of course being the "safest" crypto, since it's so ubiquitous, and because no one person really controls it. Not so even for Ethereum, even though it's the next best thing to "diversify" into (read: speculate on) in regards to crypto. I think the casual reader needs to know that distinction, lest they get a nasty surprise such as—oh IDK—Bitcoin dumping 80%. Because if it does, then all the other cryptos will most likely dump 95% or more. Or worse, go to zero like the "safe bet" Luna. And so much for "diversification!" It's like that due how all crypto coins are high risk assets that are all highly correlated to Bitcoin. And so the correct wording for buying other cryptos should never be "diversification" but speculation.
  - notch656a 4y ago
    Use whatever words you like. The entire world except yourself considers splitting assets to multiple (still correlated, but not quite 100% correlated) as increasing diversification. You can speculate with diversification :) >you're just scamming them into buying something If you want to consider me a "scammer" for thinking maybe to not put 100% of your crytpo money in UST, or whatever shitcoin was used as an example above, so be it. Y'all are the ones that mentioned specific coins, not me, I don't even understand what you think I'm selling to "scam" people on. I don't even hold any crypto to sell right now, I'm not sure what benefit I could possibly have from advocating that someone consider diversifying their holdings.