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Vast Majority of People Who Invest in Bitcoin Inevitably Lose Money, Study Shows

262 points by mikece 4y ago

sizzzzlerz 4y ago
Similarly, the vast majority of people who play Roulette in a casino inevitably lose money.
pjkundert 4y ago
>Well, the economists at the Bank of International Settlements stated it pretty plainly. >“Users [are] being drawn to Bitcoin by rising prices—rather than a dislike for traditional banks, the search for a store of value or distrust in public institutions,” I'm convinced. In other news, Foxes overwhelmingly support vulnerable hen-houses...
xutopia 4y ago
Well that's a given knowing that the price went down drastically. That's like saying that the vast majority of those who invested in a market that just crashed lost money.
- throwup 4y ago
  Yep, this factoid goes in cycles just like the price. If anyone is interested in diving deeper, the indicator to look at is called MVRV (Market Value to Realized Value). During time periods when it's less than 1, the average investor is carrying a loss, and > 1 means carrying a profit. Historically every halving it has spent some time below 1, and this time around we're right on schedule. https://charts.woobull.com/bitcoin-mvrv-ratio/ https://charts.woobull.com/bitcoin-mvrv-ratio/
- harimau777 4y ago
  Is that true of other investments? My understanding is that someone who invests regularly in the stock market is likely ahead over a long period of time even if the market just crashed.
  - bitlax 4y ago
    But that's true of Bitcoin as well.
    - MisterSandman 4y ago
      It literally isn't.
      - xutopia 4y ago
        It actually is. You can see it here against other types of assets: https://dcabtc.com https://dcabtc.com Over a 3 year period... 10$ a month and BTC actually comes up ahead of many other forms of investments.
      - cypress66 4y ago
        Assuming this is correct https://www.bitcoindollarcostaverage.com/ https://www.bitcoindollarcostaverage.com/ You would be up 60% if you DCAd for 5 years.
PuppyTailWags 4y ago
Actual paper here: https://www.bis.org/publ/work1049.htm https://www.bis.org/publ/work1049.htm
avgDev 4y ago
I mean this is generally true for stock pickers also.
- nradov 4y ago
  Not really. The majority of frequent stock traders inevitably lose money. But since the majority of stocks do generate positive returns over the long term, the majority of stock pickers make money if they buy and hold. While those stock pickers come out positive on average, they usually do a little worse than if they had just purchased low-cost index funds.
  - celticninja 4y ago
    Same applies to bitcoin unless you bought in last 12 months or so
    - cuteboy19 4y ago
      But most people who bought did buy in that period. It's always going to be true that the average Bitcoin buyer lost money even if people higher in the pyramid have made a lot of money
  - sicp-enjoyer 4y ago
    You're mixing up two things: 1. How well do individual traders (people) perform? 2. How well do most investments perform? The majority of people in the stock market do lose, because it's psychologically hard to buy and hold. A common outcome is to hold for years in a 401k and then panic sell at a big dip, or family emergency. Another is to buy hot stocks on peak years (word of mouth) and then lose (happening right now). The same is true in cryptocurrency. If all you did was DCA buy and hold bitcoin over the past 3-8 years you are doing just fine. I am also not equating stocks and cryptocurrency. Stocks give you a right to cash flow and coins do not. However, similar psychological challenges hinder all investors.
outside1234 4y ago
NO - I CAN'T BELIEVE IT!
- bell-cot 4y ago
  REALLY, it's TRUE! BUT!!! - if YOU are smart enough to buy my time-tested secrets for successful Bitcoin Investing, then YOU can be ONE OF THE BIG WINNERS!!! {Further scam-tastic sales pitch here.} {Nice-looking link to sucker-chute.pig-butcher.scam here.}
superkuh 4y ago
"Vast Majority of People Who Invest Inevitably Lose Money". Yep. That's always held true. Speculators gonna speculate. Somehow the concept of cryptocurrency has been lost in all the scamming and speculating since 2015. If you just use cryptocurrency as a currency there's no problem at all. It's the speculators with their completely off-chain normal finance hijinks that everyone gets upset and confused about. It's a shame that's what people think cryptocurrency is.
- burkaman 4y ago
  Is that true? At least in the US, the "vast majority of people who invest" are probably people with 401ks and not much else. In that case, most people who invest do not lose money.
- harimau777 4y ago
  Do the speculators mess up the value of the various coins for the people who intend to use them as currency?
- tablespoon 4y ago
  > "Vast Majority of People Who Invest Inevitably Lose Money". Yep. That's always held true. I don't think that's true, otherwise people wouldn't pile so much money into stock funds in their 401ks.
  - randomdata 4y ago
    Let's assume, for argument's sake, all investments lose money. People are still going to try and invest in the places where they expect to lose the least. Humans tend to be very loss averse. Hanging onto what they've got, to the greatest extent possible, may be their priority and doesn't necessarily disprove the earlier assertion.
    - pessimizer 4y ago
      Except that if the mean investment loses money, the place where you expect to lose the least is cash. e.g. if you are very loss averse, you don't buy lottery tickets at all. You don't just buy the safest ones where you expect to lose the least.
deleted 4y ago
[deleted]
bell-cot 4y ago
No phenomenon that is fueled by human nature is ever really new - https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions_and_the_Madness_of_Crowds https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusion... https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 https://en.wikipedia.org/wiki/Dot-com_bubble https://en.wikipedia.org/wiki/Dot-com_bubble
bannedbybros 4y ago
JofArnold 4y ago
I don't know anything about Bitcoin tech but assuming it's roughly like Ethereum it's a negative sum game due to transaction fees/mining. So even in a bull market it's a fundamental property of the system that people will collectively lose versus fiat. Furthermore, the more they trade the more they will - on average - lose.
- blululu 4y ago
  True but this critique more or less applies to real money as well. Inflation does seem to be a naturally emergent property of every healthy monetary system ever created so I don't think that this is necessarily a problem. And transaction fees are a fact of life. The objection here is a matter of degree more than of kind.
  - JumpCrisscross 4y ago
    > this critique more or less applies to real money as well Currency is transparent about being negative sum per se. It's not designed to be held for long term, it's designed to create positive externalities by enabling trade. (The value-holding form of the U.S. dollar is the Treasury.)
- __s 4y ago
  This is gone over in Bitcoin is not a store of value: https://news.ycombinator.com/item?id=32892327 https://news.ycombinator.com/item?id=32892327
aetherson 4y ago
"Inevitably" lose money? What this paper finds is that (from 2015-2022), people tend to buy when BTC is making new peaks, and so they are buying high and then so far are not in a position to sell for a profit. I strongly expect that if you tracked people who in the relatively recent past have bought any other asset that had a rise and then a big spike during the pandemic, you'd see something similar.
- abeppu 4y ago
  Framed this way (selecting for people who had bought an asset which had a rise and spike) this makes sense. But I think a key difference between BTC and more traditional assets is that for other assets, one typically has information from which to judge whether it is over or underpriced. If in late 2021, I had two friends Alice and Bob, who were enthusiastic and so far successful in shoveling money into TSLA and BTC respectively, and who are both telling trying to convince me to follow their lead, how can I judge their suggestions? I can look at Tesla's quarterly reports, and rabbithole into information about other company's EV efforts, and see analysts try to make projections about future revenue. I'd be left with a lot of uncertainty, but I can make a good faith effort to try to judge what an appropriate price is based on future earnings, and whether the current price is too high or too low. With BTC one doesn't have that. Even if prices had increased lately, how would one judge whether that was high or low relative to where prices _should_ be? Today, after a period when prices have fallen a lot, are they high still? Would $10k be too high? $1k? About a decade ago it was roughly $11 and 2 years before that it was $0.20. There's no way to judge value, only price.
  - aetherson 4y ago
    You have to disbelieve the efficient markets hypothesis to an unreasonable degree to imagine that the kind of information you're talking about isn't baked into TSLA. And people certainly forecast -- with varying success -- the future of BTC. You can read their analyses and disagree/agree with them. This isn't to imply that BTC isn't a volatile and risky asset. Of course it is! But some people want to buy volatile and risky assets.
LatteLazy 4y ago
An investment is when you have a reasonable expectation of return. Bonds are an investment because the average bond pays out more than it costs. The same is true of the average share. That is because these instruments produce value by making capital available to people who need it. By this definition, BTC is NOT an investment. Neither is Gold or land (unless you rent it) or commodities. Buying those things is just "speculation". Speculating is fine. It can be useful for the market. You might even make money. But please please, stop reffering to these things as "investments". They're not investments any more than my buying a hamburger.
sophrocyne 4y ago
1) "I told you so." 2) "Yeah, but you just wait and see - It'll be different a year or two from now" Crypto bulls and bears oscillate between 1/2, as the market turns hot/cold. Gizmodo is very clearly selling confirmation to the anti-crypto crowd currently looking for narratives to support their use of statement 1). Anyone who is hyper-confident in either direction is usually wrong.
- pessimizer 4y ago
  > Anyone who is hyper-confident in either direction is usually wrong. Judgement about a particular subject should at the least rely on some detail about that subject. This is just an generalized appeal to the law of averages.
  - sophrocyne 4y ago
    I'm unclear on what you're asking me to opine on, but if you're looking for me to state my stance, as differentiated from the two aforementioned parties, here it is. TL;DR - Armchair experts on either side of the argument make poor investors. The lack of barriers to creating, marketing, and hype-selling a new project inherently makes 99% of the projects in this space "vaporware". The terms "grift, rugpull, scam" etc. are appropriate. Unsophisticated retail "investors" (and hell, even sophisticated speculators just subscribing to 'greater fool' investing - e.g., most VCs) are focused heavily on the upside in these types of projects, because the measure of success is "money made". There are people who respond to this by writing off the space entirely - "It's a ponzi scheme", "scam city", "tulips", etc. All fun memes to tout the "I told you so narrative" My personal belief is that there is the potential for "ethical alpha" (subjective, perhaps - primarily meant to differentiate from 'get out before it implodes' alpha) to be had by investing long-term in the remaining projects with the combination of development attention, enterprise buy-in, and scaling capabilities that could deliver meaningful value to end-users. I'm not going to get into a debate over which projects meet these criteria, whether they exist, or any other debate which likely will revolve endlessly with no resolution. I acknowledge there are risks associated with the broader technology being adopted in a meaningful sense, but subscribe to a perspective that there is yet-unrealized value in its application.
ashpool37 4y ago
In other news: 100% of people who drink water inevitably die
lightning19 4y ago
when I was messing around with day trading crypto my main strategy was actually to short btc. It was a long ride, I was up 500% on my initial invesment, I then lost 500%, made 50%, lost 50%, finally made 50% again and quit forever. Thankfully I cashed out before FTX went bust. Lessons learnt: - day trading is stressful - I had no idea what I was doing most of the time - if I replaced my shorts with longs I would've likely made 1000% at minimum. Any idiot could've day traded for a profit during the 20-21 boom
daniel-cussen 4y ago
ISL 4y ago
I'd venture that the majority of people who invested in BTC from 2010-2016 have made money, in USD-terms. Back then, the bull case (market-cap approaching M1) was orders of magnitude stronger relative to the price than it is today. The bear case remains the same (you lose all your money tomorrow when the hash is cracked or your government bans trading in it).
- deleted 4y ago
  [deleted]
- NineStarPoint 4y ago
  Almost certainly both true that people who invested in bitcoin 2016 or earlier made money and that most people who invested in bitcoin lost money. The most pessimistic numbers I’ve found has the number of bitcoin wallets 10X’d since 2016. And while there isn’t a one to one relationship between wallets and users, I’m sure people who only used exchanges instead of their own wallets in recent bull runs more than make up the difference there.
  - ISL 4y ago
    Agreed entirely. My point was that to emphasize that there can be reasonable value-investment cases in these odd asset classes. The maxims of "price is what you pay, value is what you get" and "are you willing to buy this if the market were to stay closed for five years after the purchase?" have felt very helpful in guiding my decision-making.
  - throwup 4y ago
    It's pretty hard to estimate the number of users from just on-chain data, since change from a transaction usually goes to a fresh address. That makes every single transaction appear to create a fresh "wallet".
BurningFrog 4y ago
Bitcoin was at $1100 5 years ago. Today it's $17,000.
- pessimizer 4y ago
  Bitcoin was at $17,000 2 years ago. Today it's at $17,000.
- SketchySeaBeast 4y ago
  Are you saying that's proof it will continue to go up?
  - BurningFrog 4y ago
    I'm saying losing money is not "inevitable"!
stickac 4y ago
The study finds that "majority of people who invest in crypto inevitably lose money", but the article puts "Bitcoin" in title to mislead the readers. So: Do people lose money when they invest into crypto? Yes. Do people lose money when they invest into Bitcoin? No (if their timespan is 5+ years).
- cuteboy19 4y ago
  The problem is that exponentially fewer people qualify the latter condition. Put it another way, for Bitcoin to retain its price, an exponentially increasingly number of people need to invest in it. Such a structure, when graphed, looks very similar to a certain geometric shape
zackbloom 4y ago
I think the title is using the word 'inevitably' where they mean 'eventually' or 'ultimately'. It's not inevitable that people who invest in Bitcoin lose money, for example, they could have changed their mind and sold then next day, making it avoidable. What they mean to say is that most people who invest _end up_ losing money, not that it was unavoidable (the meaning of inevitable).
jpmattia 4y ago
Note how they measured that the "Vast Majority of People Who Invest in Bitcoin Inevitably Lose Money" is > the report did assume that a user purchased bitcoin when they downloaded a crypto app. Look directly at the blockchain, and instead find 49.4% of the addresses were in profit as of the time this article was published: https://www.yahoo.com/now/majority-bitcoin-addresses-now-lost-114631434.html https://www.yahoo.com/now/majority-bitcoin-addresses-now-los... It looks like "inevitably" is more evitable than inevitable used to be. [If anyone has a Glassnode subscription, the real-time readout is here: https://studio.glassnode.com/metrics?a=BTC&class=Addresses&m=addresses.ProfitRelative&s=1604842056&u=1625616000&zoom= https://studio.glassnode.com/metrics?a=BTC&class=Addresses&m...]
- notch656a 4y ago
  The headline is a pre-supposing statement, that relies on a false notion that people are all using bitcoin as an 'investment' rather than for other reasons such as a currency. Only a fool is using most currencies as an investment, except perhaps as part of some hedging scheme. Bitcoin as represented in the white paper was never portrayed as an investment vehicle.
  - tromp 4y ago
    The disinflationary emission set it up to be a speculation vehicle. For use as a currency, a fixed block subsidy, i.e. linear emission would have been far preferable.
  - SR2Z 4y ago
    The overwhelming majority of people with Bitcoin are speculators. It's fairly useless as far as currencies go. It literally fails at the first requirement: it's not a reliable store of value.
    - notch656a 4y ago
      For most cases I would not consider it the best option. However I have used bitcoin codebase based coins for transactions where the time-span was short enough that it was a reliable store of value. Reliable store of value really depends on how long you intend to hold it. Dollars are a terrible store of value over 100 years and decent over 2 years. Several crypto coins are a bad store of value over 1 week but a decent one over a couple hours. There are certain circumstances where I think it may make sense for someone to pick an alternative currency; I'm not arguing it is superior to the rest of them.
notch656a 4y ago
And 99.9% of those who sit on physical cash-bills fiat lose value. Those that don't have a rare coin or bill or something. The point of bitcoin, if you intend to use it as a currency, is not appreciation.
fpiacenza 4y ago
Can we take a look at stocks and other investement instruments at different time lentghs, you know just as a benchmark.
- saalweachter 4y ago
  The S&P 500 looks to be up about 96% between 2015 and 2022 (today), using the time range mentioned in the article. It also paid about a 2% yearly dividend over that time frame.
potatototoo99 4y ago
I'm sure people in Lebanon, Turkey, Argentina, et. would disagree.
egberts1 4y ago
How correct. I pumped my entire two-hour’s worth of lifesaving into Bitcoin and hardware for a cold-wallet and now, I have 23 minutes worth. So glad that I didn’t put my entire life-saving into this.
- sparkie 4y ago
  I put 6 hours of work into Bitcoin in 2011. That's now a year and a half's salary. Gutted that I didn't put my life savings into it back then, although I pretty much have now (~95% of my net worth).
staticman2 4y ago
This makes sense because people will chase something that recently made money but at that point the easy money has already been made. It's not the same investment at super expensive prices.
TacticalCoder 4y ago
> Vast Majority of People Who Invest in Bitcoin What about the people who "invested" their money by sending it to FTX while all the media were presenting SBF as the altruistic white knight of cryptocurrencies? All the while puking on Coinbase's CEO because he implemented a "no politics" at work policy. The NY Times has been coming up with hit pieces after hit pieces criticizing Coinbase but, follow the money trail, repeatedly presenting SBF as the savior of cryptocurrencies. SBF was, sure as hell, employing lots of people looking woke enough. Doing you think that has anything to do with the second biggest donor to the democrats being SBF through his mom's fundraising? And then everybody act suprised that the "vast majority of people" are losing money? Do you think everybody is that blind? If you read the latest article about SBF it's nearly as if he was presented as a victim. What about some talk about what's seriously going on? Bitcoin is to SBF/FTX what natural gas is to Madoff/Enron. Let's stop wagging the dog.
smithcoin 4y ago
My dollars keep losing value too. Since bitcoin came out in 2009 my dollars have lost 28% of their value to inflation[0]. [0] https://www.in2013dollars.com/us/inflation/2022?endYear=2009&amount=1 https://www.in2013dollars.com/us/inflation/2022?endYear=2009...
- jredwards 4y ago
  Dollars aren't a stable store of value either. It's baked in that the fed aims for low but positive inflation. Meanwhile, the S&P 500 is up nearly 500% since 2009.
  - EVa5I7bHFq9mnYK 4y ago
    That's shameless cherrypicking) We can also say that S&P only returned 51% since the start of this century, adjusted for inflation.
    - jredwards 4y ago
      Wasn't trying to cherrypick, I used his date. My point is just that currency is a an effective medium of exchange, not an effective store of value.
- paulpauper 4y ago
  dollars didn't fall 80% in a year, unlike bitcoin
  - sparkie 4y ago
    They fell 99% in 99 years, unlike Bitcoin.
  - EVa5I7bHFq9mnYK 4y ago
    dollar fell in 100% of years
35amxn35 4y ago
Am I the only one that uses Bitcoin strictly to remove the middleman? Get paid in USD -> convert to BTC -> sell to someone in cash, using local currency. Bitcoin was _never_ about speculation, and it was never intended as a store of value. However, it was designed to be deflationary in nature due to having a maximum of coins ever mined, or, more strictly, cutting down the rewards to half every 210k blocks mined). And if I had to choose (which I don't, as I save in USD), I'd still prefer saving in BTC than in my local currency. People living in thirld-world countries understand this.
- ceejayoz 4y ago
  How are you converting to BTC without a middleman?
  - sparkie 4y ago
    There's a few ways to do it here: https://kycnot.me/ https://kycnot.me/ Hodlhodl for example, you can find someone locally to swap cash with bitcoin.
    - ceejayoz 4y ago
      So... a middleman?
      - sparkie 4y ago
        Matchmaker, not middleman. It does not participate in the trade, just finds you someone to trade with.
        ceejayoz 4y ago
        But that person you're trading with is a middleman, between your USD and the BTC you want. Whether their name is Coinbase, LLC or Coinbase McGee.
        4y ago
librish 4y ago
This follows from Bitcoin being a negative sum game. If some people are cashing out millions, and miners are cashing out their fees, naturally the remaining people have lost money.
paulpauper 4y ago
Someone who bought bitcoin even as far back as 5 years ago and held, still lost money. 19k vs 16k today. Index funds have crushed Bitcoin in that same timeframe. Even if you bought 2 years ago the performance is not good. I think this shows the dangers of overhyped investments. Sure, Bitcoin has done well for certain timeframes, but index funds tend to have smoother, more consistent returns.
- somenameforme 4y ago
  Here is a graph of BTC [1]. The price on November 16th 2017 (5 years ago) was $7,294. Today it's $17,027 (as of the time of this post). The absolute peak you're trying to reference lasted exactly 1 day: December 18th. By December 18th of the next year it was down to $3,500. [1] - https://www.coindesk.com/price/bitcoin/ https://www.coindesk.com/price/bitcoin/
  - paulpauper 4y ago
    fine, then 4 years and 10 months. It's evident BTC hasn't done anything for at most 5-4.75 years compared to large gains for index funds.
    - dibt 4y ago
      >BTC hasn't done anything for at most 5-4.75 years From bottom of 2018 to the first top in 2019, it went up 435%. From bottom of 2019 to the first top in 2020, it went up 60%. From bottom of 2020 to the first top in 2021, it went up 1553%. From bottom of 2021 to the second top in 2021, it went up 133%. You could capture the gains of the S&P500 with less time in the market with that volatility. If you don't think the volatility is something you're interested in managing in your portfolio, then say that. I just can't wrap my head around this buy and forget attitude. When ANY investment reaches 2 standard deviations, take profits!
- dibt 4y ago
  Who are you referring to? Are bitcoin buyers required to buy as much as they ever want at one time, and never sell? Or can they buy at lower prices, and sell at higher prices from the point you referenced?
throwaway22032 4y ago
The entire media environment around cryptocurrency is utterly hilarious. It's just nonsensical clickbait bollocks from top to bottom. It's like, ok, so Tesla autopilot crashes sometimes. Let's write an article on rubber because Tesla is a car and the car tyres are made of rubber. Rubber bad! I'm fully aware that I'm in "old man rants at cloud" territory here, but it baffles me that someone wastes the one life they have writing this stuff, and that people waste their time reading it. And sure, fair, I'm here writing comments on HN. Writing an article is a lot more deliberate than that. Outside of the development mailing lists I don't think I've seen any actually useful or valuable discussion since bitcointalk forums in the early days.
rootusrootus 4y ago
Some day we will look back and marvel at Bitcoin becoming the largest wealth transfer mechanism in history, mostly from poor people to small number of already rich people.
- sparkie 4y ago
  The transfer is from people with a high time preference to those with a low time preference. There are ~56 million 'millionaires' in the world. Not even half of them can ever own 1 bitcoin. Many jobless/formerly jobless bums have >1 bitcoin.
thecrash 4y ago
"Bitcoin has been around for decades..." With an opener like that, you have to wonder about the quality of the rest of the research that went into this article...
- ceejayoz 4y ago
  1.3 decades. More than one, less than two.
  - thecrash 4y ago
    heh. I guess even if Bitcoin had been around for 3 years it could still technically be grammatically correct to use the plural ("0.3 decades"). But that would be tricky and only serve to exaggerate how long Bitcoin has existed.
1letterunixname 4y ago
s/Bitcoin/pyramid scheme/g and it's still true. Hype is a compounding agent in wealth transfer. If (unprofessional investor) doesn't have a strategy to find or invest in value, then the value they throw at it will invariably disappear.
jupp0r 4y ago
"Investing in a Ponzi scheme is much more beneficial in the first half of its existence, researchers found in groundbreaking new study"
bityard 4y ago
I really wish people would stop conflating "speculating" with "investing." There is a world of difference between the two. Until (or even if) the markets become stable somehow, "investing" and cryptocurrencies do not belong in the same sentence, ever.
- sparkie 4y ago
  Bitcoin was never advertised as an 'investment'. People who think of it as such should go and re-read the whitepaper until it clicks. Those who consider bitcoin a ponzi have a view of bitcoin given to them by people who never understood it in the first place. It's not an investment and never has been. When did one ever 'invest' in dollars?
adolph 4y ago
All people hodling dollar are also losing money, no study needed.
fundad 4y ago
how could the house always win in gambling and, curiously, cryptocurrency
psyfi 4y ago
Vast Majority of People Who Invest Lose Money
nmeofthestate 4y ago
Didn't read the article but wanted to comment on the bizarre title. Vast majority = well over 50% Inevitably = 100%. So, "Well over 50% of bitcoin investors lose money 100% of the time". Huh? 50% of coin tosses are heads 100% of the time.
- deleted 4y ago
  [deleted]
- andromeduck 4y ago
  The equivalent woud be 50% of coin tossers loose 100% of the time.
- kazinator 4y ago
  Exactly: it's like saying "about half of all coin tosses are inevitably heads!" The adverb "inevitably" at best doesn't do anything in that sentence (not unusual for adverbs), and at worst looks as if the claim is being embedded that a heads outcome can somehow be inevitable.
- tovej 4y ago
  inevitably = eventually
- daveslash 4y ago
  They've done studies you know. 60% of the time, it works every time. [0] I am shocked. SHOCKED!!!... Well, not that Shocked. [1] Darmok and Jalad at Tanagra. Shaka, when the walls fell. [0] https://www.youtube.com/watch?v=pjvQFtlNQ-M https://www.youtube.com/watch?v=pjvQFtlNQ-M [1] https://knowyourmeme.com/photos/900923-futurama https://knowyourmeme.com/photos/900923-futurama
null0pointer 4y ago
What a non-story. This is true for every market to have ever existed. Oh no dumb people are buying stocks and losing money what can we do? Ok restrict it so that only people with a proven track record of winning can play the stock market. What?! Same result just with different winners?? It's zero sum. What a pointless hit-piece of an article/"study".
- ChrisKnott 4y ago
  The stock market is not zero sum. I would be amazed if it was not the case that most investors make money investing in stocks.
- tovej 4y ago
  The stock market is not zero sum. The value of a stock going up is not dependent on speculation alone. For most stocks there is an actual underlying asset which generates value in dividends or you get a shareholder vote.
cr4nberry 4y ago
I followed the blog post this article provides[1], which leads to another blog post[2]. It's another bullshit article > Decentralisation was always a phantom. At most it’s a way to say “can’t sue me, bro.” Every process in Bitcoin tends to centralisation — because Bitcoin runs on economic incentives, and centralised systems are more economically efficient. How exactly does anything specific about bitcoin imply anything about decentralization in general? And how do we know that centralized systems are more efficient? These quotes sum up the author's thinking: > Bitcoin is not about the technology. It’s never been about the technology. Bitcoin is about the psychology of getting rich for free > The marketing pitch is that the actual-money economy will surely collapse any moment now! And if you get into Bitcoin, you can get rich from this. This says all that needs to be said about the author. Cherry picking ridiculous examples, making broad generalizations about the interest behind bitcoin, this author has all this in common with the news media. I have a hard time taking anyone seriously who thinks it's their "moral duty" to shill for the central banks. These folks can churn out all the shitty blog posts and editorials they want, at the end of the day, they'll never be able to freeze wallets like they've frozen bank accounts. This is what upsets them [1] https://davidgerard.co.uk/blockchain/2022/08/20/proof-of-stake-is-better-than-proof-of-work-but-ethereums-merge-wont-fix-any-other-problem-with-cryptocurrency/ https://davidgerard.co.uk/blockchain/2022/08/20/proof-of-sta... [2] https://davidgerard.co.uk/blockchain/2021/06/27/bitcoin-myths-immutability-decentralisation-and-the-cult-of-21-million/ https://davidgerard.co.uk/blockchain/2021/06/27/bitcoin-myth...
EVa5I7bHFq9mnYK 4y ago
Shall we see a scientific study "100% of People Who Invest in Bitcoin Inevitably Make Money" at the next all time high?
- expazl 4y ago
  Having an unrealized gain does not mean you made money if you cannot realize it.
  - nullc 4y ago
    > if you cannot realize it. If you do not, sure. But cannot? Bitcoin markets have been quite liquid for a long time. Even during run ups to peak price you can sell millions of dollars of Bitcoin without significantly moving the markets. Then you can simply wire the funds to your bank. It's essentially the same experience as selling a comparable amount of a popular ETF w/ a stock broker, except the bitcoin exchanges are somewhat more prone to waste your time with invasive and irrelevant requests for personal information. The implication that bitcoin markets are meaningfully illiquid at the level of individuals is weird and wrong. Now, if you want to talk some weirdo fringe 'crypto' stuff instead of Bitcoin, your mileage may vary-- some of it is reasonably liquid, some of it isn't. A lot of it is primarily or only traded at exchanges that don't support real USD, so to trade it for USD you have to first trade it for something supported at an exchange that has banking relationships (potentially something like tether if you like playing with fire-- but Bitcoin is probably a better choice). But that nonsense doesn't apply when dealing with Bitcoin.
- karamanolev 4y ago
  That doesn't compute. You could have already realized losses on Bitcoin and even if you're still invested, the gains could outweigh the accumulated losses. So "all time high" doesn't mean everyone is making money. That's only true if people buy BTC and just hold without ever selling.
  - dibt 4y ago
    > You could have already realized losses on Bitcoin You could have already realized profits on Bitcoin. That's the parent commenter's point. It works both ways. The "study" only confirms the reader's bias.
bluecalm 4y ago
Deposits -> heavily negative sum game with a lot of scammers involved -> cash outs Who would have thought that the outgoing stream is thinner than the incoming one.
yayitswei 4y ago
It really depends on when you do the study, doesn't it?
benj111 4y ago
Ok, the comment under the first picture is >Bitcoin has been around for decades.... Bitcoin came out in 2009, 13 years isn't decades. Thats before even getting to the main body of the article.
mrb 4y ago
I read the study's paper (https://www.bis.org/publ/work1049.htm https://www.bis.org/publ/work1049.htm) and noticed a glaring flaw: They gather stats on 213 exchange apps (187 identified from https://www.cryptocompare.com/exchanges/ https://www.cryptocompare.com/exchanges/ + 26 tagged by Sensor Tower). They assume downloaders of any of these crypto apps buy specifically bitcoins, not altcoins. There is nothing to support this assumption. In fact, the majority of these exchanges especially from the list at https://www.cryptocompare.com/exchanges/ https://www.cryptocompare.com/exchanges/ cater specifically to altcoins. People who want to buy Bitcoin will do so through Gemini, Binance, Bitstamp, Coinbase, and a few other trusted well-established exchanges. But the majority of this list of 213 exchanges is specifically used to access altcoin markets, because they don't even have a way to deposit USD. These exchanges require users to deposit crypto. So that doesn't match at all the study's authors assumption that the enduser installs these apps as a first-time bitcoin buyer. Ignoring this glaring flaw, graph 1 charts downloads of crypto exchange apps per 100,000 people, and it is interesting as it reveals that the vast majority of users joined after Dec 2020, which was during or after the all-time highs of that year. In other words, they assume more users bought bitcoins in the last 2 years than in the first 10 of 12 years of bitcoin's existence. Anyone who bought bitcoins before approximately Nov 2020¹ is, of course, still in the green. If graph 1 was showing cumulative downloads instead of daily downloads, this would give a better breakdown of the number of users before and after Dec 2020. ¹ Except during a handful of days in Dec 2017-Jan 2018 when bitcoin was briefly above $17k.
- startupsfail 4y ago
  Everyone who bought and sold is in the green (assuming that they haven’t payed the taxes and not accounting for externalities of increased fraud, crime, CO2 emissions, etc). And then, not counting people who bought and lost (wallet lost/exchange collapsed, etc). And then, anyone who is still holding are under multiple risks: regulatory, markets tanking, taxation, fraud, exchange collapse, wallet stolen, etc.
- dibt 4y ago
  This is a common theme for BIS. I may do an analysis on the their studies. I suspect they overwhelmingly express a negative sentiment for Bitcoin and DeFi, and have questionable methodology like you describe. I notice they like to get their studies into media outlets like this one, Gizmodo or the New York Post (a tabloid).
dybber 4y ago
Of course in a negative-sum game, most people will lose money in the end of the day. The $$ going in is equal to the $$ going out of the system. However, som of the $$ goes to miners as transaction fees. Therefore, for the non-miners, it will be a negative-sum game, where less money will go out of the system, than what the traders are putting into it.
- quantified 4y ago
  Essentially red, black, and 0 + 00
- mrb 4y ago
  Not at all. Here is a simple counter-example: A has some bitcoins, he sells a few to B. Later price increases, and A sells more bitcoins to B. In total, the same $ went in as the $ that went out, but both A's and B's wealth increased.
  - Beltalowda 4y ago
    So as long as Bitcoin's price keeps going up everyone can get infinitely rich?
    - mrb 4y ago
      The price could remain constant after the second time A sells to B. Their wealth still has increased, hence demonstrating it's not a zero-sum game (let alone negative-sum). Some things that are actually zero-sum games are futures or options markets.
  - woojoo666 4y ago
    Where is A getting their bitcoins? If they didn't need to buy them, then they are miners, which seems to agree with GP's comment
pedalpete 4y ago
Most ETFs show similar results, I wouldn't be surprised if VC was similar. People pile in when the fund has a good year, or few years. They are buying at the peak. Most people just aren't investors. They don't read the rules, they follow the hype.
v0idzer0 4y ago
A study conducted during a bear market shows that most people who bought during the recent bull market are now down. Did we need a study for that? Perhaps even less surprising is the fact that people buy assets to make money and not to donate to an ideal about decentralization.
tim333 4y ago
On the other had 100% of people who bought bitcoin and held six years are up or made money. With any asset, stocks housing or whatever, the people who don't know much about it will tend to buy near the top when all the articles are saying so and so was up 30% this year and 120% over the last three. The time to buy is probably when the press are saying it's all over for so and so or a few moderate while after that.

262 points by mikece 4y ago

Similarly, the vast majority of people who play Roulette in a casino inevitably lose money.

>Well, the economists at the Bank of International Settlements stated it pretty plainly. >“Users [are] being drawn to Bitcoin by rising prices—rather than a dislike for traditional banks, the search for a store of value or distrust in public institutions,” I'm convinced. In other news, Foxes overwhelmingly support vulnerable hen-houses...

xutopia 4y ago

Well that's a given knowing that the price went down drastically. That's like saying that the vast majority of those who invested in a market that just crashed lost money.

throwup 4y ago
Yep, this factoid goes in cycles just like the price. If anyone is interested in diving deeper, the indicator to look at is called MVRV (Market Value to Realized Value). During time periods when it's less than 1, the average investor is carrying a loss, and > 1 means carrying a profit. Historically every halving it has spent some time below 1, and this time around we're right on schedule. https://charts.woobull.com/bitcoin-mvrv-ratio/ https://charts.woobull.com/bitcoin-mvrv-ratio/
harimau777 4y ago
Is that true of other investments? My understanding is that someone who invests regularly in the stock market is likely ahead over a long period of time even if the market just crashed.
- bitlax 4y ago
  But that's true of Bitcoin as well.
  - MisterSandman 4y ago
    It literally isn't.
    - xutopia 4y ago
      It actually is. You can see it here against other types of assets: https://dcabtc.com https://dcabtc.com Over a 3 year period... 10$ a month and BTC actually comes up ahead of many other forms of investments.
    - cypress66 4y ago
      Assuming this is correct https://www.bitcoindollarcostaverage.com/ https://www.bitcoindollarcostaverage.com/ You would be up 60% if you DCAd for 5 years.

PuppyTailWags 4y ago

Actual paper here: https://www.bis.org/publ/work1049.htm https://www.bis.org/publ/work1049.htm

avgDev 4y ago

I mean this is generally true for stock pickers also.

nradov 4y ago
Not really. The majority of frequent stock traders inevitably lose money. But since the majority of stocks do generate positive returns over the long term, the majority of stock pickers make money if they buy and hold. While those stock pickers come out positive on average, they usually do a little worse than if they had just purchased low-cost index funds.
- celticninja 4y ago
  Same applies to bitcoin unless you bought in last 12 months or so
  - cuteboy19 4y ago
    But most people who bought did buy in that period. It's always going to be true that the average Bitcoin buyer lost money even if people higher in the pyramid have made a lot of money
- sicp-enjoyer 4y ago
  You're mixing up two things: 1. How well do individual traders (people) perform? 2. How well do most investments perform? The majority of people in the stock market do lose, because it's psychologically hard to buy and hold. A common outcome is to hold for years in a 401k and then panic sell at a big dip, or family emergency. Another is to buy hot stocks on peak years (word of mouth) and then lose (happening right now). The same is true in cryptocurrency. If all you did was DCA buy and hold bitcoin over the past 3-8 years you are doing just fine. I am also not equating stocks and cryptocurrency. Stocks give you a right to cash flow and coins do not. However, similar psychological challenges hinder all investors.

outside1234 4y ago

NO - I CAN'T BELIEVE IT!

bell-cot 4y ago
REALLY, it's TRUE! BUT!!! - if YOU are smart enough to buy my time-tested secrets for successful Bitcoin Investing, then YOU can be ONE OF THE BIG WINNERS!!! {Further scam-tastic sales pitch here.} {Nice-looking link to sucker-chute.pig-butcher.scam here.}

superkuh 4y ago

"Vast Majority of People Who Invest Inevitably Lose Money". Yep. That's always held true. Speculators gonna speculate. Somehow the concept of cryptocurrency has been lost in all the scamming and speculating since 2015. If you just use cryptocurrency as a currency there's no problem at all. It's the speculators with their completely off-chain normal finance hijinks that everyone gets upset and confused about. It's a shame that's what people think cryptocurrency is.

burkaman 4y ago
Is that true? At least in the US, the "vast majority of people who invest" are probably people with 401ks and not much else. In that case, most people who invest do not lose money.
harimau777 4y ago
Do the speculators mess up the value of the various coins for the people who intend to use them as currency?
tablespoon 4y ago
> "Vast Majority of People Who Invest Inevitably Lose Money". Yep. That's always held true. I don't think that's true, otherwise people wouldn't pile so much money into stock funds in their 401ks.
- randomdata 4y ago
  Let's assume, for argument's sake, all investments lose money. People are still going to try and invest in the places where they expect to lose the least. Humans tend to be very loss averse. Hanging onto what they've got, to the greatest extent possible, may be their priority and doesn't necessarily disprove the earlier assertion.
  - pessimizer 4y ago
    Except that if the mean investment loses money, the place where you expect to lose the least is cash. e.g. if you are very loss averse, you don't buy lottery tickets at all. You don't just buy the safest ones where you expect to lose the least.

deleted 4y ago

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bell-cot 4y ago

No phenomenon that is fueled by human nature is ever really new - https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions_and_the_Madness_of_Crowds https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusion... https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 https://en.wikipedia.org/wiki/Dot-com_bubble https://en.wikipedia.org/wiki/Dot-com_bubble

bannedbybros 4y ago

JofArnold 4y ago

I don't know anything about Bitcoin tech but assuming it's roughly like Ethereum it's a negative sum game due to transaction fees/mining. So even in a bull market it's a fundamental property of the system that people will collectively lose versus fiat. Furthermore, the more they trade the more they will - on average - lose.

blululu 4y ago
True but this critique more or less applies to real money as well. Inflation does seem to be a naturally emergent property of every healthy monetary system ever created so I don't think that this is necessarily a problem. And transaction fees are a fact of life. The objection here is a matter of degree more than of kind.
- JumpCrisscross 4y ago
  > this critique more or less applies to real money as well Currency is transparent about being negative sum per se. It's not designed to be held for long term, it's designed to create positive externalities by enabling trade. (The value-holding form of the U.S. dollar is the Treasury.)
__s 4y ago
This is gone over in Bitcoin is not a store of value: https://news.ycombinator.com/item?id=32892327 https://news.ycombinator.com/item?id=32892327

aetherson 4y ago

"Inevitably" lose money? What this paper finds is that (from 2015-2022), people tend to buy when BTC is making new peaks, and so they are buying high and then so far are not in a position to sell for a profit. I strongly expect that if you tracked people who in the relatively recent past have bought any other asset that had a rise and then a big spike during the pandemic, you'd see something similar.

abeppu 4y ago
Framed this way (selecting for people who had bought an asset which had a rise and spike) this makes sense. But I think a key difference between BTC and more traditional assets is that for other assets, one typically has information from which to judge whether it is over or underpriced. If in late 2021, I had two friends Alice and Bob, who were enthusiastic and so far successful in shoveling money into TSLA and BTC respectively, and who are both telling trying to convince me to follow their lead, how can I judge their suggestions? I can look at Tesla's quarterly reports, and rabbithole into information about other company's EV efforts, and see analysts try to make projections about future revenue. I'd be left with a lot of uncertainty, but I can make a good faith effort to try to judge what an appropriate price is based on future earnings, and whether the current price is too high or too low. With BTC one doesn't have that. Even if prices had increased lately, how would one judge whether that was high or low relative to where prices _should_ be? Today, after a period when prices have fallen a lot, are they high still? Would $10k be too high? $1k? About a decade ago it was roughly $11 and 2 years before that it was $0.20. There's no way to judge value, only price.
- aetherson 4y ago
  You have to disbelieve the efficient markets hypothesis to an unreasonable degree to imagine that the kind of information you're talking about isn't baked into TSLA. And people certainly forecast -- with varying success -- the future of BTC. You can read their analyses and disagree/agree with them. This isn't to imply that BTC isn't a volatile and risky asset. Of course it is! But some people want to buy volatile and risky assets.

LatteLazy 4y ago

An investment is when you have a reasonable expectation of return. Bonds are an investment because the average bond pays out more than it costs. The same is true of the average share. That is because these instruments produce value by making capital available to people who need it. By this definition, BTC is NOT an investment. Neither is Gold or land (unless you rent it) or commodities. Buying those things is just "speculation". Speculating is fine. It can be useful for the market. You might even make money. But please please, stop reffering to these things as "investments". They're not investments any more than my buying a hamburger.

sophrocyne 4y ago

1) "I told you so." 2) "Yeah, but you just wait and see - It'll be different a year or two from now" Crypto bulls and bears oscillate between 1/2, as the market turns hot/cold. Gizmodo is very clearly selling confirmation to the anti-crypto crowd currently looking for narratives to support their use of statement 1). Anyone who is hyper-confident in either direction is usually wrong.

pessimizer 4y ago
> Anyone who is hyper-confident in either direction is usually wrong. Judgement about a particular subject should at the least rely on some detail about that subject. This is just an generalized appeal to the law of averages.
- sophrocyne 4y ago
  I'm unclear on what you're asking me to opine on, but if you're looking for me to state my stance, as differentiated from the two aforementioned parties, here it is. TL;DR - Armchair experts on either side of the argument make poor investors. The lack of barriers to creating, marketing, and hype-selling a new project inherently makes 99% of the projects in this space "vaporware". The terms "grift, rugpull, scam" etc. are appropriate. Unsophisticated retail "investors" (and hell, even sophisticated speculators just subscribing to 'greater fool' investing - e.g., most VCs) are focused heavily on the upside in these types of projects, because the measure of success is "money made". There are people who respond to this by writing off the space entirely - "It's a ponzi scheme", "scam city", "tulips", etc. All fun memes to tout the "I told you so narrative" My personal belief is that there is the potential for "ethical alpha" (subjective, perhaps - primarily meant to differentiate from 'get out before it implodes' alpha) to be had by investing long-term in the remaining projects with the combination of development attention, enterprise buy-in, and scaling capabilities that could deliver meaningful value to end-users. I'm not going to get into a debate over which projects meet these criteria, whether they exist, or any other debate which likely will revolve endlessly with no resolution. I acknowledge there are risks associated with the broader technology being adopted in a meaningful sense, but subscribe to a perspective that there is yet-unrealized value in its application.

ashpool37 4y ago

In other news: 100% of people who drink water inevitably die

lightning19 4y ago

when I was messing around with day trading crypto my main strategy was actually to short btc. It was a long ride, I was up 500% on my initial invesment, I then lost 500%, made 50%, lost 50%, finally made 50% again and quit forever. Thankfully I cashed out before FTX went bust. Lessons learnt: - day trading is stressful - I had no idea what I was doing most of the time - if I replaced my shorts with longs I would've likely made 1000% at minimum. Any idiot could've day traded for a profit during the 20-21 boom

daniel-cussen 4y ago

ISL 4y ago

I'd venture that the majority of people who invested in BTC from 2010-2016 have made money, in USD-terms. Back then, the bull case (market-cap approaching M1) was orders of magnitude stronger relative to the price than it is today. The bear case remains the same (you lose all your money tomorrow when the hash is cracked or your government bans trading in it).

deleted 4y ago
[deleted]
NineStarPoint 4y ago
Almost certainly both true that people who invested in bitcoin 2016 or earlier made money and that most people who invested in bitcoin lost money. The most pessimistic numbers I’ve found has the number of bitcoin wallets 10X’d since 2016. And while there isn’t a one to one relationship between wallets and users, I’m sure people who only used exchanges instead of their own wallets in recent bull runs more than make up the difference there.
- ISL 4y ago
  Agreed entirely. My point was that to emphasize that there can be reasonable value-investment cases in these odd asset classes. The maxims of "price is what you pay, value is what you get" and "are you willing to buy this if the market were to stay closed for five years after the purchase?" have felt very helpful in guiding my decision-making.
- throwup 4y ago
  It's pretty hard to estimate the number of users from just on-chain data, since change from a transaction usually goes to a fresh address. That makes every single transaction appear to create a fresh "wallet".

BurningFrog 4y ago

Bitcoin was at $1100 5 years ago. Today it's $17,000.

pessimizer 4y ago
Bitcoin was at $17,000 2 years ago. Today it's at $17,000.
SketchySeaBeast 4y ago
Are you saying that's proof it will continue to go up?
- BurningFrog 4y ago
  I'm saying losing money is not "inevitable"!

stickac 4y ago

The study finds that "majority of people who invest in crypto inevitably lose money", but the article puts "Bitcoin" in title to mislead the readers. So: Do people lose money when they invest into crypto? Yes. Do people lose money when they invest into Bitcoin? No (if their timespan is 5+ years).

cuteboy19 4y ago
The problem is that exponentially fewer people qualify the latter condition. Put it another way, for Bitcoin to retain its price, an exponentially increasingly number of people need to invest in it. Such a structure, when graphed, looks very similar to a certain geometric shape

zackbloom 4y ago

I think the title is using the word 'inevitably' where they mean 'eventually' or 'ultimately'. It's not inevitable that people who invest in Bitcoin lose money, for example, they could have changed their mind and sold then next day, making it avoidable. What they mean to say is that most people who invest _end up_ losing money, not that it was unavoidable (the meaning of inevitable).

jpmattia 4y ago

Note how they measured that the "Vast Majority of People Who Invest in Bitcoin Inevitably Lose Money" is > the report did assume that a user purchased bitcoin when they downloaded a crypto app. Look directly at the blockchain, and instead find 49.4% of the addresses were in profit as of the time this article was published: https://www.yahoo.com/now/majority-bitcoin-addresses-now-lost-114631434.html https://www.yahoo.com/now/majority-bitcoin-addresses-now-los... It looks like "inevitably" is more evitable than inevitable used to be. [If anyone has a Glassnode subscription, the real-time readout is here: https://studio.glassnode.com/metrics?a=BTC&class=Addresses&m=addresses.ProfitRelative&s=1604842056&u=1625616000&zoom= https://studio.glassnode.com/metrics?a=BTC&class=Addresses&m...]

notch656a 4y ago
The headline is a pre-supposing statement, that relies on a false notion that people are all using bitcoin as an 'investment' rather than for other reasons such as a currency. Only a fool is using most currencies as an investment, except perhaps as part of some hedging scheme. Bitcoin as represented in the white paper was never portrayed as an investment vehicle.
- tromp 4y ago
  The disinflationary emission set it up to be a speculation vehicle. For use as a currency, a fixed block subsidy, i.e. linear emission would have been far preferable.
- SR2Z 4y ago
  The overwhelming majority of people with Bitcoin are speculators. It's fairly useless as far as currencies go. It literally fails at the first requirement: it's not a reliable store of value.
  - notch656a 4y ago
    For most cases I would not consider it the best option. However I have used bitcoin codebase based coins for transactions where the time-span was short enough that it was a reliable store of value. Reliable store of value really depends on how long you intend to hold it. Dollars are a terrible store of value over 100 years and decent over 2 years. Several crypto coins are a bad store of value over 1 week but a decent one over a couple hours. There are certain circumstances where I think it may make sense for someone to pick an alternative currency; I'm not arguing it is superior to the rest of them.

notch656a 4y ago

And 99.9% of those who sit on physical cash-bills fiat lose value. Those that don't have a rare coin or bill or something. The point of bitcoin, if you intend to use it as a currency, is not appreciation.

fpiacenza 4y ago

Can we take a look at stocks and other investement instruments at different time lentghs, you know just as a benchmark.

saalweachter 4y ago
The S&P 500 looks to be up about 96% between 2015 and 2022 (today), using the time range mentioned in the article. It also paid about a 2% yearly dividend over that time frame.

potatototoo99 4y ago

I'm sure people in Lebanon, Turkey, Argentina, et. would disagree.

egberts1 4y ago

How correct. I pumped my entire two-hour’s worth of lifesaving into Bitcoin and hardware for a cold-wallet and now, I have 23 minutes worth. So glad that I didn’t put my entire life-saving into this.

sparkie 4y ago
I put 6 hours of work into Bitcoin in 2011. That's now a year and a half's salary. Gutted that I didn't put my life savings into it back then, although I pretty much have now (~95% of my net worth).

staticman2 4y ago

This makes sense because people will chase something that recently made money but at that point the easy money has already been made. It's not the same investment at super expensive prices.

TacticalCoder 4y ago

> Vast Majority of People Who Invest in Bitcoin What about the people who "invested" their money by sending it to FTX while all the media were presenting SBF as the altruistic white knight of cryptocurrencies? All the while puking on Coinbase's CEO because he implemented a "no politics" at work policy. The NY Times has been coming up with hit pieces after hit pieces criticizing Coinbase but, follow the money trail, repeatedly presenting SBF as the savior of cryptocurrencies. SBF was, sure as hell, employing lots of people looking woke enough. Doing you think that has anything to do with the second biggest donor to the democrats being SBF through his mom's fundraising? And then everybody act suprised that the "vast majority of people" are losing money? Do you think everybody is that blind? If you read the latest article about SBF it's nearly as if he was presented as a victim. What about some talk about what's seriously going on? Bitcoin is to SBF/FTX what natural gas is to Madoff/Enron. Let's stop wagging the dog.

smithcoin 4y ago

My dollars keep losing value too. Since bitcoin came out in 2009 my dollars have lost 28% of their value to inflation[0]. [0] https://www.in2013dollars.com/us/inflation/2022?endYear=2009&amount=1 https://www.in2013dollars.com/us/inflation/2022?endYear=2009...

jredwards 4y ago
Dollars aren't a stable store of value either. It's baked in that the fed aims for low but positive inflation. Meanwhile, the S&P 500 is up nearly 500% since 2009.
- EVa5I7bHFq9mnYK 4y ago
  That's shameless cherrypicking) We can also say that S&P only returned 51% since the start of this century, adjusted for inflation.
  - jredwards 4y ago
    Wasn't trying to cherrypick, I used his date. My point is just that currency is a an effective medium of exchange, not an effective store of value.
paulpauper 4y ago
dollars didn't fall 80% in a year, unlike bitcoin
- sparkie 4y ago
  They fell 99% in 99 years, unlike Bitcoin.
- EVa5I7bHFq9mnYK 4y ago
  dollar fell in 100% of years

35amxn35 4y ago

Am I the only one that uses Bitcoin strictly to remove the middleman? Get paid in USD -> convert to BTC -> sell to someone in cash, using local currency. Bitcoin was _never_ about speculation, and it was never intended as a store of value. However, it was designed to be deflationary in nature due to having a maximum of coins ever mined, or, more strictly, cutting down the rewards to half every 210k blocks mined). And if I had to choose (which I don't, as I save in USD), I'd still prefer saving in BTC than in my local currency. People living in thirld-world countries understand this.

ceejayoz 4y ago
How are you converting to BTC without a middleman?
- sparkie 4y ago
  There's a few ways to do it here: https://kycnot.me/ https://kycnot.me/ Hodlhodl for example, you can find someone locally to swap cash with bitcoin.
  - ceejayoz 4y ago
    So... a middleman?
    - sparkie 4y ago
      Matchmaker, not middleman. It does not participate in the trade, just finds you someone to trade with.
      - ceejayoz 4y ago
        But that person you're trading with is a middleman, between your USD and the BTC you want. Whether their name is Coinbase, LLC or Coinbase McGee.
        4y ago

librish 4y ago

This follows from Bitcoin being a negative sum game. If some people are cashing out millions, and miners are cashing out their fees, naturally the remaining people have lost money.

paulpauper 4y ago

Someone who bought bitcoin even as far back as 5 years ago and held, still lost money. 19k vs 16k today. Index funds have crushed Bitcoin in that same timeframe. Even if you bought 2 years ago the performance is not good. I think this shows the dangers of overhyped investments. Sure, Bitcoin has done well for certain timeframes, but index funds tend to have smoother, more consistent returns.

somenameforme 4y ago
Here is a graph of BTC [1]. The price on November 16th 2017 (5 years ago) was $7,294. Today it's $17,027 (as of the time of this post). The absolute peak you're trying to reference lasted exactly 1 day: December 18th. By December 18th of the next year it was down to $3,500. [1] - https://www.coindesk.com/price/bitcoin/ https://www.coindesk.com/price/bitcoin/
- paulpauper 4y ago
  fine, then 4 years and 10 months. It's evident BTC hasn't done anything for at most 5-4.75 years compared to large gains for index funds.
  - dibt 4y ago
    >BTC hasn't done anything for at most 5-4.75 years From bottom of 2018 to the first top in 2019, it went up 435%. From bottom of 2019 to the first top in 2020, it went up 60%. From bottom of 2020 to the first top in 2021, it went up 1553%. From bottom of 2021 to the second top in 2021, it went up 133%. You could capture the gains of the S&P500 with less time in the market with that volatility. If you don't think the volatility is something you're interested in managing in your portfolio, then say that. I just can't wrap my head around this buy and forget attitude. When ANY investment reaches 2 standard deviations, take profits!
dibt 4y ago
Who are you referring to? Are bitcoin buyers required to buy as much as they ever want at one time, and never sell? Or can they buy at lower prices, and sell at higher prices from the point you referenced?

throwaway22032 4y ago

The entire media environment around cryptocurrency is utterly hilarious. It's just nonsensical clickbait bollocks from top to bottom. It's like, ok, so Tesla autopilot crashes sometimes. Let's write an article on rubber because Tesla is a car and the car tyres are made of rubber. Rubber bad! I'm fully aware that I'm in "old man rants at cloud" territory here, but it baffles me that someone wastes the one life they have writing this stuff, and that people waste their time reading it. And sure, fair, I'm here writing comments on HN. Writing an article is a lot more deliberate than that. Outside of the development mailing lists I don't think I've seen any actually useful or valuable discussion since bitcointalk forums in the early days.

rootusrootus 4y ago

Some day we will look back and marvel at Bitcoin becoming the largest wealth transfer mechanism in history, mostly from poor people to small number of already rich people.

sparkie 4y ago
The transfer is from people with a high time preference to those with a low time preference. There are ~56 million 'millionaires' in the world. Not even half of them can ever own 1 bitcoin. Many jobless/formerly jobless bums have >1 bitcoin.

thecrash 4y ago

"Bitcoin has been around for decades..." With an opener like that, you have to wonder about the quality of the rest of the research that went into this article...

ceejayoz 4y ago
1.3 decades. More than one, less than two.
- thecrash 4y ago
  heh. I guess even if Bitcoin had been around for 3 years it could still technically be grammatically correct to use the plural ("0.3 decades"). But that would be tricky and only serve to exaggerate how long Bitcoin has existed.

1letterunixname 4y ago

s/Bitcoin/pyramid scheme/g and it's still true. Hype is a compounding agent in wealth transfer. If (unprofessional investor) doesn't have a strategy to find or invest in value, then the value they throw at it will invariably disappear.

jupp0r 4y ago

"Investing in a Ponzi scheme is much more beneficial in the first half of its existence, researchers found in groundbreaking new study"

bityard 4y ago

I really wish people would stop conflating "speculating" with "investing." There is a world of difference between the two. Until (or even if) the markets become stable somehow, "investing" and cryptocurrencies do not belong in the same sentence, ever.

sparkie 4y ago
Bitcoin was never advertised as an 'investment'. People who think of it as such should go and re-read the whitepaper until it clicks. Those who consider bitcoin a ponzi have a view of bitcoin given to them by people who never understood it in the first place. It's not an investment and never has been. When did one ever 'invest' in dollars?

adolph 4y ago

All people hodling dollar are also losing money, no study needed.

fundad 4y ago

how could the house always win in gambling and, curiously, cryptocurrency

psyfi 4y ago

Vast Majority of People Who Invest Lose Money

nmeofthestate 4y ago

Didn't read the article but wanted to comment on the bizarre title. Vast majority = well over 50% Inevitably = 100%. So, "Well over 50% of bitcoin investors lose money 100% of the time". Huh? 50% of coin tosses are heads 100% of the time.

deleted 4y ago
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andromeduck 4y ago
The equivalent woud be 50% of coin tossers loose 100% of the time.
kazinator 4y ago
Exactly: it's like saying "about half of all coin tosses are inevitably heads!" The adverb "inevitably" at best doesn't do anything in that sentence (not unusual for adverbs), and at worst looks as if the claim is being embedded that a heads outcome can somehow be inevitable.
tovej 4y ago
inevitably = eventually
daveslash 4y ago
They've done studies you know. 60% of the time, it works every time. [0] I am shocked. SHOCKED!!!... Well, not that Shocked. [1] Darmok and Jalad at Tanagra. Shaka, when the walls fell. [0] https://www.youtube.com/watch?v=pjvQFtlNQ-M https://www.youtube.com/watch?v=pjvQFtlNQ-M [1] https://knowyourmeme.com/photos/900923-futurama https://knowyourmeme.com/photos/900923-futurama

null0pointer 4y ago

What a non-story. This is true for every market to have ever existed. Oh no dumb people are buying stocks and losing money what can we do? Ok restrict it so that only people with a proven track record of winning can play the stock market. What?! Same result just with different winners?? It's zero sum. What a pointless hit-piece of an article/"study".

ChrisKnott 4y ago
The stock market is not zero sum. I would be amazed if it was not the case that most investors make money investing in stocks.
tovej 4y ago
The stock market is not zero sum. The value of a stock going up is not dependent on speculation alone. For most stocks there is an actual underlying asset which generates value in dividends or you get a shareholder vote.

cr4nberry 4y ago

I followed the blog post this article provides[1], which leads to another blog post[2]. It's another bullshit article > Decentralisation was always a phantom. At most it’s a way to say “can’t sue me, bro.” Every process in Bitcoin tends to centralisation — because Bitcoin runs on economic incentives, and centralised systems are more economically efficient. How exactly does anything specific about bitcoin imply anything about decentralization in general? And how do we know that centralized systems are more efficient? These quotes sum up the author's thinking: > Bitcoin is not about the technology. It’s never been about the technology. Bitcoin is about the psychology of getting rich for free > The marketing pitch is that the actual-money economy will surely collapse any moment now! And if you get into Bitcoin, you can get rich from this. This says all that needs to be said about the author. Cherry picking ridiculous examples, making broad generalizations about the interest behind bitcoin, this author has all this in common with the news media. I have a hard time taking anyone seriously who thinks it's their "moral duty" to shill for the central banks. These folks can churn out all the shitty blog posts and editorials they want, at the end of the day, they'll never be able to freeze wallets like they've frozen bank accounts. This is what upsets them [1] https://davidgerard.co.uk/blockchain/2022/08/20/proof-of-stake-is-better-than-proof-of-work-but-ethereums-merge-wont-fix-any-other-problem-with-cryptocurrency/ https://davidgerard.co.uk/blockchain/2022/08/20/proof-of-sta... [2] https://davidgerard.co.uk/blockchain/2021/06/27/bitcoin-myths-immutability-decentralisation-and-the-cult-of-21-million/ https://davidgerard.co.uk/blockchain/2021/06/27/bitcoin-myth...

EVa5I7bHFq9mnYK 4y ago

Shall we see a scientific study "100% of People Who Invest in Bitcoin Inevitably Make Money" at the next all time high?

expazl 4y ago
Having an unrealized gain does not mean you made money if you cannot realize it.
- nullc 4y ago
  > if you cannot realize it. If you do not, sure. But cannot? Bitcoin markets have been quite liquid for a long time. Even during run ups to peak price you can sell millions of dollars of Bitcoin without significantly moving the markets. Then you can simply wire the funds to your bank. It's essentially the same experience as selling a comparable amount of a popular ETF w/ a stock broker, except the bitcoin exchanges are somewhat more prone to waste your time with invasive and irrelevant requests for personal information. The implication that bitcoin markets are meaningfully illiquid at the level of individuals is weird and wrong. Now, if you want to talk some weirdo fringe 'crypto' stuff instead of Bitcoin, your mileage may vary-- some of it is reasonably liquid, some of it isn't. A lot of it is primarily or only traded at exchanges that don't support real USD, so to trade it for USD you have to first trade it for something supported at an exchange that has banking relationships (potentially something like tether if you like playing with fire-- but Bitcoin is probably a better choice). But that nonsense doesn't apply when dealing with Bitcoin.
karamanolev 4y ago
That doesn't compute. You could have already realized losses on Bitcoin and even if you're still invested, the gains could outweigh the accumulated losses. So "all time high" doesn't mean everyone is making money. That's only true if people buy BTC and just hold without ever selling.
- dibt 4y ago
  > You could have already realized losses on Bitcoin You could have already realized profits on Bitcoin. That's the parent commenter's point. It works both ways. The "study" only confirms the reader's bias.

bluecalm 4y ago

Deposits -> heavily negative sum game with a lot of scammers involved -> cash outs Who would have thought that the outgoing stream is thinner than the incoming one.

yayitswei 4y ago

It really depends on when you do the study, doesn't it?

benj111 4y ago

Ok, the comment under the first picture is >Bitcoin has been around for decades.... Bitcoin came out in 2009, 13 years isn't decades. Thats before even getting to the main body of the article.

mrb 4y ago

I read the study's paper (https://www.bis.org/publ/work1049.htm https://www.bis.org/publ/work1049.htm) and noticed a glaring flaw: They gather stats on 213 exchange apps (187 identified from https://www.cryptocompare.com/exchanges/ https://www.cryptocompare.com/exchanges/ + 26 tagged by Sensor Tower). They assume downloaders of any of these crypto apps buy specifically bitcoins, not altcoins. There is nothing to support this assumption. In fact, the majority of these exchanges especially from the list at https://www.cryptocompare.com/exchanges/ https://www.cryptocompare.com/exchanges/ cater specifically to altcoins. People who want to buy Bitcoin will do so through Gemini, Binance, Bitstamp, Coinbase, and a few other trusted well-established exchanges. But the majority of this list of 213 exchanges is specifically used to access altcoin markets, because they don't even have a way to deposit USD. These exchanges require users to deposit crypto. So that doesn't match at all the study's authors assumption that the enduser installs these apps as a first-time bitcoin buyer. Ignoring this glaring flaw, graph 1 charts downloads of crypto exchange apps per 100,000 people, and it is interesting as it reveals that the vast majority of users joined after Dec 2020, which was during or after the all-time highs of that year. In other words, they assume more users bought bitcoins in the last 2 years than in the first 10 of 12 years of bitcoin's existence. Anyone who bought bitcoins before approximately Nov 2020¹ is, of course, still in the green. If graph 1 was showing cumulative downloads instead of daily downloads, this would give a better breakdown of the number of users before and after Dec 2020. ¹ Except during a handful of days in Dec 2017-Jan 2018 when bitcoin was briefly above $17k.

startupsfail 4y ago
Everyone who bought and sold is in the green (assuming that they haven’t payed the taxes and not accounting for externalities of increased fraud, crime, CO2 emissions, etc). And then, not counting people who bought and lost (wallet lost/exchange collapsed, etc). And then, anyone who is still holding are under multiple risks: regulatory, markets tanking, taxation, fraud, exchange collapse, wallet stolen, etc.
dibt 4y ago
This is a common theme for BIS. I may do an analysis on the their studies. I suspect they overwhelmingly express a negative sentiment for Bitcoin and DeFi, and have questionable methodology like you describe. I notice they like to get their studies into media outlets like this one, Gizmodo or the New York Post (a tabloid).

dybber 4y ago

Of course in a negative-sum game, most people will lose money in the end of the day. The $$ going in is equal to the $$ going out of the system. However, som of the $$ goes to miners as transaction fees. Therefore, for the non-miners, it will be a negative-sum game, where less money will go out of the system, than what the traders are putting into it.

quantified 4y ago
Essentially red, black, and 0 + 00
mrb 4y ago
Not at all. Here is a simple counter-example: A has some bitcoins, he sells a few to B. Later price increases, and A sells more bitcoins to B. In total, the same $ went in as the $ that went out, but both A's and B's wealth increased.
- Beltalowda 4y ago
  So as long as Bitcoin's price keeps going up everyone can get infinitely rich?
  - mrb 4y ago
    The price could remain constant after the second time A sells to B. Their wealth still has increased, hence demonstrating it's not a zero-sum game (let alone negative-sum). Some things that are actually zero-sum games are futures or options markets.
- woojoo666 4y ago
  Where is A getting their bitcoins? If they didn't need to buy them, then they are miners, which seems to agree with GP's comment

pedalpete 4y ago

Most ETFs show similar results, I wouldn't be surprised if VC was similar. People pile in when the fund has a good year, or few years. They are buying at the peak. Most people just aren't investors. They don't read the rules, they follow the hype.

v0idzer0 4y ago

A study conducted during a bear market shows that most people who bought during the recent bull market are now down. Did we need a study for that? Perhaps even less surprising is the fact that people buy assets to make money and not to donate to an ideal about decentralization.

tim333 4y ago

On the other had 100% of people who bought bitcoin and held six years are up or made money. With any asset, stocks housing or whatever, the people who don't know much about it will tend to buy near the top when all the articles are saying so and so was up 30% this year and 120% over the last three. The time to buy is probably when the press are saying it's all over for so and so or a few moderate while after that.