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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

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.
    - danans 4y ago
      > 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. > Several crypto coins are a bad store of value over 1 week but a decent one over a couple hours. What kind of (real world) transaction would need to rely on a cryptocurrency for value stability over a couple of hours time-span that wouldn't be served by fiat currency, which provides the same stability guarantees over that same time-span?
      - toqy 4y ago
        Buying drugs and other illegal things online
      - s1artibartfast 4y ago
        International transfer is a good use, as is irrevocable payment for purchased goods. There is also a strong real world value in countries where local currency is less stable and secure than crypto. Not all places have access to USD or foreign currency. There are interesting examples coming out of Argentina. Imagine living in a country where year over year inflation is ~100% and the government may periodically seize assets in your bank account.
        bentcorner 4y ago
        > International transfer is a good use I think it could make a useful underlying tool to enable this but to be used directly by end user customers it'd be a tough sell. I've used Wise to transfer USD <-> CAD, if they use crypto to enable that (I don't think they do, but I guess they could), I couldn't really care less. I don't think your run of the mill consumer is going to want to use crypto to do the same thing. With smaller amounts the difference in cost is probably negligible, with larger amounts you could theoretically save more to make the effort worth it, but you have higher pressure to have more "traditional" assurances that nothing goes wrong.
        danans 4y ago
        > International transfer is a good use, as is irrevocable payment for purchased goods. In what ways do cash bank transfers not work for international transfers or irrevocable payments?
  - jeffbee 4y ago
    That's the first requirement of currency? I feel like you might have made that up. It seems to me that the general character of a currency is that it is a widely-accepted medium of exchange. There are loads of currencies around the world that serve their purpose without being an even slightly good store of value. The Turkish Lira, for example, has lost 90% of its value against the Dollar in 15 years, yet it is still the going currency in that country. Edit: after reading my comment I realized it might not be clear that bitcoin is astonishingly bad at imitating currency. Almost without exception trading it for goods and services is impossible.
    - samatman 4y ago
      I like to say a currency: should be a store of value, could be a unit of account, and must be a medium of exchange.
  - deleted 4y ago
    [deleted]
  - lrvick 4y ago
    I use Bitcoin as a currency all the time. It is cash for the internet. If used correctly, it is the only reliable way to buy things online without giving a central company like Visa or Mastercard a log of everything you buy and where you buy it. If you dollar cost average your acquisition of Bitcoin it smooths out the conversion risk and if anything the value against USD goes reliably up over a 3+ year window.
  - lupire 4y ago
    Currencies, as the name hints, are used to transmit value, not hold it beyond the short term.
- highwaylights 4y ago
  The great thing about Bitcoin is that it’s whatever the holder wants it to be, and nothing they don’t want it to be, while at the same time being the opposite of that to someone else, depending on what argument their trying to make and whether or not they’ve personally lost money. Anytime someone speaks crypto to me now I feel like Adam Sandler floating past Clint Howard’s window in Little Nicky: I don’t want to be part of this, they don’t want me to be part of this, and all I can do is wish them luck while they tell me they don’t need it.
  - notch656a 4y ago
    I personally lost a couple dollars on litecoin but saved 10s of dollars in transaction fees by not using a credit card. So the fact I lost money, technically, doesn't mean I didn't come out ahead versus the alternatives.
    - highwaylights 4y ago
      I had to work out in my head there how many transactions you’d need to make to have saved 10s of dollars on credit card fees, and then whether or not that was worth the hassle, let alone the loss of purchase protection. It was not.
  - thrwy_918 4y ago
    > The great thing about Bitcoin is that it’s whatever the holder wants it to be, and nothing they don’t want it to be If someone bought Bitcoin a year ago and wanted it to be a store of value, it is certainly not "whatever the holder wants it to be" for that person
    - jpadkins 4y ago
      If someone bought US Dollars($) a year ago and wanted it to be a store of value, it is certainly not "whatever the holder wants it to be" for that person. A lot of currencies are not a good store of value the last 18 months.
      - 4y ago
- BoorishBears 4y ago
  > Only a fool is using most currencies as an investment, except perhaps as part of some hedging scheme. Only a fool uses a currency that's experienced 5000% deflation? Bitcoin is a long failed currency, I can't believe there are people still trying to push that notion. Volatility is one thing, but deflation to a nonsensical degree means that using it as a way to pay for goods and services is heavily discouraged because of things like... having your $20 pizza be worth $165,000 if you had just not bought it.
  - landemva 4y ago
    I have used btc as a hedge against my government and the uncontrolled judicial system, and it has been phenomenally successful. Not everyone lives an upper-middle class existence with good rule of law.
    - BoorishBears 4y ago
      So you used bitcoin for speculation. You're making my point. It's not functioning as a currency anymore, it's an investment vehicle. It'd be like if Forex was the main way that dollars got moved.
  - deleted 4y ago
    [deleted]
- aetherson 4y ago
  This is actually exactly backward. What the paper is trying to quantify is how many people are trying to use bitcoin as an investment, versus how many are trying to use it as a currency or other financial tool (the whole thing about how many of the investors are underwater is a small point of the paper that Gizmodo is fixating on because of Gizmodo's preexisting hatred of crypto). What the paper finds (and we can certainly quibble with any paper) is evidence that the majority of people who bought Bitcoin in the 2015-2022 period did so in patterns that suggest that they're interested in an investment asset, not in a currency.
leereeves 4y ago
> Look directly at the blockchain, and instead find 49.4% of the addresses were in profit But those addresses probably include most of the estimated 20% (or more) of Bitcoins that are lost (because they were usually lost when Bitcoin was less valuable). In those cases the address hasn't lost money, but the person lost it all.
- startupsfail 4y ago
  And this also doesn’t take into account CO2 emissions from mining, manufacturing mining rigs, building and discarding mining infrastructure.
  - halpmeh 4y ago
    That seems largely irrelevant to the topic at hand (whether or not a majority of those who purchase Bitcoin are in the red).
    - sdenton4 4y ago
      Externalities matter. The report is showing people (and thus society) doing badly on average, and society overall is doing even worse because of the additional external costs.
      - capableweb 4y ago
        > Externalities matter Sure, agree. But I don't think that's the topic here, the general harm/good done by cryptocurrencies, the submission is talking exclusively about profits or the lack of them rather. If I invest 100 USD in Facebook and the stock gains double its value, I now have profits, no matter how bad Facebook is for the world.
        startupsfail 4y ago
        You’ll have unrealized gain. If, at the same time, some foreign government was sponsoring Facebook to dismantle the democracy, and successfully achieved that, overall, you might be worse off.
pyrrhotech 4y ago
Most bitcoin investors never move their coins off the exchange and thus don't have a distinct address on the blockchain, so your sampling technique is probably just as flawed as time of app download, if not more so.
- capableweb 4y ago
  > Most bitcoin investors never move their coins off the exchange Apart from having insider knowledge in how cryptocurrency exchanges operate and their data, how could you possibly know this? One address on the blockchain can belong to one or more users, just like one user can have one or more addresses on the blockchain, so being able to compare feels impossible even if you had insider knowledge/data.
  - rippercushions 4y ago
    Because when you buy or sell crypto on a centralized exchange, no actual blockchain transactions take place, it's just shuffling bits in the exchange's local database.
    - capableweb 4y ago
      Wait, what? So because trading cryptocurrency on a centralized exchange doesn't involve a blockchain, the conclusion is "Most bitcoin investors never move their coins off the exchange"? I'm missing some vital step in your reasoning here.
      - Karunamon 4y ago
        Yes that's pretty much the extent of the reasoning and I don't see what's wrong with that. Bitcoin on a centralized exchange cannot be traded for goods and services until explicitly withdrawn, unlike most brokerage accounts where cash is cash and many will even give you a debit card so you can spend directly from the account. This strongly decouples bitcoin and most other cryptos from the total money supply. When you're on Binance and you send them one BTC as a block chain transaction, you are receiving one Binance!BTC that does not exist outside of that walled garden.
2OEH8eoCRo0 4y ago
An address is not a person.
Terretta 4y ago
> Look directly at the blockchain, and instead find 49.4% of the addresses were in profit Every trade has two sides, and transactions cost fees.
purpleblue 4y ago
How many of those wallets are lost forever?
nextaccountic 4y ago
> Look directly at the blockchain, and instead find 49.4% of the addresses were in profit as of the time this article was published Someone can (and should) have multiple addresses. And most retail investors will actually keep the bitcoins in an exchange in order to not lose an obscene amount of money to fees when trading. So there isn't an 1:1 correspondence between addresses and people.
msackmann 4y ago
Realized profit? Or is the current value just above the value of the purchase date? I would believe the latter, as the value is still quite high. However, realizing the profit is a different thing. That will work only for a few who invested early and deinvest early. Basically, btc is a pyramid scheme, the only difference to other pyramid schemes is that this fact is not obfuscated. Every investor knows that he is buying a fundamentally worthless good, but is hoping that someone else will eventually pay him a higher price. That works well until the market is saturated and no one is willing to buy btc any more. Then, the price collapses. Thus: even if most investors today have made profit, that simply means that the bottom of the pyramid has not been reached. At that point, most investors will have made loss.

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.
  - danans 4y ago
    > 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. > Several crypto coins are a bad store of value over 1 week but a decent one over a couple hours. What kind of (real world) transaction would need to rely on a cryptocurrency for value stability over a couple of hours time-span that wouldn't be served by fiat currency, which provides the same stability guarantees over that same time-span?
    - toqy 4y ago
      Buying drugs and other illegal things online
    - s1artibartfast 4y ago
      International transfer is a good use, as is irrevocable payment for purchased goods. There is also a strong real world value in countries where local currency is less stable and secure than crypto. Not all places have access to USD or foreign currency. There are interesting examples coming out of Argentina. Imagine living in a country where year over year inflation is ~100% and the government may periodically seize assets in your bank account.
      - bentcorner 4y ago
        > International transfer is a good use I think it could make a useful underlying tool to enable this but to be used directly by end user customers it'd be a tough sell. I've used Wise to transfer USD <-> CAD, if they use crypto to enable that (I don't think they do, but I guess they could), I couldn't really care less. I don't think your run of the mill consumer is going to want to use crypto to do the same thing. With smaller amounts the difference in cost is probably negligible, with larger amounts you could theoretically save more to make the effort worth it, but you have higher pressure to have more "traditional" assurances that nothing goes wrong.
      - danans 4y ago
        > International transfer is a good use, as is irrevocable payment for purchased goods. In what ways do cash bank transfers not work for international transfers or irrevocable payments?
- jeffbee 4y ago
  That's the first requirement of currency? I feel like you might have made that up. It seems to me that the general character of a currency is that it is a widely-accepted medium of exchange. There are loads of currencies around the world that serve their purpose without being an even slightly good store of value. The Turkish Lira, for example, has lost 90% of its value against the Dollar in 15 years, yet it is still the going currency in that country. Edit: after reading my comment I realized it might not be clear that bitcoin is astonishingly bad at imitating currency. Almost without exception trading it for goods and services is impossible.
  - samatman 4y ago
    I like to say a currency: should be a store of value, could be a unit of account, and must be a medium of exchange.
- deleted 4y ago
  [deleted]
- lrvick 4y ago
  I use Bitcoin as a currency all the time. It is cash for the internet. If used correctly, it is the only reliable way to buy things online without giving a central company like Visa or Mastercard a log of everything you buy and where you buy it. If you dollar cost average your acquisition of Bitcoin it smooths out the conversion risk and if anything the value against USD goes reliably up over a 3+ year window.
- lupire 4y ago
  Currencies, as the name hints, are used to transmit value, not hold it beyond the short term.
highwaylights 4y ago
The great thing about Bitcoin is that it’s whatever the holder wants it to be, and nothing they don’t want it to be, while at the same time being the opposite of that to someone else, depending on what argument their trying to make and whether or not they’ve personally lost money. Anytime someone speaks crypto to me now I feel like Adam Sandler floating past Clint Howard’s window in Little Nicky: I don’t want to be part of this, they don’t want me to be part of this, and all I can do is wish them luck while they tell me they don’t need it.
- notch656a 4y ago
  I personally lost a couple dollars on litecoin but saved 10s of dollars in transaction fees by not using a credit card. So the fact I lost money, technically, doesn't mean I didn't come out ahead versus the alternatives.
  - highwaylights 4y ago
    I had to work out in my head there how many transactions you’d need to make to have saved 10s of dollars on credit card fees, and then whether or not that was worth the hassle, let alone the loss of purchase protection. It was not.
- thrwy_918 4y ago
  > The great thing about Bitcoin is that it’s whatever the holder wants it to be, and nothing they don’t want it to be If someone bought Bitcoin a year ago and wanted it to be a store of value, it is certainly not "whatever the holder wants it to be" for that person
  - jpadkins 4y ago
    If someone bought US Dollars($) a year ago and wanted it to be a store of value, it is certainly not "whatever the holder wants it to be" for that person. A lot of currencies are not a good store of value the last 18 months.
    - 4y ago
BoorishBears 4y ago
> Only a fool is using most currencies as an investment, except perhaps as part of some hedging scheme. Only a fool uses a currency that's experienced 5000% deflation? Bitcoin is a long failed currency, I can't believe there are people still trying to push that notion. Volatility is one thing, but deflation to a nonsensical degree means that using it as a way to pay for goods and services is heavily discouraged because of things like... having your $20 pizza be worth $165,000 if you had just not bought it.
- landemva 4y ago
  I have used btc as a hedge against my government and the uncontrolled judicial system, and it has been phenomenally successful. Not everyone lives an upper-middle class existence with good rule of law.
  - BoorishBears 4y ago
    So you used bitcoin for speculation. You're making my point. It's not functioning as a currency anymore, it's an investment vehicle. It'd be like if Forex was the main way that dollars got moved.
- deleted 4y ago
  [deleted]
aetherson 4y ago
This is actually exactly backward. What the paper is trying to quantify is how many people are trying to use bitcoin as an investment, versus how many are trying to use it as a currency or other financial tool (the whole thing about how many of the investors are underwater is a small point of the paper that Gizmodo is fixating on because of Gizmodo's preexisting hatred of crypto). What the paper finds (and we can certainly quibble with any paper) is evidence that the majority of people who bought Bitcoin in the 2015-2022 period did so in patterns that suggest that they're interested in an investment asset, not in a currency.

leereeves 4y ago

> Look directly at the blockchain, and instead find 49.4% of the addresses were in profit But those addresses probably include most of the estimated 20% (or more) of Bitcoins that are lost (because they were usually lost when Bitcoin was less valuable). In those cases the address hasn't lost money, but the person lost it all.

startupsfail 4y ago
And this also doesn’t take into account CO2 emissions from mining, manufacturing mining rigs, building and discarding mining infrastructure.
- halpmeh 4y ago
  That seems largely irrelevant to the topic at hand (whether or not a majority of those who purchase Bitcoin are in the red).
  - sdenton4 4y ago
    Externalities matter. The report is showing people (and thus society) doing badly on average, and society overall is doing even worse because of the additional external costs.
    - capableweb 4y ago
      > Externalities matter Sure, agree. But I don't think that's the topic here, the general harm/good done by cryptocurrencies, the submission is talking exclusively about profits or the lack of them rather. If I invest 100 USD in Facebook and the stock gains double its value, I now have profits, no matter how bad Facebook is for the world.
      - startupsfail 4y ago
        You’ll have unrealized gain. If, at the same time, some foreign government was sponsoring Facebook to dismantle the democracy, and successfully achieved that, overall, you might be worse off.

pyrrhotech 4y ago

Most bitcoin investors never move their coins off the exchange and thus don't have a distinct address on the blockchain, so your sampling technique is probably just as flawed as time of app download, if not more so.

capableweb 4y ago
> Most bitcoin investors never move their coins off the exchange Apart from having insider knowledge in how cryptocurrency exchanges operate and their data, how could you possibly know this? One address on the blockchain can belong to one or more users, just like one user can have one or more addresses on the blockchain, so being able to compare feels impossible even if you had insider knowledge/data.
- rippercushions 4y ago
  Because when you buy or sell crypto on a centralized exchange, no actual blockchain transactions take place, it's just shuffling bits in the exchange's local database.
  - capableweb 4y ago
    Wait, what? So because trading cryptocurrency on a centralized exchange doesn't involve a blockchain, the conclusion is "Most bitcoin investors never move their coins off the exchange"? I'm missing some vital step in your reasoning here.
    - Karunamon 4y ago
      Yes that's pretty much the extent of the reasoning and I don't see what's wrong with that. Bitcoin on a centralized exchange cannot be traded for goods and services until explicitly withdrawn, unlike most brokerage accounts where cash is cash and many will even give you a debit card so you can spend directly from the account. This strongly decouples bitcoin and most other cryptos from the total money supply. When you're on Binance and you send them one BTC as a block chain transaction, you are receiving one Binance!BTC that does not exist outside of that walled garden.

2OEH8eoCRo0 4y ago

An address is not a person.

Terretta 4y ago

> Look directly at the blockchain, and instead find 49.4% of the addresses were in profit Every trade has two sides, and transactions cost fees.

purpleblue 4y ago

How many of those wallets are lost forever?

nextaccountic 4y ago

> Look directly at the blockchain, and instead find 49.4% of the addresses were in profit as of the time this article was published Someone can (and should) have multiple addresses. And most retail investors will actually keep the bitcoins in an exchange in order to not lose an obscene amount of money to fees when trading. So there isn't an 1:1 correspondence between addresses and people.

msackmann 4y ago

Realized profit? Or is the current value just above the value of the purchase date? I would believe the latter, as the value is still quite high. However, realizing the profit is a different thing. That will work only for a few who invested early and deinvest early. Basically, btc is a pyramid scheme, the only difference to other pyramid schemes is that this fact is not obfuscated. Every investor knows that he is buying a fundamentally worthless good, but is hoping that someone else will eventually pay him a higher price. That works well until the market is saturated and no one is willing to buy btc any more. Then, the price collapses. Thus: even if most investors today have made profit, that simply means that the bottom of the pyramid has not been reached. At that point, most investors will have made loss.