7 ms·

What makes it irrational?

komali2 4y ago
The volatility of any cryptocurrency "investment" makes it more like a gamble pure and simple than any other investment. It's irrational to take 10% of your savings, walk into Caesar's Palace, and put it on red. People are injecting much larger percentages of their savings into cryptocurrency. No matter how many wins, no matter how high the cryptocurrency market has climbed between crashes, the volatility of it makes it irrational for anything above 1% of your savings... If even that.
- alchemist1e9 4y ago
  This isn’t really true. Even picking the most extreme moves of Bitcoin it has lower volatility than many major tech stocks and many developing country fiat currencies. Now factor in the variable that the most recent bull rally and crash was mostly instigated, in both directions, by a traditional ponzi bad actor as the FTX scam simply used crypto as a mechanism for an age old financial scam, not really caused by crypto, but instead enabled by outright corruption of regulators and governments, then … are you really sure long term natural Bitcoin downward volatility is actually high?
  - komali2 4y ago
    > are you really sure long term natural Bitcoin downward volatility is actually high? It appears to be three times more volatile than NASDAQ in the short term, and twice as volatile in the long term. So, yes. https://medium.com/swissquote-education/bitcoin-vs-risk-understanding-volatility-472efe96e439 https://medium.com/swissquote-education/bitcoin-vs-risk-unde...
    - alchemist1e9 4y ago
      Lot of cherry picking in that analysis and also you are comparing index whereas I meant individual tech stocks. Let’s not forget in speculative bubbles everything has downside volatility but lots of real and important assets undergo manias, real estate, railroads, even 1999 nasdaq then crashing 90%, left out of the analysis conveniently. I’d go as far as the argue that given the grandiose goal of competing with sovereign fiat as modern private currency, the volatility of Bitcoin is likely lower than one could reasonably expect. If we add in the reality that recent mania and crash was overwhelming instigated by perhaps the largest conventional or legacy financial fraud in modern history, FTX, then Bitcoin looks almost sleepy. Even funnier in the cherry picked analysis was they included Turkish Lira and it was 8.83, it’s now 18.89 per dollar. It along with numerous other fiat currencies have much higher volatility than Bitcoin.
      - komali2 4y ago
        I'm glad you acknowledge that Bitcoin is vulnerable to having its value cut in half by the collapse of a single company. People should probably continue to invest long term in index funds, advice that hasn't changed in decades. Yes, I agree that it's a horrible situation that Americans depend on the stock market whims to retire, but that's more due to America's allergies to socialism than an indictment of the market itself. It's still a demonstrably better investment instrument.
        alchemist1e9 4y ago
        https://iea.org.uk/publications/socialism-the-failed-idea-that-never-dies/ https://iea.org.uk/publications/socialism-the-failed-idea-th... Yes that’s certainly true that index funds are a much safer investment than Bitcoin. I wouldn’t dispute that. It’s absolutely expected that risk assets will have high uncertainty around their prices. +/- 50% changes is absolutely normal in free markets for many risk assets. Socialism provides no solutions but in this case there isn’t even a problem. Statism and socialism in my opinion are scourges of human civilization that bring nothing but misery and war. Viable modern private currency like Bitcoin provides great hope for humanity that the war machines funded by fiat currencies might have an end in sight, maybe in next 100 years. most people don’t realize that the type of money we use, fiat sovereign currency, was specifically invented to help wage war and specifically serves this purpose today as well.
        komali2 4y ago
        I mentioned that Americans depend on the whims of the market for their retirement, rather than most developed nations which have pensions and government sponsored retirement. This is generally what people mean when they say "socialism" as described in the current capitalist system we all live under. In America, you call your politicians that advocate for this sort of thing, "democratic socialists." Bernie Sanders is an example. Did you think I meant a socialist revolution seeking communism? Is that what you think Germans, Fins, Taiwanese, or Norwegians living on government pensions are doing lol? Well, that demonstrates my point re: americans are allergic to the word "socialism." I mentioned better ways for people to have a guaranteed retirement, such as a socialist policy of government pensions, and you immediately thought I was calling for a Stalinist regime? Out of curiosity, are you an anarchocapitalist? It sounds like you believe a free market of bitcoin will grant people more freedom than socialistically regulated capitalism. That'd be nice, but the evidence doesn't seem to be in favor of this argument.
    - roflyear 4y ago
      It is also highly correlated with the market, no surprise!
- ursuscamp 4y ago
  It sounds like you think it's unwise, but that's not quite the same thing as irrational. People make different decisions using different sets of information. I have a significant portion of my savings as Bitcoin (much more than 1%). That decision was made through lots of close observation of the ecosystem, careful reading and thought. I'm very confident in the long-term growth of it, but I don't keep any month to month expense money as Bitcoin because of short-term volatility. You may disagree, but you can't characterize that as irrational.
roflyear 4y ago
BTC is rational like tulip-bulbs are rational, it isn't rational like USD is rational (you can argue USD is irrational too, of course). When I said irrational I just meant in the context of things we can relate BTC to (from tulip bulbs to fairly stable fiat to securities). Like you can call penny stocks "rational" and a ponzi scheme "rational" (I don't think BTC goes this far btw so this is for illustrative purposes don't yell at me) you can call BTC "rational" but compared to the SPY or Vanguard target-date funds etc.. these things look pretty "crazy"
- latchkey 4y ago
  > BTC is rational like tulip-bulbs are rational tulip-bulbs do not have actual utility. they can't feed my family. i can guess what you'll say next... the volatility of bitcoin won't either! my response to that is that bitcoin isn't a currency. it is a store of value in that i can borrow against its value. with that borrowing, i can use it to generate value for my family. i can borrow against it (without having to go to a bank or get permission or even a credit check!) and open up a grocery market, sell bananas, generate revenue and pay down the loan. there is value in that and it has nothing to do with volatility as long as my loan-to-value ratio is maintained. few understand or even consider those aspects of bitcoin and crypto in general.

The volatility of any cryptocurrency "investment" makes it more like a gamble pure and simple than any other investment. It's irrational to take 10% of your savings, walk into Caesar's Palace, and put it on red. People are injecting much larger percentages of their savings into cryptocurrency. No matter how many wins, no matter how high the cryptocurrency market has climbed between crashes, the volatility of it makes it irrational for anything above 1% of your savings... If even that.

alchemist1e9 4y ago
This isn’t really true. Even picking the most extreme moves of Bitcoin it has lower volatility than many major tech stocks and many developing country fiat currencies. Now factor in the variable that the most recent bull rally and crash was mostly instigated, in both directions, by a traditional ponzi bad actor as the FTX scam simply used crypto as a mechanism for an age old financial scam, not really caused by crypto, but instead enabled by outright corruption of regulators and governments, then … are you really sure long term natural Bitcoin downward volatility is actually high?
- komali2 4y ago
  > are you really sure long term natural Bitcoin downward volatility is actually high? It appears to be three times more volatile than NASDAQ in the short term, and twice as volatile in the long term. So, yes. https://medium.com/swissquote-education/bitcoin-vs-risk-understanding-volatility-472efe96e439 https://medium.com/swissquote-education/bitcoin-vs-risk-unde...
  - alchemist1e9 4y ago
    Lot of cherry picking in that analysis and also you are comparing index whereas I meant individual tech stocks. Let’s not forget in speculative bubbles everything has downside volatility but lots of real and important assets undergo manias, real estate, railroads, even 1999 nasdaq then crashing 90%, left out of the analysis conveniently. I’d go as far as the argue that given the grandiose goal of competing with sovereign fiat as modern private currency, the volatility of Bitcoin is likely lower than one could reasonably expect. If we add in the reality that recent mania and crash was overwhelming instigated by perhaps the largest conventional or legacy financial fraud in modern history, FTX, then Bitcoin looks almost sleepy. Even funnier in the cherry picked analysis was they included Turkish Lira and it was 8.83, it’s now 18.89 per dollar. It along with numerous other fiat currencies have much higher volatility than Bitcoin.
    - komali2 4y ago
      I'm glad you acknowledge that Bitcoin is vulnerable to having its value cut in half by the collapse of a single company. People should probably continue to invest long term in index funds, advice that hasn't changed in decades. Yes, I agree that it's a horrible situation that Americans depend on the stock market whims to retire, but that's more due to America's allergies to socialism than an indictment of the market itself. It's still a demonstrably better investment instrument.
      - alchemist1e9 4y ago
        https://iea.org.uk/publications/socialism-the-failed-idea-that-never-dies/ https://iea.org.uk/publications/socialism-the-failed-idea-th... Yes that’s certainly true that index funds are a much safer investment than Bitcoin. I wouldn’t dispute that. It’s absolutely expected that risk assets will have high uncertainty around their prices. +/- 50% changes is absolutely normal in free markets for many risk assets. Socialism provides no solutions but in this case there isn’t even a problem. Statism and socialism in my opinion are scourges of human civilization that bring nothing but misery and war. Viable modern private currency like Bitcoin provides great hope for humanity that the war machines funded by fiat currencies might have an end in sight, maybe in next 100 years. most people don’t realize that the type of money we use, fiat sovereign currency, was specifically invented to help wage war and specifically serves this purpose today as well.
        komali2 4y ago
        I mentioned that Americans depend on the whims of the market for their retirement, rather than most developed nations which have pensions and government sponsored retirement. This is generally what people mean when they say "socialism" as described in the current capitalist system we all live under. In America, you call your politicians that advocate for this sort of thing, "democratic socialists." Bernie Sanders is an example. Did you think I meant a socialist revolution seeking communism? Is that what you think Germans, Fins, Taiwanese, or Norwegians living on government pensions are doing lol? Well, that demonstrates my point re: americans are allergic to the word "socialism." I mentioned better ways for people to have a guaranteed retirement, such as a socialist policy of government pensions, and you immediately thought I was calling for a Stalinist regime? Out of curiosity, are you an anarchocapitalist? It sounds like you believe a free market of bitcoin will grant people more freedom than socialistically regulated capitalism. That'd be nice, but the evidence doesn't seem to be in favor of this argument.
  - roflyear 4y ago
    It is also highly correlated with the market, no surprise!
ursuscamp 4y ago
It sounds like you think it's unwise, but that's not quite the same thing as irrational. People make different decisions using different sets of information. I have a significant portion of my savings as Bitcoin (much more than 1%). That decision was made through lots of close observation of the ecosystem, careful reading and thought. I'm very confident in the long-term growth of it, but I don't keep any month to month expense money as Bitcoin because of short-term volatility. You may disagree, but you can't characterize that as irrational.

roflyear 4y ago

BTC is rational like tulip-bulbs are rational, it isn't rational like USD is rational (you can argue USD is irrational too, of course). When I said irrational I just meant in the context of things we can relate BTC to (from tulip bulbs to fairly stable fiat to securities). Like you can call penny stocks "rational" and a ponzi scheme "rational" (I don't think BTC goes this far btw so this is for illustrative purposes don't yell at me) you can call BTC "rational" but compared to the SPY or Vanguard target-date funds etc.. these things look pretty "crazy"

latchkey 4y ago
> BTC is rational like tulip-bulbs are rational tulip-bulbs do not have actual utility. they can't feed my family. i can guess what you'll say next... the volatility of bitcoin won't either! my response to that is that bitcoin isn't a currency. it is a store of value in that i can borrow against its value. with that borrowing, i can use it to generate value for my family. i can borrow against it (without having to go to a bank or get permission or even a credit check!) and open up a grocery market, sell bananas, generate revenue and pay down the loan. there is value in that and it has nothing to do with volatility as long as my loan-to-value ratio is maintained. few understand or even consider those aspects of bitcoin and crypto in general.