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OP didn't make a loss on Bitcoin. He made a loss on Butterfly Labs. Consumer mining these days is only profitable for narrow windows — you need to take delive

OP didn't make a loss on Bitcoin. He made a loss on Butterfly Labs. Consumer mining these days is only profitable for narrow windows — you need to take delivery of one of the first miners in a new ASIC generation to have a chance. It's much smarter to invest in Bitcoin directly.

SeanDav 13y ago
It is only "smart" to invest in Bitcoin with hindsight. Bitcoin is a pure gamble, no one can predict what the price will do and if it will all crash horribly tomorrow. There is very little difference between "investing" in Bitcoin and pulling the lever on a slot machine. In either case you may make a killing or lose everything you put in - so only put in what you don't mind losing.
- kbelbina 13y ago
  The difference is a slot machine is mathematically negative expectation. Also Bitcoin is zero sum after commissions. So very different.
  - joosters 13y ago
    But since you have to pay the commissions and trading costs, there's not much difference after all...
    - kbelbina 13y ago
      You can't prove that there is no edge in Bitcoin trading. You can prove it with slot machines.
  - SeanDav 13y ago
    Bitcoin is most certainly not zero sum. Zero Sum implies that for every winner, there must be a loser. It is quite possible for everyone to lose money on Bitcoin, with no winner. If tomorrow the USA gets together with China and Russia and persuades the entire world to outlaw Bitcoin, with the threat of a heavy punishment for anyone trading in Bitcoin, the value of Bitcoin will crash, probably very close to 0. In this scenario (which is not all that far-fetched) absolutely everyone loses, hence not a zero sum market.
    - maxerickson 13y ago
      Each bitcoin-dollar transaction has a winner (not really a winner, but someone left holding dollars after a bitcoin crash). Given that, the vast majority of lost value would just be in the notional value of bitcoin. If you and I agree that we each own a million fake dollars, we don't actually lose anything when later we decide we aren't.
- Jach 13y ago
  If you take the economic theory behind bitcoin seriously, then it's easy to see that its deflationary nature implies an increase in value over the long-term regardless of ups and downs. Buy (or mine) and hold is then a good strategy, the main concern you ought to have in your calculations is bitcoin being killed by a government or a competing service that offers the same and better benefits that using bitcoin does. Very different from SatoshiDice.
  - bcbrown 13y ago
    >the main concern you ought to have in your calculations is bitcoin being killed by a government or a competing service that offers the same and better benefits that using bitcoin does. Very different from SatoshiDice. Those seem pretty unpredictable to me.
    - Jach 13y ago
      Yes, it's hard to predict and the odds change every day, which makes it quite different from SatoshiDice or any casino game where the odds and rewards are in full display. It's also hard to predict which company is going to be the next Google and not get killed from the outside by a patent troll or would-be competitors who use the government to hammer down any new competition or something else, but a lot of VCs still make money regardless. I certainly wouldn't suggest anyone put all their eggs into the bitcoin basket, but mine and others' best guesses on the odds indicate the risks don't outweigh the potential rewards.
    - vbuterin 13y ago
      http://en.wikipedia.org/wiki/Ludic_fallacy http://en.wikipedia.org/wiki/Ludic_fallacy
      - deleted 13y ago
        [deleted]
  - XorNot 13y ago
    I like that in this version you ignore the problem of what happens to BitCoin when no one spends it and everyone just hordes it.
- wmf 13y ago
  Given the dynamics of mining and the fact that it's denominated in BTC, I think Bitcoin mining is even more of a gamble than Bitcoin speculation. So I'd say it's smarter to speculate than to mine it.
- jerguismi 13y ago
  > There is very little difference between "investing" in Bitcoin and pulling the lever on a slot machine. LOL, seriously? With slot machine you are guaranteed to loose statistically. Bitcoin is very different bet. No one can calculate what the probabilities are for different outcomes when it comes to Bitcoin.
  - joosters 13y ago
    Actually, it seems like an apt comparison. A slot machine (on average) takes a certain percentage of your cash each spin. Bitcoin takes a certain percentage of your cash (transaction fees, bid/ask spread) on each trade. Do either enough times and you'll most likely whittle your money away. But you could win big with a few spins or a few lucky trades.
    - skriticos2 13y ago
      You could also just buy some Bitcoins at relatively non-volatile times and wait for a year or two, then sell them. The value has been going up dramatically during the last few years pretty consistently and demand is steadily rising. Bitcoin is gaining popularity in China quickly and they trade quite some volume on the exchanges now.
lingben 13y ago
"It's much smarter to invest in Bitcoin directly." Let's assume that bitcoin is a currency, which is highly debatable, but let's put that aside for now. One does not 'invest' in a currency. One either uses a currency or one speculates in a currency. Now, returning to the fact that bitcoin is far from a true currency, as much as its proponents wish to purport to its practical usage, the fact is that 'investing in bitcoin' is very little removed from taking a punt on a race horse or a penny stock or beani-babies or any other highly dubious 'investments' which have come along so far. What kind of currency has fluctuations +109% in a less than a month's time? (October 1st to October 23rd 2013) The only difference in the case of bitcoin is that it has the allure of technology, cryptography and all the mysteries connected with it. All great hustles have that. Madoff did it with the 'mystery' of the stock market. Ponzi did it with the 'mystery' of the then still recent international stamp post delivery system.
- drcode 13y ago
  > One does not 'invest' in a currency. Someone in Venezuela putting USD under his mattress isn't investing? > What kind of currency has fluctuations +109% in a less than a month's time? A new currency that emerges out of nowhere, in an emergent fashion, such as bitcoin. You don't think gold prices fluctuated wildly in ancient Sumeria when gold was first used as a currency? > All great hustles have that. Madoff did it with the 'mystery' of the stock market. Ponzi did it with the 'mystery' of the then still recent international stamp post delivery system. Yes, and Uncle Sam with the USD. That said, I agree with you it is bad for people to extol the "smartness" of investing in bitcoin- It's impossible to predict future prices of a commodity that is speculated upon. People should instead simply explain the value that bitcoin has to offer to the world.
  - XorNot 13y ago
    > Someone in Venezuela putting USD under his mattress isn't investing? No they're not. They're trying to lose money against inflation more slowly. 10 years from now that $1000 USD will still be a $1000 USD, but it'll buy a lot less.
- bobbygoodlatte 13y ago

SeanDav 13y ago

It is only "smart" to invest in Bitcoin with hindsight. Bitcoin is a pure gamble, no one can predict what the price will do and if it will all crash horribly tomorrow. There is very little difference between "investing" in Bitcoin and pulling the lever on a slot machine. In either case you may make a killing or lose everything you put in - so only put in what you don't mind losing.

kbelbina 13y ago
The difference is a slot machine is mathematically negative expectation. Also Bitcoin is zero sum after commissions. So very different.
- joosters 13y ago
  But since you have to pay the commissions and trading costs, there's not much difference after all...
  - kbelbina 13y ago
    You can't prove that there is no edge in Bitcoin trading. You can prove it with slot machines.
- SeanDav 13y ago
  Bitcoin is most certainly not zero sum. Zero Sum implies that for every winner, there must be a loser. It is quite possible for everyone to lose money on Bitcoin, with no winner. If tomorrow the USA gets together with China and Russia and persuades the entire world to outlaw Bitcoin, with the threat of a heavy punishment for anyone trading in Bitcoin, the value of Bitcoin will crash, probably very close to 0. In this scenario (which is not all that far-fetched) absolutely everyone loses, hence not a zero sum market.
  - maxerickson 13y ago
    Each bitcoin-dollar transaction has a winner (not really a winner, but someone left holding dollars after a bitcoin crash). Given that, the vast majority of lost value would just be in the notional value of bitcoin. If you and I agree that we each own a million fake dollars, we don't actually lose anything when later we decide we aren't.
Jach 13y ago
If you take the economic theory behind bitcoin seriously, then it's easy to see that its deflationary nature implies an increase in value over the long-term regardless of ups and downs. Buy (or mine) and hold is then a good strategy, the main concern you ought to have in your calculations is bitcoin being killed by a government or a competing service that offers the same and better benefits that using bitcoin does. Very different from SatoshiDice.
- bcbrown 13y ago
  >the main concern you ought to have in your calculations is bitcoin being killed by a government or a competing service that offers the same and better benefits that using bitcoin does. Very different from SatoshiDice. Those seem pretty unpredictable to me.
  - Jach 13y ago
    Yes, it's hard to predict and the odds change every day, which makes it quite different from SatoshiDice or any casino game where the odds and rewards are in full display. It's also hard to predict which company is going to be the next Google and not get killed from the outside by a patent troll or would-be competitors who use the government to hammer down any new competition or something else, but a lot of VCs still make money regardless. I certainly wouldn't suggest anyone put all their eggs into the bitcoin basket, but mine and others' best guesses on the odds indicate the risks don't outweigh the potential rewards.
  - vbuterin 13y ago
    http://en.wikipedia.org/wiki/Ludic_fallacy http://en.wikipedia.org/wiki/Ludic_fallacy
    - deleted 13y ago
      [deleted]
- XorNot 13y ago
  I like that in this version you ignore the problem of what happens to BitCoin when no one spends it and everyone just hordes it.
wmf 13y ago
Given the dynamics of mining and the fact that it's denominated in BTC, I think Bitcoin mining is even more of a gamble than Bitcoin speculation. So I'd say it's smarter to speculate than to mine it.
jerguismi 13y ago
> There is very little difference between "investing" in Bitcoin and pulling the lever on a slot machine. LOL, seriously? With slot machine you are guaranteed to loose statistically. Bitcoin is very different bet. No one can calculate what the probabilities are for different outcomes when it comes to Bitcoin.
- joosters 13y ago
  Actually, it seems like an apt comparison. A slot machine (on average) takes a certain percentage of your cash each spin. Bitcoin takes a certain percentage of your cash (transaction fees, bid/ask spread) on each trade. Do either enough times and you'll most likely whittle your money away. But you could win big with a few spins or a few lucky trades.
  - skriticos2 13y ago
    You could also just buy some Bitcoins at relatively non-volatile times and wait for a year or two, then sell them. The value has been going up dramatically during the last few years pretty consistently and demand is steadily rising. Bitcoin is gaining popularity in China quickly and they trade quite some volume on the exchanges now.

lingben 13y ago

"It's much smarter to invest in Bitcoin directly." Let's assume that bitcoin is a currency, which is highly debatable, but let's put that aside for now. One does not 'invest' in a currency. One either uses a currency or one speculates in a currency. Now, returning to the fact that bitcoin is far from a true currency, as much as its proponents wish to purport to its practical usage, the fact is that 'investing in bitcoin' is very little removed from taking a punt on a race horse or a penny stock or beani-babies or any other highly dubious 'investments' which have come along so far. What kind of currency has fluctuations +109% in a less than a month's time? (October 1st to October 23rd 2013) The only difference in the case of bitcoin is that it has the allure of technology, cryptography and all the mysteries connected with it. All great hustles have that. Madoff did it with the 'mystery' of the stock market. Ponzi did it with the 'mystery' of the then still recent international stamp post delivery system.

drcode 13y ago
> One does not 'invest' in a currency. Someone in Venezuela putting USD under his mattress isn't investing? > What kind of currency has fluctuations +109% in a less than a month's time? A new currency that emerges out of nowhere, in an emergent fashion, such as bitcoin. You don't think gold prices fluctuated wildly in ancient Sumeria when gold was first used as a currency? > All great hustles have that. Madoff did it with the 'mystery' of the stock market. Ponzi did it with the 'mystery' of the then still recent international stamp post delivery system. Yes, and Uncle Sam with the USD. That said, I agree with you it is bad for people to extol the "smartness" of investing in bitcoin- It's impossible to predict future prices of a commodity that is speculated upon. People should instead simply explain the value that bitcoin has to offer to the world.
- XorNot 13y ago
  > Someone in Venezuela putting USD under his mattress isn't investing? No they're not. They're trying to lose money against inflation more slowly. 10 years from now that $1000 USD will still be a $1000 USD, but it'll buy a lot less.
bobbygoodlatte 13y ago