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But Bitcoin is a gamble not an investment - its value may be 1000% or 1% of its current value next year, and neither of us can really predict that. Sure I own s

by shubb 13y ago

But Bitcoin is a gamble not an investment - its value may be 1000% or 1% of its current value next year, and neither of us can really predict that. Sure I own some (I made like 100% so far), but its a lottery ticket. I'd say that investing in a high growth startup is a gamble, but investing in 100 is an investment. Which links to your diversity of investment thing. If you invested in 100 startups in the same niche, for instance 500 bitcoin exchanges, that would not be diversified. You would be betting on the same business model. If crypto currencies are discredited - the buyers today get burned by the big crash and never come back, or laws change to make it too inconvenient to bother investing in (all the exchanges are pushed into he black market), then the litecoin price will dive like bitcoin and stay there.

mikro2nd 13y ago
> its value may be 1000% or 1% of its current value next year, and neither of us can really predict that True enough, but then we could say much the same thing for the fiat currency of your choice. (Except maybe the CHF? ;)
- sentenza 13y ago
  No. All significant 'real world' currencies are tied to the economy of a nation-state or nation-state-like entity. Bitcoin et al are free-floating in that regard. To see how this makes a difference, consider what would happen if one of the early adopters were to sell 100K bitcoins right now.
  - mikro2nd 13y ago
    (I'm not arguing that Bitcoin is somehow less volatile than fiat currencies, here, but...) The values of "Real world" currencies is quite (not totally) decoupled from the intrinsic value of the issuing state's economy. See Zimbabwe for a recent object lesson - still plenty of economic activity and trade going on in the country, but hyperinflation happened anyway. "Real world" currencies are much more tied to emotional attachments (or lack thereof) to the currency and faith in its issuer. If you've ever tried your hand at forex speculation, you'll be very (perhaps painfully) just how much the relative values between fiat currencies is driven by emotion (and the stop-loss orders of other speculators.)
    - shubb 13y ago
      Shares and currencies... In theory, analysts and professional traders incorperate everything they know into bids for shares, so that the current share price 'prices in' everything publicly known about a share at the current time. I quite often talk to people who have a share portfolio, and buy mining shares because they think international demand for mining is going to rise. But the share price already reflects that because pro investors and analysts though to it first. So really, when you buy a share, unless you have some extra information, you are making a bet on variations due to things no one knows at the time - it's simply a gamble. Don't get me wrong, it's not a terrible idea to buy shares - if the economy grows, the FTSE grows with it. If you buy luxury goods manufacturers and insolvency companies, you can hedge. But if you, as a private individual, think you can make money day trading (in your lunch break) against the highest paid experts in the world, well you are kinda nuts. A friend put together a database of tick data for every currency pair in the world, for a spread of different brokers. He examined the data, and found that at last in the 3 hour / day interval, it appeared statistically random. You can bet on a random variable if you like, sometimes you will make money. I prefer to put what little money I have in passive funds, and hope it beats inflation^. ^That said, I'm cashed out and 400% ahead following this bitcoin bubble. lol
- nikolak 13y ago
  Technically you're correct, but realistically there is a very very small chance of that happening. And the chance of bitcoin changing it's value in the next year significantly, compared to fiat currency, is much higher.
- venomsnake 13y ago
  I could reasonably predict that the USD will have roughly the same purchasing power next year as the current. Same with EUR.
  - gremlinsinc 13y ago
    Bitcoin could become predictable like that, or at least not matter so much if it wasn't compared to other currencies... People think in terms of I want to buy $100 worth of this in bitcoin.. -- but when vendors start having flat BTC prices tha t don't fluctuate against the dollar value, or ONLY accept bitcoin, etc... then it might stabilize a little more and become more of a true currency.

by shubb 13y ago

mikro2nd 13y ago

> its value may be 1000% or 1% of its current value next year, and neither of us can really predict that True enough, but then we could say much the same thing for the fiat currency of your choice. (Except maybe the CHF? ;)

sentenza 13y ago
No. All significant 'real world' currencies are tied to the economy of a nation-state or nation-state-like entity. Bitcoin et al are free-floating in that regard. To see how this makes a difference, consider what would happen if one of the early adopters were to sell 100K bitcoins right now.
- mikro2nd 13y ago
  (I'm not arguing that Bitcoin is somehow less volatile than fiat currencies, here, but...) The values of "Real world" currencies is quite (not totally) decoupled from the intrinsic value of the issuing state's economy. See Zimbabwe for a recent object lesson - still plenty of economic activity and trade going on in the country, but hyperinflation happened anyway. "Real world" currencies are much more tied to emotional attachments (or lack thereof) to the currency and faith in its issuer. If you've ever tried your hand at forex speculation, you'll be very (perhaps painfully) just how much the relative values between fiat currencies is driven by emotion (and the stop-loss orders of other speculators.)
  - shubb 13y ago
    Shares and currencies... In theory, analysts and professional traders incorperate everything they know into bids for shares, so that the current share price 'prices in' everything publicly known about a share at the current time. I quite often talk to people who have a share portfolio, and buy mining shares because they think international demand for mining is going to rise. But the share price already reflects that because pro investors and analysts though to it first. So really, when you buy a share, unless you have some extra information, you are making a bet on variations due to things no one knows at the time - it's simply a gamble. Don't get me wrong, it's not a terrible idea to buy shares - if the economy grows, the FTSE grows with it. If you buy luxury goods manufacturers and insolvency companies, you can hedge. But if you, as a private individual, think you can make money day trading (in your lunch break) against the highest paid experts in the world, well you are kinda nuts. A friend put together a database of tick data for every currency pair in the world, for a spread of different brokers. He examined the data, and found that at last in the 3 hour / day interval, it appeared statistically random. You can bet on a random variable if you like, sometimes you will make money. I prefer to put what little money I have in passive funds, and hope it beats inflation^. ^That said, I'm cashed out and 400% ahead following this bitcoin bubble. lol
nikolak 13y ago
Technically you're correct, but realistically there is a very very small chance of that happening. And the chance of bitcoin changing it's value in the next year significantly, compared to fiat currency, is much higher.
venomsnake 13y ago
I could reasonably predict that the USD will have roughly the same purchasing power next year as the current. Same with EUR.
- gremlinsinc 13y ago
  Bitcoin could become predictable like that, or at least not matter so much if it wasn't compared to other currencies... People think in terms of I want to buy $100 worth of this in bitcoin.. -- but when vendors start having flat BTC prices tha t don't fluctuate against the dollar value, or ONLY accept bitcoin, etc... then it might stabilize a little more and become more of a true currency.