8 ms·

In April, I watched the price of bitcoin every day. When it approached $200 I said "f*ck it," took out a student loan and bought in at $225. The VERY NEXT DAY t

In April, I watched the price of bitcoin every day. When it approached $200 I said "f*ck it," took out a student loan and bought in at $225. The VERY NEXT DAY the price collapsed. I watched bitcoin slide to $50 in a state of complete and utter devastation. I felt so stupid. I decided not to sell, and just considered the loan to be a write-off. Point being, you should assess the quality of your investment in years, not hours. And in regards to the Chinese government, allow me to quote Mahatma Gandhi: > first they ignore you, then they laugh at you, then they fight you, then you win.

grey-area 13y ago
Should a currency be an investment?
- greghinch 13y ago
  Currency speculation is a risky but thriving market
  - grey-area 13y ago
    Speculation is not the same as investing. You can speculate in currency fluctuations in any currency, but to refer to a currency as an investment is a huge red flag for it as a currency, and for investment assets you should prefer slow appreciation over wild fluctuations and speculative moves.
    - deleted 13y ago
      [deleted]
    - twelvechairs 13y ago
      investment and speculation are two sides of the same coin (pardon the pun). all investment has risk. bitcoin speculation is a high risk investment. this may not be good for everyone but its an investment nonetheless.
      - deleted 13y ago
        [deleted]
      - prodigal_erik 13y ago
        Speculation is not investment. The difference is that investments pay dividends, and buy and hold is a viable strategy. A speculator is relying on appreciation to make flipping the asset pay off, and is screwed if they eventually need a greater fool and can't find one.
        twelvechairs 13y ago
        invest. "1. To commit (money or capital) in order to gain a financial return". nothing about dividends or buy and hold here. your definition seems very narrow by comparison.
        prodigal_erik 13y ago
        I wouldn't take a definition seriously that failed to exclude lottery tickets. Ever since Rich Dad, Poor Dad I've been careful to distinguish assets that bring income, and other forms of property and equity whose price is purely an illusion supported by speculators' predictions about other speculators' whims.
- richardw 13y ago
  Wrong question, I think. This thing is barely a currency. It has built-in deflation, which makes it a great long-term store of value (assuming it isn't killed somehow) in a world of depreciating alternative stores of value, but a bad currency. If you want a currency for day-to-day use, USD is what you want. If you want to hedge against USD depreciation, BTC is one option.
  - JumpCrisscross 13y ago
    >It has built-in deflation, which makes it a great long-term store of value It also has a very large risk premium, which makes it inferior to other options for solely a long-term store of value. >If you want to hedge against USD depreciation, BTC is one option. Bitcoin is an imperfect hedge against U.S. dollar depreciation. There are valid reasons for investing in Bitcoin, but this should not be one of them.
    - josu 13y ago
      >It has built-in deflation, which makes it a great long-term store of value Besides, so far, Bitcoin has been highly inflationary. In a bit more than a year, the number of bitcoins in circulation has doubled. https://blockchain.info/charts/total-bitcoins?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address= https://blockchain.info/charts/total-bitcoins?timespan=all&s...
      - JumpCrisscross 13y ago
        >Bitcoin has been highly inflationary Inflation and deflation are not solely functions of the supply of money. They are functions of the price of money, which is a function of both supply and demand. The price of goods, which have been reasonably stable in U.S. dollar terms, have fallen in terms of Bitcoin. Thus Bitcoin is presently deflationary, not inflationary.
        josu 13y ago
        You are completely right. I hope I haven't mislead anybody with my comment.
- mattm 13y ago
  It doesn't matter if it should or not, it is. As is most other currencies. See how George Soros made his fortune.
  - grey-area 13y ago
    George Soros made money from speculation (e.g. shorting the pound out of the ERM), not investment (buy and hold as the OP advocates).
    - mattm 13y ago
      It all depends on how you look at it though. For Venezuelans, the US dollar is an investment.
- oznathan 13y ago
  One of the greatest investors of all-time, George Soros, made billions betting against the British Pound. A pretty old currency. http://www.telegraph.co.uk/finance/2773265/Billionaire-who-broke-the-Bank-of-England.html http://www.telegraph.co.uk/finance/2773265/Billionaire-who-b...
  - grey-area 13y ago
    https://news.ycombinator.com/item?id=6927003 https://news.ycombinator.com/item?id=6927003
    - oznathan 13y ago
      I replied on the matter of investing in currency. Shorting is one investment strategy. Buy and hold is another one. I bet a lot of people would short bitcoin if they could. Anyway this is ridiculous. People try to analyze an new phenomena with the old terminology. It doesn't work like that. You can't understand the change if you don't change your paradigm.
raingrove 13y ago
speculation != investment
- dualogy 13y ago
  I keep hearing this but I never see any angle to this statement where it could possibly be true.
  - mdemare 13y ago
    An investment is productive - buying a share in a company allows that company to increase production, which should increase their profit. Lending money to a company allows that company to invest, and increase their profits. Buying BTC is nothing like that. It's speculation - hoping that the price will go up, nothing more.
    - LargeWu 13y ago
      FWIW, most "investments" that regular people make in the stock market are also, in fact, speculation. Once the stock has been issued originally, the issuing company receives no proceeds from subsequent sales of that stock. There might be secondary or tertiary effects that eventually lead to real investment, but for the most part, the majority of American's retirement savings are in speculative holdings.
      - prodigal_erik 13y ago
        "If you really think of it, when a stock doesn't pay dividends, there really isn't a whole lot of difference between a share of stock and a baseball card." - http://blogmaverick.com/2008/09/08/talking-stocks-and-money/ http://blogmaverick.com/2008/09/08/talking-stocks-and-money/
confluence 13y ago
In 08' pension funds got wiped out. They felt so stupid. They decided not to sell, and just considered their loans a write-off. They stayed written off. You should assess the quality of your investment in utility, not years. And in regards to Bitcoin, allow me to quote myself > Everything goes up in price, until it doesn't.
- harvestmoon 13y ago
  Reminds me of the reassuring heart surgeon saying: "The bleeding always stops."
ivanplenty 13y ago
There's a few things weird about this story. Are you really proud you have a leveraged position in bitcoin? Isn't that among the riskiest positions you can take on a very volatile, illiquid, and possibly illegal asset? That's totally a personal choice, but it's certainly not one I would or a typical retail investor should ever take. Your decision to buy-and-hold during a sell off in the Spring is at best an anecdote and certainly should not be used as any evidence on what behavior to do now. Government intervention is just one of a few significant black swans: blocksize changes, verification (i.e. mining) fragmentation (effectively doubles the money supply for each split), and SHA collision attacks becoming practical. None of this should ever happen, right? However, this line should be clarified in every context: > took out a student loan and bought in at $225. In the US, this is generally _not OK_. To everyone else in the US, do not read this as a positive example. Do not use student loans for bitcoin or any other investment. What can I use my federal student loan money for? You may use the money you receive only to pay for education expenses at the school that awarded your loan. Education expenses include such school charges as tuition, room and board, fees, books, supplies, equipment, dependent child care expenses, transportation, and rental or purchase of a personal computer. Talk to someone at the financial aid office at your school if you need more details. [1] [1] https://studentaid.ed.gov/sites/default/files/your-federal-student-loans_1.pdf https://studentaid.ed.gov/sites/default/files/your-federal-s... (Of course you may have been one of the small percentage who took out an unregulated private loan, but the principles behind those are generally the same).
- master_shake 13y ago
  Thank you captain obvious. I had ABSOLUTELY NO IDEA that using student loans for unauthorized investments is a violation of the contract. Gee willakers! I better go turn myself in!
  - forgotmycreds 13y ago
    Your reply makes me think: You should buy more. Invest as much as you can!
- dualogy 13y ago
gruseom 13y ago
allow me to quote Mahatma Gandhi Gandhi never said the "first they ignore you" thing. It's been traced back to a speech by a union activist in 1912 or so. Lots of previous discussion about this on HN.
Greed 13y ago
I'd like to point out that, as an early adopter, it really pains me when I see people using situations like this to argue for the viability of Bitcoin as a currency. Bitcoin is going to succeed because anecdotally you risked far more than was responsible on a winning gamble? Prices don't just increase inexhaustibly. Bitcoin isn't going to 'win' if the only value it has is that people can wake up to find their investment multiplied overnight. These are the elements of a ponzi scheme, and you shouldn't argue for its success because of your kitschy miracle story.

grey-area 13y ago

Should a currency be an investment?

greghinch 13y ago
Currency speculation is a risky but thriving market
- grey-area 13y ago
  Speculation is not the same as investing. You can speculate in currency fluctuations in any currency, but to refer to a currency as an investment is a huge red flag for it as a currency, and for investment assets you should prefer slow appreciation over wild fluctuations and speculative moves.
  - deleted 13y ago
    [deleted]
  - twelvechairs 13y ago
    investment and speculation are two sides of the same coin (pardon the pun). all investment has risk. bitcoin speculation is a high risk investment. this may not be good for everyone but its an investment nonetheless.
    - deleted 13y ago
      [deleted]
    - prodigal_erik 13y ago
      Speculation is not investment. The difference is that investments pay dividends, and buy and hold is a viable strategy. A speculator is relying on appreciation to make flipping the asset pay off, and is screwed if they eventually need a greater fool and can't find one.
      - twelvechairs 13y ago
        invest. "1. To commit (money or capital) in order to gain a financial return". nothing about dividends or buy and hold here. your definition seems very narrow by comparison.
        prodigal_erik 13y ago
        I wouldn't take a definition seriously that failed to exclude lottery tickets. Ever since Rich Dad, Poor Dad I've been careful to distinguish assets that bring income, and other forms of property and equity whose price is purely an illusion supported by speculators' predictions about other speculators' whims.
richardw 13y ago
Wrong question, I think. This thing is barely a currency. It has built-in deflation, which makes it a great long-term store of value (assuming it isn't killed somehow) in a world of depreciating alternative stores of value, but a bad currency. If you want a currency for day-to-day use, USD is what you want. If you want to hedge against USD depreciation, BTC is one option.
- JumpCrisscross 13y ago
  >It has built-in deflation, which makes it a great long-term store of value It also has a very large risk premium, which makes it inferior to other options for solely a long-term store of value. >If you want to hedge against USD depreciation, BTC is one option. Bitcoin is an imperfect hedge against U.S. dollar depreciation. There are valid reasons for investing in Bitcoin, but this should not be one of them.
  - josu 13y ago
    >It has built-in deflation, which makes it a great long-term store of value Besides, so far, Bitcoin has been highly inflationary. In a bit more than a year, the number of bitcoins in circulation has doubled. https://blockchain.info/charts/total-bitcoins?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address= https://blockchain.info/charts/total-bitcoins?timespan=all&s...
    - JumpCrisscross 13y ago
      >Bitcoin has been highly inflationary Inflation and deflation are not solely functions of the supply of money. They are functions of the price of money, which is a function of both supply and demand. The price of goods, which have been reasonably stable in U.S. dollar terms, have fallen in terms of Bitcoin. Thus Bitcoin is presently deflationary, not inflationary.
      - josu 13y ago
        You are completely right. I hope I haven't mislead anybody with my comment.
mattm 13y ago
It doesn't matter if it should or not, it is. As is most other currencies. See how George Soros made his fortune.
- grey-area 13y ago
  George Soros made money from speculation (e.g. shorting the pound out of the ERM), not investment (buy and hold as the OP advocates).
  - mattm 13y ago
    It all depends on how you look at it though. For Venezuelans, the US dollar is an investment.
oznathan 13y ago
One of the greatest investors of all-time, George Soros, made billions betting against the British Pound. A pretty old currency. http://www.telegraph.co.uk/finance/2773265/Billionaire-who-broke-the-Bank-of-England.html http://www.telegraph.co.uk/finance/2773265/Billionaire-who-b...
- grey-area 13y ago
  https://news.ycombinator.com/item?id=6927003 https://news.ycombinator.com/item?id=6927003
  - oznathan 13y ago
    I replied on the matter of investing in currency. Shorting is one investment strategy. Buy and hold is another one. I bet a lot of people would short bitcoin if they could. Anyway this is ridiculous. People try to analyze an new phenomena with the old terminology. It doesn't work like that. You can't understand the change if you don't change your paradigm.

raingrove 13y ago

speculation != investment

dualogy 13y ago
I keep hearing this but I never see any angle to this statement where it could possibly be true.
- mdemare 13y ago
  An investment is productive - buying a share in a company allows that company to increase production, which should increase their profit. Lending money to a company allows that company to invest, and increase their profits. Buying BTC is nothing like that. It's speculation - hoping that the price will go up, nothing more.
  - LargeWu 13y ago
    FWIW, most "investments" that regular people make in the stock market are also, in fact, speculation. Once the stock has been issued originally, the issuing company receives no proceeds from subsequent sales of that stock. There might be secondary or tertiary effects that eventually lead to real investment, but for the most part, the majority of American's retirement savings are in speculative holdings.
    - prodigal_erik 13y ago
      "If you really think of it, when a stock doesn't pay dividends, there really isn't a whole lot of difference between a share of stock and a baseball card." - http://blogmaverick.com/2008/09/08/talking-stocks-and-money/ http://blogmaverick.com/2008/09/08/talking-stocks-and-money/

confluence 13y ago

In 08' pension funds got wiped out. They felt so stupid. They decided not to sell, and just considered their loans a write-off. They stayed written off. You should assess the quality of your investment in utility, not years. And in regards to Bitcoin, allow me to quote myself > Everything goes up in price, until it doesn't.

harvestmoon 13y ago
Reminds me of the reassuring heart surgeon saying: "The bleeding always stops."

ivanplenty 13y ago

There's a few things weird about this story. Are you really proud you have a leveraged position in bitcoin? Isn't that among the riskiest positions you can take on a very volatile, illiquid, and possibly illegal asset? That's totally a personal choice, but it's certainly not one I would or a typical retail investor should ever take. Your decision to buy-and-hold during a sell off in the Spring is at best an anecdote and certainly should not be used as any evidence on what behavior to do now. Government intervention is just one of a few significant black swans: blocksize changes, verification (i.e. mining) fragmentation (effectively doubles the money supply for each split), and SHA collision attacks becoming practical. None of this should ever happen, right? However, this line should be clarified in every context: > took out a student loan and bought in at $225. In the US, this is generally _not OK_. To everyone else in the US, do not read this as a positive example. Do not use student loans for bitcoin or any other investment. What can I use my federal student loan money for? You may use the money you receive only to pay for education expenses at the school that awarded your loan. Education expenses include such school charges as tuition, room and board, fees, books, supplies, equipment, dependent child care expenses, transportation, and rental or purchase of a personal computer. Talk to someone at the financial aid office at your school if you need more details. [1] [1] https://studentaid.ed.gov/sites/default/files/your-federal-student-loans_1.pdf https://studentaid.ed.gov/sites/default/files/your-federal-s... (Of course you may have been one of the small percentage who took out an unregulated private loan, but the principles behind those are generally the same).

master_shake 13y ago
Thank you captain obvious. I had ABSOLUTELY NO IDEA that using student loans for unauthorized investments is a violation of the contract. Gee willakers! I better go turn myself in!
- forgotmycreds 13y ago
  Your reply makes me think: You should buy more. Invest as much as you can!
dualogy 13y ago

gruseom 13y ago

allow me to quote Mahatma Gandhi Gandhi never said the "first they ignore you" thing. It's been traced back to a speech by a union activist in 1912 or so. Lots of previous discussion about this on HN.

Greed 13y ago

I'd like to point out that, as an early adopter, it really pains me when I see people using situations like this to argue for the viability of Bitcoin as a currency. Bitcoin is going to succeed because anecdotally you risked far more than was responsible on a winning gamble? Prices don't just increase inexhaustibly. Bitcoin isn't going to 'win' if the only value it has is that people can wake up to find their investment multiplied overnight. These are the elements of a ponzi scheme, and you shouldn't argue for its success because of your kitschy miracle story.