6 ms·

Should a currency be an investment?

by grey-area 13y ago

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.

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.