[PolymathGuru]

First off, I am not anti cryptocurrency. I am not speculation. I am anti principle. If you want to invest in cryptocurrency, feel free to do so. But I recommend investing at most money you would be willing to lose and never miss.

1) Lacks principle- The reality is we only understand how things work based on past experience. We don't have large swaths of knowledge and data to understand how cryptocurrency works. This is less than 10 years old. You are dealing with untested waters.

2) Problems when people are financing finance- People finance cars. People finance houses. People finance Businesses. All these things are assets that have an underlying value. Cryptocurrencies are only valuable as a storage of value. When people are financing finance such as the Wall Street Crash of 1929, 2007 financial crisis or Tulip Mania or the south sea company, you tend to see busts.

3) Lacks intrinsic value- What is money useful for? Money has three features; a medium of exchange, a unit of account, a store of value. Hypothetically cryptocurrencies have these features. However, they lack two of these three features. It does well for storing value. However, it isn't well used as a medium of exchange. With the exception of a few vendors, most people do not buy stuff in cryptocurrencies. Most do not measure objects in terms of bitcoins, but in dollars, yen and pound sterling. As it currently stands, for the 8 major currencies in the world, the highest rate of inflation is 3% which is the pound sterling. Why would I want to own a cryptocurrency? To make money?

3) Huge growth in a short amount of time- Most of this growth in the total market capitalization has occurred since May. On May 1st of this year, the market capitalization was 38 Billion USD. Today of writing this, the market capitalization is 185 Billion USD. This is an uptick of 386% within 6 months. That is about 64% a month. Facebook's price share increase per a year on average is 75% since its IPO.

4) Anybody and everybody is getting in on the craze- How many cryptocurrencies do you think exist? Over 700 different cryptocurrencies. When there is no meaningful barrier of entry into creating a new one. Why do you need 700 different cryptocurrencies?

If you think I am wrong, go get some crypto coins. But do not go in assuming you have all the information.

[ProGambler]

There are disruptive projects with tremendous upside. Easily outweighs these arguments if you select carefully and get in early.

[Maciano]

1) Bitcoin is a commodity like gold. We know how commodities work. As long as there's no premine or inflation or other dishonest mechanism at play, you can start out with crypto.

2) Bullshit. Please... Anno 2017 coming up with the regression theorem as an argument is like saying "game doesn't work" to PUAs. It works. End of story.

3) Sure. So what? It grows, it crashes, it consolidates, it grows again.

4) True. So don't buy other shit than bitcoin. Or only buy something you've researched to be valuable. (You clearly haven't, btw) I won't buy ICOs but I bet out of 1000s of ICOs a few will be useful. Some alts will survive. Alternative blockchains like Ethereum might work, as long as they're not intended to be currency.

In general, I think it's fair to warn people about ICOs, alts or bitcoin forks, but you're throwing away the baby with the bath water.

You're mostly wrong and negative, and you clearly haven't researched much of this a lot. That's fine.

Nobody in crypto assumes they have all the information. Nobody sane would. That's true for everything, btw, especially new tech.

[jamaicabound]

While I do applaud you for encouraging people to maybe take a step back and not thoughtlessly allow themselves to get greedy and over spend on something which is somewhat speculative your post is pretty much common sense stuff we could say about any investment in terms of put in what you can afford to lose, diversify, etc.

In terms of your arguments about crypto being a currency who cares, I've said from day one it doesn't really matter one way or the other if people use Bitcoin to buy coffee, if anyting we have faster cheaper cryptos than Bitcoin for that.

As far as intrinsic value USD, has no intrinsic value, gold has a little in terms of it being a conductor, silver is used in medical stuff a bit but the intrinsic value in those metals is incredibly small. I do agree that crypto is young but saying it's new as a negative thing I don't think is fair. Its new so be cautious, realize we don't have a long track record but the internet at one point was new as well and that turned out pretty well

[Geomann180]

Isaac Jordan appears in 3, 2,...

G

[SamuelBRoberts]

You've given some very good reasons not to invest money you can't afford to lose, and to treat Crypto as high-risk.

You didn't give any good reasons not to invest in Crypto, though.

[redbeard]

(11-01-2017 06:48 PM)SamuelBRoberts Wrote:  

You've given some very good reasons not to invest money you can't afford to lose, and to treat Crypto as high-risk.

You didn't give any good reasons not to invest in Crypto, though.

On the other hand, I've got over six thousand reasons why you should invest in Bitcoin.

[S3K2]

Nah not bitcoin, monero is the future. Privacy alone is going to make xmr more popular than the bitcoun in 10 years, if that. My bad, off topic but disagree with op. Crypto is good to invest in as long as you do your homework.

[king bast]

My altcoin portfolio is currently demonstrating all the reasons you could ever need not to invest in alts. At this rate, ill wake up tomorrow and itll be lucky if its worth a single satoshi.

Luckily though, the overall dollar value is actually rising, thanks to my holdings in bitcoin.

[NewDayNewFace]

(11-01-2017 06:54 PM)redbeard Wrote:  

(11-01-2017 06:48 PM)SamuelBRoberts Wrote:  

You've given some very good reasons not to invest money you can't afford to lose, and to treat Crypto as high-risk.

You didn't give any good reasons not to invest in Crypto, though.

On the other hand, I've got over six thousand reasons why you should invest in Bitcoin.

I got closer to Seven Thousand Reasons

[bacon]

@Maciano cryptos are not commodities. And until they get used for more transactions they are not even operating as an alternative currency. Yet...

Actually, I dont think the overall market cap of cryptos is so large that it indicates the end of its bubble. But I have concerns over the new BTC futures market. It will be possible for financial entities who dont want Cryptos to be strong since it causes people to lose faith in fiat currencies to lower the price. It is well documented, although not widely known, how the futures market manipulates gold and silver prices.

But now they are introducing futures contracts to Crypto:

Quote:

The Chicago Mercantile Exchange (CME) announced a plan to launch Bitcoin futures by the end of the year. The price of Bitcoin surged to a new record in response to the announcement. It was reminiscent of the dot.com era, when a dot.com stock would jump 10% if Maria Bartiromo merely whispered the name of the company on CNBC.

Ironically, the cheers for this new contract from the Bitcoin faithful could turn out to be analogous to chickens in the barnyard cheering at the appearance of Colonel Sanders.

GATA released an article about the new Bitcoin futures contract titled “So Long Cryptos.” I’m sure that editorial stance puzzled most Bitcoin price-momentum chasers. Crypto aficionados, for now, overlook the fact that CME futures are used aggressively to push around the dollar-based Comex gold and silver futures contracts.

As GATA points out, the ability to manipulate precious metals futures contracts by the official entities motivated to suppress the price of gold is reinforced by the volume trading discounts given from the CME to Governments and Central Banks who trade on the CME.

If there any reason to assume that the same volume discounts will not be extended to the Bitcoin contract? Another curious feature of the Bitcoin contract is that it will be settled in cash. I would point out the original intent behind futures contracts was to enable producers and users to agree ahead of time on a price that would be paid for the delivery of the underlying commodity associated with the futures contract. Futures were a financing tool intended to facilitate the production and distribution of the underlying commodity product.

The Bitcoin futures contract is settled only in cash – U.S. dollars. To wit, does this not theoretically sabotage the intended purpose of Bitcoin, which is to provide an alternative to fiat currencies? Why would you want to receive fiat dollars rather than delivery of the underlying?

Technically this is not a bona fide futures contract. It’s a derivative of the “index” price of Bitcoin but it does not facilitate the production and distribution of Bitcoin. As such, it’s an instrument of pure speculation. By definition, this opens the door to manipulation by the entities who might be motivated to control the price of Bitcoin. Oh, by the way, those entities can buy and sell the contracts at a price advantage to the speculators by virtue of the volume discounts.

At least with gold and silver contracts, the contract enables the contract owner to take delivery of the actual physical commodity connected to the contract. To a limited extent, this mechanism serves to prevent the complete unfettered manipulation of gold and silver via the Comex futures contract.

With the Bitcoin futures contract, the contract owner is paid cash. The absence of a requirement to deliver actual Bitcoins enables the issuance of an unlimited number of fiat dollar-based paper Bitcoin contracts which can be used to drive the price lower by increasing the supply of the contract relative to the demand. So much for the idea that Bitcoin supply issuance is firmly capped. This could actually be quite entertaining to observe.

source

The reason gold and silver are manipulated by Banking entities is that they present a threat the public's faith in fiat currencies(with endless devaluation through inflation). Given the limited supply to act as a buffer to devaluation over time, doesn't Crypto also represent a similar threat to fiat?

People should pay attention to the fact that if the same mechanisms used to control gold and silver prices via future contracts are going to soon be used for Crypto, with the same Banking entities being key players in the market, then what will happen to future Crypto prices?

[jamaicabound]

(11-01-2017 07:19 PM)S3K2 Wrote:  

Nah not bitcoin, monero is the future. Privacy alone is going to make xmr more popular than the bitcoun in 10 years, if that. My bad, off topic but disagree with op. Crypto is good to invest in as long as you do your homework.

I stupidly bought Monero high on a buddies recommendation, not sure why as I never listen to other people. I really don't like it. That said why do you think Monero will win out over Dash, ZCash, Pivx, Nav, etc? Or do you think all privacy coins will see a rise?

[gework]

According to a 2016 study by University College London, around $440 million dollars are spent annually on mining Bitcoin, enough money to employ about 14,000 people in the United States. In the same year the largest Bitcoin payment processor, BitPay, was only handling a few millions dollars of transactions per month. If you added up all the real economic transactions (not speculative transactions) it's possible that there was more money invested in securing the network (mining) than in real transactions. Since Bitcoin is billed as a cryptocurrencey and not crypto-store-of-value, this isn't a great advertisement. International bank wires, visa fees etc. are only around 1-2% of the transactions they facilitate. This year BitPay may reach $1 billion in transactions, but this is a figure which again will not stand well against the resources poured into Bitcoin mining. To translate that $440 million estimate for 2016, that meant that an equivalent value of food production, transport, communications, energy, manufacture etc. had to be destroyed to provide for the resources put into the Bitcoin network.

I'd also add that of the people who are using Bitcoin for real, non-speculative transactions, almost all of them are likely to be people who have accrued large gains in purchasing power from Bitcoin's appreciation and don't have national currencies to use so are forced to used Bitcoin. This leads to another problem, which is Bitcoin's epic deflation against assets...

Bitcoin is billed as a cryptocurrencey, but it lacks one of the most important features of a currency - stability.

The affects of a currency losing value against assets (inflation) are well known. The price instability causes assets to require repricing (sometimes daily), which in itself wastes time. In this environment consumers don't want to hold on to money, they want to spend it before it becomes worthless. But more importantly it destroys businesses ability to be able to plan anything as today's investment has an unknown price in the future. People don't know how to react as there is no reliable valuation for anything. It causes people to hold on to assets they can't value, loose their jobs, production to slow and business to go bankrupt.

The affects of a currency gaining value against assets (deflation) are less well known but have occurred. In this instance, you can buy more assets each passing day, week, month, year. This may sound brilliant for consumers, but it has the same affect as inflation: slowing production, bankruptcy and job losses. Productive (rather than speculative) business ventures carry considerable risk. If you invest $100,000 in starting or growing a business, you can not only loose all of it, but end up with less via debt, legal problems etc. When a currency is deflating (it can purchase more assets) the incentive to make such risky investments falls. Why would you invest it and risk it when you can leave it to go up in value?

An example of deflation of a currency against an asset is when there is a stock market crash - the currency buys more stock. This causes the economic turmoil above, where no one has a good measure of fair value and few want to make investment risks in such an environment. According to perennial Bitcoin bulls, Bitcoin will always be in this state of deflation against assets. The more people buy and hold Bitcoin the more assets Bitcoin will be exchangeable for. If Bitcoin were a de facto currency it would cause a deflationary depression that would never end, as Bitcoin is inherently deflationary with it's 21 million cap.

The purpose of a currency is to be a reliable medium of exchange. In itself it doesn't need any value, it just represents the value of what it is agreed it can be exchanged for. If the currency has a backing, like gold, it then becomes at risk to the deflationary nature of gold's limited supply. A currency should not make people incredibly wealthy for sitting at home doing nothing, producing nothing on the virtue of buying it before other people. If the whole world did this, there wouldn't be an economy. A genuine and usable cryptocurrency must have a mechanism for price stability to be able to compete as a usable currency against national currencies.

At writing, the coin market cap is $192 billion. Presumably a similar amount of money has entered the market. That's $192 billion (roughly equal to the GDP of Portugal) that has exited the economy which provides things people need and want, that provides jobs and the basis for future economic growth. These people are investing in something that is producing no physical value, little measurable value and is the most inefficiently powered transaction method available.

Bitcoin can't produce any wealth (assets) in the future to warrant it's $117 billion market cap and it can't be a stable medium of exchange. This has led some Bitcoin bulls to promote it as a store of value; that it should be a safe place to park your purchasing power for the future. But an asset is only a store of value in certain circumstances. Bitcoin has been an incredible store of value since 2009, while silver (also called a store of value) has lost more than half its value since 2011. An asset is only a store of value in certain circumstances. Silver and other precious metals have earned the title "store of value" over a long history in which they tend to have been stores of value over a lifetime. It became a store of value on the back of having real economic value which the speculative investment market causes an unproductive bubble on top of.

Bitcoin is often touted as being valued, because it is rare. Yet there are billions of other tokens that have virtually the same properties, sometimes better. They are not so well adopted, but neither is Bitcoin itself. If BitPay do $1 billion of transactions this year, I am assuming the economy of real Bitcoin transactions amounts to $2 billion dollars, roughly equivalent to the GDP of Greenland with a population of 56,000. The internet was doing much better with real users by this point and the uses of the internet were much more obvious.

Bitcoin does have interesting and useful properties and it has opened avenues which may be useful in the future, but are you buying Bitcoin for that? Are you paying 1% to covert your national currency to Bitcoin to pay a merchant so they can pay 1% to convert it to their national currency? Probably not, you are likely buying it because you think it will go up in value while you and no one else produces anything or does anything to back that value. That increase in value comes from people doing productive jobs, getting paid and pumping up the Bitcoin price with that value.

With that said, if you want to increase your purchasing power via speculation my guess is that the crypto markets will continue to grow until someone develops a crypto that can attach itself to the real, productive economy. So far no crypto has done so to an extent that would make it anything approaching a sound investment. Bitcoin isn't particularly appealing as it would take maybe something in the region of a $100 billion inflow for you to double your money and pull backs don't take much volume to shave off huge percentages of the market cap. There's quite a lot of coins that have slipped a lot and occasionally these get a good pump. But a better method would be to go with what drives a lot of the market, which is buzz. In that case I would go with EOS, which has just gone up about 100% on volumes that would barely affect Bitcoin. Another angle is to buy small caps. Some of the older ones get heady pumps and some of the newer ones often get better. As an example, ETP, was recently added to BitFinex. It was at ~$40M, fell to ~$20M before shooting up to ~$140M. So that's one you could have made 7X on in a week or so. In this category I am looking at three that are below $15M: EDO, SAN and AVT. I consider all of these to be junk, which no one will remember in a few years, but they will likely have their pump(s).

If you want real value, invest in where you think the most real wealth will be produced or where people will spend their excess wealth on luxury items (that destroy real wealth). For the former I am looking at tech and science areas that will open new grounds or save considerable time, as a dual example companies that produce automation robots. For the latter the main area I am looking at is marijuana stocks in Canada, where lealisation is seemingly around the corner. These have already gone up a few hundred percent and could sink their teeth into a very large untapped market.

[SamuelBRoberts]

I don't understand how you're using the terms "real value" and "real wealth".

[gework]

(11-02-2017 09:42 PM)SamuelBRoberts Wrote:  

I don't understand how you're using the terms "real value" and "real wealth".

Real wealth = assets with an easily demonstrable economic value: food, transport, communications, computers... As opposed to fake wealth which can be quickly wiped out, such a the speculative bubbles that get blown up on the top of real wealth-producing assets, like:



When people own a stock like that, they calculate their wealth based on selling at the current bid price, but as people start selling, a more realistic view of the asset is exposed.

In the right circumstances, any asset that could be viewed as having a solid economic value can tank. What I am getting at is an asset that has a clearly demonstrable value and is fairly priced in the current economic environment.

Bitcoin isn't fairly priced because it has little use in the non-speculative, productive economy. Most of the value of Bitcoin is people speculating it will go higher. Maybe the economic environment will change and a justification for Bitcoin's value can be found, but I've yet to hear a good argument as to what real wealth could ever justify its valuation or how a wildly deflationary asset could ever be a widely used currency.

[SamuelBRoberts]

Well, if you're saying "This is a bubble and the price won't keep going up forever, and when it drops, it's likely to drop very rapidly", you're not saying anything that everyone here doesn't already know. Hence the "this is high-risk", "don't invest more than you can afford to lose" talk that you see on basically every page of the bitcoin thread.

[Maciano]

(11-01-2017 11:43 PM)bacon Wrote:  

@Maciano cryptos are not commodities. And until they get used for more transactions they are not even operating as an alternative currency. Yet...

Actually, I dont think the overall market cap of cryptos is so large that it indicates the end of its bubble. But I have concerns over the new BTC futures market. It will be possible for financial entities who dont want Cryptos to be strong since it causes people to lose faith in fiat currencies to lower the price. It is well documented, although not widely known, how the futures market manipulates gold and silver prices.

But now they are introducing futures contracts to Crypto:

Quote:

The Chicago Mercantile Exchange (CME) announced a plan to launch Bitcoin futures by the end of the year. The price of Bitcoin surged to a new record in response to the announcement. It was reminiscent of the dot.com era, when a dot.com stock would jump 10% if Maria Bartiromo merely whispered the name of the company on CNBC.

Ironically, the cheers for this new contract from the Bitcoin faithful could turn out to be analogous to chickens in the barnyard cheering at the appearance of Colonel Sanders.

GATA released an article about the new Bitcoin futures contract titled “So Long Cryptos.” I’m sure that editorial stance puzzled most Bitcoin price-momentum chasers. Crypto aficionados, for now, overlook the fact that CME futures are used aggressively to push around the dollar-based Comex gold and silver futures contracts.

As GATA points out, the ability to manipulate precious metals futures contracts by the official entities motivated to suppress the price of gold is reinforced by the volume trading discounts given from the CME to Governments and Central Banks who trade on the CME.

If there any reason to assume that the same volume discounts will not be extended to the Bitcoin contract? Another curious feature of the Bitcoin contract is that it will be settled in cash. I would point out the original intent behind futures contracts was to enable producers and users to agree ahead of time on a price that would be paid for the delivery of the underlying commodity associated with the futures contract. Futures were a financing tool intended to facilitate the production and distribution of the underlying commodity product.

The Bitcoin futures contract is settled only in cash – U.S. dollars. To wit, does this not theoretically sabotage the intended purpose of Bitcoin, which is to provide an alternative to fiat currencies? Why would you want to receive fiat dollars rather than delivery of the underlying?

Technically this is not a bona fide futures contract. It’s a derivative of the “index” price of Bitcoin but it does not facilitate the production and distribution of Bitcoin. As such, it’s an instrument of pure speculation. By definition, this opens the door to manipulation by the entities who might be motivated to control the price of Bitcoin. Oh, by the way, those entities can buy and sell the contracts at a price advantage to the speculators by virtue of the volume discounts.

At least with gold and silver contracts, the contract enables the contract owner to take delivery of the actual physical commodity connected to the contract. To a limited extent, this mechanism serves to prevent the complete unfettered manipulation of gold and silver via the Comex futures contract.

With the Bitcoin futures contract, the contract owner is paid cash. The absence of a requirement to deliver actual Bitcoins enables the issuance of an unlimited number of fiat dollar-based paper Bitcoin contracts which can be used to drive the price lower by increasing the supply of the contract relative to the demand. So much for the idea that Bitcoin supply issuance is firmly capped. This could actually be quite entertaining to observe.

source

The reason gold and silver are manipulated by Banking entities is that they present a threat the public's faith in fiat currencies(with endless devaluation through inflation). Given the limited supply to act as a buffer to devaluation over time, doesn't Crypto also represent a similar threat to fiat?

People should pay attention to the fact that if the same mechanisms used to control gold and silver prices via future contracts are going to soon be used for Crypto, with the same Banking entities being key players in the market, then what will happen to future Crypto prices?

I'm not interested in or have time for discussions with ppl like you.

If you want to keep your gold, fine. Keep it. If you believe gold can be manipulated down for decades, fine, whatever helps you sleep at night.

I'm abt bitcoin.

[CleanSlate]

(11-03-2017 12:56 AM)Maciano Wrote:  

I'm not interested in or have time for discussions with ppl like you.

If you want to keep your gold, fine. Keep it. If you believe gold can be manipulated down for decades, fine, whatever helps you sleep at night.

I'm abt bitcoin.

Easy there... there's no need to get snippy. Bacon was just pointing out how futures were used in the past to manipulate gold and silver prices, and bringing up the possibility the same could be done to Bitcoin -- and asking how it will affect BTC prices.

We don't know for sure whether it will have the same effect on Bitcoin as it does on precious metals, because they are two entirely different asset classes. But it's good to be prepared for anything, even if we're bullish on Bitcoin's long term.

There's a lot we can learn from having a discussion about it instead of shutting it down.

[bgbusiness]

I am not saying that you should invest in bitcoin/cryptocurrency or not invest in them, just your logics are heavily flawed with all due respect.

(11-01-2017 11:23 AM)PolymathGuru Wrote:  

1)This is less than 10 years old. You are dealing with untested waters.

Warren Buffet also said the same thing to Facebook and Amazon.
He said that no such businesses have existed before and they are too "risky".

(11-01-2017 11:23 AM)PolymathGuru Wrote:  

2) Problems when people are financing finance- People finance cars. People finance houses. People finance Businesses. All these things are assets that have an underlying value. Cryptocurrencies are only valuable as a storage of value. When people are financing finance such as the Wall Street Crash of 1929, 2007 financial crisis or Tulip Mania or the south sea company, you tend to see busts.

I studied accounting and finance in one of the top universities in United States. That's not how business works. Lol.
Businesses do hardcore deep financing with huge leverage all the time.
Is it risky? Yes, but high risk is also correlated with high reward.
You see, most of startups are leveraging huge debt in the first few years, thinking that they will pay them off in the future. That's how business works.
Just because you see busts doesn't mean you shouldn't invest.

Risk comes from not knowing what you are doing.
- Warren Buffett

(11-01-2017 11:23 AM)PolymathGuru Wrote:  

3) Lacks intrinsic value- However, it isn't well used as a medium of exchange. With the exception of a few vendors, most people do not buy stuff in cryptocurrencies.

That doesn't make sense.
Cryptocurrency and bitcoin is still relatively new concept to the world.
That's like saying emails are useless because nobody uses them when it got first introduced. Same as Microsoft, Amazon, dating apps, etc.
The more uses, the more it will be accepted and increases its own value.

(11-01-2017 11:23 AM)PolymathGuru Wrote:  

3) Huge growth in a short amount of time

It's all relative. If the prices jumps 10 times, you will think that it is big, but if it jumps 100 times or 1000 times, you will think that the first 10 x was NOTHING.

[SamuelBRoberts]

ZeroHedge is usually trash, but they had an article today on investing in the cryptocurrency bubble that's so good I'm just gonna copy/paste it in full. I agree with every word, every letter, down to the placement of the periods and the use of punctuation.

Quote:

Investing In Bubbles

Tyler Durden's picture
by Tyler Durden
Nov 3, 2017 5:20 PM
101
SHARES
TwitterFacebookReddit
Via The Speculative Investor blog,

Many assets show signs of being immersed in bubbles right now.



The most obvious example is the cryptocurrency speculation, which includes Bitcoin, the numerous and rapidly-multiplying Bitcoin alternatives and, more recently, the stocks that are involved in cryptocurrency ‘mining’. Other examples are the broad US stock market, the stocks of companies involved in social media and/or e-commerce, the market for junk bonds, and a group of junior mining stocks where just the hint of a possible discovery has led to spectacular price gains and market capitalisations that bear no resemblance to current reality.

The most enthusiastic participants in each bubble believe that although bubbles exist elsewhere, there is a special set of circumstances that justifies the seemingly high valuations in the asset that they happen to like. For example, many of the cryptocurrency enthusiasts believe that the US stock market’s valuation doesn’t make sense but that Bitcoin’s valuation does, and many stock-market bulls believe that the S&P500′s current level is justified whereas Bitcoin’s valuation is ridiculous.

However, the bubbles are all related in that they all stem from the returns on conservative investments having been driven to near zero by the actions of central banks.

Now, just because an asset is immersed in an investment bubble doesn’t mean that it should be avoided. Buying something after it enters bubble territory can be very profitable, because huge gains will often occur AFTER valuation reaches a point where it no longer makes sense to a level-headed investor.

The problem is, if you ‘know’ that a particular asset is immersed in a bubble then you will be constantly on the lookout for evidence that the bubble has ended and that the inevitable implosion has begun. In effect, you will constantly have one foot out the door and will be acutely vulnerable to being shaken out of your position in response to a normal correction.

A related problem is that once something has entered bubble territory the normal corrections tend to be vicious. Each correction will look like the start of the ultimate collapse, so unless you are a true believer (someone who believes so strongly in the story that they are oblivious to the absurdity of the valuation) you will be unable to hold through. For example, during the first half of September the Bitcoin price had a peak-to-trough decline of about 40%. This looked at the time as if it could be the first leg of a total collapse, but it turned out to be just a short-term correction. Only a true believer in the cryptocurrency story could have held through this correction.

Eventually, of course, a vicious price decline turns out to be the start of a bubble implosion. The true believers will naturally hold, thinking that it’s just another bump on the road to a much higher price. They will continue holding while all the gains made during the bubble are given back.

An implication is that you need to be a true believer to do phenomenally well from an investment bubble, but if you are a true believer then you will be wiped out after the bubble collapses.

Alternatively, you may decide to participate in an investment bubble while knowing it’s a bubble. In doing so you may be able to generate some good profits, but in general you will be too quick to sell. Therefore, while the bubble is in progress your profits will pale in comparison to those achieved by the true believers, although you will stand a better chance of retaining your profits over the long haul.

The worst-case scenario is to be a non-believer and non-participant in a bubble, but to eventually get persuaded by the relentless rise in price that special circumstances/fundamentals justify the valuation and that a large commitment is warranted.

That is, to become a true believer late in the game.

This worst-case scenario is what happens to most members of the general public.

[Vaun]

Most of all it undermines and threatens the worlds currencies; the dollar, the GBP etc. But if you hate your country and want to weaken your currency, why not buy in. I view it was the least nationalist option for currency, sort of the ultimate globalist version of the Euro, too convenient to be adopted by a governing body as the worlds currency.

That is why you will see most of the major banks and countries trash it. Despite what LB said the other day, even though GS largely rides bubbles as marketing to stay relevant to new investors, and to profit on the back end.

[[email protected]]

@gework

I'd rather live in a deflationary hell hole than the inflationary insanity we've been living in for the past 100+ years. I'm not a bitcoin maximalist, it has it host of problems but I'd choose to call this money than the fiat that can literally be printed without any limit until the currency loses all trust.

I am really looking forward to see Bitcoin disrupt governments and central planners. It seems to me they are unprepared to deal with this other than getting the MSM to FUD it. For a while it worked but with Bitcoin now already 7k USD even the normies have taken notice.

[bgbusiness]

I had to comeback to this thread.

Although I understand how bitcoin works and I do believe that the prices will go up at least for short-term.
I would say at least couple years. If not for decades. I do think that it will reach 10k+ and start hitting like 20k+ or even 100k+.

However, I don't see it as different than just investing in a currency of a country such as WON in Korea or Pesos in Mexico. At the end of the day, I think it's still speculation. I would usually invest in something when it produces some kind of dividend or something valueable like passive cashflow. In finance, most of the assets are valued by the amount of the future cash flow meaning how much revenue/profit/money it can produce.

Bitcoin doesn't produce anything.
If anything I would say that it's just like holding gold or other currencies like I said.

Please clarify me if I wrong.
(Again, not saying that I would not invest or I would invest. Personally I had my friends making decent about of money from this just from this year. However, it is still speculation and you can't deny that.)

[SamuelBRoberts]

(11-04-2017 04:23 PM)bgbusiness Wrote:  

I had to comeback to this thread.

Although I understand how bitcoin works and I do believe that the prices will go up at least for short-term.
I would say at least couple years. If not for decades. I do think that it will reach 10k+ and start hitting like 20k+ or even 100k+.

However, I don't see it as different than just investing in a currency of a country such as WON in Korea or Pesos in Mexico. At the end of the day, I think it's still speculation. I would usually invest in something when it produces some kind of dividend or something valueable like passive cashflow. In finance, most of the assets are valued by the amount of the future cash flow meaning how much revenue/profit/money it can produce.

Bitcoin doesn't produce anything.
If anything I would say that it's just like holding gold or other currencies like I said.

Please clarify me if I wrong.
(Again, not saying that I would not invest or I would invest. Personally I had my friends making decent about of money from this just from this year. However, it is still speculation and you can't deny that.)

If you really think Bitcoin has a final value of at least 25% higher, and possibly 10 times higher, than what it is now, and that its price is going to rise for years or decades, but you're not buying it because it doesn't pay a dividend...

That's pretty dumb man. You ain't getting 10x returns out of your dividend stock.

[bgbusiness]

(11-04-2017 04:23 PM)bgbusiness Wrote:  

(Again, not saying that I would not invest or I would invest. Personally I had my friends making decent about of money from this just from this year. However, it is still speculation and you can't deny that.)

(11-04-2017 06:55 PM)SamuelBRoberts Wrote:  

If you really think Bitcoin has a final value of at least 25% higher, and possibly 10 times higher, than what it is now, and that its price is going to rise for years or decades, but you're not buying it because it doesn't pay a dividend...

That's pretty dumb man. You ain't getting 10x returns out of your dividend stock.

Read again.

Don't just skim over and think you got my point, that's pretty dumb, bro.
I never said I will invest or not invest, I am just making a point.
Yes, you can get 10x returns out of your dividend stocks, check out stocks like Apple when it rose tremendous amount in the last 10~20 years.
It was paying dividends all the time. There are a lot of stocks like this.

You sound really dumb without any knowledge in business or investing.
I am not talking about stocks, all I was saying was it's still speculation.