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Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

crypto.robinhood.com

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Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#141

Post by brokensegue »

darawk wrote: post #49
tptacek wrote: post #30

Earlier quoted context omitted.

I put money down on a blackjack table, play a hand, win, and cash out with more money than I put in. How is that not an investment?

A better question might be: How is anything an investment? If the stock market is priced efficiently, it is as much a gamble as Bitcoin. The stock market is of course not perfectly efficient, but it is likely extremely efficient relative to the knowledge of your average retail investor. Which means that buying Bitcoin or other cryptos is no more a gamble than any stock market investment with a similar volatility.

stocks give you ownership in productive companies. those companies on average go up in value and produce profits which they throw off as dividends (or re-invest to increase their market-cap).

so one difference then is that stocks have a justification for their returns given the variance you experience.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#142

Post by brokensegue »

AznHisoka wrote: post #104
Retric wrote: post #97

Earlier quoted context omitted.

What separates investing from gambling is the expected return for everyone is greater than zero. AKA buy stock at 100$ and sell it at 100$ does not mean you broke even. You could have gotten 10$ in dividends. Now that positive may be small and some people may lose money, but that's allowed as long as the expected returns end up positive. Bitcoin's can't have a net positive return because they only way to add money in…

What about stocks with no dividends (which constitutes the vast majority)? By your definition, only dividend investing and rental property investing is true investing. I'm not disagreeing with you. In fact I almost agree with you, but your argument fails for most stocks.

stocks without them re-invest the profits and that re-investing increases the share price.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#143

Post by brokensegue »

ZitchDog wrote: post #128
paulgb wrote: post #60

Earlier quoted context omitted.

If the market is priced perfectly efficiently you will still make money because your capital is put to work. A perfectly efficient market just means you can't beat that intrinsic rate of return.

Wouldn't this expectation be built into the current price of the stock?

the risk you take for those returns means the price won't fully match the expectation. but you can mitigate that risk via diversification.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#144

Post by vec »

pixie_ wrote: post #129
vec wrote: post #112

Earlier quoted context omitted.

But all cryptocurrencies are not equally valuable, and there's no reason to think that all of any given crypto won't eventually equally be worth (arbitrarily close to) $0. I can imagine a lottery where usually nobody wins anything but every now and then everyone who bought a ticket wins collectively. It's still a lottery.

How is that different from any other asset? One day it can be valuable, the next it might not. It doesn't change the fact that it is immutable.

Other assets are tied to real phenomena.

With stocks, for example, I can make a prediction about a company's future performance, buy or short accordingly, and expect that if I am correct I will profit.

I may be wrong about my prediction, but if I am correct then I've got far better than chance odds of also being correct about the future price of the asset.

Without making any further predictions about the state of the world I can equally easily imagine the price of Bitcoin in 5 years being $100 or $100,000. Neither price feels "wrong" the way it would if, say, Google's stock price rose or dropped by an order of magnitude without the company changing anything.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#145

Post by foobaw »

dawhizkid wrote: post #123

Something about Robinhood just makes me uneasy - clearly their main target market is the small retail investor who is sensitive to a $7/trade fee, but the low friction, mobile-first no fee stock trading experience they've created mostly serves to encourage bad investor behavior i.e. emotional, irrational day trading among people who can least afford it. Now they are "democratizing" margin trading (Robinhood Gold), op…

I think Robinhood's purpose is exactly to promote "emotional, irrational day trading." Isn't that part of what impacts the market anyway? There are tons of bad traders in any given platform, and you're right that Robinhood increases that likelihood but you can't exactly blame an app for poor trading motivations. That's a due diligence.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#146

Post by hiram112 »

dawhizkid wrote: post #123

Something about Robinhood just makes me uneasy - clearly their main target market is the small retail investor who is sensitive to a $7/trade fee, but the low friction, mobile-first no fee stock trading experience they've created mostly serves to encourage bad investor behavior i.e. emotional, irrational day trading among people who can least afford it. Now they are "democratizing" margin trading (Robinhood Gold), op…

Bingo.

This sort of investing works well in bull market, and after an almost 9 run-up, I'm guessing we have a lot of younger traders who have not seen a bear market.

This is not going to end well for a lot of folks...

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#147

Post by searine »

dawhizkid wrote: post #123

Something about Robinhood just makes me uneasy - clearly their main target market is the small retail investor who is sensitive to a $7/trade fee, but the low friction, mobile-first no fee stock trading experience they've created mostly serves to encourage bad investor behavior i.e. emotional, irrational day trading among people who can least afford it. Now they are "democratizing" margin trading (Robinhood Gold), op…

I learned a long time ago that the solution to a problem is never a blanket ban on a product or tech. All that does is punish well-intentioned or needy people.

Trade fees are a relic, and deserve to die. They do nothing but skim money from smalltime players. Yes that also increases risk of gambling behaviors, but the solution is better education and treatment, not depriving everyone of a fair and low friction system.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#148

Post by darawk »

Retric wrote: post #97
darawk wrote: post #49

Earlier quoted context omitted.

A better question might be: How is anything an investment? If the stock market is priced efficiently, it is as much a gamble as Bitcoin. The stock market is of course not perfectly efficient, but it is likely extremely efficient relative to the knowledge of your average retail investor. Which means that buying Bitcoin or other cryptos is no more a gamble than any stock market investment with a similar volatility.

What separates investing from gambling is the expected return for everyone is greater than zero. AKA buy stock at 100$ and sell it at 100$ does not mean you broke even. You could have gotten 10$ in dividends. Now that positive may be small and some people may lose money, but that's allowed as long as the expected returns end up positive. Bitcoin's can't have a net positive return because they only way to add money in…

Bitcoin can absolutely have a net positive return. People can simply keep buying it and holding it. Do you think gold cannot be an investment?

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#149

Post by darawk »

Retric wrote: post #133
ZitchDog wrote: post #109

Earlier quoted context omitted.

Not all crypto is bitcoin. Smart contracts could accomplish the same thing.

No, smart contracts can't make money show up from 'thin air' aka outside the system the way dividends do.

First of all, yes they can. Proof of stake coins pay dividends. Second of all, dividends from companies don't show up 'from thin air'. They show up from the economic activity of the company. Which is facilitated by their capital investments. Just like staking in cryptos.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#150

Post by darawk »

brokensegue wrote: post #141
darawk wrote: post #49

Earlier quoted context omitted.

A better question might be: How is anything an investment? If the stock market is priced efficiently, it is as much a gamble as Bitcoin. The stock market is of course not perfectly efficient, but it is likely extremely efficient relative to the knowledge of your average retail investor. Which means that buying Bitcoin or other cryptos is no more a gamble than any stock market investment with a similar volatility.

stocks give you ownership in productive companies. those companies on average go up in value and produce profits which they throw off as dividends (or re-invest to increase their market-cap). so one difference then is that stocks have a justification for their returns given the variance you experience.

So, by your logic, gold is not an investment?
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