Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies • Hacker News Board

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#271

Post by m-i-l » Thu, Jan 25, 2018, 10:48 PM UTC

Retric wrote: post #181

m-i-l wrote: post #175

Earlier quoted context omitted.

Some cryptocurrencies generate the equivalent of "dividends", especially those based on Proof of Stake systems. For example, holding Neo generates Gas equivalent to a 3-6% annual return[0], and Stellar (given free to HN readers a few years back[1]) has "inflation" equivalent to around 1% annual return[2], to name two that Robinhood will be listing. [0] https://www.neotogas.com/ [1] https://news.ycombinator.com/item?i…

As I said in another comment. If you have 1 coin and in 1 year you have 2 coins, you still need to sell those coins to end up with money. The only way money enters the system is for someone to buy a coin, so having more tokens in no way makes something an investment.

So are Berkshire Hathaway shares not investments, because you need to sell them to end up with money? What about a savings account with compound interest, or an ETF with automatic dividend reinvestment - do they not count as investments either, because you have to do something with them to get money out?

Don't forget that investing in the stock market is still something of a gamble, because the return for everyone is not guaranteed to be greater than zero - a company can go bust leaving the shareholders with nothing.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#272

Post by ram_rar » Thu, Jan 25, 2018, 10:49 PM UTC

dguo wrote: post #41

DerfNet wrote: post #27

Earlier quoted context omitted.

I buy bitcoin, it changes in value, I cash out, I now have a different amount of money than I put in. How is that not an investment?

If you asked that question to Warren Buffett, he would probably point you to Benjamin Graham's distinction between investment and speculation: "An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative." http://buffettpedia.com/2017/08/investment-versus-speculatio...

you can analyse the hell of the stock and still be wrong. Markets can stay irrational much longer than you think!

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#273

Post by simonh » Thu, Jan 25, 2018, 10:49 PM UTC

chatmasta wrote: post #255

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…

So do you think the “small retail investor” (Wall St. PC speak for “poor person”) should not be able to take the same risks as those of “ accredited investors”? Accredited investor status is a very non-libertarian idea. By forbidding a class of risks to the lower and middle classes, it excludes them from the corresponding class of rewards. When the lower/middle-class investor can only take a subset of the risks anoth…

It’s not just to protect the investor, but also to protect those selling the investment. Generally these are non SEC regulated securities, so the disclosure and registration rules largely don’t apply. Investors are expected to do their own due dilligence. It provides a degree of protection to the vendor from accusations of miss-selling, or missleading or not fully informing the investor of risks.

SEC regulations are there to protect investors. If the rules for trading my nn regulated securities were dropped, then there would be much less reason for securities to go through the registration process, undermine my the whole regulatory system, but ncreasing risk for everyone including the country. After all these rules came out of the aftermath of the Great Depression.

Think of it on the same way as retail goods quality control standards. If you buy goods in a store they must comply with strict safety and quality controls, but if you’re a business or dealer those rules don’t apply, for extample if you’re buying the goods to scrap them, or bring them up to standard and then sell on. Different rules apply to retail purchasers and trade purchasers.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#274

Post by adidar83 » Thu, Jan 25, 2018, 10:50 PM UTC

almost_usual wrote: post #244

Lewton wrote: post #234

Earlier quoted context omitted.

> Invested a little saved and since then made a decent return, better than if that money was in a bank. So far, I'm doing better than the large-company mutual funds after 3 years, but as I've been reading, that's probably good luck. The only thing you should be comparing yourself against is the s&p500, if you haven't beaten that, then you're down. Also, the markets have been in an unprecedented bull run. Everything y…

I believe the unprecedented bull run is also a contributor to Robinhood’s success. Most of your mobile app day traders are going to drop off when the market turns bearish.

I agree. A lot of young people have not seen anything except the economic expansion we have experienced for the past 8 years.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#275

Post by Retric » Thu, Jan 25, 2018, 10:54 PM UTC

m-i-l wrote: post #271

Retric wrote: post #181

Earlier quoted context omitted.

As I said in another comment. If you have 1 coin and in 1 year you have 2 coins, you still need to sell those coins to end up with money. The only way money enters the system is for someone to buy a coin, so having more tokens in no way makes something an investment.

So are Berkshire Hathaway shares not investments, because you need to sell them to end up with money? What about a savings account with compound interest, or an ETF with automatic dividend reinvestment - do they not count as investments either, because you have to do something with them to get money out? Don't forget that investing in the stock market is still something of a gamble, because the return for everyone is…

Berkshire Hathaway is something of an exception as the vast majority of successful company's pay dividends. Clearly, buying a single stock is risky. But if you buy a basket of stocks and those stocks pay dividends then the only way to lose money is for the socks to be worth significantly less money when you sell them thus making it a positive sum game.

PS: Berkshire Hathaway still returns money to shareholders via stock buybacks. Which preform similar functions the difference is simply related to taxes. They can and are likely to at some point issue dividends.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#276

Post by nopriorarrests » Thu, Jan 25, 2018, 10:56 PM UTC

chatmasta wrote: post #255

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…

So do you think the “small retail investor” (Wall St. PC speak for “poor person”) should not be able to take the same risks as those of “ accredited investors”? Accredited investor status is a very non-libertarian idea. By forbidding a class of risks to the lower and middle classes, it excludes them from the corresponding class of rewards. When the lower/middle-class investor can only take a subset of the risks anoth…

>should not be able to take the same risks as those of “accredited investors”?

I would say yes. Well, he should be able, if he wants, but is it good for him, really? For example, options trading is useful for hedging large positions in stocks, so you can pay small amount to, um, hedge against corrections in a bull market. By hedging correctly, you can make some money in during correction while avoiding fees associated with selling your sizeable position and buying it back.

But options trading without having large positions in stocks? It's not trading, it's lottery. 1% chance of making 10x return and 99% chance of losing the whole bet.

I don't mind, but let's not pretend that options trading is opportunity in itself. Having ability to trade large sums is opportunity, access to options market is not.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#277

Post by Retric » Thu, Jan 25, 2018, 11:03 PM UTC

jessaustin wrote: post #258

Retric wrote: post #248

Earlier quoted context omitted.

Try and write a loan on Etherium via a smart contract. I apply, get eth, cashing out by selling it to someone else, then get hit by a buss or just ignore you. Now, in what way can the system enforce that loan? If you can get the eth from someone that gave me money then they are not going to give me money in the first place. If you say, sue someone in the real world that's fine. But, the smart contract did not actuall…

I don't know much about ETH, but would it be possible to write a contract using an escrow concept? I.e., there would be a wallet that eventually would pay out to one party in one circumstance, and to some other party in some other circumstance. (If you want to get complicated, it could even blend payouts among multiple parties.) We wouldn't have to trust you not to get hit by a bus, because the value wouldn't be in y…

If the value is not in my wallet then how do I get cash to pay for a house etc.

Escrow accounts are fine if I am doing contracting work, but that are not a loan.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#278

Post by Retric » Thu, Jan 25, 2018, 11:08 PM UTC

darawk wrote: post #228

Retric wrote: post #189

Earlier quoted context omitted.

I said pay out coins not create new coins. Lets say I Buy '1,000' tokens including a 10 token payment for a transaction fee for 1$. Now A had 1,000 tokens and now has 1$, I have 990 tokens and another group get's 10 tokens. But, notice that other person(s) got tokens not money. If I got to keep 1,000 tokens or someone else get's those 10 tokens nothing changes because nobody who has tokens got any money. The only way…

Money is just another form of token. I'm not sure why you're making this distinction between 'money' and 'tokens'. They are the same thing.

Bitcoins and USD may both be tokens, but they are not the same token. The same is true of say WoW gold and ISK (EVE Onlines money). I can farm WoW gold all day, that does not turn into ISK unless someone is selling ISK.

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#279

Post by oil7abibi » Thu, Jan 25, 2018, 11:10 PM UTC

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…

They also make money by selling orders to high frequency traders. The User accepts at potential 5% markup on orders in exchange for “zero-fee trades.” https://startupsventurecapital.com/robinhoods-exceptionally-...

Re: Robinhood Crypto – Invest in Bitcoin and other cryptocurrencies

#280

Post by 2trill2spill » Thu, Jan 25, 2018, 11:15 PM UTC

woolvalley wrote: post #217

2trill2spill wrote: post #198

Earlier quoted context omitted.

> Ah, I didn't know they made money off that part of it. I suppose you give up some privacy/data when they resell your order, similar to using Facebook or Google. It's a slick business model, I didn't even realize it. Your also giving up better trade execution ie paying more for shares. Robinhood is good for getting your feet wet but people should switch brokers as soon as possible.

Why not just get a vanguard / schwab / fidelity account then and buy their no fee ETFs?

If all your doing is passive investing then yes a Vanguard account would be ideal. I'm not sure on the fees for chwab and fidelity so I can't comment on those. For my passive investments I use a Vanguard account for my trading(active investing) I use Interactive Brokers.