Why I’m Putting All My Savings Into Bitcoin • Hacker News Board

Re: Why I’m Putting All My Savings Into Bitcoin

#91

Post by Canada » Sun, May 29, 2011, 4:48 PM UTC

hugh3 wrote: post #81

hasenj wrote: post #73

Earlier quoted context omitted.

Real world economy is a kind of a ponzi scheme, in my opinion. With the central bank being at the top, and other banks below it, followed by the financial sector, and all the people who become rich by "speculating" on money instead of actually producing something useful EDIT: Please read this in context before you downvote. We're talking about bitcoin. If bitcoin is a kind of a Ponzi scheme, then it's no different fr…

That's not really how the real world economy works. The real world economy is all about people producing and consuming things. Banks, even central banks, are just a thin layer of icing on top of the cake.

That is not true. They get to issue new money and decide who gets to spend that new money before the circulation of that new money causes general prices to raise.

Those who get the new money first live at the expense of those who don't.

The central bank doesn't need to produce anything to create this new money.

Re: Why I’m Putting All My Savings Into Bitcoin

#92

Post by limmeau » Sun, May 29, 2011, 4:54 PM UTC

pbreynolds wrote: post #78

It seems to me that a key move to stabilizing bitcoin would be finding a high demand product that can only be purchased with bitcoin. That along with offering retailers incentives (aside from the "no fees" aspect). A group of heavily invested bitcoin owners would be wise to organize such efforts.

That would have to be something that cannot be resold. Still, a company which sells its product (which would have to be unique within its market segment) for "real" money today would have to say goodbye to all those dollar-wielding one-dot-oh customers and hope they come back tomorrow with bitcoins.

Why would a company do that?

Re: Why I’m Putting All My Savings Into Bitcoin

#93

Post by FooBarWidget » Sun, May 29, 2011, 4:55 PM UTC

bcl wrote: post #7

bitcoin is somewhat interesting, I've been experimenting with it recently. One thing to note is that transfers aren't instant until your client catches up with the network -- when you first connect you currently have about 127k blocks to download before you are current. At first I had some trouble understanding why you couldn't just had a client and create easier coins. The thing is, you can, but the network won't re…

> The key to the system's security is that as long as 50% of the bitcoin nodes agree on that the current difficulty level is you can't inject 'fake' money into the system.

Isn't it quite easy to spawn a few million malicious nodes?

Re: Why I’m Putting All My Savings Into Bitcoin

#94

Post by diego » Sun, May 29, 2011, 4:55 PM UTC

splat wrote: post #37

luigi wrote: post #3

This violates two simple, and obvious, tenets of investing: 1. Don't put all your eggs in one basket. 2. If it sounds too good to be true, it probably is.

Andrew Carnegie would respectfully disagree with your first tenant: "Put all of your eggs in one basket -- and watch that basket!"

For every Andrew Carnegie, there are lots of others who watched their basket and saw it destroyed. They just don't go around giving advice.

Re: Why I’m Putting All My Savings Into Bitcoin

#95

Post by tptacek » Sun, May 29, 2011, 4:59 PM UTC

stevenj wrote: post #68

sorbus wrote: post #64

Earlier quoted context omitted.

The purpose of diversification is in case your insight is wrong. In case bitcoin crashes faster than he's able to pull his money out, or in case demand slackens and prevents him from pulling his money out (being able to transform money from bitcoins to dollars is necessary until all the places he would spend money accept bitcoins too), being diversified would prevent him from losing everything.

I know nothing about Bitcoin. And I agree that you probably shouldn't put all your eggs in one basket. But that doesn't mean that wide diversification is the right strategy. I think some of the greatest successes have occurred because of an obsessive focus (e.g. Apple, Pixar, 37signals, Trader Joes, Chipotle, Berkshire Hathaway, top professional athletes).

Apart from the fact that you're comparing the obsessive focus of a business plan to that of a portfolio, you realize that Berkshire owns NetJets, Dairy Queen, Borsheim's jewelry, insurance companies, and the Burlington Northern Railroad, right?

"Obsessive focus on being awesome" is not a non-diversified investing strategy.

Re: Why I’m Putting All My Savings Into Bitcoin

#96

Post by javert » Sun, May 29, 2011, 5:02 PM UTC

nazgulnarsil wrote: post #88

Bitcoin has aggravated the "layman talks out his ass about economics" problem again. 1. Gold is a proof of work system just like bitcoin. When someone accepts gold as payment for some other commodity or service they are doing so under the assumption that the value will be stable because it takes at least X amount of time/labor/ingenuity/money to "create" more gold by mining it. This is what backs non-consumption comm…

I don't know much about economics, but...

Gold isn't really a non-consumption commodity. It's used in things like jewelry and compter circuits.

In other words, it doesn't just work because everybody agreed that it's a good mechanism for trade. It works because it actually has underlying value. Or, at least, I can't rule out that possibility, because it DOES have underlying value.

Re: Why I’m Putting All My Savings Into Bitcoin

#97

Post by hugh3 » Sun, May 29, 2011, 5:06 PM UTC

daniel-cussen wrote: post #60

aaa1 wrote: post #41

Earlier quoted context omitted.

>If the dollar drops, well the US is backing it; and they will be forced to deal with the consequences. http://en.wikipedia.org/wiki/Hyperinflation Currencies made by governments routinely lose >99% of value in few weeks. How this "backing" helps if you lose everything? In my country it happened 15-20 years ago. Also even US dollar drops every year.

Srsly. One of the many, many problems with government debt is that there is no collateral.

The government doesn't need collateral, they use yours.

Seriously, government debt is backed by the fact that the government has the legal right and the practical ability to confiscate as much of its population's wealth as it feels like. I don't like US government debt at all, but it's nowhere near the point at which the don't have the ability to pay it back.

Re: Why I’m Putting All My Savings Into Bitcoin

#98

Post by hugh3 » Sun, May 29, 2011, 5:09 PM UTC

diego wrote: post #94

splat wrote: post #37

Earlier quoted context omitted.

Andrew Carnegie would respectfully disagree with your first tenant: "Put all of your eggs in one basket -- and watch that basket!"

For every Andrew Carnegie, there are lots of others who watched their basket and saw it destroyed. They just don't go around giving advice.

Yes they do. They're the ones who go around saying "Don't put all your eggs in one basket".

Re: Why I’m Putting All My Savings Into Bitcoin

#99

Post by nradov » Sun, May 29, 2011, 5:09 PM UTC

hugh3 wrote: post #72

tectonic wrote: post #67

Earlier quoted context omitted.

Does investing in foreign stocks hedge against this?

Investing in any stocks hedges against this. For instance, I have shares in General Electric. That means I indirectly own part of all GE's assets. Some of their assets are in US dollars, but the vast majority of their assets are tangible things -- factories that make jet engines and diesel locomotives and dishwashers and... whatever the hell else we make. If the US dollar drops in value, the US dollar value of these…

That's only true for some stocks, and GE is a bad example. The majority of GE's assets are not tangible things but rather debt owed to GE Capital. As of 2010 only 9% of GE's assets were tangible property, plants, and equipment. http://www.ge.com/investors/financial_reporting/index.html

Re: Why I’m Putting All My Savings Into Bitcoin

#100

Post by netcan » Sun, May 29, 2011, 5:12 PM UTC

Interesting side effect of these bitcoin discussions is the back & forward of "this is a scam" --> "This is insane social engineering hack" --> "This is no different from any other money" :

Makes you think about what money is. We're so used to it that it seems trivial but if someone explained to you about their idea for this new thing called money you would probably think it was stupid, pointless and a way of scamming a goat for some stupid round things.

So much of our world wouldn't exist without money.

Serious question: Is there currently some easy way of buying and holding bitcoin without having to know anything about it, install anything, compile anything or be able to justify it or explain why to your wife? Perhaps some relaible online wallet?