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Why I’m Putting All My Savings Into Bitcoin

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

#111

Post by hugh3 »

knowtheory wrote: post #105
hugh3 wrote: post #65

Earlier quoted context omitted.

You're right. While bitcoin has certain similarities to Ponzi schemes (i.e. the fact that the people who start the scheme get rich while the folks who come later lose their money) I think it's really more accurately described simply as an asset bubble. Except, y'know, without any actual underlying asset. I don't think I've ever seen an asset bubble in something that was literally worthless before. Even the tulip bulb…

pets.com stock doesn't count? ;)

I know you're being facetious, but just to clarify it for everybody: no, stock in a company never counts, because pets.com was an actual company with actual assets. For instance, they owned that sock puppet.

Bitcoins have literally zero value.

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

#112

Post by maxwell »

netcan wrote: post #100

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 scammin…

MyBitcoin and Mt. Gox are OK, but are only for exchange. As far as I know, there isn't a web app for trading and mining yet. With browsers moving toward supporting hardware acceleration, it won't be long. The desktop client is pretty unfriendly to normal people; the whole scene reminds me of BitTorrent a few years back.

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

#113

Post by gamble »

weavejester wrote: post #23
synctext wrote: post #11

"I predict that it has at least another thousandfold increase to go in the coming few years" Clearly a 'Bernard Madoff 2.0' pyramid scam. Only profitable for the early adopters, pay by the last suckers whom enter.

Bernard Madoff ran a Ponzi scheme, not a pyramid scheme, and Bitcoin cannot be classed as either.

You're right, Bitcoin is actually more like a penny stock pump-and-dump scheme.

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

#114

Post by knowtheory »

adrianN wrote: post #106
knowtheory wrote: post #103

Earlier quoted context omitted.

That gold is overinflated doesn't diminish the fact that it has a utility outside of it's use as a financial instrument.

The paper used to print dollars also has intrinsic value, but you wouldn't want to argue that it's a good choice as currency just because you can burn it.

Okay, now i'm veering into positions where i don't have a sound enough background in economics to be totally confident in the statements i am going to make. I'm sure there's economic research on this, and i'd further hazard a guess that there's probably not agreement on the subject:

Sorry, let me be more clear. The criteria for a sound investment as an asset is different from the criteria determining soundness in a currency (from the perspective of an individual holding an asset or currency).

I say that on the basis of a variety of discussions on what money is and what it's supposed to represent. The point of making sound investment is that you have faith that even if plans go horribly awry, you are exchanging your money and interest for an asset of some concrete worth (at least in the ideal).

The point of currency is to provide a broad-based and stable mechanism to ensure liquidity in economic markets. The whole point of US dollars and what the Fed is trying do is provide a solid fundamental basis upon which the US economy can function.

We can argue about the intrinsic worth of currency, but i don't think that's the point of currency. So, do i think gold is a good investment? No, i think it's way over-inflated, but if you have a big pile of gold, you'll be able to do something with it. Do i think gold is a good currency? Absolutely, positively, one-million-times NO. I think that using gold back currencies is being pushed by people (shysters) who want to further inflate the value of gold, and by people who have bought the bad arguments that the shysters have been pushing.

tl;dr: good asset != good currency

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

#115

Post by stevenj »

tptacek wrote: post #95
stevenj wrote: post #68

Earlier quoted context omitted.

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.

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

I disagree. I think focusing on only owning/investing in "All-Stars" is a non-diversified investing strategy.

"Berkshire's CEOs come in many forms. Some have MBAs; others never finished college. Some use budgets and are by-the-book types; others operate by the seat of their pants. Our team resembles a baseball squad composed of all-stars having vastly different batting styles. Changes in our line-up are seldom required."

-Warren Buffett's 2010 letter to shareholders: http://www.berkshirehathaway.com/letters/letters.html

In the tech world VCs and angels seem to want this too. If they only invested in Google, Facebook, Twitter, Groupon, LivingSocial, Amazon, Spotify, etc., I think they'd be perfectly happy.

IMO, DST seems to be implementing this strategy, at least to some extent.

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

#116

Post by plainOldText »

hasenj wrote: post #73
Tichy wrote: post #42

Earlier quoted context omitted.

BitCoin doesn't promise any returns, and doesn't distribute anything to new people who sign up. It is only a Ponzi scheme if the real world's economy is a Ponzi scheme. I don't know if it is.

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…

I agree with you. However you have to realize that whenever you make such controversial statements (controversial with respect to mainstream view) you will get downvoted, because people don't like to have their worldview shaken, and their orderly views disrupted. For most people it is much easier to accept something based on what it appears to be than to think of what it truly is.

Also, unlike the current monetary system in USA and most of other countries, the bitcoin network has no central control and after a certain point no more currency will be produced. In contrast, in the current monetary system more money gets pumped as needed.

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

#117

Post by orijing »

This reminds me of those penny-stock pump-and-dump articles/spam emails I used to receive.

"Why I'm Putting All My Savings Into BITC". As soon as the pump scheme drives up the stock, you dump it and move onto the next thing.

I'm not saying mazsa is doing this, just that it could serve the same purpose. "Now that I'm fully invested in bitcoins, please buy it up so I can sell it later at a better price."

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

#118

Post by orijing »

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…

In fact, Warren Buffett said this in an interview: Owning talent is the only way to hedge against depreciation of your currency (equivalently inflation).

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

#119

Post by Jd »

hugh3 wrote: post #79
knowtheory wrote: post #43

Earlier quoted context omitted.

Actually Luigi, you're missing the best and most fundamental rule: 3. Past performance is no guarantee of future returns

Personally, my most fundamental rule is this: 4. Invest in stuff that has value.

This is the right strategy (IMO) not only because of near and long-term returns, but because it produces a better mentality. Trend or fad chasing may also produce substantial returns, but it produces scatter-brained people, often addicted to the beeps of their assorted gadgets, and detrimental to their health and well-being and the well-being of those around them.

I'd rather be a carpenter in the Catskills making 35K / year and producing beautiful products that enhance life than a Forex trader taking 10x that amount but simply sloshing capital around.

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

#120

Post by plainOldText »

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.

Sure it is about producing and consuming things. No one can argue about that. But remember that we don't exchange goats for cows, and milk for banana juice anymore. You produce things because you believe you will make enough money so you can then buy something else with it. So you can regard money as an intermediary economic good which everybody wants. The problem however is that some participants to this market, like the central bank for example, get to have access to virtually unlimited supplies of money, which puts you at great disadvantage.
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