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After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors

nytimes.com

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Re: After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors

#111

Post by sdf43543t345 »

guildenstern wrote: post #46
oleganza wrote: post #42

Earlier quoted context omitted.

Bitcoin has been through at least 3-4 major "run ups" already. Those who do not look at the log chart think that "this time it's different" and Bitcoin will surely die for good. Later it'll crash from $250K to $50K and then it will certainly be the end. 2011: $1->$30->$3. 2012: $5->$15->$10. 2013: $10->$270->$80. 2013-14: $100->$1100->$250. 2016-2018: $500->$20000->$6000 (so far).

Consider how much money had to enter the market for the price to reach $1000. Consider how much money had to enter the market for the price to reach $20,000. Now consider how much money will have to enter the market, after everyday “normal” people from outside of tech have lost hundreds or thousands, for the price to reach $250,000.

The price is the last price paid for the coin. So by definition, if nobody sold any coin, it would only take 250000-6000 dollars for the price to reach 250k.

Its not so much about how much money enters the market, but supply/demand for the underlying asset.

Re: After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors

#112

Post by tptacek »

NickM wrote: post #98
tptacek wrote: post #78

Earlier quoted context omitted.

I'm unclear on why we wouldn't just ban both things. The reason you can't buy a share of Uber or SpaceX is, effectively, that those companies don't want your money . Both could easily do a public offering and admit you as a shareholder, but choose not to. Further clarity: I'm "accredited", and I don't think I can buy a share of either company either.

They could do public offerings, but that comes with a lot of legal and regulatory requirements and expenses, accounting rules, disclosure rules, etc. etc. Not all of those things are necessarily bad; ostensibly they are there to protect public investors, but they do sometimes discourage companies from going public that might otherwise want to do so. But sure, maybe Uber and SpaceX aren't the best examples. Not sure i…

Most well-run startups do not want to sell you their shares, among other reasons because they become liable for a whole bunch of new investor relations torts once they do so. It's not just Uber or SpaceX that won't take your money; it's (I believe) most startups that ever hope to raise money institutionally later on.

Re: After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors

#113

Post by judah »

rootusrootus wrote: post #47
oleganza wrote: post #42

Earlier quoted context omitted.

Bitcoin has been through at least 3-4 major "run ups" already. Those who do not look at the log chart think that "this time it's different" and Bitcoin will surely die for good. Later it'll crash from $250K to $50K and then it will certainly be the end. 2011: $1->$30->$3. 2012: $5->$15->$10. 2013: $10->$270->$80. 2013-14: $100->$1100->$250. 2016-2018: $500->$20000->$6000 (so far).

That looks like skillful manipulation to me. There is an important difference with the most recent bubble -- now bitcoin is a household name. Where is the next pool of gamblers coming from?

Institutional investors via Bitcoin futures ETFs[0].

It will likely result in a lot of money flowing into the market via funds and investment houses where investors seek to diversify their investments.

That will probably bring the cryptocurrency market back up to $20K and above. It probably won't happen until 2019 or 2020, though. The SEC is still on the fence about it, but I see it as an eventual inevitability.

[0]: https://www.coindesk.com/sec-bitcoin-futures-etf/

Re: After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors

#114

Post by waterphone »

systematical wrote: post #79
RivieraKid wrote: post #21

Investors? More like speculators, gamblers... Most people buy crypto because they believe the price will rise and they will be able to sell at profit. Investing is when you buy something that generates profits or utility, for example a share of a company or a house.

Isn't that what my 401k is? Sure I get matching contributions from my employer, but I am hoping it keeps rising and that I can sell later for a profit when I retire. Maybe I'm oversimplifying that, but how is that any different?

The assets in your 401k (if invested in the market, especially if invested in broad market index funds to be highly diversified) actually have value beyond simply being a speculative asset. They're shares in businesses with a lot of motivations to make a profit, and they're going to continue doing their best to do so, and you benefit from that as a shareholder.

Cryptocurrency is largely a bubble of speculation and get-rich-quick hype with not much actual utility for most people beyond a lot of claims that don't ever really pan out.

Re: After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors

#116

Post by tim333 »

rapnie wrote: post #102
evancox100 wrote: post #13

Where do they find these people? Is this what a lot of "ordinary" people do? Take out tens of thousands of dollars in loans to invest in cryptocurrency? Are the people profiled in the article a representative sample? Or are we hearing about the worst cases only because they are so notable and out of the ordinary? Will this post ever stop asking questions?? Stories like these are full of anecdote and short on facts, i…

Probably you hear about them because they are so notable, like the Dutch family that became world news when they went all-in [0], but there will be many who are over-invested. [0] https://www.cnbc.com/2017/10/17/this-family-bet-it-all-on-bi...

There's this guy who sold his home to put it all into Litecoin. That was in Sept 2016 so he probably did quite well https://www.youtube.com/watch?v=5v5y3icu6YY

Re: After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors

#117

Post by tedunangst »

sdf43543t345 wrote: post #93
jonas21 wrote: post #88

Earlier quoted context omitted.

How does mining set a floor?

cost to hash, in electricity. If the cost of mining is greater than the price of the coin, the miners turn off their hashboards. Some like to think of this as a floor, however if everyone turned off their miners the system would fail to produce blocks. The network difficulty will take 2 weeks to adjust, and the miners will start mining again if it is profitable.

If the difficulty adjusts down to make mining profitable, that's because the miner is earning more coins, but each coin is still worth less than before.

Re: After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors

#118

Post by paulpauper »

jonas21 wrote: post #88
paulpauper wrote: post #82

Earlier quoted context omitted.

due to the mining aspect of bitcoin, unlike a stock, it does a a sort of floor, but that too can eventually fail

How does mining set a floor?

let's assume it costs $4k to mine a bitcoin. If the price were to fall to $10 or some extreme low value, the miners would see no reason to mine. Therefore all activity would stop. But in order for existing bitcoin holders and merchants to use bitcoin, they need transactions confirmed. So this will lead to the price rising to an equilibrium where the miners will mine at a loss and merchants and hodlers will sell at a loss which is optimal for both than if the price is too low.

Re: After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors

#119

Post by abakker »

teachrdan wrote: post #109
JumpCrisscross wrote: post #99

Earlier quoted context omitted.

> 90k in savings isn't going to cut it in their retirement $90k at 45 years old isn't great, but it isn't destitution.

I think the point is that it wasn't enough . In which case it makes sense to gamble, especially if the odds seem to be in your favor.

And the real question is: enough for what?

Re: After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors

#120

Post by sdf43543t345 »

tedunangst wrote: post #117
sdf43543t345 wrote: post #93

Earlier quoted context omitted.

cost to hash, in electricity. If the cost of mining is greater than the price of the coin, the miners turn off their hashboards. Some like to think of this as a floor, however if everyone turned off their miners the system would fail to produce blocks. The network difficulty will take 2 weeks to adjust, and the miners will start mining again if it is profitable.

If the difficulty adjusts down to make mining profitable, that's because the miner is earning more coins, but each coin is still worth less than before.

Not necessarily. While there is a positive correlation to hashrate and price, the market sets the value of the coin.

Just because miners are making more or less coins does not make them worth less or more. Miners choose when and if they release the coins to the market.

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