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Bitcoin: Be prepared to lose all your money, FCA warns consumers

theguardian.com

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Re: Bitcoin: Be prepared to lose all your money, FCA warns consumers

#111

Post by esja »

me_me_me wrote: post #101
nabla9 wrote: post #42

Bitcoin speculation is an almost pure Keynesian beauty contest. https://en.wikipedia.org/wiki/Keynesian_beauty_contest As long as most people think everyone else thinks BTC is the prettiest girl, it can have substantial value and the sky is the limit. It's a pure speculation asset. You don't need bitcoins to pay taxes. The value has a very weak link anchored to anything in the real economy (limited number of coins an…

BTC is a value store. You can use it to exchange large values without traditional middleman. Saying that BTC is just a hash, a virtual nothing and it has no intrinsic value is silly. Its not a tulip bulb. Talking about pretty things, how come nobody gets railed up when a painting gets sold for millions and its a single color modernistic piece? Its literally just a hearsay that it has any value and no function apart f…

I've just dug a hole in my back garden, and created 21 million tiny slices of air that now occupy that space. It took work to dig this hole, so it definitely has value. And I'm only digging one hole, ever, I promise.

I've also made a list of people who own the different bits of air in the hole. I'm using pencil and paper, but it works. If you give me some money I can write your name on there and you can "store value". Later if you tell me to write someone else's name, I can rub yours out and you can "exchange large values".

If you or your friends want the money back later, I can give it to you. Probably... mostly. But don't ask me for more money than you gave me in the first place, because I won't have it.

p.s. I lied when I said I dug the hole by myself. I really dug up a billion tonnes of coal and used it to power a microscopic spaghetti noodle which dug the hole. For some reason this gave a lot of people confidence that my hole is the One True Hole.

Re: Bitcoin: Be prepared to lose all your money, FCA warns consumers

#112

Post by esja »

thekyle wrote: post #66
tebbers wrote: post #40

In London they are advertising bitcoin on the side of buses and in the Underground with the slogan 'when you see bitcoin on the side of a bus, it's time to buy'. I thought that was outrageous and actually was a sign to sell. I mentioned this to a foreign exchange trader friend and we even finished each other's sentence with the above!

There is a relevant quote apparently from the 1920s. "Taxi drivers told you what to buy. The shoeshine boy could give you a summary of the day's financial news as he worked with rag and polish. An old beggar who regularly patrolled the street in front of my office now gave me tips and, I suppose, spent the money I and others gave him in the market. My cook had a brokerage account and followed the ticker closely. Her…

The original "shoeshine boy" story featured Joe Kennedy (as the speculator), father of JFK.

Re: Bitcoin: Be prepared to lose all your money, FCA warns consumers

#115

Post by me_me_me »

esja wrote: post #111
me_me_me wrote: post #101

Earlier quoted context omitted.

BTC is a value store. You can use it to exchange large values without traditional middleman. Saying that BTC is just a hash, a virtual nothing and it has no intrinsic value is silly. Its not a tulip bulb. Talking about pretty things, how come nobody gets railed up when a painting gets sold for millions and its a single color modernistic piece? Its literally just a hearsay that it has any value and no function apart f…

I've just dug a hole in my back garden, and created 21 million tiny slices of air that now occupy that space. It took work to dig this hole, so it definitely has value. And I'm only digging one hole, ever, I promise. I've also made a list of people who own the different bits of air in the hole. I'm using pencil and paper, but it works. If you give me some money I can write your name on there and you can "store value"…

That's such a crude reductionist argument that I can smell the sent of arrogance and mockery, and I am not sure if response is warranted.

Especially since your simile has rather gaping holes in it.

Actually thinking about it... ironically your example is better description of fiat currency than btc.

Use low resource output to generate cheap tokens that will be loosely tracked by 'One True Government', and people agree that they have value. People can exchange it for goods and even can go back to the 'One True Government' to exchange their gold back token back to gold... oh wait... right we got rid of that whole gold backing while back...

Re: Bitcoin: Be prepared to lose all your money, FCA warns consumers

#116

Post by alwillis »

nabla9 wrote: post #103
me_me_me wrote: post #101

Earlier quoted context omitted.

BTC is a value store. You can use it to exchange large values without traditional middleman. Saying that BTC is just a hash, a virtual nothing and it has no intrinsic value is silly. Its not a tulip bulb. Talking about pretty things, how come nobody gets railed up when a painting gets sold for millions and its a single color modernistic piece? Its literally just a hearsay that it has any value and no function apart f…

All assets have value store abilities. BTC is arguably bad value store. Value changes too much. When you need to withdraw the money you can lose or wing big. TIPS (Treasury Inflation-Protected Securities) are good value store. You neither lose nor gain.

You're definitely losing.

Inflation of things you actually want and need is 10-15% per year and if you're not keeping pace with that, you're losing. TIPS can't help you with real world inflation.

Look at housing, medical care, higher education, quality food—these items are increasing in cost every year by more than the fictitious 2% CPI the government aims for.

Being a store of value doesn't mean the value of something never changes or that there's no volatility; just that over the medium to long term, it will at least keep pace with inflation, so that you don't losing buying power.

Gold has traditionally been a reliable store of value, but now it's becoming bitcoin.

Bitcoin has never had a negative 5-year period, but the return on TIPS can be negative during a deflationary period, not to mention federal taxes that occur while you hold them [1].

Bitcoin is only taxable when you sell, which, if you're smart, you never actually have to do, since you can borrow dollars using bitcoin as collateral [2].

[1] https://www.thebalance.com/how-do-tips-work-417128

[2] https://news.bitcoin.com/10-loan-providers-taking-crypto-as-...

Re: Bitcoin: Be prepared to lose all your money, FCA warns consumers

#117

Post by alwillis »

nabla9 wrote: post #65
eloff wrote: post #48

Earlier quoted context omitted.

I don't think fiat currency has terribly much more going for it, in terms of intrinsic value, other than you do need it day to day because there aren't alternatives for buying things and paying your taxes. If here in Canada the US dollar became legal tender and I could use it for all my transactions, would the Canadian dollar hold its value? I don't think so.

Liquidity matters. Cash is king because it's the most liquid asset. You can sell $100s million dollars worth USD/EUR/JPY/GBP in a day without affecting the price those currencies. Bitcoin is the polar opposite of liquidity. Bitcoin markets are notoriously thin. If you try to by or sell large amounts the price either collapses or skyrockets. Bitcoin is like water tower where you can move water level (price) up or down…

Bitcoin is the polar opposite of liquidity. Bitcoin markets are notoriously thin.

This hasn't been true for a while, especially lately, as tens of billions of dollars flows through bitcoin exchanges everyday.

Re: Bitcoin: Be prepared to lose all your money, FCA warns consumers

#118

Post by agumonkey »

rootsudo wrote: post #110
agumonkey wrote: post #47

Earlier quoted context omitted.

It's a sad possibility that people are actively getting newcomers to join the game at the worst of times.

Or the best!

Totally depends on the psychology. To some speculator buying at 40k will be the best move of your life.

Re: Bitcoin: Be prepared to lose all your money, FCA warns consumers

#119

Post by leppr »

alwillis wrote: post #117
nabla9 wrote: post #65

Earlier quoted context omitted.

Liquidity matters. Cash is king because it's the most liquid asset. You can sell $100s million dollars worth USD/EUR/JPY/GBP in a day without affecting the price those currencies. Bitcoin is the polar opposite of liquidity. Bitcoin markets are notoriously thin. If you try to by or sell large amounts the price either collapses or skyrockets. Bitcoin is like water tower where you can move water level (price) up or down…

Bitcoin is the polar opposite of liquidity. Bitcoin markets are notoriously thin. This hasn't been true for a while, especially lately, as tens of billions of dollars flows through bitcoin exchanges everyday.

It is still true. The latest buying by Microstrategy doubled the price (and more as more buyers piled on after the announcement), and they had to accumulate it over months.

That's how a fixed supply asset works, the price reacts to supply and demand, and sell-side liquidity dries up with expected increase in demand.

Re: Bitcoin: Be prepared to lose all your money, FCA warns consumers

#120

Post by leppr »

graeme wrote: post #72
eloff wrote: post #48

Earlier quoted context omitted.

I don't think fiat currency has terribly much more going for it, in terms of intrinsic value, other than you do need it day to day because there aren't alternatives for buying things and paying your taxes. If here in Canada the US dollar became legal tender and I could use it for all my transactions, would the Canadian dollar hold its value? I don't think so.

1. You can use dollars to pay taxes. Big difference from bitcoin 2. No one expects fiat currency to be an investment asset! Why anyone expects the value of bitcoin to increase like stock ownership of a corporation is beyond me. And it has no intrinsic value like gold.

Not all demand for an asset is tied to states. Most activity around Bitcoin is actually precisely about evading state controls.
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