BitCoin, LiteCoin, SwiftCoin, whatever. Apps: CoinBase, BitPay, etc...
Yes, I am VERY aware of how sketchy this stuff is. I shouldn't even call it investing. It should probably be known as E- gambling. Or maybe drug lord financing...
But some of you know something about this, and I want to learn.
I know nothing. Teach me.
Definitely the mother of all speculative investments right now. How much money are you willing to lose?
A couple of the investment news letters I get have talked about it, but they are generally too conservative to recommend them as anything more than speculation. Invest however much you can afford to lose. As soon as you double your money, get that money out. Then you're playing with house money and can watch the insanity with amusement.
Of course, I'm so chicken I haven't done anything. I read the news letters mainly because they offer an interesting take on the world from a pure-greed point of view, generally devoid of any political slant (other than pure Libertarianism).
How lucky do you feel?
I'm still a little bitter about my bitcoin losses over the years because of hardware problems, but now that it has become mainstream and topical, I consider it too volatile to be an investment. There are people I put faith in that see much high price per coins, but seeing the bizarre tactics the IRS is now using to get their chunk of the pie, it almost seems like a wash, if not a liability depending on what collection tactics they manage to come up with.
I have been turning my focus to smaller alt-coins, and taking the shotgun approach. What does that mean, you ask? I pulled up the coin market cap, that has the top few hundred *-coin currencies tracked on it, and bought $10 each of 6 different coins, most with a price of under a penny per coin. https://coinmarketcap.com/
I'm looking at the whole thing as bitcoin has opened the door, and while there are almost as many cryptocurrencies as their are people, a lot of them are following bitcoins trend. So maybe my $10 in Ripple (purchase price $0.22/coin) won't hit the highs that bitcoin has, but going up to a dollar/ coin would be a great improvement. while something like TRON, with a current buy in of $0.00453 per coin, if it rallied to a dollar, well that's a royal E36 M3load of money, and if it fails entirely hey, it's only $10 on my end.
With talks of an emerging petro-yuan, and a russian/chinese gold backed currency, getting money into gold or bitcoins or just out of USD should be every investors goal right now, in my personal opinion.
Edit to add: over the next 12 months, we're going to be seeing some very drastic changes to the way cryptocurrencies are used across the web. With people growing tired of the Google Adwords racket, YouTube demonetization, people are working on new media monetization platforms based on bitcoin and blockchain technology. New, more secure, not nearly as volatile wallets are under design. From the beta of K.im I've played with, youtube could be in trouble if they keep screwing over their talent like they have been. Bitcache and BitcoinCash, two VERY different things, are also looking to make major leaps and bounds through 2020. I state these almost as facts, because the people that are working on them are very very interested in taking monetary power away from fiat currencies AND introducing some privacy back to the internet, so there may be some stumbling in the beginning, but should MegaNet succeed and we have peer to peer blockchain based internet, all cryptocurrencies will flourish and there really isn't a damn thing any government can do about it. Pandora is already out of the box, as it were.
In reply to RevRico :
I'd disagree with calling the IRS's tactics "bizarre" - in fact, IMHO they're doing exactly what tax authorities are supposed to do, namely to investigate when people are suspected of not paying their taxes. The fact that only a handful of people (IIRC around 800) declared any income from Bitcoin speculation last year obviously raised some red flags at the IRS (and so it should).
As you rightly pointed out, wallet design is a problem at the moment. IIRC there are (complicated) ways to hold at least bitcoin without using a third party wallet provider, but from what I've seen, those are strictly for crypto geeks only. I consider myself more computer literate than the average bear and even for someone like me, that stuff is rather borderline. And wallet security is the big issue, as you have to trust the vendor in a completely unregulated industry - if someone breaks into their infrastructure there is no backstop if the content of your wallet disappears. Or gets lost because of a software engineering issue, or the exchange misplaces their "cold wallet" etc etc.
For bitcoin per se (not talking about alt coins here), the big issues I see are:
In reply to SVreX:
As long as you're aware of the volatility and the (pretty high) chance that this speculation would've yielded a better return if you had purchased a boat and a Biturbo with the money, it's fairly easy to get started:
As an alternative, it might be worth looking into mining coins, but for bitcoin that is prohibitively expensive at the moment (it pretty much requires custom hardware that costs a fair amount of real money both to acquire and run). The problem with mining is also that you're putting all eggs in a single basket unless you end up buying more mining rigs, as you can't mine multiple cryptocurrencies in parallel.
To me, it's extremely high risk speculation, which is why I currently don't even have toy money invested in it. I did toy with the idea of doing some ether mining, which may have been a good idea about six months back, but by now it's got the same problem that unless your electricity is essentially free, it's currently a losing proposition. That said, I do like RevRico's scatter approach to limit the risk somewhat.
"Learn me investing in tulip bulbs..." -Dutch person, 1637, probably
Here's a recent primer. They all function roughly the same way as outlined.
I'm sure you're aware that Bitcoin has been undergoing massive valuation swings in short periods of time. This has led to Steam discontinuing it's acceptance of it as a currency.
Additionally there have been a number of "alt" coins lately which are, dubious is the kind way to put it.
Finally keep in mind that if you want to cash out the transactions aren't instantaneous, so if it's going under an extreme bout of volatility the valuation may fluctuate thousands of dollars by the time the exchange takes place.
Also keep your wallet somewhere safe. Once the hashes that constitute a coin are lost they're gone forever.
In reply to The0retical :
That's a good article.
Looks like they were valued at about $11,000 on 12/2, and are somewhere close to $16K today, 8 days later. Yikes!
In reply to SVreX :
Also keep in mind that the value depends on the exchange you use, some of them tend to be out of whack in one or the other direction from the prices that make the headlines. IE, the value in Zimbabwe of bitcoin against USD tends to be somewhat higher.
Oh, and inbetween the above valuations, there were a couple of drops that were well over $1k.
I have a staff member who bought 4 bitcoin when it was $300 per unit, makes me sick thinking how much it's worth now. My gut tells me that it's all going to come crashing down at some point.
I used to use this stuff on the dark web and above board to buy rare car parts out of the country where the USD was not easy or legal to accept.
It kind of sickens me just how much all of those 100-500 coin orders are worth now if you could actually cash them out. This is not a currency or investment. Its a quick and impossible to track way of sending cash to people who would rather not be located by their local government.
As bad investment ideas go, most of us can stop right after the word "cars"...
This should have been in Off-topic.
Mods, please move. Sorry
SVreX said:Yes, I am VERY aware of how sketchy this stuff is. I shouldn't even call it investing. It should probably be known as E- gambling. Or maybe drug lord financing...
As long as you know the pitfalls of E-gambling...
I do like RevRico's gambling tactics though. Something to watch out for is a multi-government clampdown on exchanging cryptocurrencies for fiat currencies, I'm sure it will come eventually and prices of all cryptocurrencies will tank when it does. I'm kind of surprised it hasn't happened already, since previous, less cryptography-backed attempts at making "electronic money" were treated by governments the way a suburban homeowner who happened to be wearing boots might treat a particularly large and hairy spider on his bathroom floor. I would expect that Venezuela's Petro is going to speed things up on that front.
BoxheadCougarTim said:As you rightly pointed out, wallet design is a problem at the moment. IIRC there are (complicated) ways to hold at least bitcoin without using a third party wallet provider, but from what I've seen, those are strictly for crypto geeks only. I consider myself more computer literate than the average bear and even for someone like me, that stuff is rather borderline. And wallet security is the big issue, as you have to trust the vendor in a completely unregulated industry - if someone breaks into their infrastructure there is no backstop if the content of your wallet disappears. Or gets lost because of a software engineering issue, or the exchange misplaces their "cold wallet" etc etc.
Any cryptocurrency can be privately held on your own computer, it's certainly not easy to set up but it's not that hard either. Obviously backups and security are extremely important if you DIY it...I'd say it's beyond the average computer user for sure, but it's not rocket science. Cryptocurrency exchanges are now THE hacking target and they often do get hacked. Hosted wallets services also cost you something while hosting your own wallet doesn't (beyond electricity and effort).
Also, I'm staying away from BitCoin specifically for environmental reasons.
I buy Ethereum, but for fun. Not looking to really do well lol.
I've worked with a guy for about 3 years now. Fortune 200 company with requisite benefits. Maybe 6 months ago, I had to explain to this college educated person how a 401k worked, and why he should be taking advantage of it. After about 10 minutes, he interrupted me and said "So it's for retirement?". He's still not taking advantage of it in any way.
Fast forward to last week, and he approaches me and says "I'm thinking about investing in BitCoin." That tells me all I need to know about the current market for Crypto.
It's a gamble. You just have to hope that you're not the last person who wants to buy in.
Rhetorical question: What is Bitcoin? (I know literally what it is, but think about it.) Is it a company? Is it a service? Is it a resource? Is it a currency?
I heard an interesting analysis of how it does not work as a currency. As I recall, the two key elements of a currency are it's ability to hold its value (be trusted) and it's usefulness as a medium to exchange for goods and services. It is doing okay in holding it's value, but the massive appreciation actually makes it terrible as a medium to exchange for goods and services. If you think it will double it's value in a month... why would you buy anything with it? You are comfortable buying a cup of coffee with a dollar because a dollar is worth a dollar. Tomorrow it will be worth a dollar. In a month it will be worth a dollar. In a year... it may actually only be worth $0.98 of what it is now. Which incentivizes you to put it to use somehow.
With Bitcoin jumping in value so fast, the only thing it makes sense to spend Bitcoins on is paying Russian gangsters ransom to unfreeze your computer. Not a good currency, and it certainly isn't a company that is actually producing anything.
In summary: my advice is worth exactly what you paid for it. I wouldn't invest in it unless your goal is to have fun and see what happens.
The Mt Gox hack should be enough to dissuade you from keeping any serious value in bitcoin. Your money is in the hands of completely unregulated and completely uninsured people that face no punishment if they or nefarious third parties walk off with it. Mt Gox was handling 70% of bitcoin transactions worldwide and lost $460 MILLION in bitcoin and just ... shut down. No compensation possible for those that lost it. And then there's the millions upon millions of dollars worth of bitcoin that people literally threw away when they upgraded hard drives or had an unbacked up drive failure. Any currency that is that undependable is worthless to the vast majority of humans.
Also, even if it was dependable and widely acceptable - buying and selling currency is not investing. Picture "investing in Euros - learn me," or "investing in Pesos - learn me." It's really a form of arbitrage or just "currency trading." There's no product or service of value being provided anywhere in the process, so it's literally shuffling paper around.
I'm not investing because I don't understand the market at all, so it's probably safe to ignore what I say.
Having said that..... my 14 year old is super excited to get money for Christmas so he can 'invest'. That's not normal.
There is also the question of resources required to make these currencies function. The blockchain authentication process is distributed over a poop ton of computers. Someone calculated how much energy it was taking for a single transaction and it was enough to power a house for three days. That seems like a horribly inefficient system in the long term if it's used as an actual currency. $10 in electricity to process my transaction to buy a coffee?
So I'm missing out on something that's literally creating wealth out of thin air, and I'm ok with that. If my kid can fund his college on it I'll be happy to admit how wrong I was.
Folks, there’s only two ways for this movie to end…
Cryptocurrencies wind up being regulated to the point that there’s little reason to own them.
Cryptocurrencies become widely adopted which chokes off the stream of tax revenue sending societies into anarchy.
I’m with STM317 on this.
My step son (Age = 31…Net Worth = MINUS $41,000) in a fatherly tone urged me to move some of the savings I’ve set aside for my two daughters into Bitcoin…Bhahaha.
Bottom line…
Everyone seems to be focused on the risk / reward aspect of this thing (should I jump in, is it too late, how much should I get, what currency should I get, etc.)…I’m thinking about the threat this thing poses to our core values (get rich quick…patience and hard work is for suckers, so what if I’m providing cover for illegal activities, avoiding capital gains tax is part of what makes this good, etc.).
I’m kinda’ surprising myself as I tend to have a fairly “morally casual” attitude towards things but I can’t help but see this as little more than a Sodom and Gomorrah style celebration of some pretty dark and unattractive aspects of the human condition.
This is the right question, about 7 years too late.
I wish I’d listened to my brother’s stoner in law. The kid never worked a day in his life, bought bitcoins cheap early on and has amassed a pile of money. There’s an ATM in Manhattan that lets you take cash from your bitcoin collection so he cashes some out regularly to have useable currency. He’s an idiot so it will go wrong for him at some point but right now he’s doing well for himself.
Beer Baron said:I heard an interesting analysis of how it does not work as a currency. As I recall, the two key elements of a currency are it's ability to hold its value (be trusted) and it's usefulness as a medium to exchange for goods and services. It is doing okay in holding it's value, but the massive appreciation actually makes it terrible as a medium to exchange for goods and services. If you think it will double it's value in a month... why would you buy anything with it? You are comfortable buying a cup of coffee with a dollar because a dollar is worth a dollar. Tomorrow it will be worth a dollar. In a month it will be worth a dollar. In a year... it may actually only be worth $0.98 of what it is now. Which incentivizes you to put it to use somehow.
Bingo. The acolytes of Bitcoin will argue with you that you can split a Bitcoin into a hundred millionth so the value doesn't matter but it does to the vendor who is attempting to accept it. If the value is fluctuating wildly, and a transaction takes some time to process, you have no idea what your cash flow will look like until the transaction goes through. With dollars you're pretty certain. That's ultimately what led Steam to stop accepting it as a currency. It's like stocks, just with 10 to 20% fluctuations on an hourly basis.
Overall I don't have much of an opinion on the matter for what other people do, I don't even lecture them. For my own purposes I won't be putting money into it because it feels too much like the 2000's where investors were pumping tons of money into tech they didn't understand in hopes to get rich quick off someone else's genius.
The gold rush is likely entering it's final phase anyway. Grist posted an article I think Ars linked to which calculated that Bitcoin is consuming the energy equivalent to one Denmark and growing. That isn't sustainable. '49ers got rich because the gold was easily accessible which is why you don't hear about all the '55ers who showed up late to the picked over carcas. Added to that, which no one bothers to mention, is that the chain can be manipulated by a single entity controlling more than 50% of the computational power. One of the Chinese coin farms, prior to it's shut down, actually made it to that point but supposedly didn't manipulate it. So it isn't as secure and trouble free as you'd think.
RX Reven' said:Folks, there’s only two ways for this movie to end…
Cryptocurrencies wind up being regulated to the point that there’s little reason to own them.
Cryptocurrencies become widely adopted which chokes off the stream of tax revenue sending societies into anarchy.
THIS. It'll be the first one of course, but possibly with a taste of the 2nd on the side if governments don't wake the hell up soon. It really surprises me that this has been allowed to go on for so long. I saw Richard Quest talking to a Wall Street suit on CNN about some incredibly powerful instruments of financial crime just now like they were fun and cool things for investors to play with.
Related note, if any of you use "crypto" as a shorthand for cryptocurrency, you will look painfully stupid to anyone with a computing/mathematics/linguistics education X_X
RX Reven' said:Everyone seems to be focused on the risk / reward aspect of this thing (should I jump in, is it too late, how much should I get, what currency should I get, etc.)…I’m thinking about the threat this thing poses to our core values (get rich quick…patience and hard work is for suckers, so what if I’m providing cover for illegal activities, avoiding capital gains tax is part of what makes this good, etc.).
I’m kinda’ surprising myself as I tend to have a fairly “morally casual” attitude towards things but I can’t help but see this as little more than a Sodom and Gomorrah style celebration of some pretty dark and unattractive aspects of the human condition.
It's like you took the thoughts right out of my head, although I wouldn't have bothered to voice them unrequested because I've accepted that the world is, morally, a carnival of horrors.
I doubled my money in a month with BTC.
That being said, I don't like other cryptos creepin. I wanted to see LTC drop as BTC rose, because that would indicate the market falling behind a single currency. I saw LTC slowing, so I sold. Bad move, as now it's nearly double in price in less than 72 hours. LTC is the better currency, and so I hope to support it as long as it's growing.
Meanwhile BTC has stagnated since a few days ago, but it will be good if it stabilizes now that we've got futures.
The biggest issue for cyrptos are fees and delays, taxes and regulation. If it goes mainstream that'll be great for those people hodling now, but it will no longer be quite the get-rich-quick scheme it has been.
One thing I like about cyrptocurrency investing is that it legit scares most "oldschool" investors. I can't invest in some super secret IPO or some funds that huge minimum purchases, and I'm almost always going to be a huge disadvantage to people with tremendous information and market intelligence. I feel like cryptos kinda even the playing field, as neither I, nor the hugely rich investor has any better information on the future of the currency.
The0retical said:Bingo. The acolytes of Bitcoin will argue with you that you can split a Bitcoin into a hundred millionth so the value doesn't matter but it does to the vendor who is attempting to accept it. If the value is fluctuating wildly, and a transaction takes some time to process, you have no idea what your cash flow will look like until the transaction goes through. With dollars you're pretty certain. That's ultimately what led Steam to stop accepting it as a currency. It's like stocks, just with 10 to 20% fluctuations on an hourly basis.
It's not just what it does to vendors. Think about what it means for buyers. Let's say you can buy a game on Steam for $20 USD or for whatever fraction of Bitcoin. Which one will you use to buy that game? If you use the $20 USD and sit on the Bitcoin for another month, the bitcoin might be worth TWO games in a month. If you use the Bitcoin and sit on the $USD, the $20 USD will still only be worth ONE game in a month. You're not going to spend that rapidly appreciating Bitcoin. You're going to spend the $USD.
Bitcoin is a E36 M3ty currency if people's incentive is to sit on it.
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