Investing in cryptocurrencies...Learn me

pheller said:

 

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. 

Perhaps the reason that it "legit scares most old school investors" is the volatility that is driven only by speculation, and is based on nothing tangible? You can't have inside info on something that is wildly inconsistent and fluctuates based on nothing more than supply/demand. Most people don't consider something highly volatile that is based on totally intangible things to be an investment as much as a game of chance.

In reply to Beer Baron :

I think you're dead on. It needs to stabilize and be made into an actual (cheap and fast to exchange) currency. Thing is, as it nears that eventuality, it also becomes more valuable, so it loses stability. 

Chicken and the egg. 

If you think the world really needs a cryptocurrency (which I would disagree with), Bitcoin is certainly not it. It's the primitive clunker of cryptocurrencies that's popular because it got there first.

Someone I went to high school with we could never figure out why it seemed he could just go years and years of just traveling and apparently not working.  Turns out he invested super early in crypto currencies, paid for his college in full, and is just bouncing around doing what he wants abroad.  He's a really smart guy and living well within his means, it would not surprise me if he could go on with this lifestyle for many many years. 

On the other hand, someone else in the same class invested late, and is constantly posting on facebook about his poorly timed investing, constantly trying to move money around and make a quick buck overnight with what little money he has.  Or doesnt have, when he is trying to buy more with a credit card.   Don't be him. 

Wanted to get into LiteCoin when it was at $90-100 recently. Nothing crazy just maybe 5-10 coins. Couldn't get verified. Then it went to 160. Got verified, waited for it to dip, it went as low as 130s and I wanted to see it hit 100. It never did and now it's over 350. Bleh. 

I just invested $500 in bitcoin, to see what happens.  I'm willing to lose it.  I will probably buy more will if it dips back towards $12K or so and doesn't look like a nose dive.  A few office colleagues have been in crypto currencies for awhile, some I'm guessing 5K USD worth, some I'm guessing add a zero or more USD to that.  I'm looking at it as a very tiny portion of my portfolio that might turn a huge return, or not.  I have a few penny stocks that I view in a similar fashion.  Tossed some extra $ at them because they looked like an opportunity.   I bought Bitcoin through coinbase for the ease of it to get started, but would look to other options with lower fees if I become a regular buyer.   Block chain and crypto currencies are here to stay.  But regulation/taxation are going to rein in the volatility at some point.   

My damn cousin spent 800 bucks on etherium when it was 70 cents. He neglected to inform me of this. He neglected to inform of it when it went to 7 bucks. He waited to tell me about this when it was a couple hunnerd.  I do not think this is forgivable...

In reply to STM317 :

You have just described the current stock market.

In reply to NOHOME :

You could argue that, but the stock market doesn't swing as wildly, the speculation tends to be based on things like sales/profits etc and you get tangible ownership in the companies selected. There are definitely cases that defy common sense (the ones that jump to mind are a couple of tech/car companies) but overall it's still pretty much tied to actual performance of a business rather than something that is totally arbitrary.

I don't claim to know anything about cryptocurrencies (other than what I read on forums/ the news).

But....

I get the sense it's like the lottery or a pyramid scheme....it requires a lot of losers and a lot of hype for a few to make real money.

I was talking to my kid about the charts and creating value out of nothing. It reminds me of the tech bubble where $100m companies were popping up overnight with little more than an idea. There's novel tech in crypto, but Bitcoin's $200B market cap doesn't mean that blockchain is worth $200B. When the tech companies fell into a hole their intellectual property was often worth pennies if anything. People are making a TON of money to be sure, but people also made a ton of money off houses, and tech stocks and junk bonds, and buying on margin in the 20's. I'm watching with fascination kind of hoping that I'm wrong and we really are shifting to a new way of moving value around. 

In reply to mazdeuce - Seth :

Here's the problem with Bitcoins blockchain: the tech is open source and it can, and has been, forked. 

It's literally value that can be duplicated by anyone able to convince enough people to contribute computational power. The tech is neat but you're correct, it literally created value out of thin air. Am I sorry I didn't jump on it rather than scoff at it 2 years ago?  A little yea, but my arguments were the same then.

Most of my spare CPU and GPU cycles over the last 10 years have gone to Folding@Home which has produced real tangible results against the war on cancer. Some libertarian/black market currency hardly seems to have the value that the hard science projects do.

My problem with bitcoin is that it represents nothing legal in any country.  It's very much not like currency that is backed by a government, and is legally tied to transactions.  It's not like stocks where you legally own a part of a company, and it's not like bonds where you legally own owed debt.

There's no government in the world that stands with it and a legal form of payment.

So I don't understand they hype around it- it's basically a glorified way to barter stuff without an actual value to it.  It's very much like a person who starts with a paper clip and trades it enough times so that they buy a car.

Investing in it is pure gambling.  You are betting that the future, someone will pay you more for it than you paid for it.  

“When even shoeshine boys are giving you stock tips, it’s time to sell” (Joseph P. Kennedy?)

https://www.barrypopik.com/index.php/new_york_city/entry/when_even_shoeshine_boys_are_giving_you_stock_tips_its_time_to_sell_joseph

DuctTape&Bondo said:

Wanted to get into LiteCoin when it was at $90-100 recently. Nothing crazy just maybe 5-10 coins. Couldn't get verified. Then it went to 160. Got verified, waited for it to dip, it went as low as 130s and I wanted to see it hit 100. It never did and now it's over 350. Bleh. 

I tried to buy low-3-digits worth of BTC and another cryptocurrency back when BTC was about $500, couldn't get verified...it's vastly more difficult for us furriners. Would've made over a grand on that, but hey, it IS gambling.

I was thinking the other day, what if you were a 1600s Dutch person and the price of tulips had just started to skyrocket, and you somehow magically got a credible message from the future telling you that it was a bubble and that the price would fall back close to zero sometime in the future, what would you do? You don't know how far it will go. You could lose everything you put in. I think putting in little to no money would be the smart thing to do.

I know people always think "this time it is different", but it always seems to end up the same. This is a time to sell Bitcoin, not buy. That's my $0.02, but I don't have any bitcoin in the fight.

^Wow, most of those hardly look like bubbles in comparison to the big 3!

In reply to T.J. :

Wow that makes the tech bubble and the Great Depression look like blips on the radar... I suppose the exposure is more limited in regards to Bitcoin though so it's unlikely to put wide swaths of the population into poverty.

In reply to GameboyRMH :

Right.  And most of them don't look like they ever had much gain. 

Its a little bit of a weird chart. It's graphed in "multiples of the starting point". So, most of them did not offer many multiples above their starting point. 

Of course, none of us know what the starting point IS, either.  Is it the START of the S&P500, or the start of the bubble (which is pegged rather randomly).  I'll bet it's the start of BitCoin (which could be argued to be the start of the bubble).  Since the value of BitCoin at the start was essentially zero, a graph based on "multiples of the start" would make BitCoin look horrible.

I don't think it is smart to go buy BitCoins, but that chart is enormously deceptive. It shows exactly what it was trying to prove. 

^Well it looks like the peak is at 65x for BTC, and if you divide $15k by 65 you get $230, which is far from zero or any early trading number. So the graph is actually being quite soft on BTC.

alfadriver said:

My problem with bitcoin is that it represents nothing legal in any country.  It's very much not like currency that is backed by a government, and is legally tied to transactions.  It's not like stocks where you legally own a part of a company, and it's not like bonds where you legally own owed debt.

There's no government in the world that stands with it and a legal form of payment.

So I don't understand they hype around it- it's basically a glorified way to barter stuff without an actual value to it.  It's very much like a person who starts with a paper clip and trades it enough times so that they buy a car.

Investing in it is pure gambling.  You are betting that the future, someone will pay you more for it than you paid for it.  

It's not often that we see eye-to-eye, but on this count we are of the same mind.  My son and I were discussing a classmate who made a small investment in Litecoin, and we poked around the web a while to see about the mechanics of investing in cryptocurrencies.  In the end, I decided against it, not so much because we might simply be throwing our money away, but rather because of what cryptocurrencies represent.

In reply to SVreX :

As a disclaimer, I just cherry picked the chart from an article I read this morning and I don't know if it is valid or fair or misleading. Yes, I posted it here because it shows what I want to believe and it may be 'fake news'. You made a good point about charts often being misleading since they are created to prove a point in most cases and not created to find out what the data actually says. My son was talking about Bitcoin the other day and seemed a bit perplexed that I thought it was in a bubble and that it is a sucker move to invest in it now. He thought it could only keep going up and up and people better jump on board now before it gets too expensive. As with most things in the world, only time will tell.

In reply to 1988RedT2 :

I feel the same way about the opacity of what's going on. There is some suspicion floating around that a non-trivial amount of the money flooding into these has not been acquired by legal means and that this is quite the boon to money launderers who are hoping it lasts long enough to clean what they need to clean. Upside is just a huge bonus. 

What I really need is for this cryptocurrency craze to end so I can pick AMD stock up again for 2 bucks ride it to 15 short and repeat.