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jaimelobo said:   IVYtony said:   rumors say open coin is coming next monthI'm holding out for the EuroBitcoin.

Seems like the safest investment, what could possibility go wrong with wealthy Europe?

dpid said:   jaimelobo said:   IVYtony said:   rumors say open coin is coming next monthI'm holding out for the EuroBitcoin.

Seems like the safest investment, what could possibility go wrong with wealthy Europe?


Paging IFYHTA

I think the reason why bit coins became so popular was that they emerged at exactly the right point of time: right in the middle of the economic doom mongering in the middle of the recession. They instantly appealed to libertarians, geeks, and some fringe groups who already at the time believed the end was nigh economically so bit coin presented a safe haven to store their cash. That was more than enough to begin the surge upward a few years ago. It became more widespread than that because the financial crises was really the first global economic downturn of the social media age. During the last recession, in the early 2000s, internet usage may have been common but use of social media was not. These days though everyone has an ipad and facebook, and the amount of echo chamber hysterical fear mongering going on that the economy would collapse any day now from 2008 onward made a lot of people consider alternative investments that are insane.

At first the favored investment strategy by those listening to the economic collapse fear mongering was hoarding precious metals in their physical form. But the gold price stopped surging after $1900, so the people who make money off spreading fear over the economy turned to bit coin. Cyprus - which turned out to be a non-issue for nearly everyone who doesn't live in the country - was the perfect time to pump and dump bit coin by preying on the irrational fears of people, and it worked like a charm.

What I find fascinating is now that its crashed so many of the "economic doom" based investors are in total denial. On reddit there are college students that were dumb enough to use student loans to buy thousands of dollars worth of bit coins at $250 each who are now claiming that they are going to hold firm because SURELY the price will go back up to historic highs. Its pure insanity.

germanpope said:   the CNBC coverage prior to this grand dump seems very suspicious

that is some pretty high tech pumping before some big time dumping


That's definitely what this looked like... when all the "finance blogs" start talking about how they bought a bitcoin, it looks an awful lot like letting people in on this amazing pharm stock that is about to explode!

This thing does seem to just fly around in a 50 dollar range -- I think it's funny that expenses in buying in/selling out of this stuff means that even though it's basically guaranteed to go to 120 when it's at 80 and guaranteed to go to 80 when it's at 120 means you still can make money off of it.

GodelianKnot said:   parmenides said:   I think putting your head in the sand here is probably the wrong approach, as is throwing your life savings at bitcoin. Decentralized crypto-currency could be a real thing...

I agree it could be. However, any version where early adopters make millions (or billions?) without any real risk or effort will not be the version that succeeds in the end. So, in my opinion, there will never be a good opportunity to "invest" in a crypto-currency; investment is antithetical to its purpose.


GodelianKnot's response is so incredibly thoughtful.

A currency is a medium for commerce. All the bitcoin crazy folks are using bitcoin either as a wealth accumulation investment vehicle, or a speculative trading vehicle. Neither of those purposes is good for a currency.

Unless you are actively participating to the widening of the circulation of bitcoin by selling goods that your company makes in bitcoins, reporting your accounting statement in bitcoins, or other activities that promote bitcoin as a currency, you are simply contributing to the speculative bubble of bitcoin.

As far a trading and speculation instrument, let's analyze this. Bitcoin can have daily fluctuations of 50%. That's annualize volatility of 750%. What type of return do you need in order for that to make a good "investment" in risk-adjusted terms? 1500% a year? Ok, let's give you that bitcoin will increase by 1500% a year for the next year or so.

Don't you think that an investment vehicle with that kind of risk-return profile has a potentially to be in a speculative bubble?

magika said:   I think the reason why bit coins became so popular was that they emerged at exactly the right point of time: right in the middle of the economic doom mongering in the middle of the recession. They instantly appealed to libertarians, geeks, and some fringe groups who already at the time believed the end was nigh economically so bit coin presented a safe haven to store their cash. That was more than enough to begin the surge upward a few years ago. It became more widespread than that because the financial crises was really the first global economic downturn of the social media age. During the last recession, in the early 2000s, internet usage may have been common but use of social media was not. These days though everyone has an ipad and facebook, and the amount of echo chamber hysterical fear mongering going on that the economy would collapse any day now from 2008 onward made a lot of people consider alternative investments that are insane.

At first the favored investment strategy by those listening to the economic collapse fear mongering was hoarding precious metals in their physical form. But the gold price stopped surging after $1900, so the people who make money off spreading fear over the economy turned to bit coin. Cyprus - which turned out to be a non-issue for nearly everyone who doesn't live in the country - was the perfect time to pump and dump bit coin by preying on the irrational fears of people, and it worked like a charm.

What I find fascinating is now that its crashed so many of the "economic doom" based investors are in total denial. On reddit there are college students that were dumb enough to use student loans to buy thousands of dollars worth of bit coins at $250 each who are now claiming that they are going to hold firm because SURELY the price will go back up to historic highs. Its pure insanity.


Also very thoughtful post.

The total mined gold on planet earth, IMO, has a value around 1 trillion dollars.

The bitcoin "asset" base is probably around 1 billion dollars.

Gold has a lot of legitimate users and a lot of wealthy hoarders. Among users of gold are: (1) eletronics producers, (2) jewelry buyers. The wealthy hoarders of gold include: (1) sovereigns, (2) private individuals, (3) public funds.

I don't see many users of bitcoin yet. Maybe mafia, cocaine cartels, and the geeks.

So did any of the Bitcoin early adopters make out at this?

One year ago Bitcoins were worth $6 each. How has the bubble burst when they are still $95?

TravelerMSY said:   So did any of the Bitcoin early adopters make out at this?

Probably not. If they were in it to cash out they would have done so when Bitcoin topped out at $20 a couple years ago. The idealists will never let go of their tens of thousands of coins.

BondGamer said:   One year ago Bitcoins were worth $6 each. How has the bubble burst when they are still $95?

TravelerMSY said:   So did any of the Bitcoin early adopters make out at this?

Probably not. If they were in it to cash out they would have done so when Bitcoin topped out at $20 a couple years ago. The idealists will never let go of their tens of thousands of coins.

Thank you for reading the future and the minds of "the idealists" for us! All you have to do is read at the bitcoin forum to know what you said to be false.

Decide for yourself! If they exchanged into fiat even now that "the bitcoin bubble has popped", they "made" what ~80-90000% in USD in less than 4 years.

True fatwalleters are not idealists. They see that mtgox is trading at $101 and btce is trading at $96, and they wonder why they can't arbitrage that at scale.

mapen said:   True fatwalleters are not idealists. They see that mtgox is trading at $101 and btce is trading at $96, and they wonder why they can't arbitrage that at scale.
It's because by now all the traders at the other exchanges know that the mtgox rate is the most distorted, manipulated, and bogus rate of all exchanges. That's where the biggest pump-and-dumpers congregate to fleece so many noobs, who foolishly insist on using it to buy in.

Income from bartering is taxable in the year it is performed. The rules for reporting barter transactions may vary depending on which form of bartering takes place. Refer to Tax Responsibilities of Bartering Participants (IRS)http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/T... for more information about reporting income and staying in compliance.BobM73 said:   nixmahn said:   greling said:    If I trade hunting rights to my land for a new roof and labor, IRS can't tax that.

Just because they don't see the transaction doesn't mean it's tax free. You're still legally required to report it.

Or do you believe that since I didn't see you take a cookie from the cookie jar, it's yours?

mapen said:   True fatwalleters are not idealists. They see that mtgox is trading at $101 and btce is trading at $96, and they wonder why they can't arbitrage that at scale.

I actually stayed awake 2 nights ago trying to figure out if it was worth trying to do this. I decided it was not, but man it is tempting.

NET1 said:   tehlorax said:   bobbybore said:   rufflesinc said:   The most you can lose if Bitcoins go to zero is 100% of your money.
The most you can make, meanwhile ...
Well, no one knows exactly how much you can make.
Isn't that a feature for every investment?


NO, this isn't an investment and some investments can lose more than 100%


How exactly does one lose more than 100% buying bitcoins?


Leverage


Thank you

umcsom said:   mapen said:   True fatwalleters are not idealists. They see that mtgox is trading at $101 and btce is trading at $96, and they wonder why they can't arbitrage that at scale.

I actually stayed awake 2 nights ago trying to figure out if it was worth trying to do this. I decided it was not, but man it is tempting.


I don't think there's any way to short sell bitcoins. I'm assuming sales transactions clear instantly.

mapen said:   True fatwalleters are not idealists. They see that mtgox is trading at $101 and btce is trading at $96, and they wonder why they can't arbitrage that at scale.

Some of us have been. But it is very difficult to get USD into btc-e.

TravelerMSY said:   umcsom said:   mapen said:   True fatwalleters are not idealists. They see that mtgox is trading at $101 and btce is trading at $96, and they wonder why they can't arbitrage that at scale.

I actually stayed awake 2 nights ago trying to figure out if it was worth trying to do this. I decided it was not, but man it is tempting.


I don't think there's any way to short sell bitcoins. I'm assuming sales transactions clear instantly.


If you can find someone who owns bitcoins who will let you borrow them, then you could short them. Sell his bitcoins, and then re-buy them later in the future to return them to him... of course it's unlikely you'd be able to find someone to go along with that transaction.

brettdoyle said:   TravelerMSY said:   umcsom said:   mapen said:   True fatwalleters are not idealists. They see that mtgox is trading at $101 and btce is trading at $96, and they wonder why they can't arbitrage that at scale.

I actually stayed awake 2 nights ago trying to figure out if it was worth trying to do this. I decided it was not, but man it is tempting.


I don't think there's any way to short sell bitcoins. I'm assuming sales transactions clear instantly.


If you can find someone who owns bitcoins who will let you borrow them, then you could short them. Sell his bitcoins, and then re-buy them later in the future to return them to him... of course it's unlikely you'd be able to find someone to go along with that transaction.


There's Bitfinex (in beta) that allows just that. You can loan USD (to bulls) or BTC (to bears) and make interest on either.



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