Investment: There is something about Bitcoin

[tom2021]

I ignored bitcoin and didn't bother to learn about it for years.
I thought it was like a ponzi scheme, could be hacked and the value could go down to zero.
Now, I start paying attention to the news about bitcoin and take time to learn about it.
I come to think it is a good investment asset.
1. Bitcoin started in 2009. Twelve years later, it hasn't been wiped out by hackers. So, the algorithms behind it are solid.
2. More and more people own bitcoin. Venezuela will use Bitcoin as their currency! Unlike ponzi scheme, no worries it will be worthless in the near future.
3. There are bitcoin ATMs now, where you can buy bitcoin.

The world have abandoned the Bretton Woods Agreement. All currencies are issued by countries with the assumption that each nation can support the value of its currency. However, many countries suffered from hyperinflation and their currencies became worthless.

In conclusion, if we think that bitcoin is not worth it since we just rely on the next person to buy it, isn't it similar to all currencies in the world?

Any thoughts?

[Nachbar]

I sold 75%
Will sell rest higher on the way to 100k. Buying back in the next bearmarket.

[Tuxedo]

it's a ponzi scheme ish, a public one to boot.
Auction a 20 dollar bill at a poker table see how much it goes up to. still worth the base value but if 2 or more bid over 20 the competitive spirit assumes. winner has braggin' rights and all but spending it means it's over value, however if you build a story about the history of said 20 making it so desirable the winning bid seems cheap. bid'n after some time and exposed to more confident folks and... compound effect. invest, greed, cycle rests the mind and ease when said 20 is worth 10x then 100x etc. until blamo crash. 20 now can be worth 19.99-0

20 bucks works best when it's worth $20 and how much it buys moves slow and steady, apply the same logic to crypto

[gatorfast]

It has value because people believe it does. Same concept as what's going on in the sports card market. People are paying insane money for a piece of cardboard with a picture on it ultimately because they believe there will be an even bigger fool in the future willing to pay more. As someone who isn't into cards, I think they are worthless but at the end of the day they are scarce and finite and there is a market for it and people are making real money. Apply that to bitcoin.

[Tommy-G]

Originally Posted by gatorfast

It has value because people believe it does. Same concept as what's going on in the sports card market. People are paying insane money for a piece of cardboard with a picture on it ultimately because they believe there will be an even bigger fool in the future willing to pay more. As someone who isn't into cards, I think they are worthless but at the end of the day they are scarce and finite and there is a market for it and people are making real money. Apply that to bitcoin.

I couldn’t believe what I heard cards were going for. I never had any so I don’t feel like I’m missing out but damn!

[tom2021]

Originally Posted by gatorfast

It has value because people believe it does. Same concept as what's going on in the sports card market. People are paying insane money for a piece of cardboard with a picture on it ultimately because they believe there will be an even bigger fool in the future willing to pay more. As someone who isn't into cards, I think they are worthless but at the end of the day they are scarce and finite and there is a market for it and people are making real money. Apply that to bitcoin.

I like your analogy.

[2000cs]

Some basics about money (currency).
It has basically two functions: 1. A medium of exchange, and 2. A store of value.

For it to function as a medium of exchange, it needs to be widely accepted. This is why nations mandate their currency for use in the nation, and often restrict others. But in border areas and travel hubs, it is often easy to get other national currencies accepted (for example, it is pretty easy to spend USD in many Canadian cities, and CDN in northern US cities).

For it to function as a store of value, it must be reasonably stable over the storage time. Gold and silver coins were good at this for long periods; the USD has been pretty good too. In hyperinflationary periods, the affected currency loses its ability to store value for more than a few minutes. Most currencies are not pegged to any commodity, and thus their value is determined by the economic conditions in the issuing country (mainly inflation) versus the rest of the world (or at least major currencies).

So Bitcoin and other cyber currencies. As they get more broadly accepted, they achieve the medium of exchange. They can only hold on to this by continued acceptance which means political pressure and financial institution pressures to restrict them matter. They will also lose acceptance if their value continues to be highly volatile unless they can be very quickly transferred into a fiat currency.

Cyber currencies are not tied to any other store of value, and their production is limited, so to the extent there is demand, they can be a store of value (or even a speculative investment). However, without being a fiat (national) currency, that could crumble very quickly.

For the reasons hinted at above, I think they are speculative assets and not really currencies/money. I personally wouldn’t invest in them long term, but like other commodities would consider trading them if that was my bag. I’m neither smart enough nor fast enough to be confident with a trading strategy for commodities including all currencies and cyber currencies. That doesn’t mean they won’t go up in value - I don’t know. It just means the risks are beyond my skill set.

[Finn Germai-Yaz]

bitcoin is legal tender in El Salvador. bitcoin is like digital gold. There can only be a certain number of bitcoin in circulation, about 21 Million. 18 million coins have already been mined.

I think it is ok to hold some bitcoin but it is also best to diversify and have cash, stocks, crypto, and property.

[MsGoGoMoto]

I like money.
Hard cash

Gold…
Or

Money..

[No one]

My thoughts are these.

Originally Posted by tom2021

1. Bitcoin started in 2009. Twelve years later, it hasn't been wiped out by hackers. So, the algorithms behind it are solid.

It's being stolen at the crypto exchanges. Whichever way you like it: grab and run (in Turkey, for example) or telling stories (about hackers).

Originally Posted by tom2021

2. More and more people own bitcoin. Venezuela will use Bitcoin as their currency!

Crypto currency is just what it is: a mere nothing. If you are any sane at all, you can only buy it with the money you literally have nothing to do with (or to conceal your transaction from legal supervision, etc.). The fact there are such people isn't really reassuring. Greed is a common cause of failure, widely exploited by criminals. The financial institutions may(/must?) be actually dumping their excess money (to save the value of the rest) to preserve the world(?) economy from a collapse, not investing. Venezuela won't use Bitcoin as their currency. It will issue a crypto currency of it's own to manifest how void their fiat currency (and economy) is.

Originally Posted by tom2021

3. There are bitcoin ATMs now, where you can buy bitcoin.

Can you sell it? They claim you can, but there's no guarantee, is there? I read crypto exchanges are totally shameless with both the "prices" and availability of their services.

Originally Posted by tom2021

if we think that bitcoin is not worth it since we just rely on the next person to buy it, isn't it similar to all currencies in the world?

Not so much: fiat currencies are (supposed to be) backed by economies (products and services value), while crypto currencies are nothing you can't do without.

Originally Posted by 2000cs

Cyber currencies are not tied to any other store of value, and their production is limited, so to the extent there is demand, they can be a store of value ... I think they are speculative assets

A store of value: all their value is demand. Can you store it? Limited production is solved by creating new crypto currencies. Can you tell a nothing from a nothing? The conclusion looks correct though: they are speculative assets (only).

[DougVA]

Originally Posted by tom2021

I ignored bitcoin and didn't bother to learn about it for years.
I thought it was like a ponzi scheme, could be hacked and the value could go down to zero.
Now, I start paying attention to the news about bitcoin and take time to learn about it.
I come to think it is a good investment asset.
1. Bitcoin started in 2009. Twelve years later, it hasn't been wiped out by hackers. So, the algorithms behind it are solid.
2. More and more people own bitcoin. Venezuela will use Bitcoin as their currency! Unlike ponzi scheme, no worries it will be worthless in the near future.
3. There are bitcoin ATMs now, where you can buy bitcoin.

The world have abandoned the Bretton Woods Agreement. All currencies are issued by countries with the assumption that each nation can support the value of its currency. However, many countries suffered from hyperinflation and their currencies became worthless.

In conclusion, if we think that bitcoin is not worth it since we just rely on the next person to buy it, isn't it similar to all currencies in the world?

Any thoughts?

My best advice: buy low, sell high.

[burro_blasta]

It's probably easiest to claim that crypto isn't going away. Bitcoin is incorrectly synonymous with crypto too often. It's only one piece. Harder part is how to invest in crypto in a diversified strategic way that you'll stay invested in for the long run.

Eg, it was easier to say cars would take over horses and buggies, harder to trade it without buying one of the manufacturers or suppliers that went bust. Or easy to say that the internet would change the world, hard not to have blown up in the late 90s by buying the wrong IPO...

So, what is that diversified strategic crypto fund you could keep for the long run? A mix of coins and blockchain tech?

[iminhell1]

Besides drugs and hoes, what can you buy with it? Isn't he point of currency a means of exchange for goods or services?
But really it's not much different that stocks that don't sell any goods or services and use stock for day to day operations.

[smokesrcki]

Crypto is future... You will not have cash money in 10 years.
And other cryptos beside Bitcoin, have interesting projects for future. You can research on that.

[P1]

At times, I think this will all end up being the largest scam the world has ever seen.

[F32Fleet]

Originally Posted by nawfoo

bitcoin is legal tender in El Salvador. bitcoin is like digital gold. There can only be a certain number of bitcoin in circulation, about 21 Million. 18 million coins have already been mined.

I think it is ok to hold some bitcoin but it is also best to diversify and have cash, stocks, crypto, and property.

IMO it's because the developers of the Lightening Network cut a deal and the country relies on hydroelectric power which makes mining cost free.

[XutvJet]

Originally Posted by smokesrcki

Crypto is future... You will not have cash money in 10 years.
And other cryptos beside Bitcoin, have interesting projects for future. You can research on that.

They've been saying that for the last 5 years about Bitcoin and cryptocurrency. About the only places it's useful is in countries with unstable currencies or for illicit transactions. It is not the future.

It has value because people believe it does.

^This.

[No one]

Originally Posted by nawfoo

bitcoin is like digital gold. There can only be a certain number of bitcoin in circulation

Not everything that's in limited availability is in high demand/cost. Look at artists' works: only a few are recognized as masterpieces and cost insanely. Those who have them can't tell them from fake/shit , but some still can and that must be what's making the value. You can make hardware from gold and wear it. What about "bitcoin" whatever you mean by that?

Originally Posted by iminhell1

But really it's not much different that stocks that don't sell any goods or services and use stock for day to day operations.

Stocks and derivatives are ultimately connected to valuables (goods or services), aren't they?

Originally Posted by P1

At times, I think this will all end up being the largest scam the world has ever seen.

I think the "pandemic" is a valid contender.

[BRAKE!]

Faith in fiat currency comes at the backing of the issuing institutions (ie US gov’t, fed reserve, us treasury). There are layers to this backing that creates trust and accountability to the maintenance and stability of the currency’s value.

My concern with cryptocurrency (ie bitcoin) is that this trust is based on “miners” (who I have no idea of their identity/location), the server which the Bitcoin is held in, and the public ledger (block chain). While the claims are that this system works very well to secure Bitcoin, there have been times where it has failed already. Who then claims responsibility for this? I have no idea.

If you’re investing in cryptocurrency in the secondary market as a small portion of your portfolio, I can understand, but to go heavy handed in something that is quite difficult to understand at times seems like the wrong move.

[BMWILUVU]

I read that bitcoin is digital gold. I had to laugh because there is no such thing as digital gold. Gold is gold and there is no digital gold. You can give me a digital I owe you for borrowed gold and call it digital gold but thats not what bitcoin even is.

[davidr3]

A few points to make
- At some point gold was just a rock
- The United States prints money. You can claim "my 20 dollars is just my 20 dollars" but look at the inflation rate. While there is backing of the U.S dollar, your 20 dollars is not the same 20 dollars years ago.

Instead of viewing it as digital money, I view it somewhat like it's a stock. While it's more volatile you can still make lots of money on it right now.

[No one]

Originally Posted by davidr3

At some point gold was just a rock

A rock isn't gold still.

Originally Posted by davidr3

The United States prints money. You can claim "my 20 dollars is just my 20 dollars" but look at the inflation rate. While there is backing of the U.S dollar, your 20 dollars is not the same 20 dollars years ago.

It prints it for you. You should have (many?) more 20 dollars than you had years ago. There must've been times when one could buy a woman for 1$. Or a cow for 1.50$. But one could have just neither back then.