If your investment thesis is this will go up in price because there are bound to be pumps and the value is "low," then you're doing nothing more than gambling. The value is $7500 and the irony is that you're posting on a thread that when it was first made was hoping the value might reach $700. The price has been pretty unreasonable and supported by mass mania for quite awhile now. Buy just randomly looking and saying well the price is lower than it was last year, so it must be a good time to buy because that means the price is low and eventually it will have to be higher you might as well just go to a casino and bet on black and every time you lose double your bet because eventually red has to come up. Of course, only simpletons think this is a foolproof plan because most people understand that a stretch of reds can last longer than you have money to bet on it ending. If things were that simple, everybody would have endless money. Best advice I can give is that if you have an unsophisticated view of investing, don't invest, because all you're actually doing is betting that you're lucky, and that's a horrible investment strategy.

I want to address these emphasized points because some of them get to the heart of crypto as an investment. "Every dollar that is made by someone, someone will lose money." Essentially, this is absolutely correct. As an investment, Bitcoin is inherently worthless. It is an unproductive asset because it doesn't produce income. You buy it and the only way to make money is to sell it to someone else for more than you bought it for. So in this sense, the only dollars you get out of owning Bitcoin come from someone else.

"This market is basically made to make money from new users like a scheme."  Correct, in that it wasn't designed to operate like a ponzi scheme, but it does operate like a ponzi scheme for anyone buying crypto trying to get rich on it. That's because, again, the only way you can make money on Bitcoin is to sell it for more than you bought it for, and the only reason someone else would pay more for it is they also think they are going to be able to sell it to someone else down the line for yet more money. So the earliest people into crypto make the most money, and it requires ever-increasing amounts of people to get into the market for the later people to make money. This isn't intentional by Bitcoin, it's just what naturally happens when mania takes over and large groups of people chase pipe dreams.

"For example can you actually believe that if you would've put 10k usd into bitconnect you would have a monthly return of about 3400 every month by lending?"  Lending in crypto is the same as any other currency, it can be repaid through the extra economic activity it allows without anyone losing money, so your conclusion that people have to lose money through lending is not correct. However Bitconnect was a clear ponzi, and anyone who invested in that got exactly what they deserved. Anyone offering stupid ridiculous returns shouldn't be trusted, except everyone in the Bitcoin community has been so conditioned to expect those eye popping returns that it didn't seem abnormal, and that's a case where the mania over Bitcoin has warped everyone's expectations and left them susceptible to being scammed. I don't feel bad about that because the only thing that's going to restore sanity is people losing loads of money and collectively realizing this Bitcoin bubble is not normal and not sustainable. But it's worth noting the difference between something designed to be a ponzi (Bitconnect) and something that only operates as one because everyone is behaving recklessly (Bitcoin). The dangerous difference is that people who are investing in crypto don't realize the risk they've taken on in doing so, because it operates like a ponzi in that you can only ever make the money you take from later buyers, even though nobody has set up crypto to intentionally be function this way.

Why would countries need to issue their own cryptos when they already issue their own fiat? All state-issued fiat is already electronic as well and operates predominantly electronically already, so there is absolutely no benefit to a state-issued crypto over the system already in place. The USD is far more versatile in electronic form than Bitcoin is currently and likely ever will be. It's cheaper and easier to send electronic payments currently within the electronic fiat system, the only edge Bitcoin has is possibly speed in that Bitcoin transactions "settle" generally within an hour and electronic fiat transfers take a couple days still to fully transfer, but this would not be difficult to change and stems from the banking system's legacy infrastructure. But it's only moving electrons through a computer, the same as Bitcoin, so shouldn't be difficult to change at all once the banks decide they should.

Man, these super old threads are fun to read today with all the benefit of hindsight and knowing how things have developed over the past 7 years since the OP. All these people saying Bitcoin regulation is bad and impossible sure turned out to be wrong. We know it's not only possible but definitely coming and for the better. There's one post on the first page about not caring what regulations get put on Mt. Gox, and boy does that seem stupid now. Regulations on Mt. Gox would have required much more stringent accounting practices and regulatory controls and would have likely prevented the loss of all those Bitcoins. The fact of the matter was that the exchange was set up by people who had no business running an exchange and nobody knew any better exactly because it wasn't regulated. Exchanges now actively seek to be regulated because that's how customers know they can trust there's oversight and will be responsibility if anything goes wrong, and people ought not to trust any exchange that seeks to avoid being regulated.

You probably need to talk to an accountant or tax attorney. Taken as a given that the tax law passed in January eliminated the like to like exchanges being a taxable event (and I'm taken this as a given because I don't actually know if this is true, as this is the first I've heard of it), but if true, it would make sense to me that you would not claim the exchange of Litecoin to another crypto as a taxable event because you're not calculating the tax burden until April and in April you use the laws that are current at that time, which would include the January change. It would be like if you owned a stock that pays dividends all year, in April of the next year you would have to calculate how much tax you owe on this dividend payments, but if in January the law changed and said dividends are tax free, I assume you would likewise not have to pay taxes on the dividends the previous year because as of the tax filing deadline, the law says no income tax on dividends.

However, this logic needs to be vetted by actual tax professionals. It's a shame that no response in this thread is even on point to the OP.

One thing that is certain is that Munger in absolutely no way is sad that he didn't buy crypto. To even suggest things like this is to trumpet your ignorance about the topic to the world. For anyone who knows anything about Munger and Buffet, they know that both of these investors are value-oriented investors who have made all their money buying companies that are undervalued by the market and scaling them so that they become more valuable and profitable. They compound the value they created by buying more undervalued companies and doing the same thing. This has created extraordinary returns over the decades they have been doing this. Now in contrast, why might a value investor object to about Bitcoin? Easily the fact that it produces zero income and is only worth what everyone else agrees to pay for it. This is anathema to their approach. If you've made some money in Bitcoin, the only way you're going to make more money is if other people continue to agree to pay higher prices for it. Once that stops happening, the price crashes. When you own actual companies, it doesn't matter what other people think they're worth because they produce actual income. This is the advantage real investing has over speculating on crypto.

I don't see institutional investors having much of a role at all. They have regulated and insured products that allow them to deal with Bitcoin inside the sandbox they're accustomed to (through CBOT or CBOE with futures, etc.) and because those instruments are divorced from actual Bitcoin trading (because they're cash-settled instead of product settled), their actions buying and selling those futures actually don't impact the price of Bitcoin at all because no Bitcoin is traded as a result of trading those futures. Adoption seems to be the main long term driver, and crypto traders appear to be mostly responsible for the price swings on a short term basis. The thing that concerns me is that because of this, Bitcoin has to eventually plateau as it runs out of buyers to adopt it. In contrast, an investment in a company doesn't have a limit on how much it can be worth because its an asset that produces income, and even if it becomes entirely saturated in the market, can distribute earnings in the form of dividends if the capital it creates can no longer be effectively deployed.

I would expect we're about at the point where Bitcoin won't be growing 500% in a single year anymore. The valuation is already huge, and in order to accommodate such growth at this level would require so much additional money flowing into Bitcoin that it seems impossible. It's hard to imagine Bitcoin growing 500% over any period of time from an $8,000 price point, let alone in a year. People think the more time that goes by, the more people will pile into Bitcoin, but it could also be that the more time that goes on, the more people get accustomed to the idea that Bitcoin makes people rich by taking money from the people who buy later and giving it to the people who already have Bitcoin. That is, the only way to make money from it is to sell it to someone else for more than what you bought it from someone for. Because that is economically unsustainable, the smarter people are going to realize that it's far too risky to buy and risk running out of people to sell to in the future. The more time that goes by, the fewer people to sell to there will be.

I do a lot of "traditional" investing (equities and such) and like reading about companies and how they make money, as opposed to what the stock is doing. Traders are more concerned with the stock, investors are more concerned with the company. The stock will eventually follow what the company does, if it falls out of whack occasionally due to traders. So my post about the projections and all that fell within my wheelhouse on this one due to my familiarity with how companies report information to investors.

As it applies to Nvidia, crypto has been big source of frustration to Nvidia's traditional customers, as miners have snapped up GPUs and caused shortages for gamers and other customers who want to buy GPUs for non-mining reasons. I'm not sure if Nvidia has really chased the crypto market though, I think it's much more a case of they make powerful GPUs for computers and gamers, and it happens to have utility in crypto mining. The drop in sales is definitely demand side though, not supply side.

Bitcoin only does one thing new, and that's decentralization. It's a poor store of value due to instability in the price, it's an even poorer currency for the same reason. When he says Bitcoin doesn't solve any real world problems, it's acknowledging the reality as it is right now. The best you can say about Bitcoin is it has potential to change things, but nobody who needs to conduct day to day commerce is taking Bitcoin seriously. To the extent it's used at all, it's to appeal to the niche part of the market that wants to use it for transactions. Bitcoin hasn't proved any ability to be the new gold, the best you can say again is that it has potential, but it's much more of a speculative asset than a store of value.

Bitcoin can't even hold it's value for an hour, the notion that it's more stable than the USD is idiotic. Sorry, there's no sense in sugarcoating that. It's absolutely absurd.

No elite prefers the gold standard because the fiat standard is what made them wealthy. The gold standard was abandoned because it constrained the economy by limiting debt-fueled growth. It wasn't until the abandonment of the gold standard that you got this explosion of ultra wealthy elites, and since the abandonment of the gold standard, the wealth accumulation by the top .1% has really accelerated relative to the rest of the populace. It defies logic they would abandon the system that created their wealth to a larger degree than the gold standard would have allowed, so if you want to sell that, you need to provide some substantiation, because it's not a compelling theory.

This is stupid advice. You've lost the money the second the price drops, you just haven't realized the loss yet. By continuing to hold while the price drops, you have the potential to make it back whereas once you sell you don't. But you also have the potential to continue losing money by holding. Holding through the down times doesn't guarantee you're going to make it back someday. But trying to delude people into thinking they haven't lost money by holding an asset that has dropped in value is disingenuous and stupid.

To the underlined bit: This is quite different. Wall Street analysts expected the company to post earnings of a certain amount, but the company generally has a much better idea. If Amazon had said it expected to earn $1.24 and then posted $3.27, that would be more on point, but also not perfect since so much more goes into computing earnings than sales, so there's more likelihood of variance. When a company projects sales for the next quarter, it's generally the best indication of what is going to happen since nobody knows their business better than they do. On top of that, Nvidia is not known to sandbag sales numbers (by comparison, Apple is notorious for under promising so they can over deliver in their quarterly reports), so Nvidia's projection of a 2/3 drop in cryptp-related sales should be taken seriously as there's really no better authority on what they're going to sell than they are themselves. Lastly, Nvidia is likely warning about a trend they've already identified. At the time of the quarterly call, the current quarter is half done, so they already have some pretty decent sales data and trends for the current quarter, so when they're saying they're projecting a 2/3 fall, it's probably because they're already seeing the significant drop playing out. It's less of a prediction than it is an extrapolation of what's already happened.

I suspect Nvidia is probably experiencing the effects of what is happening in China as you point out. The drop in investment in mining is likely due to the uncertainty of ever recouping cost if the government is shutting down mines.

I don't see any coordination at all. They're in the public eye and constantly have reporters asking them their opinions on Bitcoin and they all happen to think poorly of it for their own reasons. People are interested in what Buffet and Munger think because they're two of the most famous and well-respected investors in history, and people are interested in what Gates thinks because he's one of the preeminent technology moguls and also does a tremendous amount of investing through the Bill and Melinda Gates Foundation for philanthropic causes. There's no conspiracy here. I actually agree with Buffet that Bitcoin doesn't represent anything substantial as far as investing goes because it doesn't generate income and isn't a productive asset. It's purely a speculative vehicle, and that's fine if you want to gamble on it, but it's not investing. Investing is the use of capital to create something new of value, and the added value creates more wealth. Bitcoin doesn't create any new wealth, it only transfers it between people when they sell it from one to the other. People getting rich of Bitcoin should not be confused with creating new wealth, which by contrast is what investing does.

Nvidia has announced that they expect sales of GPUs related to cryptocurrency mining to drop by about 67% in the current quarter. That's a pretty monstrous drop, and if mining investment is a leading indicator of overall market demand for crypto, it would follow that this decreased demand in mining equipment foretells decreased demand for crypto generally. If not a leading indicator, I think it has to be pretty tightly correlated with general crypto demand, so perhaps there's less investment in mining because there's less interest in crypto.  67% seems to be far too large to be a natural variance in buying patterns.  If this was unrelated variance, I would expect a drop to be no more than 10%, so a drop this large suggests interest may be on the decline. This would seem to coincide with the price weakening we've seen as Bitcoin has failed repeatedly to get back over $10,000. Every time it gets close, it suffers a fall back below $9,000. It's almost impossible to draw any long term conclusions about this, but it's an interesting piece of the puzzle.

https://www.bloomberg.com/news/articles/2018-05-10/nvidia-reveals-crypto-sales-for-first-time-and-predicts-big-drop

If mining equipment sales are a leading indicator, demand may be stalling out. Nvidia announced that they are projecting sales of GPUs related to cryptocurrency mining to drop by about 67% in the current quarter. That's a pretty monstrous drop, and if mining investment is an indicator of overall market demand, it would follow that this decreased demand is correlated with (either causing or caused by) decreased demand for crypto in general. This does coincide with the price weakening we've seen as Bitcoin has failed repeatedly to get back over $10,000 and every time it gets close suffers a fall back below $9,000. It's almost impossible to draw any long term conclusions about this, but it's an interesting piece of the puzzle.

https://www.bloomberg.com/news/articles/2018-05-10/nvidia-reveals-crypto-sales-for-first-time-and-predicts-big-drop

Major error in your assumptions. Poor people are not getting poorer in absolute terms, in fact the standard of living for poor people has risen against what poor people had in the past. It's just that the rich are economically improving much faster than the poor, so the disparity between rich and poor is increasing, even though the poor are becoming marginally better off over time. Simply splitting the world into haves and have nots is rather reductive, as there are innumerable shades of gray in between the two extremes. The middle class continues to expand around the world, and this has done more to lift people out of poverty than any organized government effort has even been able to achieve. The expanding middle class will continue to be the key to economic improvement.

My point didn't come across, so let me rephrase. The government already controls traditional fiat gateways, which are points at which you exchange fiat for electronic cash. Banks, currency exchanges, money transfer businesses, brokerages, stock exchanges: all regulated by the government. You cannot move large amounts of money through any traditional fiat gateway anonymously because they are so tightly regulated. These same choke points exist for crypto. You don't have to control crypto, you just have to pass regulations outlawing all the traditional gateways from dealing in it, and because the people running the businesses can't do so anonymously, violations of the law will be easy to prosecute. That won't kill crypto completely, but it will greatly reduce its use and value by driving it deep underground and stall adoption for normal people who aren't interested in becoming criminals by using it and deal with the hassle of trying to avoid detection in converting fiat back and forth. There would essentially be no incentive to any longer except for criminals at that point.

The age of the investor is much less important than the size of the investor. In fact, the age of the investor (whether they're new or old) shouldn't matter at all. All that matters to price is how much btc they're moving at a time. You could have a new whale buying and selling and it would move the price much more than an existing investor who's held a small amount of coins for years. You are right that holders reduce the available supply, and so if there was a glut of supply that was released to the market it would tank the price. This could happen with one large investor selling all his coins, or thousands of little investors selling all their coins. Age of the investor though is irrelevant.

Yeah, people are greedy, which is why you see them flocking to crypto right now amidst the wild price fluctuations. People aren't interested in crypto as a currency, they're interested in it as a speculation vehicle. By trying to use Bitcoin to get rich quick, people are adding to the volatility and the extremes of the price swings, and the more volatile the price is the less utility it has as a currency. So the question then becomes, is the whole world going to be interested in gambling on some speculative asset, and the answer there is an easy no. The only way the whole world gets on Bitcoin is if Bitcoin is stable enough to use as a currency, and if it were so stable, most of the people who are currently interested in it because they're trying to make money off it would lose interest. It's a Catch-22, but the end result either way is the whole world isn't adopting it.

On the subject of reaching the moon, it already went there and nobody realized it.

I'd rather see neither. I'd rather Bitcoin find a steady value and hold it. It would be far more useful as a currency and a store of value if it maintained a steady value day to day, week to week, and month to month. The rapid rise and fall attracts all the wrong people who are only here to speculate and try to get rich quick. The 'lambo chasers' aren't good for long term adoption or stability, and I'd rather do without them. If Bitcoin maintained a steady value, it would be more compelling for businesses and consumers, but as long as it wildly fluctuates in price, there is a 0% chance of it every being taken seriously as a currency.