example way to take long term position on bitcoin

[bullioner]

I'm always amazed to see people saying things like "I bought in at X, it's now X+10, I might sell if it goes down to X+5 to lock in some gains, or at X+15, cos that would be a great profit", or various combinations of that.  Unless you are performing very disciplined market making in a volatile market, such behaviour is going to at best even out in the long term, before fees are taken into account.  After fees are taken into account, you are going to be way, way down.

I want to provide a simple example of a strategy that is a long term bet on Bitcoin's success.  This is independent of any coins which may be bought for day to day use.

Using 5% of one's salary after tax each month, buy the same value of Bitcoins each month, as valued in the currency in which one's salary is paid.  Send the coins straight to a set of cold storage wallets.  Around once a year, evaluate whether one's savings have put one in a position where one can make any significant long term changes to one's life.  If so, decide what, if any, changes one will make.  That's it!  No frittering away on exchange fees, no wasting time on relatively small (taking the long view) fluctuations.

It's still speculation, but it's long term, less work, and the potential upside is greater.

I know many people advocate this under the name dollar cost averaging.  Which is fine if your main currency is dollars!  Just thought I would mention the strategy again to give some perspective to all the short termers playing the currenct market.

[phatsphere]

well, but don't put 100% of those coins into cold storage. if everyone would do that, the promise of bitcoin won't be fulfilled and the price plummets. put 50% into cold, and keep the rest at hand. then, try to buy something with it, at least just for the fun of it.

[KTE]

Sound advice, the OP that is. My plan was to get in very light after WordPress announcement as that would cause me to follow up on BTC more closely. In mid-january I was convinced it's worthwhile to increase BTC position considerably so I got re-allocated investments to BTC. Ended up buying at $13, $20 and $27, didn't really care about timing, bought the last two bits as soon as the money cleared from other investments.

Now I'm as vested as I can be in BTC with a good conscious, holding for a long time unless some negative news shatters the future prospects of the currency or I start to feel too anxious about my BTC position for other reasons. After all, it's just money; if I start losing sleep because of my investments, they're not doing what they're supposed to do.

That's my simple long focused investment philosophy.

[bullioner]

well, but don't put 100% of those coins into cold storage. if everyone would do that, the promise of bitcoin won't be fulfilled and the price plummets. put 50% into cold, and keep the rest at hand. then, try to buy something with it, at least just for the fun of it.

That's why I said:

This is independent of any coins which may be bought for day to day use.

The suggested strategy does not have to be each person's sole interaction with Bitcoin.  It is just an example of a long term savings strategy.  Strategies for other things, such as having some coins on hand and ready, can coexist perfectly peacefully with it for each person!

[piramida]

I agree, immediately sending coins to cold storage can prevent many silly things, so this is a very good idea. To have coins to spend you just hold some change at blockchain wallet; that should be separate from investment.

[chmod755]

I'm always amazed to see people saying things like "I bought in at X, it's now X+10, I might sell if it goes down to X+5 to lock in some gains, or at X+15, cos that would be a great profit", or various combinations of that.  Unless you are performing very disciplined market making in a volatile market, such behaviour is going to at best even out in the long term, before fees are taken into account.  After fees are taken into account, you are going to be way, way down.

What about taxes? You're earning government money when you're selling those bitcoins so I guess you'll have to pay taxes when you cash out (at least when it's a significant amount like $10,000+)....

[bullioner]

What about taxes? You're earning government money when you're selling those bitcoins so I guess you'll have to pay taxes when you cash out (at least when it's a significant amount like $10,000+)....

Sure.  In many jurisdictions you'll be subject to capital gains tax.  Orthogonal issue, I think.

[Walter Rothbard]

I'm always amazed to see people saying things like "I bought in at X, it's now X+10, I might sell if it goes down to X+5 to lock in some gains, or at X+15, cos that would be a great profit", or various combinations of that.  Unless you are performing very disciplined market making in a volatile market, such behaviour is going to at best even out in the long term, before fees are taken into account.  After fees are taken into account, you are going to be way, way down.

What about taxes? You're earning government money when you're selling those bitcoins so I guess you'll have to pay taxes when you cash out (at least when it's a significant amount like $10,000+)....

Not if government money doesn't exist anymore when you take them out.

[TTBit]

With a bit of effort & lbaat.net, you can lock them away securely for about as long as you wish.