2012-09-14 - Inversor Global - "I would put my savings into bitcoins"

[majamalu]

The Argentinian Santiago Siri ( http://santiagosiri.com/#699/linkedin ) bluntly stated that, when it comes to preserving the value of his savings, he has more confidence in Bitcoin than in any other currency.

We are talking about a bright young man, who is also frequently invited to give his views on radio and television in Argentina.

Excerpt:

"When I heard about Bitcoin for the first time, I began to find out and after a year of research I thought the best way to see how it worked was by making a transaction." Thus began the adventure of Siri in a world unknown to most people.

"Software is eating the world: Internet is also revolutionizing the economy."

http://www.igdigital.com/2012/09/yo-pondria-mis-ahorros-en-bitcoins/

[1715084098]

1715084098

[dissipate]

If a currency like Bitcoin that can lose half of its value overnight is better than your local currency, that local currency must be pretty damn bad. 

[majamalu]

If a currency like Bitcoin that can lose half of its value overnight is better than your local currency, that local currency must be pretty damn bad.  

He is talking about savings. Are you sure that, in the long run, your euros/dollars/etc. will keep their purchasing power?

[Technomage]

If a currency like Bitcoin that can lose half of its value overnight is better than your local currency, that local currency must be pretty damn bad.  

You have to be kidding, I hope. Investing into bitcoins or using it as savings usually means that the investment will stay in bitcoins for at least many months, often years. There has been only 1 month period in the entire history of Bitcoin where the value was actually higher than it is now. That was in June 2011. Investing at any other time would have been profitable, most of the time very profitable.

This doesn't really prove anything for the future but saying that bitcoins are a bad savings currency is absolutely ridiculous. There is nothing in the whole world that is better right now. The arguments regarding volatility affect a different problem entirely. In the short term or for using bitcoins as a payment method, volatility does matter and it can sometimes cause big problems. This will get better with increased liquidity, however.

These are two completely different issues. Long term thinkers know the value in Bitcoin and so far that has been rewarded in a strong way. Bitcoins don't only store value, they actually increase value right now because there is so much growth. Even a 30% inflation of the monetary base (yearly) has done nothing to stop this growth and that is impressive. Soon, with the block halving, even the monetary base will grow much more slowly.

Of course the growth of Bitcoin will slow down eventually and it will start to become "just a store of value" and not the super investment it has been thus far, and that's the way it's supposed to be. Something like Bitcoin is not really meant as an investment but it is meant to be good for savings and to work as a store of value. In the long term it truly has been a good savings currency already, it's undeniable.

[dissipate]

If a currency like Bitcoin that can lose half of its value overnight is better than your local currency, that local currency must be pretty damn bad.  

You have to be kidding, I hope. Investing into bitcoins or using it as savings usually means that the investment will stay in bitcoins for at least many months, often years. There has been only 1 month period in the entire history of Bitcoin where the value was actually higher than it is now. That was in June 2011. Investing at any other time would have been profitable, most of the time very profitable.

This doesn't really prove anything for the future but saying that bitcoins are a bad savings currency is absolutely ridiculous. There is nothing in the whole world that is better right now. The arguments regarding volatility affect a different problem entirely. In the short term or for using bitcoins as a payment method, volatility does matter and it can sometimes cause big problems. This will get better with increased liquidity, however.

These are two completely different issues. Long term thinkers know the value in Bitcoin and so far that has been rewarded in a strong way. Bitcoins don't only store value, they actually increase value right now because there is so much growth. Even a 30% inflation of the monetary base (yearly) has done nothing to stop this growth and that is impressive. Soon, with the block halving, even the monetary base will grow much more slowly.

Of course the growth of Bitcoin will slow down eventually and it will start to become "just a store of value" and not the super investment it has been thus far, and that's the way it's supposed to be. Something like Bitcoin is not really meant as an investment but it is meant to be good for savings and to work as a store of value. In the long term it truly has been a good savings currency already, it's undeniable.

I'm a strong supporter of Bitcoin and I have a significant percentage of my own money in Bitcoin right now, but it is misleading to say that Bitcoin is a good unit of account or store of value. It is just too volatile right now to serve those purposes. It is without a doubt, however, the world's greatest medium of exchange.

Let's take for example the use case of saving for a house that I want to buy in a year's time. If I were to have bought Bitcoins as a 'store of value' or for savings back in June of last year, I would have lost over half of my savings for buying a house. That's just unacceptable for a 'store of value'. Unless, however, the local currency you are using is even worse. That seems like it could be the case for Argentina. It certainly seems to be the case for a country like Zimbabwe.

Bitcoin is a great medium of exchange, and in my opinion, an awesome speculative investment, but store of value it is not. I cannot in good faith recommend people use Bitcoin as a means of acquiring a 'savings account'.

Bitcoin will slow down, but at what price and at what market cap? Will it slow down at a price of $100? A price of $500? A price of $50,000? Maybe governments across the world will launch a coordinated attack on Bitcoin exchanges, shutting them down. Then the price of Bitcoin could plummet to less than $1. There is a huge range of possibility there. As I have said elsewhere, speculators will be trying to find out what the 'true value' of Bitcoin is. Those speculators' sentiments will fluctuate wildly as news comes out about Bitcoin, or for a million other reasons. We have already seen this happen. There will continue to be panic buying and selling, causing wild price swings. That's not a 'store of value', that's a speculative investment.

[majamalu]

There will continue to be panic buying and selling, causing wild price swings. That's not a 'store of value', that's a speculative investment.

Compared to what? Is the euro, for example, safer than Bitcoin in the long run?

[dissipate]

There will continue to be panic buying and selling, causing wild price swings. That's not a 'store of value', that's a speculative investment.

Compared to what? Is the euro, for example, safer than Bitcoin in the long run?

I'm not sure about that. But if you are looking for a 'store of value', look at gold, silver, platinum etc. Those have large markets that have a high degree of liquidity.

[majamalu]

There will continue to be panic buying and selling, causing wild price swings. That's not a 'store of value', that's a speculative investment.

Compared to what? Is the euro, for example, safer than Bitcoin in the long run?

I'm not sure about that. But if you are looking for a 'store of value', look at gold, silver, platinum etc. Those have large markets that have a high degree of liquidity.

So would you agree that Bitcoin might be a better "store of value" than the euro?

[dissipate]

There will continue to be panic buying and selling, causing wild price swings. That's not a 'store of value', that's a speculative investment.

Compared to what? Is the euro, for example, safer than Bitcoin in the long run?

I'm not sure about that. But if you are looking for a 'store of value', look at gold, silver, platinum etc. Those have large markets that have a high degree of liquidity.

So would you agree that Bitcoin might be a better "store of value" than the euro?

Yes, I would agree with that. All the major economies of the world are facing systemic problems, so the Euro could definitely be affected by that in a really bad way. Bitcoin could offer some protection there since it can't be debased by any central bank. But, once again, Bitcoin is currently too volatile to be as good of a store of value as precious metals.

[BkkCoins]

People who bought bitcoins when they were shooting up to $30 in June last year were not sensibly looking for a store of value. They were speculating on the latest hype. So I have no problem discarding that data point as a measure of store of value. Having said that I have very little tied up in Bitcoin but if I had more surplus income I would choose to put some into Bitcoin as a long term play.

[majamalu]

There will continue to be panic buying and selling, causing wild price swings. That's not a 'store of value', that's a speculative investment.

Compared to what? Is the euro, for example, safer than Bitcoin in the long run?

I'm not sure about that. But if you are looking for a 'store of value', look at gold, silver, platinum etc. Those have large markets that have a high degree of liquidity.

So would you agree that Bitcoin might be a better "store of value" than the euro?

Yes, I would agree with that. All the major economies of the world are facing systemic problems, so the Euro could definitely be affected by that in a really bad way. Bitcoin could offer some protection there since it can't be debased by any central bank. But, once again, Bitcoin is currently too volatile to be as good of a store of value as precious metals.

Agreed. It boils down to timing and risk tolerance. I would add that Bitcoin is not immune to collapse, but gold neither (at some point in the distant future it could become obsolete).

[majamalu]

People who bought bitcoins when they were shooting up to $30 in June last year were not sensibly looking for a store of value. They were speculating on the latest hype. So I have no problem discarding that data point as a measure of store of value.

+1  However, I think that those who bought at $ 30 were closer to the truth than those who sold at $ 30 thinking that the price would fall to zero.

[n8rwJeTt8TrrLKPa55eU]

The Argentinian Santiago Siri ( http://santiagosiri.com/#699/linkedin ) bluntly stated that, when it comes to preserving the value of his savings, he has more confidence in Bitcoin than in any other currency.

We are talking about a bright young man, who is also frequently invited to give his views on radio and television in Argentina.

Excerpt:

"When I heard about Bitcoin for the first time, I began to find out and after a year of research I thought the best way to see how it worked was by making a transaction." Thus began the adventure of Siri in a world unknown to most people.

"Software is eating the world: Internet is also revolutionizing the economy."

http://www.igdigital.com/2012/09/yo-pondria-mis-ahorros-en-bitcoins/

Nice coverage. Unfortunately the full article is behind a paywall...anyone have access to it?  Is Santiago Siri a member of this forum?

[kokojie]

There will continue to be panic buying and selling, causing wild price swings. That's not a 'store of value', that's a speculative investment.

Compared to what? Is the euro, for example, safer than Bitcoin in the long run?

I'm not sure about that. But if you are looking for a 'store of value', look at gold, silver, platinum etc. Those have large markets that have a high degree of liquidity.

Gold price has swung from $30, to $800, to $200 to now $1700 in the last 50 years. Just look at the chart of gold price last year, 10-20% moves are basically a monthly occurrence, it's just as volatile as bitcoin. If you are looking for "stable", then USD is actually pretty stable in the long term, the only thing it does, is stably lose value, it never gains value in the long term.

[BlackBison]

Let's take for example the use case of saving for a house that I want to buy in a year's time. If I were to have bought Bitcoins Gold as a 'store of value' or for savings back in June of last year 1980, I would have lost over half of my savings for buying a house by 1981. That's just unacceptable for a 'store of value'. Unless, however, the local currency you are using is even worse. That seems like it could be the case for Argentina. It certainly seems to be the case for a country like Zimbabwe.

Fixed. 

[Fjordbit]

I really only recommend 5% of your long term savings go into bitcoin. There are still large risks with the system. The other side of that is that there are large potential gains, so just putting 5% in now can easily lead to bitcoin eclipsing your entire portfolio in 10 years.

As a disclaimer, I personally have put in a lot more than 5%. At the time, it was more like 50% and now with the price rise etc it's clearly tilted more (but I haven't done an actual check). But I still recognize that what I did was pretty reckless and it just happened to work out for me at the time. It pissed off my wife to no end.

5% is really pretty sane though. If it all collapses, then that's not really going to change your long term standard of living.

[majamalu]

Nice coverage. Unfortunately the full article is behind a paywall...anyone have access to it?  Is Santiago Siri a member of this forum?

I think it is just a "suscribe wall" 

[Vladimir]

Having some (could be also significant) part of ones investment/saving portfolio is a nobrainer.

Bitcoin is a new asset class, which has very low correlation to other asset classes.

In times when virtually every other asset class is becoming more and more correlated to all other asset classes and they all, it seems, stopped trading based on fundamentals and instead base their valuation on whims of central banks, a significant bitcoin holding is a must for any balanced investment portfolio.