Are Bitcoins a Good Investment?

[FinShaggy]

Are Bitcoins a Good Investment:
http://www.youtube.com/watch?v=wmcF7G69_5Q

Bitcoin Island:
http://www.youtube.com/watch?v=J28H07dn0is

BlueSeed:
http://www.youtube.com/watch?v=h4KJN9HRo6s

Devcoin Investment:
http://www.youtube.com/watch?v=G6AWKEEEN-Y

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[ukuna]

yes

[FinShaggy]

yes

Agreed

[Zaih]

Bloody oof m8!

[htcking]

Depends a which end your in when they crash

[NewLiberty]

They are a better currency than an investment
(store of value, unit of account, medium of exchange)

They don't pay interest or anything.  They are what they are.

But as they say, "bad money drives out good".
This means that good money goes into hiding in wallets, storage, while bad money gets exchanged for stuff.
When you can trade bad money for good money, you do it.
So your question is really, is it better money than the alternatives.
In some ways yes, in others no.  If it is better for you, than hold it, and trade away your fiat currencies.

[herzmeister]

But as they say, "bad money drives out good".

That is only true when an authority like the state enforces the use of bad money and merchants to accept it.

If that is not the case, then good money will drive out the bad, because merchants will prefer and demand it (gold, silver, bitcoins).

[jasonf9ace]

Bloody oof m8!

+1

[cardcomm]

I depends... I once knew a guy who made 16k on a 2k investment, over a 4 month period.

[gambit1]

If you are looking at bitcoin as an investment then you must consider it very high risk and its position in your portfolio must reflect that. The volatility of bitcoin is well known. This means it can be very profitable or it can be ruinous.

[FinShaggy]

If you are looking at bitcoin as an investment then you must consider it very high risk and its position in your portfolio must reflect that. The volatility of bitcoin is well known. This means it can be very profitable or it can be ruinous.

But over all it's profitable. If you keep your coins long enough they will go up in value, you just have to wait for the difficulty to go up

[jml]

In my view, I think that bitcoins are worth more than printed fiat currencies as they are not backed by the "gold standard" anymore. Bitcoins like fiat currencies are backed only by confidence of the people. For me, the idea of using bitcoins to pay for wares and services is the similar analogy pulling up a big finger to greedy bankers as they impose an interest on the money loaned from central banks to Governments which is then passed on to you; the hard working people. This is why I use Bitcoins and screw the pound, dollar, euro, etc.

[Zetor]

Bitcoins have pretty small financial liquidity at this time. So it's resonable to invest only small amount of money - max few thousands $. If you buy fe bitcoins for 1M $ stock price would propably rise a lot.

[gambit1]

"But over all it's profitable. If you keep your coins long enough they will go up in value, you just have to wait for the difficulty to go up Smiley"

I can't agree with that. It is not even certain that bitcoin has a long term future and its current high price is not related to supply; it is driven by speculative forces. I believe that bitcoin will grow but that is a belief, not a certainty.

"In my view, I think that bitcoins are worth more than printed fiat currencies as they are not backed by the "gold standard" anymore. Bitcoins like fiat currencies are backed only by confidence of the people. For me, the idea of using bitcoins to pay for wares and services is the similar analogy pulling up a big finger to greedy bankers as they impose an interest on the money loaned from central banks to Governments which is then passed on to you; the hard working people. This is why I use Bitcoins and screw the pound, dollar, euro, etc."

Me too but that is a political perspective, not an investment perspective.

"Bitcoins have pretty small financial liquidity at this time. So it's resonable to invest only small amount of money - max few thousands $. If you buy fe bitcoins for 1M $ stock price would propably rise a lot."

Liquidity isn't too bad if you use the right exchange. The problem is if you buy bitcoins now you are buying at quite a high price; a price that could fall substantially and stay at a lower level for a long time. I don't think that bitcoin are a bad long term investment and they have been very good for me but its important to be realistic.

[tskweres]

1000% yes

[bennett616]

na....... :/

Andy B

[jml]

"In my view, I think that bitcoins are worth more than printed fiat currencies as they are not backed by the "gold standard" anymore. Bitcoins like fiat currencies are backed only by confidence of the people. For me, the idea of using bitcoins to pay for wares and services is the similar analogy pulling up a big finger to greedy bankers as they impose an interest on the money loaned from central banks to Governments which is then passed on to you; the hard working people. This is why I use Bitcoins and screw the pound, dollar, euro, etc."

Me too but that is a political perspective, not an investment perspective.

You are quite mistaken, it is not a political statement, it is an ideology based on economic morality (which the financial institutions lack) and the crisis of capital. Furthermore, it is one of the main reasons why Bitcoin was developed a) to avoid central banks taking a cut from transfer fees, b) provide a distributed currency which is controlled by the public, and NOT by a single exclusive entity AND c) send money from person a to b easily and securely.

Look up http://www.themoneyfix.org/. You will see smaller communities stricken by austerity using other types of limitless currency (such as time) to pay for goods and services without the risk of inflation and added interest on loans which in turn devalues your money and end up with less because you have to pay interest on the money you use.

Look into the following resources:

Professor David Harvey's books and lectures on "Crises Of Capital".
http://en.wikipedia.org/wiki/Henri_Lefebvre
http://en.wikipedia.org/wiki/Right_to_the_city

[gambit1]

An investment perspective doesn't necessarily have "economic morality". The guy who posted this asked if it was a good investment. What he is likely to have meant is: will I profit from this?

I know you mean well but I don't need a lecture on economics or on the iniquity of the prevailing monetary system. I am well aware of that iniquity. What you need to realize is that bitcoin means different things to different people. Some people are committed to bitcoin as a political phenomenon that represents economic freedom, and you seem to fall into that category. Some people are just curious about it some people are interested in it from a technological perspective (interested in the cryptography). Some people are just interested in speculating in bitcoin and have little if any interest in its political implications. Without further information I have to assume that the guy who posted asking whether bitcoin is a good investment falls into that category, as do you.

[NewLiberty]

Just keep in mind that it "could" go to zero.  Don't bet the family, but maybe bet the car.

[Matthew N. Wright]

If you're asking is bitcoin a "Sound investment" ("financially strong, secure, or reliable"), the answer would be not even close. Investing in bitcoin is absolutely speculation (read: gambling), but even I admit there is a certain amount of cultism behind it that will keep the price propped up to certain lengths. When bitcoin is useful for more than buying coffee and ugly strippers on reddit, it may be a better investment. Being a good or bad investment has never stopped people before though. Do what you believe is right as some things aren't about money, even literal internet money.

[jml]

An investment perspective doesn't necessarily have "economic morality". The guy who posted this asked if it was a good investment. What he is likely to have meant is: will I profit from this?

I know you mean well but I don't need a lecture on economics or on the iniquity of the prevailing monetary system. I am well aware of that iniquity. What you need to realize is that bitcoin means different things to different people. Some people are committed to bitcoin as a political phenomenon that represents economic freedom, and you seem to fall into that category. Some people are just curious about it some people are interested in it from a technological perspective (interested in the cryptography). Some people are just interested in speculating in bitcoin and have little if any interest in its political implications. Without further information I have to assume that the guy who posted asking whether bitcoin is a good investment falls into that category, as do you.

I agree on your point that people have a different meaning and based on the resources I have posted, the answer is simply no and the reason is that Bitcoins liquidity is dependent on fiat currencies which can either rise or fall based on speculation. It's value is also determined by confidence (Look at bitfloor's case when BTC value slumped) which is what I was stating before on my post. If Bitcoins was backed by "the gold standard", then I would say it is a "safe" investment.

What I wanted to demonstrate to the OP is the underlying reason of why Bitcoin was created; it represents freedom from central banks which is what we really need.

[cardcomm]

If you are looking at bitcoin as an investment then you must consider it very high risk and its position in your portfolio must reflect that. The volatility of bitcoin is well known. This means it can be very profitable or it can be ruinous.

But over all it's profitable. If you keep your coins long enough they will go up in value, you just have to wait for the difficulty to go up

The idea that Bitcoin value goes up as difficulty increases is somewhat naive, I believe.

[chalupa_batman]

i think bitcoins are a good source of investment. i think the real question is at what point do you sell? if you're in it for the long run, then hypothetically speaking by the time the value has increased substantially, then you might as well spend your coins instead of selling them. the second part to that question is what is the long term value of btc? 10k? 100k? 1m? lets hope more

[FinShaggy]

If you're asking is bitcoin a "Sound investment" ("financially strong, secure, or reliable"), the answer would be not even close. Investing in bitcoin is absolutely speculation (read: gambling), but even I admit there is a certain amount of cultism behind it that will keep the price propped up to certain lengths. When bitcoin is useful for more than buying coffee and ugly strippers on reddit, it may be a better investment. Being a good or bad investment has never stopped people before though. Do what you believe is right as some things aren't about money, even literal internet money.

Well if you write for Devtome you get your bitcoins for free, which isn't gambling at all

[maz]

For me, the idea of using bitcoins to pay for wares and services is the similar analogy pulling up a big finger to greedy bankers as they impose an interest on the money loaned from central banks to Governments which is then passed on to you; the hard working people. This is why I use Bitcoins and screw the pound, dollar, euro, etc.

This is the key right here. ^

I know hundreds of non-technical people who haven't even heard of bitcoin but given half a chance to join this ideology would jump at it. It's only a matter of time before getting them on board will be easier.

[jml]

For me, the idea of using bitcoins to pay for wares and services is the similar analogy pulling up a big finger to greedy bankers as they impose an interest on the money loaned from central banks to Governments which is then passed on to you; the hard working people. This is why I use Bitcoins and screw the pound, dollar, euro, etc.

This is the key right here. ^

I know hundreds of non-technical people who haven't even heard of bitcoin but given half a chance to join this ideology would jump at it. It's only a matter of time before getting them on board will be easier.

The main selling point to non-techies is that bitcoin is an alternative to banks. Hopefully as bitcoin becomes more widely adopted it will put pressure on banks to reduce fees and become more competitive. In the end the consumer wins regardless of whether they use btc or not.

That will never happen. This has been going on since the existence of paper money back in the 10th century. Even the founding fathers of the US (Thomas Jefferson) warned that centralised banks are a danger to its freedoms. He said the following:

Thomas Jefferson (3rd US President)
"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

Andrew Jackson (7th US President)
"If congress has the right under the Constitution to issue paper money, it was  given them to use themselves, not to be delegated to individuals or corporations. -Andrew Jackson"

His last words were, "I killed the Bank".

When Woodrow Wilson signed the Dec 23rd Federal Reserve Act

Despite these warnings, Woodrow Wilson signed the 1913 Federal Reserve Act. A few years later he wrote: I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of  credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most  completely controlled and dominated Governments in the civilized world no longer a  Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men. -Woodrow  Wilson

Others wrote:

“It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning.” Henry Ford, founder of the Ford Motor Company.

Red shield banker of UK: Look up Jacob Rothschild (France) and Nathan Rothschild (UK) funding the battle of Waterloo.

“Let me issue and control a nation’s money and I care not who writes the laws.” Mayer Amschel Rothschild (1744-1812), founder of the House of Rothschild.

History is repeating itself don't you think? We have a responsibility to rise up against this menace or do you think they are too big to fail? We are the masses and we should dictate what we use to exchange value, not the few elites.

[disambiguation]

That will never happen. This has been going on since the existence of money back in the 10th century. Even the founding fathers of the US (Thomas Jefferson) warned that centralised banks are a danger to its freedoms. He said the following:

Thomas Jefferson (3rd US President)
"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private ...

Nice post. Thats why bitcoin will be so popular.

[jml]

That will never happen. This has been going on since the existence of money back in the 10th century. Even the founding fathers of the US (Thomas Jefferson) warned that centralised banks are a danger to its freedoms. He said the following:

Thomas Jefferson (3rd US President)
"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private ...

Nice post. Thats why bitcoin will be so popular.

If you want to dig deeper, look for Red shield banks.

[FinShaggy]

I think Bitcoin is a true investment because there is a limited amount, and the block chain gets more and more difficult AND releases less coins which will raise the value.

Eventually people will be trading Satoshi the way we trade bitcoins, and since that hasn't started yet, it truly is a good investment right now.

[Sarcgasm]

I think it's a good investment so long as you buy low and sell high.  The fact that people are exchanging real money to buy this "virtual" money is a good indication that bitcoin will always hold some kind of value.

[gambit1]

Something being in limited supply is a good property for a store of value but it does not guarantee that that thing will always be valuable. Other cryptocurrencies have had a limited supply and their value has utterly dissolved. 

Jml:some great quotations there. Really interesting.

[gcgipson]

In the long run BitCoin is a good investment.  BitCoin's many advantages, combined with the fact that online merchants are totally unaware of those advantages for right now, means that BitCoin will rise in value.  Not being able to accept payments from anyone in the world, high credit card fees, credit card merchants shutting down your business on a whim, charge backs....these are all problems that bitcoin solves, but merchants are totally unaware of it.  In fact, I believe the powers that be have a negative PR campaign against bitcoin to slow or stop its adoption.  However, the global economy all but ensures that BitCoin MUST happen on a wide scale, which in turn means that bitcoin's value must rise in the long term as well.

[xmlHTTP]

Bitcoin is a good investment, but a possible investitor should not believe that it is enough to leave them there to get rich, that sadly it's what many believe.

[Ardenyham]

No one know what exchange rate of bitcoin will be in 5 years, so expect this "investment" as very risky. You could loose big, retain value or have good profit - no one know.

[gambit1]

"No one know what exchange rate of bitcoin will be in 5 years, so expect this "investment" as very risky. You could loose big, retain value or have good profit - no one know."

Is right. At least with the political angle you can't lose, if you believe in it.

[fortheyu]

That is only true when an authority like the state enforces the use of bad money and merchants to accept it

[Lethn]

They're a store of wealth, not an investment, treat them like a more volatile gold and silver.

[kieras]

Depends a which end your in when it crashes.

[FinShaggy]

In the long run BitCoin is a good investment.  BitCoin's many advantages, combined with the fact that online merchants are totally unaware of those advantages for right now, means that BitCoin will rise in value.  Not being able to accept payments from anyone in the world, high credit card fees, credit card merchants shutting down your business on a whim, charge backs....these are all problems that bitcoin solves, but merchants are totally unaware of it.  In fact, I believe the powers that be have a negative PR campaign against bitcoin to slow or stop its adoption.  However, the global economy all but ensures that BitCoin MUST happen on a wide scale, which in turn means that bitcoin's value must rise in the long term as well.

It's the same thing Alcohol and Paper do against MJ, it's basically just lobbying. The people with money pay so that they don't have to switch to the new thing, and the way they do that is by trying to make it look like a bad idea.

[FinShaggy]

Bitcoin is a good investment, but a possible investitor should not believe that it is enough to leave them there to get rich, that sadly it's what many believe.

I think currently that IS what people should believe. Until the coins stop being produced.
They will not stop going up in value until they are all produced, and the payout is 0 per block.

By then I think 1 Saratoshi will be valued like 1 BTC is today.

[zpm]

Bitcoin is genius and genius is usually a good investment

[gambit1]

"I think currently that IS what people should believe. Until the coins stop being produced.
They will not stop going up in value until they are all produced, and the payout is 0 per block.

By then I think 1 Saratoshi will be valued like 1 BTC is today."

I respect you opinion, and indeed your enthusiasm, but I don't think that you understand the economics surrounding bitcoin or the many risks involved. I hope that you only commit to bitcoin that which you can afford to lose. I really hope that.

[FinShaggy]

"I think currently that IS what people should believe. Until the coins stop being produced.
They will not stop going up in value until they are all produced, and the payout is 0 per block.

By then I think 1 Saratoshi will be valued like 1 BTC is today."

I respect you opinion, and indeed your enthusiasm, but I don't think that you understand the economics surrounding bitcoin or the many risks involved. I hope that you only commit to bitcoin that which you can afford to lose. I really hope that.

I understand that bitcoin COULD collapse at any moment, but I don't believe it WILL. And that is not pure faith...

I first learned about Bitcoin from the Silk Road, and that is NOT the only place people can trade drugs for Bitcoins.

As long as Bitcoin offers anonymity, no taxes and international convenience, it will continue to rise.
It has more REAL WORLD value than paper money.

[bobboooiie]

As good investment it is there is always pretty possible chance of it going to 0$ which makes it high risk. So invest only what you can afford to lose.

[NewLiberty]

"I think currently that IS what people should believe. Until the coins stop being produced.
They will not stop going up in value until they are all produced, and the payout is 0 per block.

By then I think 1 Saratoshi will be valued like 1 BTC is today."

I respect you opinion, and indeed your enthusiasm, but I don't think that you understand the economics surrounding bitcoin or the many risks involved. I hope that you only commit to bitcoin that which you can afford to lose. I really hope that.

I understand that bitcoin COULD collapse at any moment, but I don't believe it WILL. And that is not pure faith...

I first learned about Bitcoin from the Silk Road, and that is NOT the only place people can trade drugs for Bitcoins.

As long as Bitcoin offers anonymity, no taxes and international convenience, it will continue to rise.
It has more REAL WORLD value than paper money.

Those could also be existential threats to the existence of bitcoin if it is targeted just in order to get at the folks using it for black market.
The best money should function well in white markets, in grey and black markets there are always other options.

Even if everything that was available on the silk road were legal in all jurisdictions on the planet, there would still be a need for bitcoin.

Also, bitcoin has a very solid distributed logging and accounting, so if you are using it to break laws, you will need to be even more careful than if you were using something more anonymous.

[FinShaggy]

"I think currently that IS what people should believe. Until the coins stop being produced.
They will not stop going up in value until they are all produced, and the payout is 0 per block.

By then I think 1 Saratoshi will be valued like 1 BTC is today."

I respect you opinion, and indeed your enthusiasm, but I don't think that you understand the economics surrounding bitcoin or the many risks involved. I hope that you only commit to bitcoin that which you can afford to lose. I really hope that.

I understand that bitcoin COULD collapse at any moment, but I don't believe it WILL. And that is not pure faith...

I first learned about Bitcoin from the Silk Road, and that is NOT the only place people can trade drugs for Bitcoins.

As long as Bitcoin offers anonymity, no taxes and international convenience, it will continue to rise.
It has more REAL WORLD value than paper money.

Those could also be existential threats to the existence of bitcoin if it is targeted just in order to get at the folks using it for black market.
The best money should function well in white markets, in grey and black markets there are always other options.

Even if everything that was available on the silk road were legal in all jurisdictions on the planet, there would still be a need for bitcoin.

Also, bitcoin has a very solid distributed logging and accounting, so if you are using it to break laws, you will need to be even more careful than if you were using something more anonymous.

I don't use it to break laws. And it DOES work well in a white market, so it won't collapse.

[NewLiberty]

I don't use it to break laws. And it DOES work well in a white market, so it won't collapse.

Keep it up and encourage others to do the same, and we may have a chance to be spending them by the time the generation stops.

[FinShaggy]

I don't use it to break laws. And it DOES work well in a white market, so it won't collapse.

Keep it up and encourage others to do the same, and we may have a chance to be spending them by the time the generation stops.

Even once they are no longer generated they can be traded using transaction fees.

[dorigan22]

Bitcoin is a speculative investment.  It's better if you buy it because you plan to use it.  Plus the more people use bitcoin, the more valuable it will become.

[FinShaggy]

Bitcoin is a speculative investment.  It's better if you buy it because you plan to use it.  Plus the more people use bitcoin, the more valuable it will become.

This is a good point about the market. Not only is it better to buy it if you plan to use it, it is better for the economy for you to spend a bitcoin than it is for you to sell one.

[NewLiberty]

But as they say, "bad money drives out good".

That is only true when an authority like the state enforces the use of bad money and merchants to accept it.

If that is not the case, then good money will drive out the bad, because merchants will prefer and demand it (gold, silver, bitcoins).

Or, it is always true when there are multiple currencies in play and you are suggesting a situation where there is not multiple?

For the example of the United States, where there is not such enforcement of the use of bad money generally.
The only place you are forced to use the fiat money is when you are paying your taxes (the Legal Tender law).
So when the merchant is the government, they demand (not merely prefer) the bad.
Everyone else is free to offer or take what they desire, provided the exchange does not include contraband, there is the same tax liability no matter the currency, and the tax gets calculated on the unit of account for the tax.
One risk in accepting something other than the fiat is that when time comes to pay the taxman, if everyone is converting to the fiat at that time, there is a price drop at the worst time.
So it may be easier and perceived as less risky to use the fiat, until such time as the network effects and systemic integration benefits make it easy to change, this is how Diner's Club card was born.  And so we have payment cards of many types.

When we have automatic accounting for bitcoin built into things like quickbooks or other small merchant applications that can read the blockchain and do their accounting for them, we get a more broad acceptance.

[SimplyBTC]

I think you should only buy what you can afford to lose. Prices have gone up recently but could also crash just as easily.

[Simonsays]

If you got into BTC 1-3 or many more months ago you've seen your holdings rocket hundreds or even thousands of %.  Not to mention if you got in early on Asicminer.

Hindsight is always 20/20 and its easy to say 'Doh I was gonna put some money there and I didn't'   -   I think many of us - including myself - have been doing exactly that over the past month.

Personally - I'm getting into the game late and slowly acquiring BTC as a diversification of my portfolio. I think mining is a truly unique and fascinating foundation on which bitcoins exist - but sadly by the time my BFL shipment arrives it won't be much more than a conversation piece chugging in a few dollars at a time.

You can take some of the risk out of BTC as an investment by writing yourself a bot (or using one of the few opensource ones currently available through these forums) that will automatically sell all your BTC in case of a major (or minor) price drop.  This way you can 'ride the wave' as bitcoin gains popularity and hopefully continues to rise - while mitigating some of the risk using a bot.   This of course - puts a lot of trust in a program and would require holding your funds in a hot wallet (as opposed to a cold wallet offline) which in itself lies a greater risk.

Personally I have 50% in Asicminer and 50% on exchanges.

[Preschoolv2]

If you got into BTC 1-3 or many more months ago you've seen your holdings rocket hundreds or even thousands of %.  Not to mention if you got in early on Asicminer.

Hindsight is always 20/20 and its easy to say 'Doh I was gonna put some money there and I didn't'   -   I think many of us - including myself - have been doing exactly that over the past month.

Personally - I'm getting into the game late and slowly acquiring BTC as a diversification of my portfolio. I think mining is a truly unique and fascinating foundation on which bitcoins exist - but sadly by the time my BFL shipment arrives it won't be much more than a conversation piece chugging in a few dollars at a time.

You can take some of the risk out of BTC as an investment by writing yourself a bot (or using one of the few opensource ones currently available through these forums) that will automatically sell all your BTC in case of a major (or minor) price drop.  This way you can 'ride the wave' as bitcoin gains popularity and hopefully continues to rise - while mitigating some of the risk using a bot.   This of course - puts a lot of trust in a program and would require holding your funds in a hot wallet (as opposed to a cold wallet offline) which in itself lies a greater risk.

Personally I have 50% in Asicminer and 50% on exchanges.

Smart moves.. i was trying to get asic miner shares..but instead i ordered from bfl. ill be waiting patiently while trying to buy some avalons;]

[Simonsays]

Smart moves.. i was trying to get asic miner shares..but instead i ordered from bfl. ill be waiting patiently while trying to buy some avalons;]

If you believe in AM and think they can keep up the 20-25% network share for the next few or even many months, then even at 2.5btc a share (or the 0.025btc micro-passthroughs) are worth looking at.

How is the avalon front? I haven't kept up - when are they making the next batch avail for order?

[moranes]

yes.

[Harryman]

Yes

[alphacoin]

bitcoin is a good investment as long as they are people buy it, otherwise it's just something completely worthless

[robert5]

yes

Agreed

yes

[ropavaje]

Bitcoin rullz