[2018-01-07] Study: 22% of Bitcoin Investors Used Borrowed Money For Trading...

[cybersofts]

Study: 22% of Bitcoin Investors Used Borrowed Money For Trading, Not Recommended



According to LendEDU, a personal loan research firm, more than 18 percent of Bitcoin investors have used borrowed money to trade the cryptocurrency. In a global survey of 672 active Bitcoin investors, researchers asked traders the method they used to fund their cryptocurrency trading accounts. The majority of investors used banking systems such as credit cards and ACH transfers to fund their accounts.

But 22 percent of traders revealed that they have not paid off their credit and debit cards after purchasing Bitcoin, effectively investing in the cryptocurrency with borrowed money. The report read:

    “The wisest and most frugal way to fund a virtual currency exchange account would be through an ACH transfer, which is completely free of charge. Only 18.60 percent of our 672 Bitcoin-invested respondents were paying for the cryptocurrency in this fashion.

    However, this was not even the most pressing concern coming from the LendEDU poll. That recognition belongs to this data-point: 22.13 percent of Bitcoin investors did not pay off their credit card balance after purchasing Bitcoin.”


Exaggerated generalization

Lately, Binance, the world’s largest cryptocurrency exchange, revealed that it has been adding more than 250,000 active users on a daily basis, and were forced to stop adding new users temporarily as a result. Coinbase and Bitstamp have also been adding more than 100,000 users per day and at the time of reporting, Coinbase has close to 20 mln users.

In early December, Bitstamp Co-founder and CEO Nejc Kodrič stated:

    “Please understand that we currently have over 100,000 new accounts opened daily. It is challenging to cope with such surge. We are expanding our capacity to onboard clients faster, but this takes a bit of time.”

Hence, 618 Bitcoin users, is nowhere sufficient to create generalizations about the entire global Bitcoin and cryptocurrency market.

But, it is important to acknowledge that a small portion of Bitcoin investors are still trading the cryptocurrency with debt to this date, despite the advice of experts and analysts to refrain from doing so.


Only invest amount that can be lost

In June, Bitcoin and security expert Andreas Antonopoulos strongly emphasized that he only invests an amount in cryptocurrencies that he is willing to lose, given the significant risk involved in cryptocurrency trading. While the risk of investing in Bitcoin is lower than others given the size of its market, the risk for other cryptocurrencies in the global market still remains substantially high.

“I own a few different crypto assets as part of a small but diversified portfolio. I only risk as much as I'm willing to lose,” said Antonopoulos.

In a presentation at Coinscrum, an event hosted by the Imperial College London, Antonopoulos also noted that he can lose all of his investments in cryptocurrencies and still have everything else because he has invested his career, intellectual capacity, and work in Bitcoin and the cryptocurrency market.

For casual investors and newcomers, it is extremely risky to obtain debt to invest in a particular asset and this is not exclusive to Bitcoin. It does not matter which asset it is, becoming in debt to invest in a particular asset or asset class is highly risky.

"My small savings that I do have are invested in Bitcoin. 100 percent [of it]. I actually have a tiny debt in US dollars that I'm still trying to pay off, so it is more than 100 percent in Bitcoin. Now, I'd like to emphasize again, that is not a recommendation to invest. Because I haven't invested my money in Bitcoin, I invested my career, my intellectual capacity, my creativity energy, my passion, and my work in Bitcoin. The money is the least of the investment that I have made in Bitcoin and I could lose everything of it and I'd still have everything else,” Antonopoulos explained.


Source: https://cointelegraph.com/news/study-22-of-bitcoin-investors-used-borrowed-money-for-trading-not-recommended

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[Kloug]

22% of investors maybe, but that's probably not much money.

I mean, a credit card won't lend more than a few thousands to the average joe. 22% of investors who have invested a few satoshis, then.

[davis196]

Pretty interesting research,but it would be more interesting if the big crypto companies like Coinbase and Bitstamp conduct surveys and ask their users about the capital they use to fund their accounts.
Buying cryptocurrencies with borrowed money isn`t  a  big problem.Those people can pay their debts with their salaries and continue to hold their crypto savings.I`m sure most of them have a "nine-to-five" job.

[Slow death]

22% of investors maybe, but that's probably not much money.

I mean, a credit card won't lend more than a few thousands to the average joe. 22% of investors who have invested a few satoshis, then.

-

Even though it is a small amount of money, it is still very risky and nobody should do it, imagine someone borrowing $17,000 to buy bitcoin, that person buys a bitcoin for the price of $17000 and then the bitcoin price drops to $14000 if this person promised that he would pay the loan in a week and in a week the price of bitcoin does not increase to  $18000 or more than  $18000 that person is in great trouble. This person can be arrested or even killed. Unfortunately people commit the greatest atrocities because of money and make loan is something very risky

But, it is important to acknowledge that a small portion of Bitcoin investors are still trading the cryptocurrency with debt to this date, despite the advice of experts and analysts to refrain from doing so.


Only invest amount that can be lost

many people ignore this phrase:

Only invest amount that can be lost

But they should not ignore!!!

[Kloug]

imagine someone borrowing $17,000 to buy bitcoin

But you can't borrow 17k using an average joe's credit card..
When you're poor (& when you're not, you don't need to borrow 17k), people don't lend you 17k without asking questions.

Yes, some idiots have mortgaged their house to buy BTC.. idiots gonna lose their house, are you gonna cry for them?
Maybe the BTC will go through the roof and they will get richer than you, and won't cry for you.

[squatter]

Study: 22% of Bitcoin Investors Used Borrowed Money For Trading, Not Recommended

The way this is framed is a bit misleading. There's no accounting for the degree of investment. Most exchanges enforce pretty low limits on credit cards due to the high likelihood of fraud. At least the authors made clear that this wasn't entirely representative of the situation.

22% of investors maybe, but that's probably not much money.

I mean, a credit card won't lend more than a few thousands to the average joe. 22% of investors who have invested a few satoshis, then.

You'd be surprised. Overstating income is common, and during the days of easy credit, I've known people that have received six-figure credit lines based on no proof of income. The real bottleneck is the low limits on credit card transactions allowed by exchanges.

I think that credit cards are more about fear of missing out than anything else. Wires can take several days or even weeks to process. I'm pretty sure you can buy instantly with credit cards.

[lotto-fan]

Man this is not that different from the stock trading in wall street. They gamble with other people's money, lol.

[1Referee]

Yes, some idiots have mortgaged their house to buy BTC.. idiots gonna lose their house, are you gonna cry for them?
Maybe the BTC will go through the roof and they will get richer than you, and won't cry for you.

The problem isn't really Bitcoin itself, but the unstable nature of the human being. I am confident that Bitcoin at some point will break through $100,000, but how will these noobs react when we go through a massive selloff? It must be tough for them to watch how just in a matter of days, the market goes down with 20%, where they will probably try to cut losses before it tanks all the way back to zero. If I listen to what average joes say about Bitcoin, then the one thing that's always returning is their 'believe' that Bitcoin can become worthless overnight. For that reason they will sell at a loss in an attempt to prevent further losses, and buy back when the price is going back up again, where the cycle continues. People have to suffer for their own wrongdoings, I seriously don't feel sorry for them.

[error08]

many people ignore this phrase:

Only invest amount that can be lost

But they should not ignore!!!

It's a common rule of invest in cryptocurrencies due to the volatility which can change in a matter of minutes.
But recently this rule being ignored by 22% of bitcoin investors, even if they bought bitcoin, there is no guarantee it can give profits every month to cover the debt as bitcoin seems to fluctuate but can't reach $20,000 again anytime soon.

[placergold]

High risk investment people always use other people's money to gamble