Are fiat-reliant BTC-related investments viable?

[Kluge]

There was recently a thread posted on BTC-rich people investing in a BTC ATM manufacturer.

Well... if they were bullish on BTC, why would they invest in a fiat-reliant manufacturer when (with a bullish outlook) BTC would almost certainly increase in value faster than equity in a fiat-reliant BTC-related business? AFAIK, there is no group of industrial manufacturers which could manufacture components and assemble a BTC ATM. The best they could probably do is choose a team of assemblers who'll work for BTC and exclusively accept BTC for payment. Ultimately, the best business plan would probably be to.... do nothing and just sit on the coins.

ASIC manufacturers are an exception since they're basically loaned the BTC for a long length of time (ASICMiner excluded), which gives them a major long position.

So... Can an investment in something like a Bitcoin ATM be anything but charity?

(There are some other drawbacks to an equity investment, too, such as the lower liquidity and extra regulatory risk. Someone please give me a better phrase than "fiat-reliant, BTC-related"  )

[puax]

So many flawed assumptions

"BTC would almost certainly increase in value faster than equity in a USD-reliant BTC-related business"
Dude, even with a bullish outlook that's less than certain, and even so: what about risk-adjusted returns?

"ASIC manufacturers are an exception since they're basically loaned the BTC for a long length of time (ASICMiner excluded), which gives them a major long position."
ASIC manufacturers are massively long BTC? Bunch of idiots. They should hedge that. And maybe they do!

[Kluge]

So many flawed assumptions

"BTC would almost certainly increase in value faster than equity in a USD-reliant BTC-related business"
Dude, even with a bullish outlook that's less than certain, and even so: what about risk-adjusted returns?

"ASIC manufacturers are an exception since they're basically loaned the BTC for a long length of time (ASICMiner excluded), which gives them a major long position."
ASIC manufacturers are massively long BTC? Bunch of idiots. They should hedge that. And maybe they do!

Using a business-in-fiat model which relies on increased BTC adoption (like a BTC ATM) would basically rely on the price of BTC (through adoption, which is what they're actually looking for) increasing. If you're betting on increased adoption, why would you ever invest in a business in which success relies on BTC adoption instead of just investing in BTC?

Investing in BTC - if it's kept secure - there's definitely not more risk in holding vs. investing in a registered company. The only models using BTC which make sense to me skim off the top of BTC revenue. BTC-denom lending, or anything handling BTC transactions which take a % cut. If you're going to bet on Bitcoin - why would you invest in a business model which mostly uses fiat?

As for ASIC manufacturers - I actually have no idea if they're long BTC. They don't release that kind of stuff. Theoretically, one might exist which didn't use pre-order funds to manufacture (as is legally prohibited in a good many places), and kept the bulk of, or all funds in BTC.  Maybe they hedged. Maybe not.

ETA: For clarity - I'm not asking about why someone would be long on BTC. I'm asking why someone betting on Bitcoin would use a business where capital is not tied into assets which'd appreciate with Bitcoin.

[puax]

Perhaps they're looking at even larger profits with that venture. You're seriously oversimplifying our world.

Follow your argument to its logical conclusion and anything anyone should ever do is buy a shitload of BTC on margin on Bitfinex. Obviously that's silly. You need actual investments, not just financial investments, for BTC to take off.

[Kluge]

Perhaps they're looking at even larger profits with that venture. You're seriously oversimplifying our world.

Follow your argument to its logical conclusion and anything anyone should ever do is buy a shitload of BTC on margin on Bitfinex. Obviously that's silly. You need actual investments, not just financial investments, for BTC to take off.

Huh. I concede defeat. You're right. By accepting both USD and BTC, a business with an advantage over competitors is viable whether BTC succeeds (increasing price/adoption) or fails (decreasing price/adoption). There is less risk. If BTC succeeds, they may not get the same level of RoI as simply holding BTC, but they are protected if BTC never achieves mass adoption, too. This isn't really true of the Bitcoin ATM example, and I can't think of any BTC-related businesses other than BitcoinStore (and gambling sites, though this would lead to a different argument) which offer an advantage over conventional stores in their market - but at least for BitcoinStore, the argument doesn't hold water.

What I wrote before re-reading and realizing I was wrong:

Prisoner's dilemma. So who wants to self-sacrifice to invest in a Bitcoin ATM (or another venture in the same boat)?

It's only seeing big success if Bitcoin takes off. If Bitcoin takes off, the chance of an ATM providing superior profitability than holding BTC is probably very unlikely.

What kind of businesses exist in the BTC world right now? Payment processors skimming BTC, mining farms generating BTC, gambling services skimming BTC, lenders skimming BTC, escrow skimming BTC, auction sites skimming BTC, pre-order companies taking BTC, and a very small handful of companies like BitcoinStore, which isn't meeting its contract quotas (and very possibly immediately converting BTC to USD to repurchase stock, so it'd be more of a pass-through [if that's the case]).

I could understand diversification of currency acceptance - by accepting both BTC and USD you aren't just "betting on BTC," but most BTC-accepting companies (with BitcoinStore incidentally being an exception) offer no advantage except that they accept BTC. If they couldn't accept BTC, most would almost certainly fade into obscurity.

[xxjs]

Perhaps they're looking at even larger profits with that venture. You're seriously oversimplifying our world.

Follow your argument to its logical conclusion and anything anyone should ever do is buy a shitload of BTC on margin on Bitfinex. Obviously that's silly. You need actual investments, not just financial investments, for BTC to take off.

Huh. I concede defeat. You're right. By accepting both USD and BTC, a business with an advantage over competitors is viable whether BTC succeeds (increasing price/adoption) or fails (decreasing price/adoption). There is less risk. If BTC succeeds, they may not get the same level of RoI as simply holding BTC, but they are protected if BTC never achieves mass adoption, too. This isn't really true of the Bitcoin ATM example, and I can't think of any BTC-related businesses other than BitcoinStore (and gambling sites, though this would lead to a different argument) which offer an advantage over conventional stores in their market - but at least for BitcoinStore, the argument doesn't hold water.

What I wrote before re-reading and realizing I was wrong:

Prisoner's dilemma. So who wants to self-sacrifice to invest in a Bitcoin ATM (or another venture in the same boat)?

It's only seeing big success if Bitcoin takes off. If Bitcoin takes off, the chance of an ATM providing superior profitability than holding BTC is probably very unlikely.

What kind of businesses exist in the BTC world right now? Payment processors skimming BTC, mining farms generating BTC, gambling services skimming BTC, lenders skimming BTC, escrow skimming BTC, auction sites skimming BTC, pre-order companies taking BTC, and a very small handful of companies like BitcoinStore, which isn't meeting its contract quotas (and very possibly immediately converting BTC to USD to repurchase stock, so it'd be more of a pass-through [if that's the case]).

I could understand diversification of currency acceptance - by accepting both BTC and USD you aren't just "betting on BTC," but most BTC-accepting companies (with BitcoinStore incidentally being an exception) offer no advantage except that they accept BTC. If they couldn't accept BTC, most would almost certainly fade into obscurity.

One possibility is that the investors in businesses utilizing the bitcoin biotope does not know what they are doing.