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Author Topic: If someone buys Bitcoin today, they'll be lucky to see a 300%+ ROI.  (Read 17628 times)
Mitzplik
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March 02, 2014, 05:13:42 PM
 #21

Aside from all the possible counter-arguments, there's an implication here that 300% is a poor rate of return. Tell that to the average stock investor.
For sure this is very risky and it could be -1000% too.
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Dragonkiller
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March 02, 2014, 05:13:50 PM
 #22

yes you do make really valid points there, but again who though that bitcoin could go to $1000 in one year when buying at $10 ....

It took $6.8 billion to get from $10 to $500.  It would take $63 billion to get to $5000/Bitcoin.  A lot of people are counting on Wall St. and institutional investors to make that happen, but $63 billion is A LOT of money, even for Wall St. How likely is it that investors will come up with $63 billion to put into a speculative currency?

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March 02, 2014, 05:15:22 PM
 #23

If its already awesome, it wouldn't be cheap.
Its similar to when the OP bought his BTC

Ripple was started by the original Mt.Gox CEO. I wouldn't go anywhere near something founded by Magic The Gathering folk.

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March 02, 2014, 05:20:06 PM
 #24

yes you do make really valid points there, but again who though that bitcoin could go to $1000 in one year when buying at $10 ....

It took $6.8 billion to get from $10 to $500.  It would take $63 billion to get to $5000/Bitcoin.  A lot of people are counting on Wall St. and institutional investors to make that happen, but $63 billion is A LOT of money, even for Wall St. How likely is it that investors will come up with $63 billion to put into a speculative currency?

Why, because 12.5 million coins x $5000 = $63 billion?  I'm surprised someone who's been here since 2011 could still think this. 

Alright, alright, bad math acknowledged. However, I stand by the point I was trying to make.

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March 02, 2014, 05:25:40 PM
 #25

yes you do make really valid points there, but again who though that bitcoin could go to $1000 in one year when buying at $10 ....

It took $6.8 billion to get from $10 to $500.  It would take $63 billion to get to $5000/Bitcoin.  A lot of people are counting on Wall St. and institutional investors to make that happen, but $63 billion is A LOT of money, even for Wall St. How likely is it that investors will come up with $63 billion to put into a speculative currency?

Why, because 12.5 million coins x $5000 = $63 billion?  I'm surprised someone who's been here since 2011 could still think this. 

Alright, alright, bad math acknowledged. However, I stand by the point I was trying to make.

yes growth will slow down after a certain price is reached, I think this is what you were implying to...
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March 02, 2014, 05:30:27 PM
 #26

The top was not obvious until it was passed. I was hoping to see a return to the $800 level before I sold the remainder, but the Mt.Gox fiasco has motivated me to sell earlier.

Fair enough.  Thank you for the explanation. 

I was interested because I actually view the MtGox fiasco as medium and long term bullish (especially if the missing coins were stollen in 2011 and long ago sold into the market).  I see this event as the impetus needed to create real exchanges in the US, as well as a supply shock reducing the bitcoins currently available for purchase. 


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Alright, alright, bad math acknowledged. However, I stand by the point I was trying to make.

Thanks for acknowledging the mistake.  But your point that it would likely take an order of magnitude more fiat is still valid.  My counter argument is that more than an order of magnitude more people now know about bitcoin and may be considering purchasing some. 


Only time will tell....

Run Bitcoin Unlimited (www.bitcoinunlimited.info)
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March 02, 2014, 05:45:30 PM
 #27


I was interested because I actually view the MtGox fiasco as medium and long term bullish (especially if the missing coins were stollen in 2011 and long ago sold into the market).  I see this event as the impetus needed to create real exchanges in the US, as well as a supply shock reducing the bitcoins currently available for purchase. 


That's the million dollar question, isn't it?  Based on the various attempts at investigative journalism I've read, I'm leaning more towards the Bitcoins having been either seized or temporarily frozen by the US government due to something likely related to the Silk Road investigation, or to money transmitter licensing issues.

If they have in fact already disappeared and were sold, or the private keys have been lost, then I agree with you that it's a bullish situation. I'm just concerned that the US government may now be in control of hundreds of thousands of coins. To me, the downside risk of such a reality makes an investment in Bitcoin untenable at this juncture.

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March 02, 2014, 05:48:42 PM
 #28

For the record, I just sold all of my Bitcoins. 


Given the viewpoint you expressed above, I'm surprised that you didn't sell your bitcoins in November to January for over $1000.  Why did you feel they were worth holding at a higher price a few months ago, and worth selling now at a lower price today?

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March 02, 2014, 05:50:50 PM
 #29

For the record, I just sold all of my Bitcoins.  I bought my first Bitcoins in June 2011 at around $28 and continued buying all the way down to $2.  I actually bought about 8000 BTC around the time I made this post: http://www.thebitcointrader.com/2011/10/im-calling-bottom.html.

Needless to say, my return on investment was massive. We're talking 25,000% plus.  For someone to see that kind of ROI today, Bitcoin would have to hit $125,000 each, or a market cap of $2.6 trillion on 21 million coins. Which brings me to my first point:

There's significantly less incentive for someone to speculate on Bitcoin today. To see a return comparable to what we've been seeing over the last couple of years, the amount of capital that would have to be injected into the markets is exponentially more than it was just over a year ago. This is going to cause investors to really do their homework before buying Bitcoin, and recent news events are exactly the sort of thing that will deter new investors.

Next, the vast majority of merchants are using Bitcoin as a protocol, not as a store of value. Anytime we hear of a new merchant choosing to "adopt Bitcoin," what they're actually doing is two-fold. One, they're getting free advertising for themselves, especially local businesses that find themselves on the front of the business sections of their local papers. Two, they're not adopting Bitcoin, they're adopting BitPay or Coinbase. These merchants care about lower fees and irreversible transactions, not so much the value of a Bitcoin itself. There are a few exceptions where the merchants retain some or all of the Bitcoins, but they're the minority, by far.

Third, Bitcoin early-adopters are cashing out. When you hear about Overstock, TigerDirect, Fancy, and others doing hundreds of thousands, if not millions of dollars of business in Bitcoin, those are old Bitcoins that are being sold. No one is going out to buy Bitcoins so they can make purchases they could already make with PayPal. It's inefficient and expensive.

Finally, there are better protocols that are being derived from and have improved upon Bitcoin. If Bitcoin is more useful to businesses as a protocol, then why wouldn't a better protocol oust Bitcoin in the long run? The Bitcoin 2.0s of the world (Ethereum, Open Transactions, Ripple, etc) will eventually unseat Bitcoin. Some say that Bitcoin will remain an ideal store of value, and the other technologies will become the ideal "payment rails," but is Bitcoin really a good store of value if 35% of Bitcoins are held in only 500 addresses?

Anyway, suffice it to say that I'm not done in the crypto-currency space. I've divested into Bitcoin 2.0 technologies, and look forward to seeing the space grow. I expect to see better returns on those investments than I would if I simply held Bitcoin.

I agree, I've posted before about how I believe bitcoin is over as an investment
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March 02, 2014, 06:00:16 PM
 #30

Wow you're rich! Send me some coins!  Grin Grin Grin

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March 02, 2014, 06:05:44 PM
 #31

Well, if it can go from zero to $1000+ off the back of a few hundred thousand enthusiasts, scammers and libertarian whack jobs then all bets are off if it gains traction in the wider world.

There are ever increasing rumblings of that being the case.

2014 may not set the world on fire in terms of returns, it is creating the building blocks for the infrastructure it requires to spread far and wide.

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March 02, 2014, 06:07:25 PM
 #32

Aside from all the possible counter-arguments, there's an implication here that 300% is a poor rate of return. Tell that to the average stock investor.
For sure this is very risky and it could be -1000% too.

How do you manage to lose more than 100%?
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March 02, 2014, 06:09:42 PM
 #33

Is Bitcoin really a good store of value if 35% of Bitcoins are held in only 500 addresses?

As much as I don't like paraphrasing Paul Krugman, I think you're conflating normative and positive analysis here. You are basically making the argument that Bitcoin has a socially undesirable element to it because it has high wealth concentration. However, that does not mean jack to someone looking to preserve the value of their own wealth, and people who have wealth will not put their money into media that try to wash wealth disparities away. Bitcoin has among the lowest inflation rates of cryptocurrencies, with the exception of 100% premined/presold coins like MSC, XRP and NXT, but most importantly it has the Schelling point aspect of being the first cryptocurrency out there. Bitcoin is temporally antecedent to every other crypto, and that is one property that it will never lose; hence, it will always be "special" amidst a sea of innumerable other cryptos no matter how powerful they are. That's why I can see it maintaining its value for quite a long time as a digital gold.

You make a good counter-argument, but I'm not sure if "first mover" status is sufficient to generate a large ROI going forward. It might be, but I'm not convinced.

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March 02, 2014, 06:13:52 PM
 #34

In this case first mover status means that it's taken a beating that'll echo down the centuries.

It's still standing and many are still choosing to trust it. That counts for rather a lot more than any groovy innovations.

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March 02, 2014, 06:27:59 PM
 #35

yes you do make really valid points there, but again who though that bitcoin could go to $1000 in one year when buying at $10 ....

It took $6.8 billion to get from $10 to $500.  It would take $63 billion to get to $5000/Bitcoin.  A lot of people are counting on Wall St. and institutional investors to make that happen, but $63 billion is A LOT of money, even for Wall St. How likely is it that investors will come up with $63 billion to put into a speculative currency?

You definitely not understand market capitalization , you dont need 63 billion dollars to get 5,000 dollar coins.

This is correct. Explaining the valuation of bitcoin seems to be intrinsically hard.

Think of a game of tennis, where one player hits the ball and it travels over the net to the opponent. Then imagine the audience, their heads turning from one player to the other. It is the market players that change their valuation. If the players value bitcoin higher, whether they have some, many or none, the price also rises. Nothing has to move. The price we see on the market is only a part of it, namely we see a price when someone who valued it low, reconsiders and values it higher than the current offer. If some permabull changes his valuation of the first coin he might sell, from f.ex 1000 USD to 2000 USD, we don't see that on the market.

The value enters into bitcoin from whatever the participants earlier placed value on. It could be fiat money, cars, houses, beer or whatever. There doesn't even have to be equality between the old and bitcoin. So if everyone sold their dollars for bitcoin to the extent that the dollar lost all value, the total value of bitcoin will not necessarily be the same as the total value of the dollar now. It could be more, or less.

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March 02, 2014, 06:31:47 PM
 #36

Props to the OP for making a very fat profit. If it were me I would've kept a few hundred coins just in case.

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March 02, 2014, 06:32:02 PM
 #37

Well, if it can go from zero to $1000+ off the back of a few hundred thousand enthusiasts, scammers and libertarian whack jobs then all bets are off if it gains traction in the wider world.

There are ever increasing rumblings of that being the case.

2014 may not set the world on fire in terms of returns, it is creating the building blocks for the infrastructure it requires to spread far and wide.


Umm, telling the truth that it's based on enthusiast, scammers and crazy anarchist and state denying libertarians isn't really a positive thing.

Many bubbles have had crazy people and they didn't end too well... Some survive out of those and the value stagnates a long time... Maybe never recovering or going up again...

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March 02, 2014, 06:35:33 PM
 #38

True true.

But for better or worse professional investors, VCs and large finance is slowly waking up. Unless I'm mistaken that was never the case for beanie babies.

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March 02, 2014, 06:47:39 PM
 #39

Props to the OP for making a very fat profit. If it were me I would've kept a few hundred coins just in case.

I'll admit I'm a little extreme when it comes to my investing/trading decisions.  It's how I ended up in Bitcoin in the first place. I *did* hold onto those last few hundred coins for three months, but I've made my decision, and I'm out.

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March 02, 2014, 06:55:02 PM
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I hope you enjoy your gains. I still think it's worth squirreling away a symbolic amount, 21 perhaps.

Having said that being out completely is probably going to be better for your social life and blood pressure.

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