Bitcoin as an investment

[jjacob]

Bitcoin isn't an investment vehicle, period.

It's a payment technology, protocol, and most of all cryptocurrency.

If you're in it to make a quick buck, you're doing it wrong.

Bitcoin is what the majority of people treat it to be.
A majority of people seem to be buying bitcoins treating it as an investment.

[mmortal03]

Bitcoin isn't an investment, it's insurance.

People devote a percentage of their investment portfolios to cash, so this is all just semantics.

[soy]

I like the idea of limited availability.  There will never be enough Bitcoins that every living US college graduate could own one.

But the falling price as it relates to large farms dumping the mined coins leads me to consider that KnC has had the most efficient Bitcoin miners and prices those too high but sells to a relative's farm.  Tactically they'd dump BTC until their efficient farms are the only viable farms  (I'm discounting miners who get free electric as they're unlikely unless government supported) and less efficient large farms would shutdown.  A disturbing facet is that if they then allowed the price to rise the previously mothballed farms would fire up so they would keep the price at that low.  They'd be harvesting a large slice of the mined Bitcoins until the payout for a discovered block drops from 25 to 12½.

[soy]

The low Russian ruble and no cash flow into Bitcoin points to a very real loss of confidence in those who have defacto control and the idea itself. 

That photo of Karpeles giving the world the finger while wearing a very expensive suit comes to mine.

[the joint]

Bitcoin is independent of any of the fiat economies.

Oh, really?

Yet Bitcoin's value is measured in USD ... And merchants "accepting" bitcoin, actually doesn't accept Bitcoin at all, but USD through Bitpay and Coinbase ... Doesn't sound very independent to me.

If all the fiat economies of the world were to come crumbling down at the same time, would poor peasants in Africa and Asia all suddenly come flocking to Bitcoin? Or would they perhaps focus on getting food in their stomachs instead?

The Bitcoin hype started dying as soon as Gox went out of business and took Markus and Willy with it. Every BTC bubble was fueled by Gox manipulation schemes. Now the world is seeing bitcoin for what it really is: A couple of thousand deluded cultist hoarders, and another couple of thousand junkies and pervs looking for drugs and child porn on the deep web.

So why, then, are venture capitalists pouring hundreds of millions of dollars into infrastructure and business development?

[the joint]

The low Russian ruble and no cash flow into Bitcoin points to a very real loss of confidence in those who have defacto control and the idea itself. 

That photo of Karpeles giving the world the finger while wearing a very expensive suit comes to mine.

Do you actually expect a strong correlation between the prices of the ruble and BTC?

If you live in a country whose currency's value is in decline, do you think the smart thing to do is to...invest?  Investing is something you do when you have all your immediate needs met and you have the money to invest.

Moving from the ruble to Bitcoin is like jumping off a sinking ship onto an active volcano.  Why on Earth would somebody do such a thing when BTC is so volatile?  High volatility is expected in such a small market whose reach extends to a global scale.  It's perfectly reasonable to establish confidence in BTC's future while simultaneously making the decision that it's currently a risky investment.

[RodeoX]

Perhaps the speculators have discovered the price. Maybe it's $300?, that seems reasonable. 

[soy]

The low Russian ruble and no cash flow into Bitcoin points to a very real loss of confidence in those who have defacto control and the idea itself. 

That photo of Karpeles giving the world the finger while wearing a very expensive suit comes to mine.

Do you actually expect a strong correlation between the prices of the ruble and BTC?

One word answer: Cyprus.

[oda.krell]

The long term slow drop in Bitcoin value, is it the result of ...

It's probably a combination of things, really:

(1) Cyclical nature of markets. Biggest bull market ever -> pretty spectacular bear market only to be expected.

(2) Price outran fundamentals means that, eventually, price will be brought back to earth. Maybe too much even, so now fundamentals are starting to catch up with price, and eventually will probably outrun the price.

(3) Professionalization of the entire market: both trading and mining.

(3.1) Professionalization of trading mainly means: the ability to short, to scale, which wasn't really possible until this year.

(3.2) Professionalization of mining means, competing industrial scale actors taking easy profits by selling newly mined coins at a small reliable profit, as opposed to the classical miner who held in anticipation of a less sure but higher profit. Race to the (profit) bottom started as a result: once enough miners sell, it becomes rational for the other, previously "hodling" miners as well to sell.

(4) Growth of network is solid, but possibly not as strong as previously thought. Had enough discussions with Jorge Stolfi about this topic in the wall observer thread, so I don't really feel like arguing why I believe there is significant adoption slash network growth happening. However, I also do believe we saw a "dip" of sorts on several metrics (no. of tx, tx volume, to name two). Network is still growing, but at least over the last 1 and a half years, the rate of growth is arguably lower than in the previous 2 or so years.

(5) OTC transactions distorting price discovery / hiding buying pressure from the public market. This one is more speculative, but it's a point I have been making for now more than a year: there is (maybe by now: was) this naive notion that "big money" would buy into BTC large scale, as a way to secure their wealth in the coming crypto world. The problem is: even if that would be happening (I'll remain agnostic about this going or not), there was never any chance big money would "buy in" on the exchanges in a straight forward way. It would have been always preferable to bind large mining operation's output to you contractually, possibly even sell a portion of the acquired coins to depress market price. NB please: I'm not saying that "big money is buying OTC". I'm just pointing out that if this happens, it will present as lower buying pressure than if it would happen on-exchange.

(6) Mtgox. Enough said.

(7) Various stuff I forget now... ETF still not listed. Looming bear market in general. Correlation with gold price, which isn't doing so hot either lately.


If I only had to pick the three biggest reasons, I would say: market cycle + large scale shorting + professional short term profit mining.

[the joint]

The low Russian ruble and no cash flow into Bitcoin points to a very real loss of confidence in those who have defacto control and the idea itself. 

That photo of Karpeles giving the world the finger while wearing a very expensive suit comes to mine.

Do you actually expect a strong correlation between the prices of the ruble and BTC?

One word answer: Cyprus.

So?  What does that have to do with anything?  Do you think BTC was the best possible option for Cypriots while accounts were being confiscated?  Almost *any*thing else would have been better.

[NotLambchop]

The low Russian ruble and no cash flow into Bitcoin points to a very real loss of confidence in those who have defacto control and the idea itself. 

That photo of Karpeles giving the world the finger while wearing a very expensive suit comes to mine.

Do you actually expect a strong correlation between the prices of the ruble and BTC?

One word answer: Cyprus.

One word reply: NeoBee.

[soy]

The low Russian ruble and no cash flow into Bitcoin points to a very real loss of confidence in those who have defacto control and the idea itself. 

That photo of Karpeles giving the world the finger while wearing a very expensive suit comes to mine.

Do you actually expect a strong correlation between the prices of the ruble and BTC?

One word answer: Cyprus.

So?  What does that have to do with anything?  Do you think BTC was the best possible option for Cypriots while accounts were being confiscated?  Almost *any*thing else would have been better.

One of the early big spikes in Bitcoin value was when Russian money in Cyprus banks had been threatened.  I can't envision the Russian money completely trusting the Cyrpus banking system ever since but even after almost seeing reverse interest rates on savings (didn't the Swiss just do that?) they perhaps trust it more than Bitcoin.  (Hope Karpeles was looking in a mirror when he gave that finger.)

[the joint]

The low Russian ruble and no cash flow into Bitcoin points to a very real loss of confidence in those who have defacto control and the idea itself. 

That photo of Karpeles giving the world the finger while wearing a very expensive suit comes to mine.

Do you actually expect a strong correlation between the prices of the ruble and BTC?

One word answer: Cyprus.

So?  What does that have to do with anything?  Do you think BTC was the best possible option for Cypriots while accounts were being confiscated?  Almost *any*thing else would have been better.

One of the early big spikes in Bitcoin value was when Russian money in Cyprus banks had been threatened.  I can't envision the Russian money completely trusting the Cyrpus banking system ever since but even after almost seeing reverse interest rates on savings (didn't the Swiss just do that?) they perhaps trust it more than Bitcoin.  (Hope Karpeles was looking in a mirror when he gave that finger.)

I find it hard to believe that the "spikes" were the result of BTC being purchased on behalf of those whose money was directly threatened.  That occurred during a time when news events directly catalyzed market movements.  A couple years ago, you could day trade successfully just from reading headlines.

[ThatDGuy]

The long term slow drop in Bitcoin value, is it the result of ...

It's probably a combination of things, really:

(1) Cyclical nature of markets. Biggest bull market ever -> pretty spectacular bear market only to be expected.

(2) Price outran fundamentals means that, eventually, price will be brought back to earth. Maybe too much even, so now fundamentals are starting to catch up with price, and eventually will probably outrun the price.

(3) Professionalization of the entire market: both trading and mining.

(3.1) Professionalization of trading mainly means: the ability to short, to scale, which wasn't really possible until this year.

(3.2) Professionalization of mining means, competing industrial scale actors taking easy profits by selling newly mined coins at a small reliable profit, as opposed to the classical miner who held in anticipation of a less sure but higher profit. Race to the (profit) bottom started as a result: once enough miners sell, it becomes rational for the other, previously "hodling" miners as well to sell.

(4) Growth of network is solid, but possibly not as strong as previously thought. Had enough discussions with Jorge Stolfi about this topic in the wall observer thread, so I don't really feel like arguing why I believe there is significant adoption slash network growth happening. However, I also do believe we saw a "dip" of sorts on several metrics (no. of tx, tx volume, to name two). Network is still growing, but at least over the last 1 and a half years, the rate of growth is arguably lower than in the previous 2 or so years.

(5) OTC transactions distorting price discovery / hiding buying pressure from the public market. This one is more speculative, but it's a point I have been making for now more than a year: there is (maybe by now: was) this naive notion that "big money" would buy into BTC large scale, as a way to secure their wealth in the coming crypto world. The problem is: even if that would be happening (I'll remain agnostic about this going or not), there was never any chance big money would "buy in" on the exchanges in a straight forward way. It would have been always preferable to bind large mining operation's output to you contractually, possibly even sell a portion of the acquired coins to depress market price. NB please: I'm not saying that "big money is buying OTC". I'm just pointing out that if this happens, it will present as lower buying pressure than if it would happen on-exchange.

(6) Mtgox. Enough said.

(7) Various stuff I forget now... ETF still not listed. Looming bear market in general. Correlation with gold price, which isn't doing so hot either lately.


If I only had to pick the three biggest reasons, I would say: market cycle + large scale shorting + professional short term profit mining.

Covered lots of bases, really nice summary of a perspective of the current situation.

[ThatDGuy]

Huge marketplace and potential in that alone. Like it, or not.

You need to add another category though: "Douchebag crybaby gamblers that post anonymously on internet forums in an attempt to vent their rage from being douchebag crybaby gamblers."

Yeah, I'm talking about you. People like you make me want Bitcoin to fail.

Just ignore the trolls, they aren't worth the effort.

[mlferro]

Bitcoin isn't an investment vehicle, period.

It's a payment technology, protocol, and most of all cryptocurrency.

If you're in it to make a quick buck, you're doing it wrong.

Bitcoin is what the majority of people treat it to be.
A majority of people seem to be buying bitcoins treating it as an investment.

why not an investment?

you buy bitcoins today  $ 320.00
after about 20 (maybe 10 or less)  days worth $ 400.00

you sell and earn from just over 20%, in well under one month!
opens a loophole to make an investment, so why not do it

[NotLambchop]

...
why not an investment?

you buy bitcoins today  $ 320.00
after about 20 (maybe 10 or less)  days worth $ 400.00
...

Sounds like a plan.

[nauane]

...
why not an investment?

you buy bitcoins today  $ 320.00
after about 20 (maybe 10 or less)  days worth $ 400.00
...

Sounds like a plan.

truth! 
had thought of it the other day

[soy]

So, perhaps the price had reached its stable low and is rebounding a little.

The latest contact from those handling the MtGox debacle say they've contracted with a company to "recover" stolen Bitcoins.  How I wonder.  Steal them back perhaps?

[unent]

So, perhaps the price had reached its stable low and is rebounding a little.

The latest contact from those handling the MtGox debacle say they've contracted with a company to "recover" stolen Bitcoins.  How I wonder.  Steal them back perhaps?

Only if Mark Karples or one of his employees stole them.