You Asked When To Buy Bitcoin...Well Now's Your Chance(cryptojunky.com)
cryptojunky.com
You Asked When To Buy Bitcoin...Well Now's Your Chance
http://cryptojunky.com/blog/2013/12/18/you-asked-when-to-buy-bitcoin-well-nows-your-chance/
16 comments
>Warren Buffet will tell you that investing is putting your money into something which creates real value, like a business.
Warren Buffet is an investor, i.e. someone seeking returns from interest, dividends, or capital gains from the reasonable expectation of future interest or dividends. Healthy markets have three other fundamental actors: hedgers, who trade to offset a preëxisting risk, arbitrageurs, who trade to profit from establishing the Law of One Price, and speculators, who absorb excess risk and illiquidity other participants do not want.
Speculators absorb the error term. Healthy markets don't function without a proper amount of speculation. So if you believe Bitcoin has fundamental value as an asset and think the upside at least fairly compensates you for the risk, go ahead and absorb that risk. By boosting the asset's value you make it more attractive to others to hold and possibly transact with, thereby giving you a return on your risk.
Point is, you may want to speculate or not. I do not. But that doesn't mean we need to moralise investing over speculating any more than an arbitrageur need find himself intellectually superior to investors.
Warren Buffet is an investor, i.e. someone seeking returns from interest, dividends, or capital gains from the reasonable expectation of future interest or dividends. Healthy markets have three other fundamental actors: hedgers, who trade to offset a preëxisting risk, arbitrageurs, who trade to profit from establishing the Law of One Price, and speculators, who absorb excess risk and illiquidity other participants do not want.
Speculators absorb the error term. Healthy markets don't function without a proper amount of speculation. So if you believe Bitcoin has fundamental value as an asset and think the upside at least fairly compensates you for the risk, go ahead and absorb that risk. By boosting the asset's value you make it more attractive to others to hold and possibly transact with, thereby giving you a return on your risk.
Point is, you may want to speculate or not. I do not. But that doesn't mean we need to moralise investing over speculating any more than an arbitrageur need find himself intellectually superior to investors.
Thanks for taking the time to make such a well written reply to my comment. This further backs up one of my main points. I'm not a sophisticated trader (nor do I wish to become one) so I probably shouldn't be speculating.
> The more mainstream and the larger the Bitcoin market, the more stable it should become. But I'm not interested in risking a large amount of assets to be a revolutionary or financial martyr.
So don't risk a large amount of assets. Risk a small amount. I too want to see BTC succeed as a currency and global payment system, so I've been buying $25 every month worth of BTC and just putting aside. It can go to zero tomorrow and I wouldn't care. It can go to $10000 and I wouldn't sell. But every new opportunity that I get to use BTC as a currency, I use them - namecheap domains come to mind.
I think in this way you are not risking much, but you are contributing to reduce the volatility and turn this into an actual currency, without ruining yourself if this experiment fails.
So don't risk a large amount of assets. Risk a small amount. I too want to see BTC succeed as a currency and global payment system, so I've been buying $25 every month worth of BTC and just putting aside. It can go to zero tomorrow and I wouldn't care. It can go to $10000 and I wouldn't sell. But every new opportunity that I get to use BTC as a currency, I use them - namecheap domains come to mind.
I think in this way you are not risking much, but you are contributing to reduce the volatility and turn this into an actual currency, without ruining yourself if this experiment fails.
Strictly speaking, you would only lose 1x your money on Bitcoin ;) Otherwise, I agree with what you said.
I would prefer to invest in something where their assets will be used to make the world a better place. Not only do I (hopefully) gain long-term value, but also moral satisfaction. If you happen to believe that there will be human value in Bitcoin-as-a-currency, consider investing in the infrastructure rather than the coins.
I would prefer to invest in something where their assets will be used to make the world a better place. Not only do I (hopefully) gain long-term value, but also moral satisfaction. If you happen to believe that there will be human value in Bitcoin-as-a-currency, consider investing in the infrastructure rather than the coins.
I have a question that may sound stupid to Bitcoin aficionados, and yet is the first question that comes to my mind whenever I read something like this, and I'm asking it in all seriousness: why would I want to buy Bitcoin (given that I don't wish to profit from Bitcoin speculation)?
I get that there is some novelty to using an online crypto-currency. But other than the possible fun factor (which I don't expect to experience) what other reason would there be? Now, I'm not asking about Bitcoin's general merit as a currency. Personally, I believe currencies are better when regulated. But that's not what we're talking about. The question of using an unregulated, deflationary crypto-currency instead of "regular money" for most uses by a large population is a theoretical one at the moment, and will remain so for years to come. My question is about using Bitcoin casually now as a supplement to money. A vanishingly small number of vendors accept it. It is not more secure than money: I keep hearing about Bitcoins stolen from online "banks", and I wouldn't trust myself to keep it securely on my own machine. I don't intend to perform an illegal online transaction. So, why would I want to buy Bitcoin?
I get that there is some novelty to using an online crypto-currency. But other than the possible fun factor (which I don't expect to experience) what other reason would there be? Now, I'm not asking about Bitcoin's general merit as a currency. Personally, I believe currencies are better when regulated. But that's not what we're talking about. The question of using an unregulated, deflationary crypto-currency instead of "regular money" for most uses by a large population is a theoretical one at the moment, and will remain so for years to come. My question is about using Bitcoin casually now as a supplement to money. A vanishingly small number of vendors accept it. It is not more secure than money: I keep hearing about Bitcoins stolen from online "banks", and I wouldn't trust myself to keep it securely on my own machine. I don't intend to perform an illegal online transaction. So, why would I want to buy Bitcoin?
>> Personally, I believe currencies are better when they're regulated by governments.
Stop believing that. The exact opposite is true. If we could all use a currency that no one could manipulate at the press of a button somewhere behind the scenes, we would. But as long as governments control money, we're shit out of luck there - they're printing and borrowing money as they please, debasing their currencies and causing all kinds of grief to the little folks, ie. us.
You're right to be skeptical about Bitcoin though. It's basically a "speculative investment vehicle", as someone mentioned. Until that changes, you should be cautious about buying them. The gold rush is probably over.
( Or not. But no one knows. )
Stop believing that. The exact opposite is true. If we could all use a currency that no one could manipulate at the press of a button somewhere behind the scenes, we would. But as long as governments control money, we're shit out of luck there - they're printing and borrowing money as they please, debasing their currencies and causing all kinds of grief to the little folks, ie. us.
You're right to be skeptical about Bitcoin though. It's basically a "speculative investment vehicle", as someone mentioned. Until that changes, you should be cautious about buying them. The gold rush is probably over.
( Or not. But no one knows. )
I think that kind of manipulation is good, but you know what? Let's agree to disagree on that one. In any case, this is still a theoretical question at this point.
You may think so, but it's not.
Imagine a scenario like this.
Of course, this is grossly simplified, and possibly partially wrong/inaccurate etc, but you get the idea, right? We really do lose purchasing power when more currency goes into circulation.
Besides, we haven't even touched the effects of zero interest rates, borrowing massive amounts of money that will never be repaid, economic stagnation, an ever larger portion of the national tax revenues going towards paying interest on the ever more massive debts, and so on.. It's all bad, and it's all something that: 1) we do not want to happen, and 2) would not happen in a free market (with a market-chosen currency etc).
But don't take just my word for it: http://mises.org
Imagine a scenario like this.
- There's 10 units of wealth in the world
- There's 10 units of currency in the world
- Still 10 units of wealth in the world
- Now there's 20 units of currency in the world
Of course, this is grossly simplified, and possibly partially wrong/inaccurate etc, but you get the idea, right? We really do lose purchasing power when more currency goes into circulation.
Besides, we haven't even touched the effects of zero interest rates, borrowing massive amounts of money that will never be repaid, economic stagnation, an ever larger portion of the national tax revenues going towards paying interest on the ever more massive debts, and so on.. It's all bad, and it's all something that: 1) we do not want to happen, and 2) would not happen in a free market (with a market-chosen currency etc).
But don't take just my word for it: http://mises.org
That's not how the economy works (international trade is different from local trade, you're not taking employment into account etc.), but for now let's just say that some think a regulated currency is better and some don't. This has little to do with buying Bitcoin now.
>> That's not how the economy works (international trade is different from local trade, you're not taking employment into account etc.), but for now let's just say that some think a regulated currency is better and some don't
Feel free to tell me why what I described there does not correspond to reality in any meaningful way. If you can't, then maybe you should reconsider your position on "regulated" currencies.
Also, you should investigate http://mises.org - they'll tell you all you need to know about economics. You'll find out that governments are always only a net loss on any economy.
Feel free to tell me why what I described there does not correspond to reality in any meaningful way. If you can't, then maybe you should reconsider your position on "regulated" currencies.
Also, you should investigate http://mises.org - they'll tell you all you need to know about economics. You'll find out that governments are always only a net loss on any economy.
I don't know if the reference to mises.org is sarcastic, but pointing to that site to learn about economics is like referring to Glenn Beck's site to learn about President Obama. Obviously, most economists have some ideology, but I think you should try to learn from people are are at least not so fanatic.
>> pointing to that site to learn about economics is like referring to Glenn Beck's site to learn about President Obama
So where do you learn about Obama? -The mainstream media? How's that "change you can believe in" going? -Oh well, I guess stripping away your civil liberties counts as "change", right?
>> Obviously, most economists have some ideology, but I think you should try to learn from people are are at least not so fanatic.
Nah, I'm fine learning from people who are actually talking about how economics works here in the real world. You just keep on keeping on.
So where do you learn about Obama? -The mainstream media? How's that "change you can believe in" going? -Oh well, I guess stripping away your civil liberties counts as "change", right?
>> Obviously, most economists have some ideology, but I think you should try to learn from people are are at least not so fanatic.
Nah, I'm fine learning from people who are actually talking about how economics works here in the real world. You just keep on keeping on.
I see. Did they teach you about the very real Gilded Age? Because that's when the US was doing things their way; it didn't turn out so well for the very real American people back then.
I'm not sure what your point is supposed to be, but I suspect you don't actually have one.
You didn't even give the Mises Institute a chance to educate you. If you listen to their in-depth videos on the fundamental "mechanics" of economics, but find yourself disagreeing with what they say, you're pretty much just refusing to hear anything, or simply not very bright.
They're not "fanatic", they're just explaining how economics works, in very clear terms, and in a way that obviously corresponds to reality (because it's all based on the way humans actually behave).
You didn't even give the Mises Institute a chance to educate you. If you listen to their in-depth videos on the fundamental "mechanics" of economics, but find yourself disagreeing with what they say, you're pretty much just refusing to hear anything, or simply not very bright.
They're not "fanatic", they're just explaining how economics works, in very clear terms, and in a way that obviously corresponds to reality (because it's all based on the way humans actually behave).
The biggest I can think of is having the ability to give anonymous support.
Maybe one day you want to send support a movement for government transparency, but do not want to take the risk of being labeled as a terrorist?
Maybe one day you want to send support to a friend in need without having it on the permanent record?
Maybe you want to donate money to a security tool like tor, but do not want to risk being put on a no-fly lists.
Basically, if the thought "how might this look" ever pops up when doing an transaction, anonymous currency is useful. Its also the only option we got until all the spying all the time ends.
Maybe one day you want to send support a movement for government transparency, but do not want to take the risk of being labeled as a terrorist?
Maybe one day you want to send support to a friend in need without having it on the permanent record?
Maybe you want to donate money to a security tool like tor, but do not want to risk being put on a no-fly lists.
Basically, if the thought "how might this look" ever pops up when doing an transaction, anonymous currency is useful. Its also the only option we got until all the spying all the time ends.
This is actually a good answer, although sending cash (through Western Union) is also an option in those circumstances - very expensive, but less volatile.
Where I live (Sweden) even transaction through western union require identification card, and the clerk is required by law to ask about the nature of the transaction. The transaction will be booked, logged, and "shared" with most countries including the US.
I can think of a few reasons... A new approach some merchants have taken is to accept only Bitcoin and thus eliminate payment processing fees. This leads to prices lower than their competitors can reach (stores such as Bitcoinstore.com and Bitcoinin.com). While the 2-3% may not matter much on small purchases, larger orders certainly will.
Another aspect is the peer to peer nature of Bitcoin. With Bitcoin you have the ability to send money to any other Bitcoiner, anywhere, instantly. That simply isn't present with traditional currencies. Now there are some inherent difficulties there. For instance, if I need to send money to my family on the other side of the country I can do it instantly, but they still need to be able to translate Bitcoin to whatever good/service they need. Currently that may require translating it into their local currency by some means, as not all that many local/physical merchants accept Bitcoin yet.
Another aspect is the peer to peer nature of Bitcoin. With Bitcoin you have the ability to send money to any other Bitcoiner, anywhere, instantly. That simply isn't present with traditional currencies. Now there are some inherent difficulties there. For instance, if I need to send money to my family on the other side of the country I can do it instantly, but they still need to be able to translate Bitcoin to whatever good/service they need. Currently that may require translating it into their local currency by some means, as not all that many local/physical merchants accept Bitcoin yet.
>A new approach some merchants have taken is to accept only Bitcoin and thus eliminate payment processing fees.
Don't count on it. Processing services will rise up to automate various aspects of bitcoin transactions, and you'll still pay those fees.
Don't count on it. Processing services will rise up to automate various aspects of bitcoin transactions, and you'll still pay those fees.
There are already several such services, the most major being Bitpay. However, with their software as a service model they don't charge a percentage of every transaction, but rather a small recurring fee for using the service. Thus as transaction volume increases costs per transaction decrease.
The major cost for current payment processors (i.e. mastercard, paypal, etc) is that they end up third party mediators in disputes regarding chargebacks. The Bitcoin protocol, which inherently disallows chargebacks, eliminates much of that need, thus the fees decrease. What you're paying for with Bitpay or Coinbase is a piece of software that interacts with the Bitcoin protocol for you, not a traditional payment processor that ends up mediating disputes.
The major cost for current payment processors (i.e. mastercard, paypal, etc) is that they end up third party mediators in disputes regarding chargebacks. The Bitcoin protocol, which inherently disallows chargebacks, eliminates much of that need, thus the fees decrease. What you're paying for with Bitpay or Coinbase is a piece of software that interacts with the Bitcoin protocol for you, not a traditional payment processor that ends up mediating disputes.
> but rather a small recurring fee for using the service. Thus as transaction volume increases costs per transaction decrease.
That's not scalable. There are plenty of merchants out there where bandwidth and server costs alone would exceed the $30 for their "Professional" package. They're going to need to raise their prices.
> not a traditional payment processor that ends up mediating disputes.
Someone is going to have to deal with disputes, and if that is you rather than a payment processor.... Well, I wouldn't want to be in that position. The reason someone will have to, is that otherwise you will be hit with (and lose) lawsuits - most countries have some degree of consumer protection for distance sales, many countries have very extensive protection.
It is in no way clear that this will end up being any cheaper than a card processor.
I'm all for Bitcoin, but I don't see (lack of) fees as a very compelling feature.
That's not scalable. There are plenty of merchants out there where bandwidth and server costs alone would exceed the $30 for their "Professional" package. They're going to need to raise their prices.
> not a traditional payment processor that ends up mediating disputes.
Someone is going to have to deal with disputes, and if that is you rather than a payment processor.... Well, I wouldn't want to be in that position. The reason someone will have to, is that otherwise you will be hit with (and lose) lawsuits - most countries have some degree of consumer protection for distance sales, many countries have very extensive protection.
It is in no way clear that this will end up being any cheaper than a card processor.
I'm all for Bitcoin, but I don't see (lack of) fees as a very compelling feature.
1. A hidden asset that can't be taxed, a digital swiss bank account
2. Total control of movement with no fees, instant free wire transfers.
3. Purchasing of goods anonymously
4. Secure from external sources - avoiding bank of cyprus events
In my opinion its all about its widespread acceptance. It's like a telephone the more people who use bitcoin the more value there is.
2. Total control of movement with no fees, instant free wire transfers.
3. Purchasing of goods anonymously
4. Secure from external sources - avoiding bank of cyprus events
In my opinion its all about its widespread acceptance. It's like a telephone the more people who use bitcoin the more value there is.
1. Yeah, well, that's illegal. Besides, I don't have a swiss bank account either, and not because of the fees... Also, the chances of me converting a large portion of my small wealth to Bitcoin are slim to none.
2. I'm not sure about the "no fees" bit. The volatility could hurt much more than the fees. But this could be a valid reason, though not today, at least for me.
3. How? They would still need to send me the goods. The only way to buy something anonymously is with a cash transfer wearing a mask and making sure you're not followed.
4. I think it's quite the opposite. A larger percentage of Bitcoin users are hurt by Bitcoin bank robberies than that of people hurt by "bank of Cyprus" events.
2. I'm not sure about the "no fees" bit. The volatility could hurt much more than the fees. But this could be a valid reason, though not today, at least for me.
3. How? They would still need to send me the goods. The only way to buy something anonymously is with a cash transfer wearing a mask and making sure you're not followed.
4. I think it's quite the opposite. A larger percentage of Bitcoin users are hurt by Bitcoin bank robberies than that of people hurt by "bank of Cyprus" events.
3. Create a disposable wallet. Move some money to it. Buy with the disposable wallet.
The worst they can do is associate the disposable wallet address to your name and sell that information to somebody.Buying domains (namecheap.com), vpn services (privateinternetaccess.com), hosting (bitvps.com), donating to the EFF, buying a ticket on Virgin Galactic, sending money to someone else where doing an international bank transfer would be too expensive for the amount involved, receiving micro donations from other people (maybe you run a popular blog or forum).
Admittedly, that's not an enormous list of things but it's a start.
Admittedly, that's not an enormous list of things but it's a start.
But other than the international money transfer (which I don't do very often), you can do all of these with money, and it would be much easier, plus you have the option of chargebacks etc.
Chargebacks are a double-edged sword, so much so that a whole class of scams is using them to defraud people of goods and services. It's even worse for the small business if you consider how much money is tied up by the bank/paypal to allow for the charges to be reversed at least a month after payment has gone through and the goods sent.
There is a need for cashback, but there are circumstances where having that possibility only causes issues. Transactions in fiduciary money can't be reversed. Bitcoin is more like that.
Bitcoin also allows multiple party arrangements where money can be released irreversibly according to various configurations. It allows the implementation of a system similar to an escrow without the escrow having to hold that money (and without requiring a payment for their fee).
And maybe you do not transfer money abroad a lot, but a lot of people do, whether it is buying goods and services from abroad, or simply sending money home if you live abroad (that's about 230 million people who live outside of their country of origin according to the UN[1]).
Bitcoin also allows micropayments, which is an unsolved problem today since you must have a Credit Card to pay anything online and the fees charged prohibit small payments. And I'm not even talking about being able to accept credit card payment...
[1]:http://www.dw.de/more-people-living-abroad-than-ever-says-un...
There is a need for cashback, but there are circumstances where having that possibility only causes issues. Transactions in fiduciary money can't be reversed. Bitcoin is more like that.
Bitcoin also allows multiple party arrangements where money can be released irreversibly according to various configurations. It allows the implementation of a system similar to an escrow without the escrow having to hold that money (and without requiring a payment for their fee).
And maybe you do not transfer money abroad a lot, but a lot of people do, whether it is buying goods and services from abroad, or simply sending money home if you live abroad (that's about 230 million people who live outside of their country of origin according to the UN[1]).
Bitcoin also allows micropayments, which is an unsolved problem today since you must have a Credit Card to pay anything online and the fees charged prohibit small payments. And I'm not even talking about being able to accept credit card payment...
[1]:http://www.dw.de/more-people-living-abroad-than-ever-says-un...
True. Although micro payments/donations are more complicated: try donating the USD equivalent of 0.0001BTC using a credit/debit card. Also, paying a supplier with BTC means you don't need to worry about them being hacked and the thieves running off with your card details. Chargebacks are admittedly a benefit you lose.
It's easier to transfer online than dollars. You can send your bitcoins directly to another person for free or close to free. IF the use becomes widespread, I think the utility of this is obvious... it replaces Dwolla entirely and most of the function of online payment systems.
The problem is the volatility. I'm not sure how that could be fixed.
The problem is the volatility. I'm not sure how that could be fixed.
When can I actually use Bitcoin as a currency rather than a speculative investment asset?
That's when I want to buy Bitcoin.
That's when I want to buy Bitcoin.
Bitcoin will be stable as soon as everyone considers it too boring to write about.
I can and do for many things. Just loaded my namecheap account last night with some more funds, for instance.
What is "currency" for you? People refer to "currency" all the time as if it was one thing.
Cash is one kind of currency, plastic is another, bank account - yet another, savings - yet another. Converting between those is not instant and not free.
Bitcoin works OK as a bank account. That is "currency".
Cash is one kind of currency, plastic is another, bank account - yet another, savings - yet another. Converting between those is not instant and not free.
Bitcoin works OK as a bank account. That is "currency".
I always thought that Dollars / Euros / Pounds were currencies. The card / cash /bank account are mediums tro represent those currencies.
(Now that I have tried putting this into words, I see the whole concept of money / currency is more ambiguous than I originally thought. )
(Now that I have tried putting this into words, I see the whole concept of money / currency is more ambiguous than I originally thought. )
Something meaningful assets are priced in.
I can go to Europe, and buy things that have fixed Euro prices, with Euros. It's possible because the entire Eurozone economy backs the Euro. No such thing exists for BTC.
And no, buying something priced in USD, but having the option to pay for it in BTC doesn't count. At that point, I'm just speculating.
I can go to Europe, and buy things that have fixed Euro prices, with Euros. It's possible because the entire Eurozone economy backs the Euro. No such thing exists for BTC.
And no, buying something priced in USD, but having the option to pay for it in BTC doesn't count. At that point, I'm just speculating.
You are talking about day-to-day spendings. I don't understand why fixate on them. They are a very tiny blip in most people's finances. I manage to live most ordinary days of my life without spending any currency.
What I care about is raking together money for realty, and otherwise preserving money for the day when I need them. This is where bitcoin is a viable addition.
What I care about is raking together money for realty, and otherwise preserving money for the day when I need them. This is where bitcoin is a viable addition.
You really seem to fail to grasp the difference between a currency (store of value) and a speculative investment (in hopes to beat inflation or exponential returns).
Let's make your chain of thought a bit more entertaining, How much of your traditional currency savings (in percentage) are you confident to convert to BTC?
Let's make your chain of thought a bit more entertaining, How much of your traditional currency savings (in percentage) are you confident to convert to BTC?
Right now Bitcoin makes around 15% of my savings.
My rent, my car bills, and my groceries aren't a tiny blip in my finances. So far, none of them have a fixed bitcoin price.
I mean, I suppose I could do the hip thing and live in a homeless hackspace, but I don't think that would be considered normal. Also, it's bit cold for that outside the Valley.
I mean, I suppose I could do the hip thing and live in a homeless hackspace, but I don't think that would be considered normal. Also, it's bit cold for that outside the Valley.
I don't pay my rent and groceries with my savings.
I pay them from my salary.
And savings I save.
And savings I save.
Converting between Cash, Bank and Plastic(Credit Cards) IS near instantaneous. It may not be free but the speediness hasn't really been in question. Also these are all instruments that store value, but are all different instruments.
Though Bitcoin is NOT yet a currency. It cannot store value, the volatility ensures that.
An example to illustrate: Part I: Cash - Bank etc. If I have $2000 in Cash, Credit Card has a balance of $1000 (maxed out) and $0 in my Checking/Chequing/Savings account (bank).
I can visit a branch that's 10 mins away, and deposit the all the money, total wait time would be < 5 mins. (transaction cost free)
I can immediately go to an ATM and withdraw $500. (transaction cost free - $0.30)
After that I can walk back to my home and access all the $1500, this can be:
a) $500 transferred from account to high yield savings account. (transaction cost free)
b) $500 transferred to grand parents using interac (transaction cost free - $1.00)
c) $500 transferred to credit card (transaction cost free) - Note: (i) Credit cards can take up to 3 days to reflect the payment (ii) Credit Cards will consider the original transaction date as the payment date thus not incurring interest for the delay in reflecting the payment and (iii) some credit card issuers will let you make a transaction before the payment is reflected thus reducing the unfortunate "Check kiting"[1] nature of the delay in reflecting the transaction.
Part II: Cash - Bitcoin - Cash Will not go into explaining this in detail, but just answer this 1) Can you take cash and transfer it to bitcoin without using the bank? 2) Will it be nearly as quick converting between instruments as traditional stores of value? 3) In a day or two when you want to make a purchase can you guarantee or even confidently assume that the value will be the same as when you deposited it? Hell can you assure yourself that the value will be the same < 1 hour from when the transaction occurs?
[1] http://en.wikipedia.org/wiki/Check_kiting
Though Bitcoin is NOT yet a currency. It cannot store value, the volatility ensures that.
An example to illustrate: Part I: Cash - Bank etc. If I have $2000 in Cash, Credit Card has a balance of $1000 (maxed out) and $0 in my Checking/Chequing/Savings account (bank).
I can visit a branch that's 10 mins away, and deposit the all the money, total wait time would be < 5 mins. (transaction cost free)
I can immediately go to an ATM and withdraw $500. (transaction cost free - $0.30)
After that I can walk back to my home and access all the $1500, this can be:
a) $500 transferred from account to high yield savings account. (transaction cost free)
b) $500 transferred to grand parents using interac (transaction cost free - $1.00)
c) $500 transferred to credit card (transaction cost free) - Note: (i) Credit cards can take up to 3 days to reflect the payment (ii) Credit Cards will consider the original transaction date as the payment date thus not incurring interest for the delay in reflecting the payment and (iii) some credit card issuers will let you make a transaction before the payment is reflected thus reducing the unfortunate "Check kiting"[1] nature of the delay in reflecting the transaction.
Part II: Cash - Bitcoin - Cash Will not go into explaining this in detail, but just answer this 1) Can you take cash and transfer it to bitcoin without using the bank? 2) Will it be nearly as quick converting between instruments as traditional stores of value? 3) In a day or two when you want to make a purchase can you guarantee or even confidently assume that the value will be the same as when you deposited it? Hell can you assure yourself that the value will be the same < 1 hour from when the transaction occurs?
[1] http://en.wikipedia.org/wiki/Check_kiting
1) Can you take cash and transfer it to bitcoin without using the bank? 2) Will it be nearly as quick converting between instruments as traditional stores of value?
Yes, I can take my cash, dump it into Qiwi machine and btc-e accepts that. It will be faster because Qiwi machines are denser than bank branches.
3) In a day or two when you want to make a purchase can you guarantee or even confidently assume that the value will be the same as when you deposited it?
No, but neither it is with your currency.
Hell can you assure yourself that the value will be the same < 1 hour from when the transaction occurs?
Why are we again talking about day-to-day spending? I don't care about the value in one hour, I care about value in one year and Bitcoin shows pretty good performance. It's more reliable than USD/EUR and USD/RUR swing, believe it or not.
Yes, I can take my cash, dump it into Qiwi machine and btc-e accepts that. It will be faster because Qiwi machines are denser than bank branches.
3) In a day or two when you want to make a purchase can you guarantee or even confidently assume that the value will be the same as when you deposited it?
No, but neither it is with your currency.
Hell can you assure yourself that the value will be the same < 1 hour from when the transaction occurs?
Why are we again talking about day-to-day spending? I don't care about the value in one hour, I care about value in one year and Bitcoin shows pretty good performance. It's more reliable than USD/EUR and USD/RUR swing, believe it or not.
When it's 30+ percent of the world's transactions? Its market cap needs to be worth trillions before a highly stable price is established. When Bitcoin is truly mainstream and your grandma and grandpa will be having Bitcoin, and don't "panic sell" at every Bitcoin news, it's when Bitcoin's price will be stable.
Right now the market is full of people who buy and sell Bitcoin based on the latest news. Those people need to represent a tiny percentage of Bitcoin's market cap before volatility decreases drastically. Of course, when that happens, you shouldn't have major news like "China bans Bitcoin" anymore, since if so many people are using it, then you can assume the legal stuff has already been settled long ago, and most countries are using it, and won't ban it overnight anymore.
Right now the market is full of people who buy and sell Bitcoin based on the latest news. Those people need to represent a tiny percentage of Bitcoin's market cap before volatility decreases drastically. Of course, when that happens, you shouldn't have major news like "China bans Bitcoin" anymore, since if so many people are using it, then you can assume the legal stuff has already been settled long ago, and most countries are using it, and won't ban it overnight anymore.
You can't have 20-40% weekly swings in an asset and still expect to use it as currency. Neither merchants, nor consumer can trust it, and speculators just sit on it and distort the entire market. I hate that Bitcoin as a currency is almost worthless.
Every new currency has to go through that. That's unavoidable for a small, relatively new currency. With every boom and smaller bust it grows larger and more stable.
New currencies aren't born in a vaccum. When the US switched off the gold standard, the price of a bag of rice at the grocery wasn't changing by 10% every other day.
Give it some time. A child crawls before it starts walking.
I'd buy that, but bitcoin is inherently deflationary. That's a problem for a currency. The more popular it gets, the worst it gets.
Who can say whether this is a good price for Bitcoin, even after the recent drop? The author says this is the time to buy but goes on to say:
"I have no crystal ball, and can’t say that Bitcoin is at the lowest price it will be at over the next several days/weeks/months. It may very well be that Bitcoin goes lower"
If you want to speculate, try the stock market. It's been around since forever, and you might actually have a bit of an understanding of the fundamentals driving some of the stocks there.
"I have no crystal ball, and can’t say that Bitcoin is at the lowest price it will be at over the next several days/weeks/months. It may very well be that Bitcoin goes lower"
If you want to speculate, try the stock market. It's been around since forever, and you might actually have a bit of an understanding of the fundamentals driving some of the stocks there.
Given the difficulties in buying and selling quickly, at least with bitcoin the game is not currently dominated by HFT algorithms. I'd say that understanding the fundamentals driving the pricing of the modern stock market is at least as difficult as making good bets on bitcoin.
HFT competition is only relevant for day traders. If the author is that financially insightful, he should be stock-picking, and ignore the HFT noise.
Please don't fall into these cheap speculations..Cryptocurrency itself proved that its pure speculation bubble and nothing else.Everybody saw that a few weeks ago when china central bank issued bans / warnings and the markets reaction to it.I believed in crypto currency until a month ago, but now i believe that it is literally impossible for it to take place of a daily currency.Just pump/dump games richer people getting rich, poorer people getting poor.Oh and don't expect it to be adopted by merchants/vendors as anyone who did lost money because of bitcoin's fluctuation..oh by the way out of my head i can assume that %80 of people that has bitcoin only cares about gaining fiat..
What a terrible post. It doesn't justify buying bitcoins at all, it's basically squiggly lines go up and down, it just went down, so buy it before it goes back up again because that's what squiggly lines do.
At some point he equates the price of bitcoin with bitcoin's long term viability which is also not a convincing argument. bitcoin may have a viable future, but there's no convincing reason why that viable future can't be at $1 per bitcoin.
At some point he equates the price of bitcoin with bitcoin's long term viability which is also not a convincing argument. bitcoin may have a viable future, but there's no convincing reason why that viable future can't be at $1 per bitcoin.
I needed 0.5 coins last week to test something so I loaned and sold them to test an auto exchange bot @$980. Just bought back 0.5 to repay the small IRC loan @$460. Sweet thanks China
Puts and calls. Nice.
aka "I just 'lost' a 'fortune' because Bitcoin's exchange rate dropped, please buy Bitcoin for USD so I am 'rich' again!".
The only problem here is that part of the run up was based on the sense that China was allowing Bitcoin to flourish. That's pretty powerful in the world's second largest economy with a suspect currency of it's own (highly manipulated for political purposes) If that market opportunity is now closing then that makes Bitcoin much less valuable (at least over the short term) Less demand = smaller price.
You make a good point. If China shuts off entirely then the potential size of Bitcoin's network could decrease significantly. That's not to say however that Bitcoin doesn't still have a significant and increasing network of users. There have been significant gains outside of China as well recently. A large contributor to the high was resultant from the US Senate Hearings which seemed to somewhat validate Bitcoin's legality in the U.S., the world's largest economy.
Agreed. I added "Short term" to reflect this is more of a (significant) set back than a downward march. I worry that some might deduce from the article that this is a short term buying opportunity and it'll return to it's previous highs soon. If China is in fact closed it could take a very long time to return to those levels.
I had originally intended the article to be more of a suggestion to newcomers, that it may be a good time to purchase a bit of Bitcoin if you're looking to get started. It wasn't intended as advice for day traders, but rather for people with long term outlooks trying to enter Bitcoin for the first time, which is what constitutes much of my audience.
Rereading I do see how it comes across as short term trading advice though. I suppose I'll have to be much clearer in future posts. Thanks!
Rereading I do see how it comes across as short term trading advice though. I suppose I'll have to be much clearer in future posts. Thanks!
History is littered with the corpses of "investors" in various assets who bought all the way down because "this is a great opportunity!"
The exponential rise is price is always accepted as "rational", but the equally exponential fall is always explained as temporary or manipulation, or something.
A lot of people made money in 2009 when the stock market was incredibly cheap. But it was cheap because there was tangible value that could be calculated based on revenues, earnings, profit margins, etc. If you can't tell me what a Bitcoin should be worth, how do I know it's now cheap? That's speculation.
The exponential rise is price is always accepted as "rational", but the equally exponential fall is always explained as temporary or manipulation, or something.
A lot of people made money in 2009 when the stock market was incredibly cheap. But it was cheap because there was tangible value that could be calculated based on revenues, earnings, profit margins, etc. If you can't tell me what a Bitcoin should be worth, how do I know it's now cheap? That's speculation.
There's been no "investor" in the history of investment that made money by buying high and selling low.
From my limited understanding of finance, is that not what short selling is? (Followed by buying back at a reduced price).
Short selling is also buying low and selling high. You just do them in reverse order. Or quite literally you borrow the instrument, sell it to someone and then buy it lower (or higher if the position went against you) and give back the borrowed quantity.
That sounds like conventional "good" investing.
You are bit confused. What he meant is that you cannot buy high and sell low and make money, which is obvious. Its bit ironically because people will always tell you buy low sell high, duh, but its easy to say that looking on historical charts, much harder to predict future. You never know if X is high or low for stock Y. Some people are glad they dump on $1,000 but that's silly. They are glad they were lucky because had this thing go to $10,000 they would have felt like winning 5 out of 6 numbers in month-worth accumulation of lotto. Its all pure speculation at this point.
Short selling, in short, means you put a bet against commodity that this commodity will not rise up but lose value. Not all stocks/instruments can be "short sell", but you can for example bet against oil. So you say "I don't have any barrels but I can bet with someone this $100 worth of barrel will go down to $50. Can you bet against me?". Then someone comes and says "okay I believe it will be $150; I will buy this virtual security from you" (because you don't have oil at all so you sell virtually, on short sell. So actually you are negative 1 in quantity, someone is positive 1. If the value goes down to $50, you "won". So they need to cover the ride from $100 to $50 and you are $50 richer. They lost. So even if stock tanked, you gain/won. At such a point you actually buy the stock back from him to go from negative 1 to zero. If, however, the stock goes up to $150 you lost $50 because you were negative in quantity and you short sell. So there are people losing money when stock goes up.
This mechanism was created many years ago to protect commodities like orange juice or cocoa pricing on stock exchange from large fluctuations.
Short selling, in short, means you put a bet against commodity that this commodity will not rise up but lose value. Not all stocks/instruments can be "short sell", but you can for example bet against oil. So you say "I don't have any barrels but I can bet with someone this $100 worth of barrel will go down to $50. Can you bet against me?". Then someone comes and says "okay I believe it will be $150; I will buy this virtual security from you" (because you don't have oil at all so you sell virtually, on short sell. So actually you are negative 1 in quantity, someone is positive 1. If the value goes down to $50, you "won". So they need to cover the ride from $100 to $50 and you are $50 richer. They lost. So even if stock tanked, you gain/won. At such a point you actually buy the stock back from him to go from negative 1 to zero. If, however, the stock goes up to $150 you lost $50 because you were negative in quantity and you short sell. So there are people losing money when stock goes up.
This mechanism was created many years ago to protect commodities like orange juice or cocoa pricing on stock exchange from large fluctuations.
Tulips are withering.
Now may be a good time to revisit an old adage of investing: never catch a falling knife.
I knew I should of withdrew one of my coins when the price reached 1k wouldn't covered my buy in price for 3 coins plus some, o well.
If you buy it right this minute - yes, it should grow a little more, and you can make a nice profit on it. But is $600+ the price it will stay at from now on? I'm not so sure. I think it will drop to $350 soon, because there's still a lot of uncertainty in the market right now, and there could be some more European countries coming out with bad news for Bitcoin in the next few weeks.
Hahaha.
I don't really care that I could possibly get a return of 10x or more on my money in Bitcoin (or I could lose that much.) I could do the same with my businesses if I do them right, and having everything in Bitcoin would keep me from being able to allocate those resources elsewhere. While the rise in Bitcoin could be a one time thing before it stabilizes (or tanks,) my efforts elsewhere will provide me an income for a lifetime.
I'm more interested in using Bitcoin as a currency. A temporary hold for my most liquid assets which I can use to pay bills and other expenses. If I really believe in Bitcoin and want it to succeed, then I know I should try to run some of that activity on what's possible with Bitcoin now. The more mainstream and the larger the Bitcoin market, the more stable it should become. But I'm not interested in risking a large amount of assets to be a revolutionary or financial martyr.
ETA: To me, a currency is a place I can park my cash and know that it will hold approximately the same purchasing power as when I put it in there in the first place. I don't care to see it go up (as I said, I have other schemes for making it grow) and I really don't want it to go down. I just want it to be relatively stable. Living in the Philippines for a number of years and working with people around the world, there is 6 different currencies that regularly affect me or the people paying me. Since I have been here, the Peso has gained as much as 20% on the dollar. This sucks and it's not something I want to deal with. Bitcoin would drive me crazy.