Is Bitcoin a good investment?

I ran across this discussion of digital currencies. It explains some of the issues I have had with digital currencies.

https://market-ticker.org/akcs-www?post=232141

2 Likes

1 Like

I donā€™t know if itā€™s a good investment compared to other opportunities out there but the underlying technology, blockchain, has far reaching implications for currency, elections, or anything else that needs to be accounted for in a broad and secure manner.

6 Likes

Think if it as a high risk investment; donā€™t put a significant amount in there and be prepared to loose 100%.

1 Like

I think it is a wonderful mechanism for bypassing Big Brother when conducting businessā€“as long as you obtain it properly.

As an ā€˜investmentā€™ it is among the worst you could purchase. But only slightly worse then purchasing Dollars, Yen, or Euroā€™s as ā€˜investmentsā€™. Investments should be for the long term and be in something that has some intrinsic value (property for instance). Money of any type does not (at least not since the gold standard went the way of truth, justice, and the American Way.

1 Like

brutal, savage response, I was thinking of buying some bitcoin. In my opinion Dallas Real Estate is a bubble at this point.

1 Like

The security of block chains, like much else in the world of cryptography is largely a question of faith. The reason is that major research centers (NSA, Chinese, Russians, etcā€¦) conduct their research in secret and hence the state of the art is largely unknown by the vast majority.

We do know that major ā€˜inventionsā€™ in the field, including public-private key technology was known to the NSA for years before it was invented by non-NSA persons, and presumably so with any weaknesses in the technology. It may not be easy for such agencies to crack your information, but it is foolish to believe they canā€™t if you give them sufficient incentive to want to do so. That said, I do agree with your basic premise that the technology is useful. But just how useful is only something time will tell.

It may well be a bubble, but its is still real physical property with intrinsic value (even if less then you paid for it); however, something like bit coin has no such corresponding intrinsic value so that it could actually reach a zero value. Real property NEVER (yes you can find absurd arguments for when it doesā€“asteroid destroys Dallas) reaches ZERO value. Of course that is not the same thing as saying you still canā€™t loose your shirt.

I would not put any money you are not willing to loose. Even if the coin does not loose value there are still risks of losing them. (Exchanges going under or getting hacked, loosing you private key, etc)

However, I put a little into some bitcoin and transferred it to an exchange to play around with. Bitcoin is relatively stable, but a lot of the altcoins can be very volatile. Litecoin has jumped 50 percent in the past few days.

Poloniex.com is one of the higher volume exchanges. It can be interesting to watch even if you do not invest.

Most of the altcoins have interesting business propositions. I would look into XRP/Ripple, Ethereum , Litecoin, and maybe Siacoin.

Iā€™m a complete financial noob, but my opinion is that its value as an investment is completely dependent upon the length of time you intend on ā€œinvestingā€. If you want to ā€œtradeā€ Bitcoin and get in and out in periods of time limited to weeks or something, maybe it would be good, but I donā€™t think itā€™ worth holding long term.

  1. Itā€™s basically based on nothing more than faith, that is to say, itā€™s another fiat currency. In the same way Murican dollars are based on nothing more than faith in the US governmentā€™s ability to repay. In this case you are trustingā€¦ a bunch of random people throughout the world and their continued interest in the currency in keeping its value high compared to dollars and other currencies.

  2. Arguably poor convertability and poor acceptance. You need a computer just to use this currency, and nobody except a bunch of computer nerds uses it (I mean this jokingly). How many normal people day to day use Bitcoin? Itā€™s a pain to use and acquire, and as a result it will never have any mainstream appeal. Is Wal-Mart gonna take your Bitcoins? Home Depot? Your neighbor? You could probably sooner find someone to accept payment in ounces of gold or silver than a digital currency.

  3. Questionable security. Way too many stories of breaches and random hacks making off with peopleā€™s Bitcoins. Excesssive complexity for what needs to be a simple thing - an easy way to exchange ā€œvalueā€ (money).

  4. Questionable origins, and a possible CIA link? Seriously, what is the Bitcoin miner really calculating? Would be a brilliant way to ā€œfarmā€ out computations to thousands of unwitting people. Satoshi Nakamoto conveniently translates to ā€œcentral intelligentā€. Could the whole thing be a CIA project?

I read one argument that its value is going up because of widespread inflation of existing mainstream fiat currencies, people are trying to find a convenient place to store their money.

(And since this is Makerspaceā€¦ is anyone here interested in legal schemes to MAKE boatloads of cash, we should chat lol.)

Canā€™t say Yes or No. Lots of people have made money on it, and lost on it. Any currency that can have a 27% valuation swing in a day Iā€™m leery of. If you like risk,and can afford to speculate, then go for it.

But hereā€™s why I personally wouldnā€™t, especially as it is skyrocketing up. Like Walter, I tend to favor hard assets or things that are backed by companies profitably making things. But thatā€™s just me.

Here is what would be the biggest deterrent to me: Mt. Gox: 850,000 Bit Coins valued @ $450,000,000 were just ā€œGoneā€ (200,000 later ā€œfoundā€) and the company filed bankruptcy.
Mt. Gox

As far as inflation goes, hereā€™s the US, Europe, Canada, and Japan, pretty much the countries that make up the world basket of currencies. Chinaā€™s inflation also shown - but as a currency it isnā€™t allowed to truly float. I personally donā€™t see anything listed below that would raise fear of inflation that would justify driving bit coins up almost 300% this year - I donā€™t think inflation a major factor after reviewing the numbers below.

Curious what other people think is driving the hyper-rapid rise. Iā€™m sure many more people are clued into it and follow it than I do. Because I sure the heck donā€™t know - looks like rampant speculation to me.

Bit coins and other crypto currency isnā€™t really driven by fears of inflation. I believe the rise is driven by the fact that there is a fixed (and maximum) number of bitcoins. This drives increase when demand for a currency that canā€™t be tracked by the gubmint goes up.

On a related note, I read an article the other day that US billionaires were buying land in the center part of the country in ā€˜survive the catastrophe statesā€™ like Idahoā€¦

Maybe they know something we donā€™t about our future? :slight_smile:

1 Like

And shortly after that little debacle, the largest trader in bitcoins (which replaced Mt. Gox) also had a large number of bit coins stolen from its customersā€¦

It appears that the ā€˜securityā€™ on these bitcoins isnā€™t as high as some would like you to believe.

1 Like

If everything goes to crap, Iā€™ve read bullets will become the de factor currency. ā€œUsableā€ small units and wanted.

.22 short will be the new penny, LR a nickel. .50 for Barrets ā€¦ the new Franklin.:smiling_imp:

1 Like

Along with my ghost guns, I have an ample supply of such currency. It is amazing how cheap 5.56 ammo can be had for. Seriously, what also makes great currency in bad times is moonshine. Learning to make drinkable moonshine is a very valuable skill in a depression or zombie appocalypse. But guns and ammo let you keep your shineā€¦

3 Likes

Sadly I donā€™t think it is. The signs point to normal market just inflated values and I canā€™t see a real reason it will change. Demand isnā€™t artificial and the reason for the last crash was a food of forclosure due to predatory lending.

Article in the WSJ about the ā€œFlash Crashā€ that occurred in one of the other ā€œbit coinā€ markets on Friday the 23rd. There was a massive sell order that triggered a run from $324 to $0.10! It bounced back.

The article points out the markets are unregulated, never close, run 24/7, donā€™t have the circuit breakers in place to give all the automatic trading a chance to breathe. It also pointed out there doesnā€™t seem to be a way to undo an improper transaction.

From $324 to $0.10 and back is a tad more volatility than I care for. But if youā€™d bought at 10 cents, as some did, a $100 investment is worth about $324,000 ā€¦ of course that also means a $324,000 invest was sold for $100.

Ethereumā€™s Flash Crash Shows Hazards of Trading Cryptocurrencies
Digital-currency exchanges donā€™t have circuit breakers or closing bells and they donā€™t reverse trades./

Volatile Digital Currency Suffers ā€˜Flash Crashā€™ Bitcoin-rival ether briefly loses almost everything, then gains it back

3 Likes

Considering itā€™s gone up in value almost every year since it was introduced (except one year), Iā€™d say it can be a good but risky investment.

I strongly recommend that if you do purchase any, you should try to understand the basics of the tech, and then securely store it using either a hardware wallet (most run about $100, I prefer Trezor) or with a ā€œcold/paper walletā€.

1 Like

lets just say I wish I had bought more than 1.1 when it was only $500:1BC.:unamused:

One of the fears here seems to be that there has been quite a bit of theft of bitcoin (et. al.). The problem with this argument is that anytime there was any theft, it was from an exchange, rather than from a wallet. Essentially, itā€™s impossible to hack the currency itself, so if you do things like cold wallets, the currency is very safe. But if you keep a large amount in an account at an exchange where if the exchange is hacked you lose your money, then youā€™re doing it wrong.

The exchanges originally were specifically designed to be a clearing house so that if you wanted to legitimately exchange from one currency to another, youā€™d simply take the money out of your secure wallet put it in the exchange account, make the trade, then put it back in your own wallet. And by virtue of it all being digital, it was supposed to be super efficient and cheap to doā€¦ compared to a forex exchange at least.

But if youā€™re dealing strictly with one currency, you can much more easily protect your cash. When I first got into it, I had a sheet printed (done cold and off the internet completely) that had 10 or so wallets printed on itā€¦ anytime I would make a transaction, Iā€™d send what I needed to, then empty that wallet into another one of the cold onesā€¦ essentially always having 2 trades and never keeping the money in the same placeā€¦ basically impossible to hack.

Itā€™s an amazing technology, and if there were a way to invest in the blockchain technology somehow, thatā€™s where the real money will be!

1 Like