I ran across this discussion of digital currencies. It explains some of the issues I have had with digital currencies.
I donāt know if itās 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.
Think if it as a high risk investment; donāt put a significant amount in there and be prepared to loose 100%.
I think it is a wonderful mechanism for bypassing Big Brother when conducting businessāas long as you obtain it properly.
As an āinvestmentā it is among the worst you could purchase. But only slightly worse then purchasing Dollars, Yen, or Euroās as āinvestmentsā. 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.
brutal, savage response, I was thinking of buying some bitcoin. In my opinion Dallas Real Estate is a bubble at this point.
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 āinventionsā 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 canāt 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 doesāasteroid destroys Dallas) reaches ZERO value. Of course that is not the same thing as saying you still canāt 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.
Iām 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 āinvestingā. If you want to ātradeā Bitcoin and get in and out in periods of time limited to weeks or something, maybe it would be good, but I donāt think itā worth holding long term.
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Itās basically based on nothing more than faith, that is to say, itās another fiat currency. In the same way Murican dollars are based on nothing more than faith in the US governmentās 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.
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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? Itās 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.
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Questionable security. Way too many stories of breaches and random hacks making off with peopleās Bitcoins. Excesssive complexity for what needs to be a simple thing - an easy way to exchange āvalueā (money).
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Questionable origins, and a possible CIA link? Seriously, what is the Bitcoin miner really calculating? Would be a brilliant way to āfarmā out computations to thousands of unwitting people. Satoshi Nakamoto conveniently translates to ācentral 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.)
Canāt 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 Iām leery of. If you like risk,and can afford to speculate, then go for it.
But hereās why I personally wouldnāt, 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 thatās just me.
Here is what would be the biggest deterrent to me: Mt. Gox: 850,000 Bit Coins valued @ $450,000,000 were just āGoneā (200,000 later āfoundā) and the company filed bankruptcy.
Mt. Gox
As far as inflation goes, hereās the US, Europe, Canada, and Japan, pretty much the countries that make up the world basket of currencies. Chinaās inflation also shown - but as a currency it isnāt allowed to truly float. I personally donāt see anything listed below that would raise fear of inflation that would justify driving bit coins up almost 300% this year - I donāt think inflation a major factor after reviewing the numbers below.
Curious what other people think is driving the hyper-rapid rise. Iām sure many more people are clued into it and follow it than I do. Because I sure the heck donāt know - looks like rampant speculation to me.
Bit coins and other crypto currency isnāt 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 canāt 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 āsurvive the catastrophe statesā like Idahoā¦
Maybe they know something we donāt about our future?
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 āsecurityā on these bitcoins isnāt as high as some would like you to believe.
If everything goes to crap, Iāve read bullets will become the de factor currency. āUsableā small units and wanted.
.22 short will be the new penny, LR a nickel. .50 for Barrets ā¦ the new Franklin.
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¦
Sadly I donāt think it is. The signs point to normal market just inflated values and I canāt see a real reason it will change. Demand isnāt artificial and the reason for the last crash was a food of forclosure due to predatory lending.
Article in the WSJ about the āFlash Crashā that occurred in one of the other ābit 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, donāt have the circuit breakers in place to give all the automatic trading a chance to breathe. It also pointed out there doesnāt 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 youād 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.
Considering itās gone up in value almost every year since it was introduced (except one year), Iād 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 ācold/paper walletā.
lets just say I wish I had bought more than 1.1 when it was only $500:1BC.
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, itās 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 youāre 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, youād 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 youāre 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, Iād 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.
Itās an amazing technology, and if there were a way to invest in the blockchain technology somehow, thatās where the real money will be!