BITCOIN

Scottex99

Their clients aren’t 19 year old kids on TikTok either, so the biggest asset manager in the world with the richest clients (I assume) has decided that Bitcoin is a genuine asset class, then I’d say that it is too. They surely assume some risk putting their clients money into something with “no instrinsic value” or that is zero-sum. Reputational risk at least.

FTX was brought down by Sam and his cronies with far too much FTT on the balance sheet, it was profitable before that. Terra/LUNA/UST was an algorithmic stablecoin that went bad and Celsius was again profitable until Alex did some crazy stuff with the treasury.

I’m not writing those massive errors off lightly but it doesn’t mean the whole eco system is broken or a Ponzi either.  Similar to retail, there was too much leverage in the peak frenzy of the bull run and they couldn’t cope when prices dropped off. In theory the new wave of exchanges, protocols etc learn the mistakes of the past.

Also that’s all and well that one of your trading venues didn’t go broke, but it could have. Or they could have blacklisted you or restricted access to your account, these things happen in traditional finance too.

User232002

MacPingu1986 said:

Nothing mythical... as many many other posters have commented - buying cryptocurrency, or any currency, or gold, or fine art, or wine, as an investment is a zero sum game because its value is only based on the ability to sell it onto someone else at a later date - for what you hope will be a higher price. The asset doesn't "do" anything itself. You buy it, store it, and hope that someone in the future will pay you more than you paid for it.

When you dispose of your assets to crystalise your gain - that's because you've sold the assets to someone else. Your gain directly and only comes from someone else paying more - it can't come from anywhere else. It's zero-sum trading so those gains have to come from other making losses whether now, or in the future.

Thanks. This is only the 300th time this has been posted in this thread. Just because you keep repeating something doesnt make it correct. 

Many crypto protocols are incredibly profitable businesses that have yearly revenue in the billions with almost zero overheads. Apparently selling a coke to a person on the street is a great business, but selling blockspace to people on the street is zero sum. 

MacPingu1986 said:

This is a money saving board so the relative safety of an asset class is important, as is it's ability to benefit the majority of investors rather than a lucky well timed few.  This is particularly important when various pro-crypto posters are constantly pumping up how others should invest in crypto whilst ignoring (or at the very least quickly glossing over) how risky it is for the vast majority.

As we speak, 90% of all Bitcoin ever purchased is currently in profit. I'd like to check whether that counts as 'vast majority'?

MacPingu1986 said:

Whilst you've made a substantial gain so far, my own experiences with cryptocurrency (not bitcoin) resulted in over an 80% loss. Fortunately it was only a very small part of my savings and investments but many others have faired far worse and as its zero sum without others making losses you *can't* make your gains.

I found the problem....

Aegis said:

For the record, most people buy shares because they expect to participate in the growth of a company, not just to sell the shares on at a higher price at a later date. That's why many shares are considered good yield plays, because they have established a number of years of dividend payments. If your sole reason for buying investments is to sell them for higher prices at a later date, I can certainly see why you wouldn't really care at all about the fundamentals of the business, focusing instead on the technicals, but the problem is that the longer the term of an investment, the more important the fundamentals become while the technicals are largely minimised.

Many crypto protocols are incredibly profitable businesses that have yearly revenue in the billions with almost zero overheads. Apparently selling a coke to a person on the street is a great business, but selling blockspace to people on the street is zero sum. 

Aegis said:

The fact that it is so dependant on people putting money in for existing holders to make money is what makes me certain that this entire ecosystem is just a form of Ponzi scheme.  Early adopters can make a lot of money from Ponzi schemes, but it doesn't make them legitimate investments.

The fact that [The State Pension] is so dependant on people putting money in for [Retirees] to make money is what makes me certain that this entire ecosystem is just a form of Ponzi scheme.  [Boomers] can make a lot of money from [State Pension] schemes, but it doesn't make them legitimate investments.

Fixed your post. Ponzi schemes aplenty in this world. Social Security due to run out in 2032 ish I believe / NI probably sooner. Time for a commodity based monetary system to bring it all down and put everyone back on a level playing field.

Aegis said:

No idea where you got the idea that Blackrock wouldn't let their clients buy into a Ponzi scheme if they wanted. 

I mean, this is obviously a delusional argument devoid of logic. But if it isn't, I would like to take this opportunity to thank Larry for both (1) squaring the ponzi, and (2) giving me access to plenty of boomers to dump my bags on.

MeteredOut

User232002 said:

As we speak, 90% of all Bitcoin ever purchased is currently in profit. I'd like to check whether that counts as 'vast majority'?

What percentage of people who have ever owned bitcoin are in profit, or have sold with a profit?

Aegis

Scottex99 said:

Their clients aren’t 19 year old kids on TikTok either, so the biggest asset manager in the world with the richest clients (I assume) has decided that Bitcoin is a genuine asset class, then I’d say that it is too. They surely assume some risk putting their clients money into something with “no instrinsic value” or that is zero-sum. Reputational risk at least.

FTX was brought down by Sam and his cronies with far too much FTT on the balance sheet, it was profitable before that. Terra/LUNA/UST was an algorithmic stablecoin that went bad and Celsius was again profitable until Alex did some crazy stuff with the treasury.

I’m not writing those massive errors off lightly but it doesn’t mean the whole eco system is broken or a Ponzi either.  Similar to retail, there was too much leverage in the peak frenzy of the bull run and they couldn’t cope when prices dropped off. In theory the new wave of exchanges, protocols etc learn the mistakes of the past.

Also that’s all and well that one of your trading venues didn’t go broke, but it could have. Or they could have blacklisted you or restricted access to your account, these things happen in traditional finance too.

Nope, if they operate on an execution-only basis, they are absolutely not making any sort of determination on the status of Bitcoin as an asset class. They are simply responding to the demand of their clients, some of whom might well be very wealthy and also very foolish. Intelligence and wealth are not perfectly correlated, after all.  To them, there is no risk if they are clever enough to spin it as a "buyer beware" situation. They can quite rightly say that they merely facilitated something their clients were going to do anyway.

In terms of my exchange, in my entire career a total of one investment platform has gone bust, namely Beaufort.  In that instance, the administration was a mess, the ownership of underlying assets was uncertain, and yet it was still 100% protected for all retail clients, so almost no-one lost any money as a result of the platform itself going bust (off the top of my head I can't recall what happened to non-retail clients).  That's one platform needing a bailout in over 15 years, and it was a fairly minor player in the space.  Contrast that with crypto exchanges, which have seen several of the largest going bust just this year, and it quickly becomes clear that this is a very dangerous place to hold your assets, while I can pick an investment platform at random in the UK and be certain that my investments will still be there next month.

MeteredOut

MeteredOut said:

User232002 said:

As we speak, 90% of all Bitcoin ever purchased is currently in profit. I'd like to check whether that counts as 'vast majority'?

What percentage of people who have ever owned bitcoin are in profit, or have sold with a profit?

I doubt we'll get an answer for this from the ponzi-pushers, so

"As of March 2023, the top 1% of Bitcoin addresses hold over 90% of the total Bitcoin supply, according to Bitinfocharts."

https://nbx.com/crypto101/how-many-people-own-1-bitcoin

This is why people should really dig deep into *any* statement said in advocacy of crypto.

So, if 90% of bitcoins are in profit, and 1% of addresses hold 90% of bitcoins, it doesn't take too much stretching of the imagine to think that approaching 99% of people who own bitcoins are not in profit. Those with the most holdings are those that got in early.

(I know the maths doesn't strictly give us that, eg we can't assume the 1% holding 90% is hold the same 90% that is in profit, and a single person can own multiple addresses)

Scottex99

Could be right but I highly doubt they are taking that gamble on the fallout of BTC going to zero without doing their own DD. Despite the massive amount of fees on offer. Risk/reward right.

Similar to getting involved in a less than 2 decade old industry for me.

It can be dangerous to hold assets in crypto yes, but its also highly discouraged. Not your keys not your coins.

Plus risk reward again. Your assets aren't protected the way they would be in HL or whatever platform.

But you also make 600% this year holding Solana.

I don't particularly like just bringing it back to gains or returns to prove points as its kind of futile but I was thinking about optics or benchmarks. We can of course just agree to disagree and I would ALWAYS advocate for proper bankroll management (especially to my friends/family looking for info on the space).

At what point do we a declare a "winner"?

When BTC is dead and trading at $100? Buy the Dip lol

When BTC is at $100k? Did you sell though, who did you have to convince to buy from you to make that trade haha

MacPingu1986

User232002 said:

Thanks. This is only the 300th time this has been posted in this thread. Just because you keep repeating something doesnt make it correct. 

Many crypto protocols are incredibly profitable businesses that have yearly revenue in the billions with almost zero overheads. 

MacPingu1986 said:

Whilst you've made a substantial gain so far, my own experiences with cryptocurrency (not bitcoin) resulted in over an 80% loss. Fortunately it was only a very small part of my savings and investments but many others have faired far worse and as its zero sum without others making losses you *can't* make your gains.

I found the problem....

No, no no, you're misunderstanding. Bitcoin *isn't* a business, or rather its no more a business than buying sterling is. When you buy a bitcoin you are buying a piece of currency that you can sell at a later date. There's no underyling "business", no rights to other assets, no rights to infrastructure on a winding up, no other revenue streams, it's a currency. That's it. Currency trading is zero sum - in order for you to win, someone else must lose.

Secondly - your post very glibly sidesteps a real-life example (me) being a cryptocurrency loser because it wasn't bitcoin. Fair enough, but your post above (and many other posters) speak very highly about investing into cryptocurrencies generally - indeed your post above talks about how profitable "many crypto protocols". You can't responsibly say this whilst at the same time dismissing anyone losing money on cryptocurrency as being a fool because they didn't pick the right one. There's real people at the other end of this.

Ultimately in my case, it didn't matter. It was a tiny part of a wider portfolio, chalk it up to experience and move on.

 Many others are not so lucky - when you're posting online pumping up cryptocurrency investments as being incredibly profitable and that we need to get in big, NOW, you need to remember that there are real people at the other end reading these posts - and we owe it to others to behave responsibly and not irresponsibly promote incredibly high risk assets in a sector that's full of pitfalls, traps and scams for the unwary, with little to no regulatory protection.

Cryptocurrency trading is only suitable for those willing to take very high risks, with very limited regulatory protection and who already have a very sophisticated knowledge or interest in that specialist market. That's why promoting it on a general mainstream money saving board is understandably going to be met with a critical eye.

Scottex99

We’re all adults here, you’d probably find the odd tongue in cheek comment about how rich we’re making it on the pro-crypto side but nobody is angling to get their bags pumped by a £100 buy from John on the MSE forum.

Price is just one aspect and probably the most boring one too.

A critical eye is fair enough, that’s one of the reasons I like the thread, calling it a ponzi isn’t IMO.

Everyone is free to make their own choices and figure out their own tolerance to risk, I guess I told you so’s will come either way 

Aegis

Scottex99 said:

We’re all adults here, you’d probably find the odd tongue in cheek comment about how rich we’re making it on the pro-crypto side but nobody is angling to get their bags pumped by a £100 buy from John on the MSE forum.

Price is just one aspect and probably the most boring one too.

A critical eye is fair enough, that’s one of the reasons I like the thread, calling it a ponzi isn’t IMO.

Everyone is free to make their own choices and figure out their own tolerance to risk, I guess I told you so’s will come either way 

I'm sure Bernie Madoff would have hated having his investment business called a Ponzi scheme too, and would undoubtedly have shouted to anyone listening that it most definitely wasn't one. It was.  Fact is, all cryptocurrencies are functionally identical to chain letters or pyramid schemes, in that price rises come approximately logarithmically from increasing the user base.  At best, they end up being equivalent to Multi-Level Marketing schemes, where there is some argument of utility, but it's very much ancillary to the recruitment of new distributors and converts. Eventually you get to a point where there are no more users coming in to drive the price up, and at that point people realise that the gravy train has come to an end and the price collapses.

MeteredOut

As usual with these threads across the internet, as soon as a statement challenged, the ad-hominem attacks appear. And, in the noise, the underlying question "What percentage of people who have ever owned bitcoin are in profit, or have sold with a profit?" remains unanswered.