Is bitcoin just a giant game of “chicken”?

PiPi2019

HansOndabush said:

Bitcoin is a token that people buy in the hope of selling to someone else at a higher price. Not much more than that to it really. I cant see it has any use or inherent value that you can measure to see if it is expensive or cheap.
To previous poster, where do you get that idea from, that if you buy a share you will be wiped out? Doesn't seem correct. I've had the odd share go bust but many more have been taken over at a premium. The remainder move with the fortunes of the company and markets and I can generally sell anytime I choose.

I can't disagree with you on anything you wrote. Spot on!

Steve182

I cannot foresee that I will ever invest in bitcoin. I know it may be to my detriment.

On a UK banknote it says something like "I promise to pay the bearer" 
With a piece of gold or silver you know it will be worth something indefinitely
Who underwrites the value of bitcoin?

Perhaps I just don't understand it....
There is a saying by a slightly well known investor ..  "Risk comes from not knowing what you're doing"

I would certainly put myself in that category in regard to Bitcoin.....

kuratowski

You cannot unring a bell, and it seems to me that there is some latent demand for cryptocurrencies.  Although obviously I can't see the future, I don't believe cryptos will replace traditional fiat currency, but they are probably here to stay, in some shape or form.

If I could invest in a basket of cryptocurrencies on a mainstream platform (ideally within a tax wrapper!) then I probably would lob in £1k, on the grounds that I could afford to lose it, but it has the potential to boost overall returns.  I wouldn't be betting a large proportion of my NW on it, personally, although I can well understand why 20-somethings without much NW yet could be tempted to.

However, it's very unappealing to have to navigate these crypto-specific exchanges and platforms, moving well outside of the regulated arena.  I assume this is why some of the US banks (in particular) are slowly responding to customer demand, to provide some market access to cryptocurrencies through traditional venues, as this will slowly remove the 'wild west' aspect.

Will_Do

I don't think crypto is going anywhere. The question is what will it ultimately become? I don't think in its current form it will ever establish itself as true mainstream currency. We may see a time when governments / national banks leverage blockchain technology to modernise their national currencies but that is a very different scenario from the current landscape. All I see right now is speculators and gamblers intoxicated by the volatility. Some will win and some will lose but there will always be enough people tempted by the dream of a quick buck to keep the game going. Casinos and bookmakers have been around for centuries despite the fact they are a -EV game so why shouldn't crypto gambling continue to be popular?

Type_45

I own £2k of BTC (was worth £3k last month...). I've been interested in crypto, and held it, for a few years. But my knowledge of it other than is very limited.

My issues with BTC:
1) It can be banned at any time. Crypto enthusiasts totally underestimate the powers that be.
2) the lost BTC (ie, when people forget their passwords etc) is mounting up

3) they say it's finite (only 21 million BTC can ultimately be mined), but that doesn't stop BTC forking and spawning new coins.

barnstar2077

Some form of crypto may become a stable currency in the future, but I don't personally see that being Bitcoin.  The only people I can see saying that it is here to stay would be those that have an inherent interest in it sticking around.

I don't think the argument for crypto is helped by there being around five to seven thousand of them (including failed ones, according to a quick google.)   I mean, they are a conman's dream.  They don't even have to lie, they just come up with a new coin, and even though they have no real value, people will buy them just in case they become valuable later.  It's brilliant really.

me1000uk

Bitcoin is a strange one and this is just my opinion, because those wanting to exploit the masses will jump down my throat as they have money riding on it. Just let it be known in the grand scheme of things the below is just a random opinion that likely won't mean much to most.
Intuitively a global method of payment that isn't centralised and based around online technology sounds like the future and a great idea. If you asked me twenty years ago if we'd be paying with phones and watches most would laugh. It feels like the future is geared towards something that resembles cryptocurrency.

Points against it for me are as follows:
- The biggest proponents seem like evil villains. Reminds me of season 6 of Buffy the vampire slayer where the nerds had evil intentions and wanted to rule. It's like a massive amount of internet trolls intent on destroying anyone that dares to question one of the most questionable things in recent money. 'Have fun staying poor', 'look at my fancy lifestyle', ' educate yourself' blah blah, especially during a time where many are suffering and susceptible to influence of a dream.
- It resembles multi-level marketing or pyramid schemes in the way the late investors fund the early ones. The loudest voices are an absolute minority whilst the biggest losers are the absolute majority. 
- For the average person there is a clear distinction between those that got lucky/rich early, and those that are investing late hoping for 100k, 500k per coin.
- There is little accountability and the exchanges are a single point of failure for most. Any kind of government move to increase taxes or make payment into exchanges more traceable or even banned (as some banks are doing) only add to the fear factor. Proponents call it 'FUD' but in reality if you've travelled or worked in different places in the world you know there's a heck of a lot a government can do to destroy your exchange or your value (the coins themselves may not be destroyed but can be rendered worthless).
- Pretty much no predictions are accurate on price. It's guess-work and hype with every man and their dog interpreting graphs like expert statisticians in the hope that their 'contribution' will help pump prices.
- Most scams are non-specific and bog you down with waffle to confuse rather than to clarify and most of the crypto space appears this way.

If you are an experienced trader and can handle leverage perhaps there's money to be made, but if you are planning on buying and holding then it makes zero sense to do this during the highs and wait for a mid term investment at the bottom end before the potential next 'halving' and sell. Whether the next time happens this way is a complete guess based on what is essentially a decade of data in a field where innovation/technology can quickly change the goalposts.

If you HAVE money to risk and apply a modest percentage of your portfolio to play with this (say 5 or 10%), then sure it's maybe worth a punt but it almost certainly is a total gamble, hoping on total luck and not based on any real data or applications that are relevant to the average human, at the mercy of the tweets of billionaires or people that absolutely and totally have little regard for your investment except the fact that they can cash in on your input. There's no real assets, or businesses you're investing in, or anything that is realistically accountable to shareholders or whatnot. 



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me1000uk

Deleted_User said:

HansOndabush said:

Are you really as stupid as you appear on this forum?

Apparently I'm not being stupid enough, because you're not understanding ... Let's try again, more slowly:

1. The current prices of both gold and bitcoin would be vastly lower if the only thing supporting them were their intrinsic value (meaning: excluding use as a means of exchange or for speculation).

2. Both of them are a bit like currencies if you squint at them, but they're both really sh*t as currencies, compared to real modern currencies (e.g. £). Inconvenient for exchange. Unstable in value. Not reliablely inflation-proof over timescales that matter to a human being.

3. Both are environmental disasters. Bitcoin for the computing energy used solving useless puzzles to build the blockchain. Gold for the landscape destruction and energy used digging up tonnes of soil & rocks which contain tiny quantities of gold, and then the pollution from applying chemicals to separate the gold, and then dumping the unwanted rubble somewhere.

4. I wouldn't touch either with a (gold-plated / NFT) bargepole.

HTH

I don't know what the previous exchange is so I apologise if I've missed something but gold is something that for the majority of the world is a physical item that is gifted, sold and held on to by families and generations to secure your future. Grannies tell their grandkids in Asia to always keep their gold in case they run on hard times (deaths/divorce/joblessness) and it has kept them out of poverty.
These are practical realities that you'd see if you visit India or the Middle East or Africa and why at weddings people give gold (per weight) instead of cash or toasters.
A debate on inherent value and speculative investments isn't really an honest one, and essentially you're looking at a speculative asset based on luck over the past few years, rather than something that has been relatively robust for generations. I'm just a random internet bloke but it is really difficult to trust someone that devalues gold over an electronic asset that was invented anonymously with plenty of potential regulatory developments that can all but destroy it. 

naedanger

me1000uk said:

If you HAVE money to risk and apply a modest percentage of your portfolio to play with this (say 5 or 10%), then sure it's maybe worth a punt but it almost certainly is a total gamble, .... 

Is 5% to 10% of your portfolio not rather a lot to punt on a total gamble? 
Mind, if everyone thinks it is worth holding 5% to 10% of their portfolio in crypto currency then it probably will be a good gamble. (But I hope they don't.)

me1000uk

naedanger said:

me1000uk said:

If you HAVE money to risk and apply a modest percentage of your portfolio to play with this (say 5 or 10%), then sure it's maybe worth a punt but it almost certainly is a total gamble, .... 

Is 5% to 10% of your portfolio not rather a lot to punt on a total gamble? 
Mind, if everyone thinks it is worth holding 5% to 10% of their portfolio in crypto currency then it probably will be a good gamble. (But I hope they don't.)

perhaps it is, although 'if you HAVE money to risk' is probably my main focus (heck I even used caps for emphasis

Deleted_User said:

However, I think there is a hard distinction between assets that are valued in 3 different ways:

1) on the basis of the cash flows the asset is expected to pay to its owner in the future. This is how shares and bonds are valued. Gold and bitcoin can't be valued in this way, becuase they pay no income; the only way to cash in is to sell the asset.

2) on the basis of its use as a factor of production. This is how oil, industrial metals, and other commodities are valued. Although gold has some value of this kind, its price is too high for it to be supported by this kind of valuation. Bitcoin has no value of this kind.

3) on any other basis. In effect, I am calling the value of anything that can't be valued by methods (1) or (2) speculative. This includes currencies, precious metals, and cryptocurrencies. "Speculative" isn't necessarily an insult (or is it? ). It does imply that it is very difficult to project future values in this category. (It's hard enough when using method (2), and there is more to go on there.)

I see what you're saying but I just find the bandwagon that keeps talking about gold and crypto in the same sentence is purely doing that to legitimise crypto more than discredit gold. One is something that physically exists and doesn't have complex legalities that are in development, and the other doesn't physically exist and still resembles a pyramid scheme. Your tone suggests you can see the benefits of crypto but have a degree of caution. I would describe myself as on a similar boat.

Forget the energy usage arguments or the criminal usage argument (which can apply to many things). The sinister side to crypto is disturbing for me.

You have all these early adopting rich people hoping that the poor dream-chasers during a crazy global time will sell everything for crypto even though they'll never come close to the 1000x gains they had and would be lucky to get 20% if that.
All they want you to do is sell everything and HODL (for their benefit) with no clue what happens next. Popular bloggers pushing all sorts of weird tokens and then post 'sorry my bad not financial advice' when they tank (as if that gives them integrity), attractive female video bloggers acting like crypto-babes to contribute to the pumps. The 'do your own research', 'you need to educate yourself' or 'this time the cycle different' promises to make it seem like there's true academic depth to this gamble. In reality very few will understand the technicalities and they'll depend on blogger X or computer programmer Y to show them charts and claim credit for their guess on the price. Essentially it's a community filled with ruthless disingenuous people trying to take advantage of the masses to fuel their invisible asset. So many of them resemble supervillains from TV. More Lex Luthor than Tony Stark. 

Bitcoin isn't now what it was supposed to be. It was invented in mystery with billions of dollars market-destroying value either held for a cataclysmic event or lost. The actual applications don't really serve a current purpose that can't be done with something else. New applications of crypto like NFTs and whatnot sound promising but in reality is a money grab by people hoping coin rich early adopters pay them for pre-existing, non-innovative things like logo design or a musical performance (they can be paid for cheaply in fiat but they're really just hoping the early adopters with excess money can demonstrate their egos by parting with coins; Why perform for 100 quid when someone has thousands of Ether and will give you 1 worth 2k)

You can't even send to Binance/coinbase with some banks now, and such regulation will only increase. The Capital gains tax applies on any coin exchange, so if you trade 1 BTC that has gone from 1k to 35k for ETH this year, and the following year ETH tanks, you'll have paid CGT on practically no capital.

It may sound like I'm anti crypto, but all I think is that the usage will evolve into something else, and as regulation increases the value will become more realistic. I would say I'm anti the current motivations of the crypto space because the exploitation seems so blatant.