Is bitcoin just a giant game of “chicken”?

Scottex99

Malthusian said:

naedanger said:

Malthusian said:

Zola. said:

How long does it have to keep going up before people may come to realise it has high demand and ultimately value? Short-term volatility is the price you pay for 200% gains per year on average.

lol

The average yearly return from Bitcoin is nil. Average return = average across all investors. Punters' money in == punters' money out.

The price paid for 200% gains per year is that other punters have to lose (200% ^ years) of the amount you invested to allow you to cash out at a 200%pa profit.

I am no advocate of Bitcoin but that is not a sensible analysis. 

If you've got an analysis that proves that punters' money in != punters' money out in a zero sum game, we're all ears.

lozzy1965 said:
If you include the value of the underlying asset then that is correct.

Glad we agree.

But for the punter buying the portion of ownership of that underlying asset 'punters money in==punters money out' in order for that portion to change hands. 

Value added by the business to its inputs generating profit attributable to shareholders != punters' money.

The original point of dispute here is that Bitcoin generates average returns of 200%pa. An unqualified "average" means "across all investors", not "among some random minority of investors who cashed out at a profit".

Rather than argue semantics, you can win this argument by showing where the money has come from to pay Bitcoin investors 200%pa returns that does not come from other punters buying Bitcoins off existing punters.

How is it a minority?

I cant be bothered to get the exact figures but I know for a fact BTC didn't break $20k until December 2020. Right this second it's $38,817. That means that anyone who acquired Bitcoin since its inception until that date 6 months ago, is bare minimum of 2x up. So that's 10.5 years of Bitcoin's 11 year history approx. Doesn't look like a minority to me.

EDIT: This may be unrealised profits of course but there is billions of $ of liquidity on a multitude of exchanges and platforms available 24/7 if you wanted to sell. I've got a chunk at $4k that I could flip right now for 10x but I'll wait for BTC to hit $200k first I reckon 

sebtomato

Zola. said:

HansOndabush said:

Zola. said:

How many investing bubbles have lasted for over 12 years?

South Sea bubble

Japan real estate bubble

Japan stock market bubble

The Wall St. crash of 1929

US housing bubble

S&P 500 bubble (we are currently in)

Crypto bubble

The most obvious part of the bubble is the last parabolic surge upwards but many of these bubbles took years to form before that final surge. Same with bitcoin; it exactly follows the typical bubble chart; we are currently in the bull trap phase before the next leg down to sub $20K. Good luck with your investment, HFSP

I will respectively disagree. "Have fun staying poor", how classy of you. 
Bitcoin will never make me poor, as I will never over-extend myself in it.  Will it make me rich? Maybe...

If you never over-extend yourself either, then no, Bitcoin will not make you rich...
The only way to get rich now with Bitcoin is to invest a significant amount of money and see what happens.

sebtomato

Adyinvestment said:

A huge catalyst for Bitcoin will be if/when a Bitcoin ETF is approved by the SEC (anticipated by many this year) and eventually FCA.

Once/if this happens and there is easy access in pensions etc I would expect a tremendous amount of money to go into Bitcoin - at this point it will be here to stay.

Adyinvestment said:

A huge catalyst for Bitcoin will be if/when a Bitcoin ETF is approved by the SEC (anticipated by many this year) and eventually FCA.

Once/if this happens and there is easy access in pensions etc I would expect a tremendous amount of money to go into Bitcoin - at this point it will be here to stay.

Sure. Keep repeating to convince yourself. Once the various central banks ban Bitcoin, we will see how much it's worth.

lozzy1965

Malthusian said:

Rather than argue semantics, you can win this argument by showing where the money has come from to pay Bitcoin investors 200%pa returns that does not come from other punters buying Bitcoins off existing punters.

So you ARE arguing the underlying value of Bitcoin?
I take issue with your "punters money in == punters money out zero sum game" statement as an argument against Bitcoin.  My point is, that is no different to many other investments while they are trying to establish themselves and not generating any income.  Take Tesla for example.  Never made a profit but shares are worth a fortune.  At the moment why is this not a "punters money in == punters money out zero sum game"?  Because you perceive the value of Tesla as 'something' and the value of Bitcoin as 'nothing'? 
The fact is that large % gains HAVE been generated in Bitcoin over what many would regard as a long period of time, and at present the value of anyone's holding in Bitcoin is worth what the market says it is, same case with Tesla.  Anyone who got in at the present peak is sitting on a loss, same with any other investment.  If everyone sold at the same time the value would plummet, same with any other investment.  Government legislation for either might cause the value to plummet, but at the moment both are worth what the market says they are.

moneysavinghero

lozzy1965 said:

Malthusian said:

Rather than argue semantics, you can win this argument by showing where the money has come from to pay Bitcoin investors 200%pa returns that does not come from other punters buying Bitcoins off existing punters.

So you ARE arguing the underlying value of Bitcoin?
I take issue with your "punters money in == punters money out zero sum game" statement as an argument against Bitcoin.  My point is, that is no different to many other investments while they are trying to establish themselves and not generating any income.  Take Tesla for example.  Never made a profit but shares are worth a fortune.  At the moment why is this not a "punters money in == punters money out zero sum game"?  Because you perceive the value of Tesla as 'something' and the value of Bitcoin as 'nothing'? 
The fact is that large % gains HAVE been generated in Bitcoin over what many would regard as a long period of time, and at present the value of anyone's holding in Bitcoin is worth what the market says it is, same case with Tesla.  Anyone who got in at the present peak is sitting on a loss, same with any other investment.  If everyone sold at the same time the value would plummet, same with any other investment.  Government legislation for either might cause the value to plummet, but at the moment both are worth what the market says they are.

Tesla made $721 million profit in last financial year. Likely to increase this year..

kuratowski

It is not reasonable to equate shares in a company (any company) with Bitcoin.  Shares in a company have a legal meaning, they give you a right to a share in any distributions of the company profits, and they give you a right to a share in any residual assets if/when the company is wound up.  I am not saying that Bitcoin is worthless but the value, if any, springs from its utility alone and not any underlying rights it bestows.

Zola.

sebtomato said:

Zola. said:

HansOndabush said:

Zola. said:

How many investing bubbles have lasted for over 12 years?

South Sea bubble

Japan real estate bubble

Japan stock market bubble

The Wall St. crash of 1929

US housing bubble

S&P 500 bubble (we are currently in)

Crypto bubble

The most obvious part of the bubble is the last parabolic surge upwards but many of these bubbles took years to form before that final surge. Same with bitcoin; it exactly follows the typical bubble chart; we are currently in the bull trap phase before the next leg down to sub $20K. Good luck with your investment, HFSP

I will respectively disagree. "Have fun staying poor", how classy of you. 
Bitcoin will never make me poor, as I will never over-extend myself in it.  Will it make me rich? Maybe...

If you never over-extend yourself either, then no, Bitcoin will not make you rich...
The only way to get rich now with Bitcoin is to invest a significant amount of money and see what happens.

For a bit of silly fun, let's say you put in £5k, then pound cost averaged 200 quid a month for the next ten years.
Since its inception, the annualised growth of bitcoin has averaged 200% per year. Lets say from now on its "only" half of that for the next ten years, that would put the final value at £110M, presuming if you cashed out at the peak... I think we would all be happy with 1/100th of that return... past performance and all that, but who knows...!

lozzy1965

moneysavinghero said:

Tesla made $721 million profit in last financial year. Likely to increase this year..

That'll teach me to check my facts before I post!  Tesla not being a good example then, but you get what I am driving at?

lozzy1965

kuratowski said:

It is not reasonable to equate shares in a company (any company) with Bitcoin.  Shares in a company have a legal meaning, they give you a right to a share in any distributions of the company profits, and they give you a right to a share in any residual assets if/when the company is wound up.  I am not saying that Bitcoin is worthless but the value, if any, springs from its utility alone and not any underlying rights it bestows.

Profits - I was intending to compare with companies that do not yet make any profit.
Assets - Yes, you are correct.  However, there are companies with very little in the way of assets, and there are very few companies with enough assets to filter through to an actual payment to shareholders, after all liabilities are met in the event the company is wound up.
However, it's just this "zero sum game" thing I have an issue with

moneysavinghero

Zola. said:

sebtomato said:

Zola. said:

HansOndabush said:

Zola. said:

How many investing bubbles have lasted for over 12 years?

South Sea bubble

Japan real estate bubble

Japan stock market bubble

The Wall St. crash of 1929

US housing bubble

S&P 500 bubble (we are currently in)

Crypto bubble

The most obvious part of the bubble is the last parabolic surge upwards but many of these bubbles took years to form before that final surge. Same with bitcoin; it exactly follows the typical bubble chart; we are currently in the bull trap phase before the next leg down to sub $20K. Good luck with your investment, HFSP

I will respectively disagree. "Have fun staying poor", how classy of you. 
Bitcoin will never make me poor, as I will never over-extend myself in it.  Will it make me rich? Maybe...

If you never over-extend yourself either, then no, Bitcoin will not make you rich...
The only way to get rich now with Bitcoin is to invest a significant amount of money and see what happens.

For a bit of silly fun, let's say you put in £5k, then pound cost averaged 200 quid a month for the next ten years.
Since its inception, the annualised growth of bitcoin has averaged 200% per year. Lets say from now on its "only" half of that for the next ten years, that would put the final value at £110M, presuming if you cashed out at the peak... I think we would all be happy with 1/100th of that return... past performance and all that, but who knows...!

For a bit of fun lets back 10 horses at 25/1. Lets say you put in £10. Re-invest the winnings and at the end you would have £953,674,316,406,250.00 presuming your horses won. I think we would be happy with 1/1000000th of that return.