Crypto Dabble.

Aegis

adam06_2 said:

Could the growth stocks not also be considered to be a ponzi scheme?

If the shares ultimately do nothing in terms of the underlying value, then the price is likely to collapse.  At that point, any holders of shares will get a share of the wind-up value, which may well sum to nothing after costs.  Certainly this is a risk, which is why investing in growth stocks is riskier than something already established and producing underlying revenues.  If they have a good idea and can bring it to market, though, the value of the underlying company is boosted by external cash flows, and entitlement to those values becomes attractive, which then boosts the share price. 

If all goes according to plan, investing in shares is a positive-sum game.  Investing in commodities and currencies is typically zero-sum, meaning the only increases you will ever see are as a result of someone else losing money (this is ignoring the slight cost of transactions, which technically pushed these into negative-sum territory).  Gambling is a negative-sum game, in that the system is set up to, on average, separate money from participants in the system to increase the house's wealth.  Within that there are obviously still winners and losers, and there may be all sorts of people out there claiming to have a great system, which is only to be expected if you consider a typical bell curve of outcomes, but ultimately gambling is the redistribution of wealth among participents with a take for the house.

Will_Do

Cryptocurrency is such a polarising subject. It's either a near-guaranteed path to limitless wealth for those with the vision to "do their own research" or it's one great big scam of a Ponzi scheme. The truth (IMHO) is somewhere in the middle. I do think it is a classic bubble at the moment. The rate at which new cryptocurrencies have been spun up over the past few years and the volume of investment (or speculation/gambling if you prefer) is unsustainable and the market is ridiculously overpriced.

That said, whilst bubbles burst they don't necessarily evaporate. What we are seeing right now is just a rerun of the dotcom bubble. The dotcom bubble was basically an investor frenzy driven by the potential that was seen in the evolution of web2. The current cryptocurrency trading boom is the same being played out over web3. Whilst countless overpriced ventures turned to dust when dotcom burst, some did survive. Their stock prices came back down to much more realistic levels and some even went on, over time, to become the biggest enterprises on the planet (e.g. Google, Amazon, Facebook). 

There are undoubtedly amazing opportunities coming as web3 matures. The question is how to capitalise on that as an investor. Again, just my personal opinion, I think those that will get burned the most are those that overexpose themselves just now. The !!!!!! coins, meme coins and scam coins will turn to dust overnight. Many projects that look promising and talk a good talk will be found to be lacking in real substance and they will fail too. Anyone invested in those will be lucky to get out with spare change before the price hits the floor. A few will rise from the ashes though.

I think the best strategy is to keep your powder dry, wait for the bubble to pop and then start investing very selectively in the survivors for the medium to long term. If you must dabble just now then recognise that it is ultra high risk and only commit a very small percentage of your overall funds. Even if you take it seriously, DYOR till your eyes bleed AND get very lucky, chances are that you are going to lose the majority of what you have invested when the bubble inevitably pops.

HCIMbtw

Will_Do said:

Cryptocurrency is such a polarising subject. It's either a near-guaranteed path to limitless wealth for those with the vision to "do their own research" or it's one great big scam of a Ponzi scheme. The truth (IMHO) is somewhere in the middle. I do think it is a classic bubble at the moment. The rate at which new cryptocurrencies have been spun up over the past few years and the volume of investment (or speculation/gambling if you prefer) is unsustainable and the market is ridiculously overpriced.

That said, whilst bubbles burst they don't necessarily evaporate. What we are seeing right now is just a rerun of the dotcom bubble. The dotcom bubble was basically an investor frenzy driven by the potential that was seen in the evolution of web2. The current cryptocurrency trading boom is the same being played out over web3. Whilst countless overpriced ventures turned to dust when dotcom burst, some did survive. Their stock prices came back down to much more realistic levels and some even went on, over time, to become the biggest enterprises on the planet (e.g. Google, Amazon, Facebook). 

There are undoubtedly amazing opportunities coming as web3 matures. The question is how to capitalise on that as an investor. Again, just my personal opinion, I think those that will get burned the most are those that overexpose themselves just now. The !!!!!! coins, meme coins and scam coins will turn to dust overnight. Many projects that look promising and talk a good talk will be found to be lacking in real substance and they will fail too. Anyone invested in those will be lucky to get out with spare change before the price hits the floor. A few will rise from the ashes though.

I think the best strategy is to keep your powder dry, wait for the bubble to pop and then start investing very selectively in the survivors for the medium to long term. If you must dabble just now then recognise that it is ultra high risk and only commit a very small percentage of your overall funds. Even if you take it seriously, DYOR till your eyes bleed AND get very lucky, chances are that you are going to lose the majority of what you have invested when the bubble inevitably pops.

i've been through this very thought process.. but still think it is better to have some exposure than not (but maybe i'm just being impatient).. and i'm not exposing myself to everything, just backing a few that i think must end up the winners (I might be wrong).. but equally if a pop happens, i'd actually just welcome the opportunity to get in deeper/cheaper

its no different from the way I approach S&S though, think it is not out of the world my ISA value drops 60% or more at some point in the next year, I could taper out some powder over the next 12 months.. but I could be wrong, miss out on the run continuing   

history has told me if I try time investment, i suck.. so I give up and just get in with what I can when I can and enjoy the volatility on the way
 

Zola.

@Will_Do
Agree fully. There is so much muck out there and it is undoubtedly in a bubble state, just like the .com era. I do believe the OG's like Bitcoin will be here for good and will be representative of amazon.com from the bubble era in crypto. Bitcoin will crash hard, again and again, no doubt about it, but I believe in the long run it will stabilise and become a more "boring" asset class.

Most other projects will die. Some will rise and may become legitimate game-changers, who knows. 

People often don't like huge technological changes and especially when it involves their money. I think a lot of people here have spent considerable time just getting comfortable with index investing etc, only to have to relearn things like Defi and Bitcoin and are resistant to do that because it's so fundamentally different and somewhat intimidating/untrustworthy at first.

The one thing we can be pretty confident on is this area of finance isn't going away. 

Will_Do

HCIMbtw said:

Will_Do said:

Cryptocurrency is such a polarising subject. It's either a near-guaranteed path to limitless wealth for those with the vision to "do their own research" or it's one great big scam of a Ponzi scheme. The truth (IMHO) is somewhere in the middle. I do think it is a classic bubble at the moment. The rate at which new cryptocurrencies have been spun up over the past few years and the volume of investment (or speculation/gambling if you prefer) is unsustainable and the market is ridiculously overpriced.

That said, whilst bubbles burst they don't necessarily evaporate. What we are seeing right now is just a rerun of the dotcom bubble. The dotcom bubble was basically an investor frenzy driven by the potential that was seen in the evolution of web2. The current cryptocurrency trading boom is the same being played out over web3. Whilst countless overpriced ventures turned to dust when dotcom burst, some did survive. Their stock prices came back down to much more realistic levels and some even went on, over time, to become the biggest enterprises on the planet (e.g. Google, Amazon, Facebook). 

There are undoubtedly amazing opportunities coming as web3 matures. The question is how to capitalise on that as an investor. Again, just my personal opinion, I think those that will get burned the most are those that overexpose themselves just now. The !!!!!! coins, meme coins and scam coins will turn to dust overnight. Many projects that look promising and talk a good talk will be found to be lacking in real substance and they will fail too. Anyone invested in those will be lucky to get out with spare change before the price hits the floor. A few will rise from the ashes though.

I think the best strategy is to keep your powder dry, wait for the bubble to pop and then start investing very selectively in the survivors for the medium to long term. If you must dabble just now then recognise that it is ultra high risk and only commit a very small percentage of your overall funds. Even if you take it seriously, DYOR till your eyes bleed AND get very lucky, chances are that you are going to lose the majority of what you have invested when the bubble inevitably pops.

i've been through this very thought process.. but still think it is better to have some exposure than not (but maybe i'm just being impatient).. and i'm not exposing myself to everything, just backing a few that i think must end up the winners (I might be wrong).. but equally if a pop happens, i'd actually just welcome the opportunity to get in deeper/cheaper

its no different from the way I approach S&S though, think it is not out of the world my ISA value drops 60% or more at some point in the next year, I could taper out some powder over the next 12 months.. but I could be wrong, miss out on the run continuing   

history has told me if I try time investment, i suck.. so I give up and just get in with what I can when I can and enjoy the volatility on the way
 

I get you. I've used the old quote "time in the market, not timing the market" many times myself. I think though, and I'm always happy to change my mind, it possibly doesn't apply to a genuine bubble scenario (assuming that's what we're looking at) as it does to the more usual peaks and troughs of a market. There's also more than one market so time out of the crypto market doesn't need to mean uninvested altogether.

It doesn't sound like you're in the overcommitted camp anyway so worst case you might get singed a bit but not burned to a crisp. I'm more concerned for people who are getting sucked in by the hype and plowing in everything they can spare in the hope of striking it rich.

Zola.

That's why altcoins exist. People keep thinking they missed the boat on the likes of bitcoin, so they gamble recklessly on the equivalent of pink slip penny stocks with no actual future where the unit bias makes them more comfortable. If enough idiots jump on the same meme coins a small number may get rich by being incredibly lucky, before the rug gets pulled on the vast majority. 

Dandytf

My latest 'Simple' line.

Did mser's enjoy FT.com latest Vid.

Cryptocurrencies: how regulators lost control

Malthusian

Seems unfair to accuse regulators of losing control when the entire point of crypto was that it was outside regulators' control in the first place.

Nor did financial regulators (in the FCA sense) have any need to take an interest initially. Not until the point people started issuing securities via crypto or bringing ETFs holding crypto to market. In itself, people trading points between each other is not the business of financial regulators any more than people trading whiskey or horses between each other is. Even if they are doing so in the hope of making money.

Most of the demand for regulators to get involved in crypto comes, ironically, from the same bros who claim crypto is great because it's unregulatable, because if regulators take crypto seriously, more punters will be given the confidence to invest and number go up.

n15h

Zola. said:

That's why altcoins exist. People keep thinking they missed the boat on the likes of bitcoin, so they gamble recklessly on the equivalent of pink slip penny stocks with no actual future where the unit bias makes them more comfortable. If enough idiots jump on the same meme coins a small number may get rich by being incredibly lucky, before the rug gets pulled on the vast majority. 

Your comment about pink slip penny stocks just reminds of the Wolf of Wall Street movie, and how the brokers were pushing pink slip stocks to rich and poor investors - in the end it was the brokers that were making the millions and the investors were losing out.

IMO its always wise to DYOR, don't give in to the fear of missing out, and only invest what you can afford to lose.

Dandytf

what an amazing thread, which I no longer hold any interest in.
I've read too many articles suggesting Crypto mining is using up ridiculous amounts of energy.

Today I've stopped my eth/ltc dabble via pay pal. 

thanks mser's