Bitcoin

The argument of "no intrinsic value" the main argument naysayers have against crypto currency. The lack of physical existence is a key feature, not a problem. It is a digital asset. It cannot be stolen or lost. The concept of bitcoin and limited quantity drives the value. But its not meant to be an investment, just a way to trade freely and avoid centralized banking which continues to fail and mishandle assets. If the world ends tomorrow; gold, stocks, cash, and bitcoin are all worthless. So if the concern is underlying value, we should be spending all income on assets like real estate, boats, cars, guns, etc.
 
Bitcoin only has value if you can "cash out"...
Which means, if the Dollar goes away, then there is nothing to cash out to....
It's only backed by an agreement among its users that it has value....:confused:....
Might as well just trade products and services....
 
I was giggling with schadenfreude at the Bitcoin bubble back when it was fluctuating between $800ish and $80.

And again when Mt. Gox died, costing people hundreds of millions of dollars (at the time... Too many zeros to count, now).

I honestly am surprised that it is still around. But then again, my hairdresser is *really* excited about Forex right now, so it takes all kinds, I guess.
 
KeithE said:
The lack of physical existence is a key feature, not a problem. It is a digital asset. It cannot be stolen or lost.
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This is absolutely false. You may want to Google "Mt. Gox" and "James Howells"

KeithE said:
The concept of bitcoin and limited quantity drives the value. But its not meant to be an investment, just a way to trade freely and avoid centralized banking which continues to fail and mishandle assets.
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This is true... But people are using it as an investment - a risky, junk bond like, investment. But a an investment all the same.

And here's where cause and effect gets interesting. Because Bitcoin (like gold, tbh) is a kind of shitty currency. Part of that has to do with the underlying technology: to make Bitcoin transactions work, you need people to mine Bitcoins ("mining" is the side effect of the processing). Because the total number of Bitcoins is fixed, the relative benefits of mining go down as the total number of transactions decreases. So people start paying "extra" (transaction fees) to have their transactions go through in a reasonable amount of time. Valve stopped taking Bitcoin as payment because transaction costs are too high/variable.

A currency that doesn't work for transactions isn't a good currency.

So people put in their Bitcoin in exchanges, to smooth out some transaction costs, and make it easier to convert to fiat money when needed. But once you're putting your currency into the hands of a company, it's no better than fiat... In fact it's worse, because there is no FDIC for Bitcoin exchanges.

So, you end up with the speculators, alternatively hoarding and dumping so you can't get an agreement on what a Bitcoin is worth any more. Which is fun for gambling, but not great for serious investing.
 
I am investing in Tulip bulbs. Last market drop for them was in the early 1600s. Figure they are golden now! LOL
I saw a show on PBS many years ago about 4 diff plants. Apple, Potato, Tulip Bulbs, and of course todays hot one Marijuana.
The Tulip bulbs became a big thing in the late 1500s. Prices rose very high and then crashed. Pretty interesting since I, probably we, have passions ofr tree collecting.
 
sparklemotion said:
This is absolutely false. You may want to Google "Mt. Gox" and "James Howells"

So people put in their Bitcoin in exchanges, to smooth out some transaction costs, and make it easier to convert to fiat money when needed. But once you're putting your currency into the hands of a company, it's no better than fiat... In fact it's worse, because there is no FDIC for Bitcoin exchanges.
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False you say.... Mt Gox has nothing to do with the security of cryptocurrency. As your second statement mentioned, an asset is at risk anytime you trust a third party. For any asset. Once your info gets on the BlockChain, it's there forever until you change it. But most transactions never reach the BlockChain because the process is slow (which is why its so secure). That James Howell story is awesome! That goof threw away his computer, had he completed the process he would be able to unlock it from anywhere. I guess if the entire internet crashes and never returns, you technically can 'lose' your cryptocurrency ,along with any stocks, bonds, bank accounts, etc.

I never said it was a good investment, just wondering how many others have been sitting on previously worthless digital coins. The value is in the future of the technology, not the current usability. All the big banks now have blockchain research departments. The price, which is grossly inflated, which eventually stabilize. The speculation period is the most entertaining. Sit bank and enjoy the ride.
 
KeithE said:
False you say.... Mt Gox has nothing to do with the security of cryptocurrency. As your second statement mentioned, an asset is at risk anytime you trust a third party. For any asset. Once your info gets on the BlockChain, it's there forever until you change it. But most transactions never reach the BlockChain because the process is slow (which is why its so secure). That James Howell story is awesome! That goof threw away his computer, had he completed the process he would be able to unlock it from anywhere. I guess if the entire internet crashes and never returns, you technically can 'lose' your cryptocurrency ,along with any stocks, bonds, bank accounts, etc.

I never said it was a good investment, just wondering how many others have been sitting on previously worthless digital coins. The value is in the future of the technology, not the current usability. All the big banks now have blockchain research departments. The price, which is grossly inflated, which eventually stabilize. The speculation period is the most entertaining. Sit bank and enjoy the ride.
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In theory, you don't need an exchange to mediate transactions with cryptocurrencies. In practice though, exchanges were created because managing digital wallets successfully is actually kind of tricky for (most) users to do. They were something that wasn't designed into the system, but grew up organically because the need was there. And as soon as you have a need for an exchange, cryptcocurrency looses all of its benefits. Bitcoin is particularly bad on this point, other cryptocurrencies fix some of those design flaws, but bitcoin is what's getting the press (and the associated bubble).

Now -- blockchain technologies in general? Those are pretty great. I could nerd out about Ethereum all day, though it's real world applications still leave quite a bit wanting. (Cryptokitties... sigh: https://news.vice.com/story/this-game-combines-the-internets-favorite-things-cats-and-cryptocurrency)

But cryptocurrencies in and of themselves are dumb. At least tulips are pretty, speaking of which...

jmw_bonsai said:
The Tulip bulbs became a big thing in the late 1500s. Prices rose very high and then crashed. Pretty interesting since I, probably we, have passions ofr tree collecting.
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I have a thing for antique hand tools. I enjoy using them, I like that you can often find rusty gems for almost nothing at garage/estate sales and auction, and the restoration work is satisfying in it's own way.

But it comes with its own dangers, because people know that some of these rusty hunks of iron can be sold to the right collector for $$, and prices can get a little out of hand. especially for certain rarities. I knew that I needed to back off of my "vice for vises" when I started bidding on (and sometimes winning) auction vices that I didn't need, but I knew were "a good deal." The only vise I'd probably pay money for now is a 2" Wilton Baby Bullet. But at least I'm reasonable enough not to pay $600 for it (https://www.ebay.com/i/202062606593?chn=ps).

Anyways, when it comes to bonsai, I'm pretty sure the same dynamic exists. I'm actually grateful for my relative lack of skill, because I know that I'd probably kill a $1,500 tree, so I'd never buy one, even if I loved it. I don't begrudge people their expensive trees, if they enjoy them. Ditto pots.

But no one "enjoys" bitcoin. So why own it (except for the hope that you'll be able to sell it for more later)? But the current rise to $20,000 can't just be based on people who enjoy gambling.
 
I thought that stocks vs. cryptocurrencies were addressed earlier in the thread, but, at the risk of retreading:

A stock is a piece of ownership in the company. If the company doesn't pay dividends, you'll only get "value" out of the stock if you can sell it to someone, or (and this is the biggie) when the company winds up operations the shareholders get proportional "shares" of the assets (after certain creditors are paid). Most company stocks also come with the right to vote on the board of directors (therefore, steer management of the company in someway)... we can leave that aside because there are too many ifs/buts though.

When you buy stock in a company, the company needs, by law, to provide various reports to give you a sense of how the company is functioning. This is what the Securities and Exchange Commission does. It's not perfect, but the potential Jeff Skillings (https://en.wikipedia.org/wiki/Jeffrey_Skilling) of the world are not fans of the idea of going to Club Fed. It keeps most of them in line.

Bitcoin has none of those things. Even if you avoid the peril that is 3rd party exchanges, there are structural perils involved in trusting the larger mining cabals not to collude to just outright steal shit. This Fortune article doesn't get into the technical details of blockchain voting, but it does talk about other ways that miners can collude to screw people. http://fortune.com/2017/08/25/bitcoin-mining./
And to the extent that they keep their bitcoin shenanigans separate from tranasactions in fiat money -- it's mostly legal.

So yeah, stocks aren't currencies either. Investing in the market is risky. But, because of regulations, the risk of stock markets have more to do with how the market as a whole understands the value of a company, and less to do with outright fraud. People like to pretend that bitcoin is somehow "safer" because of the blockchain. But since the blockchain can be manipulated, it actually leaves you even more open to fraud than even the shadiest backroom casino (where at least people have to show their faces).

And, as an aside, that Nasdaq chart is somewhat misleadingly cropped:

nasdaq.png
 
sparklemotion said:
But no one "enjoys" bitcoin. So why own it (except for the hope that you'll be able to sell it for more later)? But the current rise to $20,000 can't just be based on people who enjoy gambling.
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I enjoy watching the meteoric rise, as do most people I hear talk about it. Except for the salty few who are upset they missed the wave. I will also enjoy watching the bubble pop.

The computing power of Bitcoin network is over 500 times the power of Google, which is the most powerful network on the web. The amount of power needed to manipulate the blockchain at this point is incredible, but anything is possible as tech advances. Quantum Computing approaches.
 
sparklemotion said:
I thought that stocks vs. cryptocurrencies were addressed earlier in the thread, but, at the risk of retreading:

A stock is a piece of ownership in the company. If the company doesn't pay dividends, you'll only get "value" out of the stock if you can sell it to someone, or (and this is the biggie) when the company winds up operations the shareholders get proportional "shares" of the assets (after certain creditors are paid). Most company stocks also come with the right to vote on the board of directors (therefore, steer management of the company in someway)... we can leave that aside because there are too many ifs/buts though.

When you buy stock in a company, the company needs, by law, to provide various reports to give you a sense of how the company is functioning. This is what the Securities and Exchange Commission does. It's not perfect, but the potential Jeff Skillings (https://en.wikipedia.org/wiki/Jeffrey_Skilling) of the world are not fans of the idea of going to Club Fed. It keeps most of them in line.

Bitcoin has none of those things. Even if you avoid the peril that is 3rd party exchanges, there are structural perils involved in trusting the larger mining cabals not to collude to just outright steal shit. This Fortune article doesn't get into the technical details of blockchain voting, but it does talk about other ways that miners can collude to screw people. http://fortune.com/2017/08/25/bitcoin-mining./
And to the extent that they keep their bitcoin shenanigans separate from tranasactions in fiat money -- it's mostly legal.

So yeah, stocks aren't currencies either. Investing in the market is risky. But, because of regulations, the risk of stock markets have more to do with how the market as a whole understands the value of a company, and less to do with outright fraud. People like to pretend that bitcoin is somehow "safer" because of the blockchain. But since the blockchain can be manipulated, it actually leaves you even more open to fraud than even the shadiest backroom casino (where at least people have to show their faces).

And, as an aside, that Nasdaq chart is somewhat misleadingly cropped:

View attachment 171199
Click to expand...
Agreed about the intrinsic value of stocks and what they represent and how they work. I was merely pointing out that, in the not too distant past, investors "speculated"-I read that as "gambled"- on internet based companies in the late 1990's, buying their stock at incredibly inflated prices with no reasonable justification and lost big time. The Nasdaq chart I posted was merely put there to highlight that loss.
 
Dav4 said:
Agreed about the intrinsic value of stocks and what they represent and how they work. I was merely pointing out that, in the not too distant past, investors "speculated"-I read that as "gambled"- on internet based companies in the late 1990's, buying their stock at incredibly inflated prices with no reasonable justification and lost big time. The Nasdaq chart I posted was merely put there to highlight that loss.
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Ah... I guess my point was that stocks *can* be a reasonable long term investment (in fact, I'd argue that not having at least some of your assets in the stock market is a bad idea, over the long term). I don't see the long term benefit for Bitcoin though.
 
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