Many with cryptocurrency haven't had to do any hard honest work to obtain it, e.g. the early joiners who have just had to wait as their "wealth" accrues from later joiners, or even newer joiners who have made their "wealth" from scams or rugpulls or wash trading to artificially inflate the value of their NFTs or whatever. These people tend not to value their "wealth" in the same way as the "greater fools" who have had to work hard at honest jobs to earn their fiat prior to converting it to cryptocurrency, and so don't have such a problem with the constant risk of losing everything via loss or theft or market crash or whatever.
With cryptocurrency it is the same. The combination of zero consumer protection and anonymity is the perfect breeding ground for fraud. If you were being charitable, you could call converting fiat money into cryptocurrency a gamble, but certainly not a sound investment. The only people who will try to convince you otherwise are those set to gain from the fraud.
How you become sure you have as much information about the subject as the person you're dealing with (i.e., whether that's because it is required by law and you expect to have some recourse if it's violated, or because you are confident that you've had access to the relevant information for some other reason) isn't really important.
They’re both inherently high risk, but the value derives from different things. With small caps, it’s the idea that one or more may grow to produce outsize returns in the future, whereas the other is hoping someone will come along later with more money to take you out of your position.
(The small caps for the most part aren’t attracting money based on popularity or memes, so are closer to high-risk investing than gambling on speculative assets).
An investor in that situation has to (presumably, and I'm ignorant so maybe not) do work in doing research, having enough domain and industry knowledge to evaluate what a "winner" looks like in a given industry, understand how valuations are formed and what can make them wrong, etc etc.
Some of that is done by crypto people sure, but the difference between a big success and losing your money there seems a lot more luck-based than in normal investing.
People have been making the argument that investing is gambling for decades at this point, and I don't think that's completely wrong but it is very hard to draw the line. I am comfortable putting crypto trading on the gambling side of that line, and most forms of professional investing probably on the non-gambling side.
They are possibly a lot closer than I think they are, but I don't think that speaks well for either activity!
Literally the only way you can profit with stocks is if people keep buying in at higher prices. It's the perfect instantiation of a pyramid scheme.
Except, of course, if you live in it, rent it out or use it as businesses asset. Good luck doing that with crypto.
> Literally the only way you can profit with stocks is if people keep buying in at higher prices. It's the perfect instantiation of a pyramid scheme.
Except, of course, that you as a shareholder can influence the direction of the company and earn dividends. Good luck doing that with crypto.
- Real estate has real-world use cases
- Stocks have real-world use cases
- Bitcoin has real-world use cases
It's meaningless to describe any of these as pyramid schemes because "to profit you must be able to sell at a higher price to someone else". That's true of buying or selling anything.
I recommend not storing your password with your coke.
I'm afraid your comment doesn't make much sense.
There are people using Bitcoin as a currency, via lightning, right now. More join all the time. The network expands.
It is a currency, is used as a currency, as sats. It is also a long term store of value as Bitcoin. You can ignore reality as much as your like, but the world has moved on from your 2017 era complaints.
It is wildly practical today, and there are several good custodial solutions if you do not wish to run a node yourself. Please give it a try!
How does that differ from other commodities trading? The only way to profit in the futures market is to buy low and sell high, too, for instance.
The "and use" phrase is what differentiates commodities from cryptocurrency.
It doesn’t. Trading is zero sum. It supports the extraction, processing and delivery of useful things, however, which is positive sum.
Trading between financial participants is, cetiris paribus, always zero sum. Irrespective of the timeline.
Buyer's gains are the seller's opportunity cost; buyer's losses were avoided by the seller. (Paribus violation is when parties have different funding costs.)
Moving commodities around isn't trading per se; it's logistics. Again, value adding.
Only if you consider the trade in the quantity of the goods traded, and not in a prevailing unit of accounting.
Nope, this is microeconomics. If you and I have the same funding costs and we trade a commodity derivative, any gain you have is a gain I gave up. Any loss you have is one I avoided.
This is true irrespective of the unit of account of point in time at which one measures it; it's an identity. The only
Someone who buys wheat, holds it and sells it the next day is definitely not “trading”, he merely engages in a series of discrete trades? Daft.
I don't think this is any more a fact than my statement. I'm merely trying to point out that you seem to be saying it's ok to invest in what people perceive as a scam (my example was pyramid schemes) because it's an investment.
If you want to be fully sovereign with your wealth, you have to accept full responsibility of that wealth. If that is not a responsibility you want bc you believe it is too risky, then do not buy bitcoin.
Or, you can trust centralized authority (a bank) with that responsibility; obviously, the trade off is you lose full control of your wealth.
Additionally, how you approach ownership of your wealth is not binary. Nothing is stopping you from putting some proportion of each in either bank or bitcoin.
Is it not totally obvious that bitcoin has market value?
If not, consider these points - bitcoin was not created by MIT and Uchicago STEM and econ PhDs, it was born out of an anonymous internet "white paper." It proved itself as a type of "money" in the internet dark markets, and continues to do so. It wasn't "lab tested," it was tested in the real world. When China banned crypto, the price of bitcoin did not crash. Only authoritarian countries have banned it, while some US lawmakers hold bitcoin and Gensler (chairmen of the SEC) taught a class at MIT about crypto.
These should be very compelling aspects of bitcoin.
If bitcoin existed before the Civil Rights movement in the US, it would not have helped people of color spend their money in "whites only" establishments or buy houses in white neighborhoods when (prior to 1948) a covenant could legally exclude a person of color from owning certain homes. And after 1948 the legal system could still be weaponized against such purchases, or if all else failed the buyer harassed or worse.
These are more extreme examples, but that sort of thing does still go on in places both in the US and elsewhere. Bitcoin or other crypto fall short of solving monetary censorship.
Separately, why does it matter where bitcoin was created? (especially given that we really don't know who created it anyway).
How do you know?
The question worth asking is about how controlling your own wealth, but having to trust the value of it to a giant swath of people over which no one entity has any significant control, compares to not having any control of your own wealth, AND having the value of any wealth you do have dependent entirely on the will of some unelected bureaucrat.
Arguments about sovereignty and control are all ultimately specious, as they depend on a global infrastructure paid for by “fiat” dollars to exist. Your “sovereignty” over a random number is meaningless without the network that facilitates its transfer.
To date, crypto has proven to be a uniquely awful store of wealth. It was initially a magical way to transfer value cheaply, but the growth of it got rid of the “cheap” part.
This is a striking claim about the asset class that has gone up in value more than any other in the years since its creation.
It's a highly speculative investment at best, and a pyramid scheme at worst.
On how many of those occasions was there no opportunity, within say 3-12 months, to sell for higher afterward?
and if you don't have the answer to this...
https://www.bloomberg.com/news/articles/2022-03-31/ukraine-s...
Worldwide, the percentage is similar.
Of course being unbanked isn’t equivalent but it’s likely very nearly so.
Not to mention, the chances of being unbanked are higher for vulnerable populations, especially those who might benefit from uncensorable money.
The last transaction fee I paid was 33¢, and the average transaction in the last Bitcoin block was 913 bytes, so your internet access speed isn't an obstacle to sending a transaction as long as it's above about 20 bits per second; if you want to run a full node you need at least 17000 bits per second of internet access unless you're using the Blockstream satellite.
Typically I pay US$5 a month for cellphone internet access when I have it, but more commonly I use Wi-Fi in various places.
Centralized internet is not long for this world. The Internet is being fractured, both ideologically and physically, right now, by world war.
This only gets worse before it gets better, which probably means mesh networks will be adopted soon enough. Anyway,
This is why adopting distribution of responsibilities is so important in projects like Ethereum — your offline handhelds will be able to make provable transactions without having immediate communication with every star in the constellation, so to speak.
The fact is that many people hold their wealth in cash, and many of the same people are part of vulnerable populations.
One shouldn’t remove another’s alternatives simply because it’s assumed that the other lacks access or sophistication. Even if true, both potential deficiencies are fully reparable and do not permanently negate the benefits of uncensorable money.
It isn't difficult to set up multisignature wallets, where you can lose some subset of the keys and still retain access to the funds. (It's not easy either, but it's not difficult, and there are companies like Casa and Unchained making it easier.)
Just like someone might keep a couple hundred dollars in their wallet/on their person, a couple percent of their wealth in a home safe, and the majority of their wealth distributed across multiple locations with various failsafes to access it, someone might keep a couple hundred bucks worth of BTC in a wallet on their phone, another percent or two of their BTC in a single-sig hardware wallet in a safe at home, and the majority of their BTC in a 3-of-5 multisig setup with only two keys at home, one in a safety deposit box, one in a trusted family member's home, and one in the custody of their attorney.
I don't think setting up the wallet is the hardest part. The hardest part would be to get into a legally binding agreement with the other parties, that you depend on from now on to access your "wealth", the very situation that crypto-currencies were supposed to avert.
You can make sure they don't have enough of the keys to move your funds without your consent. Making a legally binding agreement that they have to give you access to the key they have if/when you demand it is no more complex a legal task than any other instance where you trust someone to custody something for you.
I never said it was harder. I'm merely pointing out that the proposed solution to this particular usability issue that crypto-currencies suffer from involves reverting back to a web of mutual obligations enforced by courts of justice, which entirely defeats the purpose of using a crypto-currency.
A) huge amount of research
B) huge amount of risk / personal responsibility
C) and Still trust some or multiple 3rd party services to practically obtain or withdraw bitcoin, which have same or more power or likelihood to cut me off
I (think) understand the dream. I don't see the reality of seamlessly easily practically safely cheaply transacting bitcoin. As a mediocre techie, every time I ponder getting some bitcoin for giggle, I get lost in conolex how tos and run screaming away from complexity and risk.
Future developments like covenants (restricting future spending of a coin) will create even more secure storage, systems that allow you to claw back stolen funds using backup keys for example.
Doesn't that remove the trust in the transaction? Isn't the one of the promised joys of these things that, short of a fork, the transaction is immutable and that people don't have to worry about fraud in the form of charge backs or their money disappearing once they have it?
If you know the mechanism for potential reversal of the transaction and trust the process responsible for making the decision about when to reverse a transaction, you've known the rules and the context from the start.
It would have to be a well-designed process to earn your trust, but it's not an unsolvable problem.
To my knowledge, there aren't any smart contracts that have implemented such a system really well yet, but I might just not have heard about them, or they may just not have been tried yet.
At least in this system, you could have whole services that build a track record based on publicly identifiable information. You can't flood them with reviews to skew the results because you can cryptographically verify whether the reviewer was party to the disputed transaction.
There are a thousand theoretical variants on the same basic idea, but it's at least no worse than the existing system.
Or five different parties you trust.