[HN Gopher] Vast Majority of People Who Invest in Bitcoin Inevit...
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Vast Majority of People Who Invest in Bitcoin Inevitably Lose
Money, Study Shows
Author : mikece
Score : 220 points
Date : 2022-11-15 15:39 UTC (7 hours ago)
(HTM) web link (gizmodo.com)
(TXT) w3m dump (gizmodo.com)
| sizzzzlerz wrote:
| Similarly, the vast majority of people who play Roulette in a
| casino inevitably lose money.
| aetherson wrote:
| "Inevitably" lose money?
|
| What this paper finds is that (from 2015-2022), people tend to
| buy when BTC is making new peaks, and so they are buying high and
| then so far are not in a position to sell for a profit.
|
| I strongly expect that if you tracked people who in the
| relatively recent past have bought any other asset that had a
| rise and then a big spike during the pandemic, you'd see
| something similar.
| pencilguin wrote:
| There are exactly three possible outcomes: (1) most gain a
| little and a few lose a lot, (2) equal numbers gain and lose,
| or (3) a few win big and most people lose.
|
| The system organization favors a few winning big, so the
| majority must ("inevitably") lose.
| aetherson wrote:
| Um, no? If the asset price increases monotonically, everyone
| gains money. Obviously no at prove increases truly
| monotonically, and especially BTC doesn't, but this isn't a
| zero-sum game.
| abeppu wrote:
| Framed this way (selecting for people who had bought an asset
| which had a rise and spike) this makes sense. But I think a key
| difference between BTC and more traditional assets is that for
| other assets, one typically has information from which to judge
| whether it is over or underpriced.
|
| If in late 2021, I had two friends Alice and Bob, who were
| enthusiastic and so far successful in shoveling money into TSLA
| and BTC respectively, and who are both telling trying to
| convince me to follow their lead, how can I judge their
| suggestions? I can look at Tesla's quarterly reports, and
| rabbithole into information about other company's EV efforts,
| and see analysts try to make projections about future revenue.
| I'd be left with a lot of uncertainty, but I can make a good
| faith effort to try to judge what an appropriate price is based
| on future earnings, and whether the current price is too high
| or too low. With BTC one doesn't have that. Even if prices had
| increased lately, how would one judge whether that was high or
| low relative to where prices _should_ be? Today, after a period
| when prices have fallen a lot, are they high still? Would $10k
| be too high? $1k? About a decade ago it was roughly $11 and 2
| years before that it was $0.20. There's no way to judge value,
| only price.
| aetherson wrote:
| You have to disbelieve the efficient markets hypothesis to an
| unreasonable degree to imagine that the kind of information
| you're talking about isn't baked into TSLA.
|
| And people certainly forecast -- with varying success -- the
| future of BTC. You can read their analyses and disagree/agree
| with them.
|
| This isn't to imply that BTC isn't a volatile and risky
| asset. Of course it is! But some people want to buy volatile
| and risky assets.
| pencilguin wrote:
| Anybody who doesn't "disbelieve the efficient markets
| hypothesis" isn't paying attention.
|
| NRGV ("Energy Vault") was trading at a $2.4B market cap
| less than a year ago, and are now at $0.4B, still radically
| overpriced. Their product was an obvious scam before, then
| they pivoted to another obvious scam. The only way their
| stock could have any legitimate value would be if they
| still had $0.4B in cash, and could be prevented from
| squandering it. All perfectly legal, apparently.
|
| Same for fusion startups. (It is _just barely possible_
| that Helion could have value.) Kyoto Fusioneering builds
| equipment to use in fusion startups ' sham demos, and
| provides a conduit for dumb VC money into the pockets of
| startup founders and VCs who invest in it. All perfectly
| legal, apparently.
| abeppu wrote:
| Given that TSLA has come down by close to half in the past
| year, yeah I don't think available information was
| appropriately priced in. There was plenty of room for
| someone to say "This PE has the wrong number of digits."
| But because shares are claims on future revenue, their
| value can be grounded to _something_.
|
| My point is not that BTC is volatile, but that it has no
| fundamentals. There is only the sentiment of other
| participants. Tulip bulbs can at least be planted.
| aetherson wrote:
| Lots of assets have either no floor on their value or an
| incredibly low floor. Is it actually a comfort if you
| invest in gold that it can only lose 98% of its value
| instead of 100%? Are those two outcomes meaningfully
| different to you?
|
| Companies can go bankrupt and zero the value of their
| stock. Bonds can be defaulted on. Are you out there
| evangelizing how stocks and bonds are bad investments?
| throwaway22032 wrote:
| The entire media environment around cryptocurrency is utterly
| hilarious. It's just nonsensical clickbait bollocks from top to
| bottom.
|
| It's like, ok, so Tesla autopilot crashes sometimes. Let's write
| an article on rubber because Tesla is a car and the car tyres are
| made of rubber. Rubber bad!
|
| I'm fully aware that I'm in "old man rants at cloud" territory
| here, but it baffles me that someone wastes the one life they
| have writing this stuff, and that people waste their time reading
| it. And sure, fair, I'm here writing comments on HN. Writing an
| article is a lot more deliberate than that.
|
| Outside of the development mailing lists I don't think I've seen
| any actually useful or valuable discussion since bitcointalk
| forums in the early days.
| stickac wrote:
| The study finds that "majority of people who invest in crypto
| inevitably lose money", but the article puts "Bitcoin" in title
| to mislead the readers.
|
| So:
|
| Do people lose money when they invest into crypto? Yes.
|
| Do people lose money when they invest into Bitcoin? No (if their
| timespan is 5+ years).
| cuteboy19 wrote:
| The problem is that exponentially fewer people qualify the
| latter condition.
|
| Put it another way, for Bitcoin to retain its price, an
| exponentially increasingly number of people need to invest in
| it. Such a structure, when graphed, looks very similar to a
| certain geometric shape
| lightning19 wrote:
| when I was messing around with day trading crypto my main
| strategy was actually to short btc. It was a long ride, I was up
| 500% on my initial invesment, I then lost 500%, made 50%, lost
| 50%, finally made 50% again and quit forever. Thankfully I cashed
| out before FTX went bust. Lessons learnt: - day trading is
| stressful - I had no idea what I was doing most of the time - if
| I replaced my shorts with longs I would've likely made 1000% at
| minimum. Any idiot could've day traded for a profit during the
| 20-21 boom
| null0pointer wrote:
| What a non-story. This is true for every market to have ever
| existed.
|
| Oh no dumb people are buying stocks and losing money what can we
| do?
|
| Ok restrict it so that only people with a proven track record of
| winning can play the stock market.
|
| What?! Same result just with different winners??
|
| It's zero sum. What a pointless hit-piece of an article/"study".
| tovej wrote:
| The stock market is not zero sum. The value of a stock going up
| is not dependent on speculation alone. For most stocks there is
| an actual underlying asset which generates value in dividends
| or you get a shareholder vote.
| ChrisKnott wrote:
| The stock market is not zero sum. I would be amazed if it was
| not the case that most investors make money investing in
| stocks.
| avgDev wrote:
| I mean this is generally true for stock pickers also.
| nradov wrote:
| Not really. The majority of frequent stock _traders_ inevitably
| lose money. But since the majority of stocks do generate
| positive returns over the long term, the majority of stock
| pickers make money if they buy and hold.
|
| While those stock pickers come out positive on average, they
| usually do a little worse than if they had just purchased low-
| cost index funds.
| sicp-enjoyer wrote:
| You're mixing up two things: 1. How well do individual
| traders (people) perform? 2. How well do most investments
| perform?
|
| The majority of people in the stock market do lose, because
| it's psychologically hard to buy and hold. A common outcome
| is to hold for years in a 401k and then panic sell at a big
| dip, or family emergency. Another is to buy hot stocks on
| peak years (word of mouth) and then lose (happening right
| now).
|
| The same is true in cryptocurrency. If all you did was DCA
| buy and hold bitcoin over the past 3-8 years you are doing
| just fine.
|
| I am also not equating stocks and cryptocurrency. Stocks give
| you a right to cash flow and coins do not. However, similar
| psychological challenges hinder all investors.
| celticninja wrote:
| Same applies to bitcoin unless you bought in last 12 months
| or so
| cuteboy19 wrote:
| But most people who bought did buy in that period.
|
| It's always going to be true that the average Bitcoin buyer
| lost money even if people higher in the pyramid have made a
| lot of money
| outside1234 wrote:
| NO - I CAN'T BELIEVE IT!
| bell-cot wrote:
| REALLY, it's TRUE! BUT!!! - if YOU are smart enough to buy my
| time-tested secrets for successful Bitcoin Investing, then YOU
| can be ONE OF THE BIG WINNERS!!!
|
| {Further scam-tastic sales pitch here.}
|
| {Nice-looking link to sucker-chute.pig-butcher.scam here.}
| superkuh wrote:
| "Vast Majority of People Who Invest Inevitably Lose Money". Yep.
| That's always held true. Speculators gonna speculate. Somehow the
| concept of cryptocurrency has been lost in all the scamming and
| speculating since 2015. If you just use cryptocurrency as a
| currency there's no problem at all.
|
| It's the speculators with their completely off-chain normal
| finance hijinks that everyone gets upset and confused about. It's
| a shame that's what people think cryptocurrency is.
| triceratops wrote:
| Why would most people who invest lose their money? Assuming
| their investments are diversified and made in well-run
| businesses, or high-grade bonds.
| rglover wrote:
| Because they do so foolishly and with a bias toward the
| short-term.
|
| All of the people losing money on Bitcoin and crypto were
| trying to get rich quick and predictably got burned. Just
| like people who only hold a stock for a few days or try to
| get in on an option play like GME or AMC at the last minute.
| hn_throwaway_99 wrote:
| > If you just use cryptocurrency as a currency there's no
| problem at all.
|
| Exactly, and then you realize there is a _lot_ more difficulty
| using crypto as a currency than _actual_ currency, and then
| think "that was dumb".
|
| I'm probably one of the few people who has actually purchased
| real (legal) stuff with crypto (at least in one of the only
| ways that was really feasible at the time - converting crypto
| to a gift card at a real store). I remember waiting in the
| furniture store for nearly an hour hoping for my block to get
| confirmed to purchase a sofa. "Gosh", my non-tech spouse
| commented sarcastically, "this really is so much better than a
| credit card swipe where I'd be done in 10 seconds."
| sakras wrote:
| I think technology has advanced a lot since then. I see
| videos of peoples' transactions on the lightning network
| being confirmed within a few seconds. It's taken off in a lot
| of markets in poorer countries from what I understand.
| hotpotamus wrote:
| This was my experience with it going on a decade ago. Then my
| buddy and I both got Coinbase accounts and had fun being able
| to instantly pay each other with bitcoin (off-chain) - hey
| here's that money I owe you for lunch... in bitcoin. Of
| course, since it's off-chain it sort of defeats the purpose
| of bitcoin, right?
| JumpCrisscross wrote:
| > _Yep. That 's always held true._
|
| No, it's always true in zero sum games. The stock market is not
| zero sum. _Beating_ the stock market is, which is why most
| investors don 't beat the stock market. But that's different
| from losing principal in even nominal terms.
| NickM wrote:
| Exactly. The stock market is positive sum, since companies on
| average create more value than they destroy. Bitcoin, though,
| is negative sum, since no new value is created and value is
| actively destroyed via mining.
|
| Investing in BTC is like buying shares of stock in a company
| that produces nothing and has high ongoing costs that are
| only paid for by continuing to issue new shares.
| fragsworth wrote:
| The existence of an online alternative to gold is
| potentially valuable (also potentially harmful but I would
| say the jury is still out), and it's hard to say if mining
| rewards counteract that.
| three_seagrass wrote:
| It's investing in the confidence of the future of a network
| that can only handle 7 transactions a second, at the
| expense of a small country's use of electricity.
| chinchilla2020 wrote:
| Interestingly, most of the data is from people who never
| actually owned bitcoin.
|
| They owned bitcoin-equivalent on investing apps. These
| investors didn't control their own private keys and have their
| own coins.
| fn-mote wrote:
| > "Vast Majority of People Who Invest Inevitably Lose Money"
|
| I read this as: picking particular stock winners has been known
| for decades not to beat the market. Yet people still want to
| believe...
|
| I don't think this is particular to crypto. Don't you see the
| same phenomenon with day traders? Something like 95+% are
| losing money, as I understand it.
|
| To the later commentator: if you're investing in stocks and not
| beating the market average, then yeah, I think you should
| consider yourself to be losing money.
| acdha wrote:
| The difference is the composition: stocks are linked to
| something real and have regulatory oversight, which although
| not always sufficient does mean most people profit over time
| and the losses are usually not complete because there's some
| kind of link to revenue other than stock. Day traders usually
| don't make as much as they hoped but it doesn't take a huge
| amount of skill to avoid major losses, either.
|
| Contrast with cryptocurrencies where the value is only based
| on social consensus. Not being linked to an actual business
| means that sales can halt instantly and the floor is zero
| because people only make a disadvantageous transaction if
| they think it's going to plummet.
| cortesoft wrote:
| > "Vast Majority of People Who Invest Inevitably Lose Money".
|
| This is not true at all, unless you mean in the short term.
| There has never been a 20 year period where the S&P500 has lost
| money, and only a few 10 year periods where it has.
|
| If you are a long term investor and you invest in a broad
| index, you will make money.
|
| The stock market is not a zero sum game where on person has to
| lose for someone else to gain. The whole pie is getting bigger.
| potatototoo99 wrote:
| > There has never been a 20 year period
|
| Neither in crypto ;)
|
| And of course past performance does not guarantee future
| results.
| cortesoft wrote:
| Past performance doesn't guarantee anything, but it sure is
| a valuable tool for prediction. A 150 year track record
| means a lot more than a 10 year one.
| [deleted]
| AnIdiotOnTheNet wrote:
| > Somehow the concept of cryptocurrency has been lost in all
| the scamming and speculating since 2015
|
| What do you expect when you set out to explicitly ignore and
| bypass everything ever done to prevent this kind of thing?
| himinlomax wrote:
| > If you just use cryptocurrency as a currency there's no
| problem at all.
|
| Apart from the delays in clearing transactions, the high
| volatility, the absence of legal recourse when things go wrong,
| the computer security risks, the high complexity and so on.
| superkuh wrote:
| It's definitely no panacea. I've been using it regularly
| (monthly or more) since 2014 or so to pay for online services
| like VPS and to buy computer hardware. It works well. And it
| works even better than fiat in situations where authoritarian
| governments force payment processors to embargo journalists
| critical of them, and other such situations.
|
| I'm not going to replace paying in cash for groceries with
| bitcoin. But it definitely has it's place as a currency. It's
| pretty annoying that the only things people ever hear
| cryptocurrency have almost nothing to do with cryptocurrency
| at all.
| burkaman wrote:
| Is that true? At least in the US, the "vast majority of people
| who invest" are probably people with 401ks and not much else.
| In that case, most people who invest do not lose money.
| harimau777 wrote:
| Do the speculators mess up the value of the various coins for
| the people who intend to use them as currency?
| akira2501 wrote:
| > It's a shame that's what people think cryptocurrency is.
|
| It's odd that people think the general use of cryptocurrency
| would be happening without them. The incentives to just use
| crypto as a means of transmitting value are exceptionally low,
| and before exchanges existed, mostly negative due to the
| difficulty of conversion.
|
| Which is probably why only a small set of the criminally minded
| put any effort into using it as a currency in the first place.
| elil17 wrote:
| Except that it's impossible to just use it as a currency
| without speculating due to the volatility (and I get that
| that's probably the fault of the speculators, but that doesn't
| change the reality of it).
| tablespoon wrote:
| > "Vast Majority of People Who Invest Inevitably Lose Money".
| Yep. That's always held true.
|
| I don't think that's true, otherwise people wouldn't pile so
| much money into stock funds in their 401ks.
| welshwelsh wrote:
| Individual investors usually have terrible investment habits.
| They buy trendy stocks after hearing about them on the news,
| and then sell after they crash
|
| This same crowd gets interested in Bitcoin at every ATH
| because of the news coverage. I got so many people asking me
| how to buy Bitcoin when it hit 20k in 2017 and 60k in 2021.
| That's when the vast majority of people buy.
|
| Yes, if you put money in your 401k and don't take it out
| until retirement you will make money. That doesn't describe
| the vast majority of investors though
| cortesoft wrote:
| > That doesn't describe the vast majority of investors
| though
|
| I think you have a skewed view of the average investor.
| About 58% of Americans own stock, but only 35% of Americans
| own any outside their 401k. That means 40% of investors
| only have money in their 401k. I couldn't find the numbers
| for how many of those investing outside of their 401k just
| owned index or mutual funds, but I even if it was only a
| small percentage it would mean a majority of investors
| aren't buying individual stocks.
|
| There is a vocal minority who invest speculatively. It
| makes sense that this number would seem larger than it
| actually is, because they are the ones who talk about
| investing. You don't see questions or posts from people
| just investing in their 401k and index funds, but there are
| more of them than the speculators.
|
| https://news.gallup.com/poll/266807/percentage-americans-
| own...
|
| https://www.pewresearch.org/fact-tank/2020/09/25/few-in-
| u-s-...
| retrac wrote:
| > That doesn't describe the vast majority of investors
| though
|
| Doesn't it? My mother did it that way. Made regular
| payments into her selected cooperative low-risk mutual fund
| that built up a reasonable retirement pension. I know a lot
| of people that do that. I suppose the difference is that
| they don't think of themselves as investors.
| [deleted]
| randomdata wrote:
| Let's assume, for argument's sake, all investments lose
| money. People are still going to try and invest in the places
| where they expect to lose the least. Humans tend to be very
| loss averse. Hanging onto what they've got, to the greatest
| extent possible, may be their priority and doesn't
| necessarily disprove the earlier assertion.
| pessimizer wrote:
| Except that if the mean investment loses money, the place
| where you expect to lose the least is cash.
|
| e.g. if you are very loss averse, you don't buy lottery
| tickets at all. You don't just buy the safest ones where
| you expect to lose the least.
| jovial_cavalier wrote:
| Not necessarily. If you have 5% inflation, and the best
| returns on securities are -2% in real terms, you're still
| better off investing in securities.
| pessimizer wrote:
| If you rewrite half of the equation to be about real
| losses, of course that's true, but that wouldn't make
| sense to do. However, securities denominated in dollars
| are also affected by inflation, so the only way to
| discuss their losses coherently is also _against the
| inflation-adjusted dollar._
|
| e.g. lottery winnings are also affected by inflation.
| randomdata wrote:
| _> If you rewrite half of the equation to be about real
| losses_
|
| There is nothing in need of rewrite. The original claim
| was about money, not currency. As money is defined as the
| assets, property, or resources owned by someone (i.e.
| wealth), we can substitute currency with any other asset.
| Let's use cars, as is convention, and works well as they
| tend to decline in value much like currency does.
|
| So, you trade your car for a security. Some years go by
| and you decide you want a car again, track down the guy
| who you sold your car to, and offer to trade the security
| back for the car. He agrees and now you've got your car
| back. You didn't lose any cars. You are back to one car,
| just like you had originally. However, the car is
| scratched up a little, needs new tires, etc. and as such
| isn't worth as much as it was when you first traded it.
| And so, while you haven't lost any cars, you have lost
| money. The car isn't what it used to be; your wealth has
| declined.
|
| You might not lose any currency in an exchange of assets,
| you might even gain currency in the deal, but that
| doesn't necessarily mean you haven't lost money.
| randomdata wrote:
| Cash is the investment where you expect to lose the
| _most_. Hedging against cash losses (also known as
| inflation) is largely why people chase other investment
| opportunities.
|
| Cash is the easiest investment to hold. If it were stable
| it would be _very_ attractive, but it is not. The
| monetary system works hard to ensure that it isn 't
| stable, with mandated targets to ensure that cash
| holdings lose money every year.
| pessimizer wrote:
| If we're talking about securities that are losing money,
| they can't be beating inflation. You're talking about
| securities that are beating inflation.
|
| i.e. iff your security is worth fewer dollars than it was
| worth some period of time ago, it is losing money. The
| fact that dollars have also lost value during the same
| time means you've lost _more_ money, not _less_.
| randomdata wrote:
| _> You 're talking about securities that are beating
| inflation._
|
| I said no such thing...?
|
| _> iff your security is worth fewer dollars than it was
| worth some period of time ago, it is losing money._
|
| And if it sells for more dollars than in the past, but
| not commensurate with the decline in value of those
| dollars, then you've still lost money. Less money lost
| than would have been by holding dollars, but still a
| loss.
| elil17 wrote:
| Bonds, stocks, private equity, futures, and real estate are
| cash flow producing assets. The expected rate of return of
| cash flow producing assets is positive. I don't mean
| statistically, I mean logically. People value having money
| now more than they value having money in the future, so
| people will sell you cash flow producing assets for less than
| they're worth over the long run.
|
| Commodities and currencies (including crypto currencies) are
| not cash flow producing assets. There's no value in them that
| can't be accessed immediately, so no one's going to sell them
| to you for less than their long run worth.
| tablespoon wrote:
| So basically: the GGP's overgeneralization "Vast Majority
| of People Who Invest Inevitably Lose Money" was wrong,
| because they lumped all kinds of investments together and
| failed to make important distinctions.
| elil17 wrote:
| The story is slightly more complicated than that. Most
| people who put money into their 401ks end up with
| positive real returns. If you invest in the whole market,
| you're going to get positive real returns in something
| like 96% of historical 30 year periods. [1] Most mutual
| funds/ETFs invest in a large enough portion of the market
| that this number isn't far off.
|
| People who buy a small number of individual stocks end up
| in a different situation. While their average return is
| positive, those results have a large degree of skewness
| (meaning most stocks stagnate or fall, but the meteoric
| rise of those that do well makes up for it on average).
| If you picked a random stock in 1992, you'd quite likely
| have lost money by now.
|
| [1]: https://rationalreminder.ca/podcast/224
| dpweb wrote:
| Stock prices are tethered, albeit with unfortunate
| volatility, to the expected cash flow of real companies.
| Crypto only to the willingness of others to buy crypto.
| bityard wrote:
| I really wish people would stop conflating "speculating" with
| "investing." There is a world of difference between the two.
|
| Until (or even if) the markets become stable somehow, "investing"
| and cryptocurrencies do not belong in the same sentence, ever.
| sparkie wrote:
| Bitcoin was never advertised as an 'investment'. People who
| think of it as such should go and re-read the whitepaper until
| it clicks.
|
| Those who consider bitcoin a ponzi have a view of bitcoin given
| to them by people who never understood it in the first place.
|
| It's not an investment and never has been.
|
| When did one ever 'invest' in dollars?
| LatteLazy wrote:
| An investment is when you have a reasonable expectation of
| return. Bonds are an investment because the average bond pays out
| more than it costs. The same is true of the average share. That
| is because these instruments produce value by making capital
| available to people who need it.
|
| By this definition, BTC is NOT an investment. Neither is Gold or
| land (unless you rent it) or commodities. Buying those things is
| just "speculation". Speculating is fine. It can be useful for the
| market. You might even make money.
|
| But please please, stop reffering to these things as
| "investments". They're not investments any more than my buying a
| hamburger.
| ashpool37 wrote:
| In other news: 100% of people who drink water inevitably die
| zackbloom wrote:
| I think the title is using the word 'inevitably' where they mean
| 'eventually' or 'ultimately'. It's not inevitable that people who
| invest in Bitcoin lose money, for example, they could have
| changed their mind and sold then next day, making it avoidable.
| What they mean to say is that most people who invest _end up_
| losing money, not that it was unavoidable (the meaning of
| inevitable).
| sophrocyne wrote:
| 1) "I told you so." 2) "Yeah, but you just wait and see - It'll
| be different a year or two from now"
|
| Crypto bulls and bears oscillate between 1/2, as the market turns
| hot/cold. Gizmodo is very clearly selling confirmation to the
| anti-crypto crowd currently looking for narratives to support
| their use of statement 1).
|
| Anyone who is hyper-confident in either direction is usually
| wrong.
| pessimizer wrote:
| > Anyone who is hyper-confident in either direction is usually
| wrong.
|
| Judgement about a particular subject should at the least rely
| on some detail about that subject. This is just an generalized
| appeal to the law of averages.
| sophrocyne wrote:
| I'm unclear on what you're asking me to opine on, but if
| you're looking for me to state my stance, as differentiated
| from the two aforementioned parties, here it is.
|
| TL;DR - Armchair experts on either side of the argument make
| poor investors.
|
| The lack of barriers to creating, marketing, and hype-selling
| a new project inherently makes 99% of the projects in this
| space "vaporware". The terms "grift, rugpull, scam" etc. are
| appropriate.
|
| Unsophisticated retail "investors" (and hell, even
| sophisticated speculators just subscribing to 'greater fool'
| investing - e.g., most VCs) are focused heavily on the upside
| in these types of projects, because the measure of success is
| "money made". There are people who respond to this by writing
| off the space entirely - "It's a ponzi scheme", "scam city",
| "tulips", etc. All fun memes to tout the "I told you so
| narrative"
|
| My personal belief is that there is the potential for
| "ethical alpha" (subjective, perhaps - primarily meant to
| differentiate from 'get out before it implodes' alpha) to be
| had by investing long-term in the remaining projects with the
| combination of development attention, enterprise buy-in, and
| scaling capabilities that could deliver meaningful value to
| end-users. I'm not going to get into a debate over which
| projects meet these criteria, whether they exist, or any
| other debate which likely will revolve endlessly with no
| resolution.
|
| I acknowledge there are risks associated with the broader
| technology being adopted in a meaningful sense, but subscribe
| to a perspective that there is yet-unrealized value in its
| application.
| draw_down wrote:
| anonyme-honteux wrote:
| I'm confident that we should stop talking about crypto
| "currencies", because a currency where you get rich by just
| holding to it is the contrary of a good currency.
|
| I create value in the real world and use the euro to exchange
| it against something else of value, which is very convenient,
| but the euro itself is not the goal.
|
| Call it unregulated crypto gambling or something, that would be
| more honest.
| daniel-cussen wrote:
| jupp0r wrote:
| "Investing in a Ponzi scheme is much more beneficial in the first
| half of its existence, researchers found in groundbreaking new
| study"
| ISL wrote:
| I'd venture that the majority of people who invested in BTC from
| 2010-2016 have made money, in USD-terms.
|
| Back then, the bull case (market-cap approaching M1) was orders
| of magnitude stronger relative to the price than it is today.
|
| The bear case remains the same (you lose all your money tomorrow
| when the hash is cracked or your government bans trading in it).
| [deleted]
| NineStarPoint wrote:
| Almost certainly both true that people who invested in bitcoin
| 2016 or earlier made money and that most people who invested in
| bitcoin lost money. The most pessimistic numbers I've found has
| the number of bitcoin wallets 10X'd since 2016. And while there
| isn't a one to one relationship between wallets and users, I'm
| sure people who only used exchanges instead of their own
| wallets in recent bull runs more than make up the difference
| there.
| ISL wrote:
| Agreed entirely. My point was that to emphasize that there
| can be reasonable value-investment cases in these odd asset
| classes.
|
| The maxims of "price is what you pay, value is what you get"
| and "are you willing to buy this if the market were to stay
| closed for five years after the purchase?" have felt very
| helpful in guiding my decision-making.
| throwup wrote:
| It's pretty hard to estimate the number of users from just
| on-chain data, since change from a transaction usually goes
| to a fresh address. That makes every single transaction
| appear to create a fresh "wallet".
| rootusrootus wrote:
| Some day we will look back and marvel at Bitcoin becoming the
| largest wealth transfer mechanism in history, mostly from poor
| people to small number of already rich people.
| sparkie wrote:
| The transfer is from people with a high time preference to
| those with a low time preference.
|
| There are ~56 million 'millionaires' in the world. Not even
| half of them can ever own 1 bitcoin.
|
| Many jobless/formerly jobless bums have >1 bitcoin.
| TacticalCoder wrote:
| > Vast Majority of People Who Invest in Bitcoin
|
| What about the people who "invested" their money by sending it to
| FTX while all the media were presenting SBF as the altruistic
| white knight of cryptocurrencies?
|
| All the while puking on Coinbase's CEO because he implemented a
| "no politics" at work policy.
|
| The NY Times has been coming up with hit pieces after hit pieces
| criticizing Coinbase but, follow the money trail, repeatedly
| presenting SBF as the savior of cryptocurrencies. SBF was, sure
| as hell, employing lots of people looking woke enough. Doing you
| think that has anything to do with the second biggest donor to
| the democrats being SBF through his mom's fundraising?
|
| And then everybody act suprised that the "vast majority of
| people" are losing money?
|
| Do you think everybody is that blind? If you read the latest
| article about SBF it's nearly as if he was presented as a victim.
| What about some talk about what's seriously going on?
|
| Bitcoin is to SBF/FTX what natural gas is to Madoff/Enron. Let's
| stop wagging the dog.
| [deleted]
| 35amxn35 wrote:
| Am I the only one that uses Bitcoin strictly to remove the
| middleman? Get paid in USD -> convert to BTC -> sell to someone
| in cash, using local currency.
|
| Bitcoin was _never_ about speculation, and it was never intended
| as a store of value. However, it was designed to be deflationary
| in nature due to having a maximum of coins ever mined, or, more
| strictly, cutting down the rewards to half every 210k blocks
| mined).
|
| And if I had to choose (which I don't, as I save in USD), I'd
| still prefer saving in BTC than in my local currency.
|
| People living in thirld-world countries understand this.
| ceejayoz wrote:
| How are you converting to BTC without a middleman?
| sparkie wrote:
| There's a few ways to do it here: https://kycnot.me/
|
| Hodlhodl for example, you can find someone locally to swap
| cash with bitcoin.
| ceejayoz wrote:
| So... a middleman?
| sparkie wrote:
| Matchmaker, not middleman.
|
| It does not participate in the trade, just finds you
| someone to trade with.
| ceejayoz wrote:
| But that person you're trading with is a middleman,
| between your USD and the BTC you want. Whether their name
| is Coinbase, LLC or Coinbase McGee.
| sparkie wrote:
| That's not what a middleman means. When you buy eggs from
| your local farmer, is your farmer a middleman between
| your dollars and the eggs?
|
| No. They're a seller and you are a buyer.
|
| With a usd/btc trade, you are either the seller or buyer,
| depending on your perspective.
|
| I use hodlhold to sell unwanted dollars.
| ceejayoz wrote:
| > When you buy eggs from your local farmer, is your
| farmer a middleman between your dollars and the eggs?
|
| The eggs? No. The chicken, maybe.
|
| > With a usd/btc trade, you are either the seller or
| buyer, depending on your perspective.
|
| OK, so again; the person upthread "that uses Bitcoin
| strictly to remove the middleman" is removing _what_
| middleman? Whether you 're buying from a local or
| Coinbase, there's the same setup of buyer/seller.
| mikhael28 wrote:
| Stone cold fact. Same setup.
| uncletammy wrote:
| BTC chose the "digital gold" use case over "digital cash", a
| phrase present in the title of the Bitcoin whitepaper.
|
| Because of this, we'll all be stuck with POS Ethereum. Be sure
| to thank your favorite Maximalist for that.
| uncletammy wrote:
| BTC chose the "digital gold" use case over "digital cash", a
| phrase present in the title of the Bitcoin whitepaper.
|
| Because of this, we'll all be stuck with POS Ethereum. Be sure
| to thank your favorite Maximalist for that.
| smithcoin wrote:
| My dollars keep losing value too. Since bitcoin came out in 2009
| my dollars have lost 28% of their value to inflation[0].
|
| [0]
| https://www.in2013dollars.com/us/inflation/2022?endYear=2009...
| jredwards wrote:
| Dollars aren't a stable store of value either. It's baked in
| that the fed aims for low but positive inflation.
|
| Meanwhile, the S&P 500 is up nearly 500% since 2009.
| EVa5I7bHFq9mnYK wrote:
| That's shameless cherrypicking) We can also say that S&P only
| returned 51% since the start of this century, adjusted for
| inflation.
| paulpauper wrote:
| dollars didn't fall 80% in a year, unlike bitcoin
| EVa5I7bHFq9mnYK wrote:
| dollar fell in 100% of years
| sparkie wrote:
| They fell 99% in 99 years, unlike Bitcoin.
| bell-cot wrote:
| No phenomenon that is fueled by human nature is ever really new -
|
| https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusion...
|
| https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929
|
| https://en.wikipedia.org/wiki/Dot-com_bubble
| BurningFrog wrote:
| Bitcoin was at $1100 5 years ago.
|
| Today it's $17,000.
| SketchySeaBeast wrote:
| Are you saying that's proof it will continue to go up?
| BurningFrog wrote:
| I'm saying losing money is not "inevitable"!
| pessimizer wrote:
| Bitcoin was at $17,000 2 years ago.
|
| Today it's at $17,000.
| librish wrote:
| This follows from Bitcoin being a negative sum game. If some
| people are cashing out millions, and miners are cashing out their
| fees, naturally the remaining people have lost money.
| mrb wrote:
| I read the study's paper (https://www.bis.org/publ/work1049.htm)
| and noticed a glaring flaw:
|
| They gather stats on 213 exchange apps (187 identified from
| https://www.cryptocompare.com/exchanges/ + 26 tagged by Sensor
| Tower). They assume downloaders of any of these crypto apps buy
| specifically bitcoins, not altcoins. There is _nothing_ to
| support this assumption. In fact, the majority of these exchanges
| especially from the list at
| https://www.cryptocompare.com/exchanges/ cater specifically to
| altcoins. People who want to buy Bitcoin will do so through
| Gemini, Binance, Bitstamp, Coinbase, and a few other trusted
| well-established exchanges. But the majority of this list of 213
| exchanges is specifically used to access altcoin markets, because
| they don't even have a way to deposit USD. These exchanges
| require users to deposit crypto. So that doesn't match at all the
| study's authors assumption that the enduser installs these apps
| as a first-time bitcoin buyer.
|
| Ignoring this glaring flaw, graph 1 charts downloads of crypto
| exchange apps per 100,000 people, and it is interesting as it
| reveals that the vast majority of users joined after Dec 2020,
| which was during or after the all-time highs of that year. In
| other words, they assume more users bought bitcoins in the last 2
| years than in the first 10 of 12 years of bitcoin's existence.
| Anyone who bought bitcoins before approximately Nov 20201 is, of
| course, still in the green. If graph 1 was showing _cumulative_
| downloads instead of _daily_ downloads, this would give a better
| breakdown of the number of users before and after Dec 2020.
|
| 1 Except during a handful of days in Dec 2017-Jan 2018 when
| bitcoin was briefly above $17k.
| startupsfail wrote:
| Everyone who bought and sold is in the green (assuming that
| they haven't payed the taxes and not accounting for
| externalities of increased fraud, crime, CO2 emissions, etc).
|
| And then, not counting people who bought and lost (wallet
| lost/exchange collapsed, etc).
|
| And then, anyone who is still holding are under multiple risks:
| regulatory, markets tanking, taxation, fraud, exchange
| collapse, wallet stolen, etc.
| dibt wrote:
| This is a common theme for BIS. I may do an analysis on the
| their studies. I suspect they overwhelmingly express a negative
| sentiment for Bitcoin and DeFi, and have questionable
| methodology like you describe. I notice they like to get their
| studies into media outlets like this one, Gizmodo or the New
| York Post (a tabloid).
| bannedbybros wrote:
| jpmattia wrote:
| Note how they measured that the "Vast Majority of People Who
| Invest in Bitcoin Inevitably Lose Money" is
|
| > _the report did assume that a user purchased bitcoin when they
| downloaded a crypto app._
|
| Look directly at the blockchain, and instead find 49.4% of the
| addresses were in profit as of the time this article was
| published: https://www.yahoo.com/now/majority-bitcoin-addresses-
| now-los...
|
| It looks like "inevitably" is more evitable than inevitable used
| to be.
|
| [If anyone has a Glassnode subscription, the real-time readout is
| here:
| https://studio.glassnode.com/metrics?a=BTC&class=Addresses&m...]
| msackmann wrote:
| Realized profit? Or is the current value just above the value
| of the purchase date? I would believe the latter, as the value
| is still quite high.
|
| However, realizing the profit is a different thing. That will
| work only for a few who invested early and deinvest early.
| Basically, btc is a pyramid scheme, the only difference to
| other pyramid schemes is that this fact is not obfuscated.
| Every investor knows that he is buying a fundamentally
| worthless good, but is hoping that someone else will eventually
| pay him a higher price.
|
| That works well until the market is saturated and no one is
| willing to buy btc any more. Then, the price collapses.
|
| Thus: even if most investors today have made profit, that
| simply means that the bottom of the pyramid has not been
| reached. At that point, most investors will have made loss.
| pyrrhotech wrote:
| Most bitcoin investors never move their coins off the exchange
| and thus don't have a distinct address on the blockchain, so
| your sampling technique is probably just as flawed as time of
| app download, if not more so.
| jpmattia wrote:
| > _Most bitcoin investors never move their coins off the
| exchange_
|
| I'm curious: What is your source for this statistic?
|
| For comparison: There were about 40M non-zero addresses
| earlier this year. See eg https://news.bitcoin.com/number-of-
| addresses-holding-btc-tap... [The current number is on
| Glassnode: https://studio.glassnode.com/metrics?%3Bm=blockcha
| in.UtxoLos...]
|
| FTX is one of the larger exchanges, and FTX bankruptcy
| headlines say they "may have 1 million creditors". See eg
| reuters.com/technology/ftx-officials-contact-with-us-
| regulators-filing-2022-11-15/
|
| Edit: I'm trying to figure out if someone has actual stats or
| whether the statement is just intuitively guessing. There are
| so many bitcoin stats out there, it's hard to keep track of
| it all.
| three_seagrass wrote:
| >> Most bitcoin investors never move their coins off the
| exchange
|
| >I'm curious: What is your source for this statistic?
|
| They have no reason to.
|
| Unless the investor is specifically working on some HFT
| arbitrage scheme between exchanges, then they don't even
| need to move crypto out of the exchange.
|
| Also given the complexity of rolling your own wallet, it's
| just a risk that's not worth it when KYC exchanges are
| relatively stable.
| iamthirsty wrote:
| > There were about 40M non-zero addresses earlier this
| year.
|
| An exchange, when depositing or withdrawing to a user or
| another exchange, uses a ton of address, sometimes leaving
| behind very small amounts. Same with users. I'm sure 75% of
| non-zero address have very, very little BTC in them.
| yownie wrote:
| Exchanges batch transactions specifically to avoid tons
| of _transactions_ using ton 's of _addresses_ is
| perfectly fine however the address space is very very
| large.
| QuadmasterXLII wrote:
| If you haven't moved coins off the exchange you aren't a
| bitcoin investor.
| giaour wrote:
| "If you haven't received delivery on your crude oil futures
| contracts, you aren't a petroleum investor."
| three_seagrass wrote:
| This reads like a no-true-scotsman. If you exchange USD for
| bitcoin assets with the intent to sell later at a higher
| price, you're semantically a bitcoin investor.
| QuadmasterXLII wrote:
| I agree that my post reads like the no-true-scottsman
| fallacy, but I think I may be onto something. Compare the
| very similar phrases "You aren't a real stock investor
| unless you get your shares in physical paper" and "You
| aren't a real real estate investor if you buy the
| brooklyn bridge from a guy on a streetcorner in Harlem."
| The overwhelmingly common experience of "stock investors"
| that actually don't own the paper stock is that they are
| able to sell at market value when they decide to
| (although its not perfect, see trading halts etc.) I'd
| argue that the paper stock claim is a real no-true-
| scottsman. The overwhelmingly common experience of
| brooklyn bridge buyers is that they are not able to later
| sell the brooklyn bridge at market value- they did not
| succesfully invest in real estate. Buying "bitcoin" and
| trusting the exchange to hold it for you? Hard to say
| what the odds are but they don't seem good lately
| giaour wrote:
| Even a real estate deed or a stock certificate is just a
| piece of paper, though. At the end of the day, unless
| your investment is something you can physically hold in
| your hand, you're trusting that your claim on it will be
| honored.
|
| "You aren't a real real estate investor if you buy the
| brooklyn bridge from a guy on a streetcorner in Harlem"
| is true because the claim on the bridge was never
| credible, not because you never physically took
| possession of the bridge itself. You could argue that the
| exchange's IOU was never credible, but that's different
| from saying that any BTC-based IOU is made of lies.
| QuadmasterXLII wrote:
| If the website ftx said you had thee bitcoins three weeks
| ago, how many bitcoins did you have?
| three_seagrass wrote:
| Choosing (poorly) to invest with the wrong tools is still
| investing.
| lrvick wrote:
| If you do not move your coins off an exchange to a wallet you
| alone control, then the coins were never yours to start with.
| All you owned is a kind of IOU for some coins that could
| vanish at any time. See MtGox, FTX.
| boopboopbadoop wrote:
| I think this misses the point
| nathias wrote:
| are they really bitcoin investors if they don't have
| bitcoins? they gave money to an exchange for a promise, and
| those promises get broken a lot ...
| drdeca wrote:
| Their investment/"investment" is still in relation to
| bitcoin. It doesn't seem entirely incongruous to call it
| "investing in bitcoin".
|
| If I buy some shares in a company that does things with
| [X], I think it makes sense to say that by doing so I'm
| "investing in [X]", even if I don't e.g. have the necessary
| license needed to directly own any [X].
| lupire wrote:
| If I make a bet on the Cowboys winning a game, am I
| invested in the Cowboys, or merely dependent on them? Did
| my bet have any effect on the Cowboys, even indirectly,
| in the way that buing a share of stock does?
| capableweb wrote:
| > Most bitcoin investors never move their coins off the
| exchange
|
| Apart from having insider knowledge in how cryptocurrency
| exchanges operate and their data, how could you possibly know
| this?
|
| One address on the blockchain can belong to one or more
| users, just like one user can have one or more addresses on
| the blockchain, so being able to compare feels impossible
| even if you had insider knowledge/data.
| mindslight wrote:
| What if as part of bankruptcy proceedings, especially for a
| that business goes under due to fraud (effectively a
| failure of transparency/oversight), the business's datasets
| were opened up to regulators or the public domain rather
| than treating them as business assets to be sold for cheap
| to the next exploiter. Then one could actually run these
| kinds of reports on real data, that would otherwise be kept
| proprietary.
|
| The issue of one's "private" data then becoming part of a
| public dataset could be alleviated with deidentification,
| plus a better acceptance that when companies accumulate
| data about you, it's generally going to get exploited in
| some way or another.
| capableweb wrote:
| > Then one could actually run these kinds of reports on
| real data, that would otherwise be kept proprietary.
|
| Every cryptocurrency exchange would have to go bankrupt
| before you could make sweeping statements like that if
| so.
| lupire wrote:
| > deidentification
|
| Is consistently proven to be a myth.
| rippercushions wrote:
| Because when you buy or sell crypto on a centralized
| exchange, no actual blockchain transactions take place,
| it's just shuffling bits in the exchange's local database.
| capableweb wrote:
| Wait, what? So because trading cryptocurrency on a
| centralized exchange doesn't involve a blockchain, the
| conclusion is "Most bitcoin investors never move their
| coins off the exchange"? I'm missing some vital step in
| your reasoning here.
| Karunamon wrote:
| Yes that's pretty much the extent of the reasoning and I
| don't see what's wrong with that.
|
| Bitcoin on a centralized exchange cannot be traded for
| goods and services until explicitly withdrawn, unlike
| most brokerage accounts where cash is cash and many will
| even give you a debit card so you can spend directly from
| the account. This strongly decouples bitcoin and most
| other cryptos from the total money supply.
|
| When you're on Binance and you send them one BTC as a
| block chain transaction, you are receiving one
| Binance!BTC that does not exist outside of that walled
| garden.
| v8xi wrote:
| In that case you "own" a paper bitcoin, which is much the
| same as not owning one at all. In this case, the
| "bitcoin" you own doesn't even exist (outside of the
| exchanges database) so you cannot use this to speculate
| on actual bitcoin in actual wallets.
|
| Just look at FTX - some 1.8B in BTC liabilities but zero
| BTC assets
| three_seagrass wrote:
| Just because you don't have a bearer bond doesn't mean
| you haven't invested in bonds. Modern finance isn't about
| holding an invested asset in your hands.
|
| This splitting hairs over "true" ownership ignores the
| fact that the original investor analysis done by GP here
| premised on chain transactions is still semantically
| wrong.
| yieldcrv wrote:
| many exchanges boast user stats and funding stats which
| don't match a corresponding increase in addresses, we can
| also corroborate this with the size of the exchange's
| known hot and cold wallets, and further corroborate this
| with periods of time later when many users do move funds
| to distinct addresses outside of exchanges, the
| difference with what remains on exchange we can (or have
| to) assume to be distinct users. finally, there have been
| periods of time when its not worth it to move funds off
| of exchange because the transaction fees would eat the
| small amounts that poorer/less capitalized users bought
| and hold.
|
| that still leaves us with "most".
|
| everyone knows the theoretical issues and incompleteness
| of this statistics collection - since there is no single
| public or verifiable stat to use - its pretty new to be a
| person that chooses assume its _more likely_ that people
| are having distinct addresses on chain, than assume its
| _more likely_ they 're on an exchange
|
| kind of funny how we go full circle here, but okay. hope
| that helps your reasoning. this article has no way of
| making its claims either, so there's really no point of
| appealing to either authority or bolster any opinion.
| giaour wrote:
| It doesn't matter if the "most" statement is correct.
| _Some_ investors never move their coins off the exchange;
| therefore, the inference that 49.4% of investors have made
| money because you can see that in recorded transactions is
| based on a faulty premise. Unless you 're arguing that only
| a negligible number of exchange users do this, which seems
| implausible and would also assume facts not in evidence.
| leereeves wrote:
| > Look directly at the blockchain, and instead find 49.4% of
| the addresses were in profit
|
| But those addresses probably include most of the estimated 20%
| (or more) of Bitcoins that are lost (because they were usually
| lost when Bitcoin was less valuable).
|
| In those cases the address hasn't lost money, but the person
| lost it all.
| startupsfail wrote:
| And this also doesn't take into account CO2 emissions from
| mining, manufacturing mining rigs, building and discarding
| mining infrastructure.
| halpmeh wrote:
| That seems largely irrelevant to the topic at hand (whether
| or not a majority of those who purchase Bitcoin are in the
| red).
| sdenton4 wrote:
| Externalities matter. The report is showing people (and
| thus society) doing badly on average, and society overall
| is doing even worse because of the additional external
| costs.
| capableweb wrote:
| > Externalities matter
|
| Sure, agree. But I don't think that's the topic here, the
| general harm/good done by cryptocurrencies, the
| submission is talking exclusively about profits or the
| lack of them rather.
|
| If I invest 100 USD in Facebook and the stock gains
| double its value, I now have profits, no matter how bad
| Facebook is for the world.
| startupsfail wrote:
| You'll have unrealized gain. If, at the same time, some
| foreign government was sponsoring Facebook to dismantle
| the democracy, and successfully achieved that, overall,
| you might be worse off.
| startupsfail wrote:
| No, it is relevant. The switch to proof-of-stake is a
| recent one, there was plenty of CO2 emitted by mining
| ETH. And there is still infrastructure that supports it.
| These are negative externalities, just like the negative
| externalities of crypto fraud, black markets and money
| laundering.
|
| And it seems there isn't much to show on the good side,
| for all these negative externalities.
| purpleblue wrote:
| How many of those wallets are lost forever?
| 2OEH8eoCRo0 wrote:
| An address is not a person.
| notch656a wrote:
| The headline is a pre-supposing statement, that relies on a
| false notion that people are all using bitcoin as an
| 'investment' rather than for other reasons such as a currency.
| Only a fool is using most currencies as an investment, except
| perhaps as part of some hedging scheme.
|
| Bitcoin as represented in the white paper was never portrayed
| as an investment vehicle.
| tromp wrote:
| The disinflationary emission set it up to be a speculation
| vehicle. For use as a currency, a fixed block subsidy, i.e.
| linear emission would have been far preferable.
| SR2Z wrote:
| The overwhelming majority of people with Bitcoin are
| speculators.
|
| It's fairly useless as far as currencies go. It literally
| fails at the first requirement: it's not a reliable store of
| value.
| jeffbee wrote:
| That's the first requirement of currency? I feel like you
| might have made that up. It seems to me that the general
| character of a currency is that it is a widely-accepted
| medium of exchange. There are loads of currencies around
| the world that serve their purpose without being an even
| slightly good store of value. The Turkish Lira, for
| example, has lost 90% of its value against the Dollar in 15
| years, yet it is still the going currency in that country.
|
| Edit: after reading my comment I realized it might not be
| clear that bitcoin is _astonishingly bad_ at imitating
| currency. Almost without exception trading it for goods and
| services is impossible.
| samatman wrote:
| I like to say a currency: _should_ be a store of value,
| _could_ be a unit of account, and _must_ be a medium of
| exchange.
| [deleted]
| notch656a wrote:
| For most cases I would not consider it the best option.
| However I have used bitcoin codebase based coins for
| transactions where the time-span was short enough that it
| was a reliable store of value. Reliable store of value
| really depends on how long you intend to hold it. Dollars
| are a terrible store of value over 100 years and decent
| over 2 years. Several crypto coins are a bad store of value
| over 1 week but a decent one over a couple hours.
|
| There are certain circumstances where I think it may make
| sense for someone to pick an alternative currency; I'm not
| arguing it is superior to the rest of them.
| danans wrote:
| > However I have used bitcoin codebase based coins for
| transactions where the time-span was short enough that it
| was a reliable store of value.
|
| > Several crypto coins are a bad store of value over 1
| week but a decent one over a couple hours.
|
| What kind of (real world) transaction would need to rely
| on a cryptocurrency for value stability over a couple of
| hours time-span that wouldn't be served by fiat currency,
| which provides the same stability guarantees over that
| same time-span?
| toqy wrote:
| Buying drugs and other illegal things online
| [deleted]
| s1artibartfast wrote:
| International transfer is a good use, as is irrevocable
| payment for purchased goods.
|
| There is also a strong real world value in countries
| where local currency is less stable and secure than
| crypto. Not all places have access to USD or foreign
| currency.
|
| There are interesting examples coming out of Argentina.
| Imagine living in a country where year over year
| inflation is ~100% and the government may periodically
| seize assets in your bank account.
| bentcorner wrote:
| > _International transfer is a good use_
|
| I think it could make a useful underlying tool to enable
| this but to be used directly by end user customers it'd
| be a tough sell.
|
| I've used Wise to transfer USD <-> CAD, if they use
| crypto to enable that (I don't think they do, but I guess
| they could), I couldn't really care less.
|
| I don't think your run of the mill consumer is going to
| want to use crypto to do the same thing. With smaller
| amounts the difference in cost is probably negligible,
| with larger amounts you could theoretically save more to
| make the effort worth it, but you have higher pressure to
| have more "traditional" assurances that nothing goes
| wrong.
| danans wrote:
| > International transfer is a good use, as is irrevocable
| payment for purchased goods.
|
| In what ways do cash bank transfers not work for
| international transfers or irrevocable payments?
| s1artibartfast wrote:
| International wire transfers can take 1 to 5 days, and
| Banks can seize or reverse the funds.
| danans wrote:
| > and Banks can seize or reverse the funds.
|
| Why would they do that? I've never had that happen to me
| when I send an international transfer.
|
| But it's always been for innocuous things like "reimburse
| relative for vacation rental expenses"
| notch656a wrote:
| I had a domestic wire temporarily seized for 2 days
| because a bank wanted to KYC me a second time, even
| though I'd already KYC to open the account.
|
| Yes I was made whole but it was unpleasant and I happily
| would have eaten the ~.30 of litecoin transaction fees
| and 0.1% crypto exchange fee to avoid that. Not to
| mention the wire cost me $15 in the first place and not
| everyone has ready access to a bank with free wires.
| s1artibartfast wrote:
| I had a 100k wire held for 30+days. It was in the middle
| of escrow and I had to borrow 100k so that the purchase
| didn't fall apart.
| notch656a wrote:
| Something like Wise works most of the time but if you
| have a cousin in Papau New Guinea in the jungle with a
| cellphone and no bank account IDK how the hell you would
| send them large value in under an hour without losing
| your shirt. Maybe there is something and if so I'm
| interested in what it is (know someone else there with
| lots of money who really trusts you?).
|
| In any case ACH can be clawed back and it is my
| understanding in some exceptional circumstance a wire can
| too. The point never was crypto is always superior, it
| may be conventional is better 99.9% of the time but that
| 0.1% means a use case remains.
| lrvick wrote:
| I use Bitcoin as a currency all the time. It is cash for
| the internet. If used correctly, it is the only reliable
| way to buy things online without giving a central company
| like Visa or Mastercard a log of everything you buy and
| where you buy it.
|
| If you dollar cost average your acquisition of Bitcoin it
| smooths out the conversion risk and if anything the value
| against USD goes reliably up over a 3+ year window.
| lupire wrote:
| Currencies, as the name hints, are used to transmit value,
| not hold it beyond the short term.
| aetherson wrote:
| This is actually exactly backward. What the paper is trying
| to quantify is how many people are trying to use bitcoin as
| an investment, versus how many are trying to use it as a
| currency or other financial tool (the whole thing about how
| many of the investors are underwater is a small point of the
| paper that Gizmodo is fixating on because of Gizmodo's
| preexisting hatred of crypto).
|
| What the paper finds (and we can certainly quibble with any
| paper) is evidence that the majority of people who bought
| Bitcoin in the 2015-2022 period did so in patterns that
| suggest that they're interested in an investment asset, not
| in a currency.
| BoorishBears wrote:
| > Only a fool is using most currencies as an investment,
| except perhaps as part of some hedging scheme.
|
| Only a fool uses a currency that's experienced 5000%
| deflation?
|
| Bitcoin is a long failed currency, I can't believe there are
| people still trying to push that notion.
|
| Volatility is one thing, but deflation to a nonsensical
| degree means that using it as a way to pay for goods and
| services is heavily discouraged because of things like...
| having your $20 pizza be worth $165,000 if you had just not
| bought it.
| landemva wrote:
| I have used btc as a hedge against my government and the
| uncontrolled judicial system, and it has been phenomenally
| successful. Not everyone lives an upper-middle class
| existence with good rule of law.
| [deleted]
| highwaylights wrote:
| The great thing about Bitcoin is that it's whatever the
| holder wants it to be, and nothing they don't want it to be,
| while at the same time being the opposite of that to someone
| else, depending on what argument their trying to make and
| whether or not they've personally lost money.
|
| Anytime someone speaks crypto to me now I feel like Adam
| Sandler floating past Clint Howard's window in Little Nicky:
| I don't want to be part of this, they don't want me to be
| part of this, and all I can do is wish them luck while they
| tell me they don't need it.
| thrwy_918 wrote:
| > The great thing about Bitcoin is that it's whatever the
| holder wants it to be, and nothing they don't want it to be
|
| If someone bought Bitcoin a year ago and wanted it to be a
| store of value, it is certainly not "whatever the holder
| wants it to be" for that person
| jpadkins wrote:
| If someone bought US Dollars($) a year ago and wanted it
| to be a store of value, it is certainly not "whatever the
| holder wants it to be" for that person.
|
| A lot of currencies are not a good store of value the
| last 18 months.
| vkou wrote:
| Strange, US dollars seem to be as good at making both my
| mortgage payment, and paying my taxes this year as they
| were last.
|
| They also seem to be a lot better at buying Bitcoin and
| Euros and S&P500, but a bit worse at buying lettuce.
|
| No currency seems to be better at buying lettuce this
| year, though, perhaps the problem here is that there is a
| shortage of goods and labour...
| [deleted]
| notch656a wrote:
| I personally lost a couple dollars on litecoin but saved
| 10s of dollars in transaction fees by not using a credit
| card. So the fact I lost money, technically, doesn't mean I
| didn't come out ahead versus the alternatives.
| highwaylights wrote:
| I had to work out in my head there how many transactions
| you'd need to make to have saved 10s of dollars on credit
| card fees, and then whether or not that was worth the
| hassle, let alone the loss of purchase protection.
|
| It was not.
| Terretta wrote:
| > _Look directly at the blockchain, and instead find 49.4% of
| the addresses were in profit_
|
| Every trade has two sides, and transactions cost fees.
| nextaccountic wrote:
| > Look directly at the blockchain, and instead find 49.4% of
| the addresses were in profit as of the time this article was
| published
|
| Someone can (and should) have multiple addresses. And most
| retail investors will actually keep the bitcoins in an exchange
| in order to not lose an obscene amount of money to fees when
| trading. So there isn't an 1:1 correspondence between addresses
| and people.
| nmeofthestate wrote:
| Didn't read the article but wanted to comment on the bizarre
| title.
|
| Vast majority = well over 50%
|
| Inevitably = 100%.
|
| So, "Well over 50% of bitcoin investors lose money 100% of the
| time".
|
| Huh?
|
| 50% of coin tosses are heads 100% of the time.
| tovej wrote:
| inevitably = eventually
| [deleted]
| andromeduck wrote:
| The equivalent woud be 50% of coin tossers loose 100% of the
| time.
| daveslash wrote:
| _They 've done studies you know. 60% of the time, it works
| every time._ [0]
|
| _I am shocked. SHOCKED!!!... Well, not that Shocked._ [1]
|
| Darmok and Jalad at Tanagra. Shaka, when the walls fell.
|
| [0] https://www.youtube.com/watch?v=pjvQFtlNQ-M [1]
| https://knowyourmeme.com/photos/900923-futurama
| kazinator wrote:
| Exactly: it's like saying "about half of all coin tosses are
| inevitably heads!"
|
| The adverb "inevitably" at best doesn't do anything in that
| sentence (not unusual for adverbs), and at worst looks as if
| the claim is being embedded that a heads outcome can somehow be
| inevitable.
| 1letterunixname wrote:
| s/Bitcoin/pyramid scheme/g and it's still true.
|
| Hype is a compounding agent in wealth transfer.
|
| If (unprofessional investor) doesn't have a strategy to find or
| invest in value, then the value they throw at it will invariably
| disappear.
| paulpauper wrote:
| Someone who bought bitcoin even as far back as 5 years ago and
| held, still lost money. 19k vs 16k today. Index funds have
| crushed Bitcoin in that same timeframe. Even if you bought 2
| years ago the performance is not good. I think this shows the
| dangers of overhyped investments. Sure, Bitcoin has done well for
| certain timeframes, but index funds tend to have smoother, more
| consistent returns.
| somenameforme wrote:
| Here is a graph of BTC [1]. The price on November 16th 2017 (5
| years ago) was $7,294. Today it's $17,027 (as of the time of
| this post). The absolute peak you're trying to reference lasted
| exactly 1 day: December 18th. By December 18th of the next year
| it was down to $3,500.
|
| [1] - https://www.coindesk.com/price/bitcoin/
| paulpauper wrote:
| fine, then 4 years and 10 months. It's evident BTC hasn't
| done anything for at most 5-4.75 years compared to large
| gains for index funds.
| dibt wrote:
| >BTC hasn't done anything for at most 5-4.75 years
|
| From bottom of 2018 to the first top in 2019, it went up
| 435%.
|
| From bottom of 2019 to the first top in 2020, it went up
| 60%.
|
| From bottom of 2020 to the first top in 2021, it went up
| 1553%.
|
| From bottom of 2021 to the second top in 2021, it went up
| 133%.
|
| You could capture the gains of the S&P500 with less time in
| the market with that volatility. If you don't think the
| volatility is something you're interested in managing in
| your portfolio, then say that. I just can't wrap my head
| around this buy and forget attitude. When ANY investment
| reaches 2 standard deviations, take profits!
| dibt wrote:
| Who are you referring to? Are bitcoin buyers required to buy as
| much as they ever want at one time, and never sell? Or can they
| buy at lower prices, and sell at higher prices from the point
| you referenced?
| paulpauper wrote:
| The data overwhelmingly shows people are bad at market timing
| dibt wrote:
| > The data
|
| Which?
|
| > people
|
| Who?
|
| You should at least admit I'm asking relevant questions.
| You've provided no worthwhile commentary for the
| asset/subject of the thread.
|
| Let's try a different perspective on your comment...
|
| "Someone who bought SPY on October 11, 2008 and held, still
| lost money 5 years later."
|
| It's actually WORSE because you didn't have a single
| opportunity to exit for profit in that time. While Bitcoin
| had MANY occasions where it was in profit during the
| previous 5 years.
|
| I now see from your comment history that you are the
| typical HN commenter that hates on Bitcoin every
| opportunity, regardless of how factual or relevant your
| comment is.
| notch656a wrote:
| And 99.9% of those who sit on physical cash-bills fiat lose
| value. Those that don't have a rare coin or bill or something.
| The point of bitcoin, if you intend to use it as a currency, is
| not appreciation.
| yayitswei wrote:
| It really depends on when you do the study, doesn't it?
| pedalpete wrote:
| Most ETFs show similar results, I wouldn't be surprised if VC was
| similar. People pile in when the fund has a good year, or few
| years. They are buying at the peak.
|
| Most people just aren't investors. They don't read the rules,
| they follow the hype.
| pjkundert wrote:
| >Well, the economists at the Bank of International Settlements
| stated it pretty plainly.
|
| >"Users [are] being drawn to Bitcoin by rising prices--rather
| than a dislike for traditional banks, the search for a store of
| value or distrust in public institutions,"
|
| I'm convinced.
|
| In other news, Foxes overwhelmingly support vulnerable hen-
| houses...
| EVa5I7bHFq9mnYK wrote:
| Shall we see a scientific study "100% of People Who Invest in
| Bitcoin Inevitably Make Money" at the next all time high?
| karamanolev wrote:
| That doesn't compute. You could have already realized losses on
| Bitcoin and even if you're still invested, the gains could
| outweigh the accumulated losses. So "all time high" doesn't
| mean everyone is making money.
|
| That's only true if people buy BTC and just hold without ever
| selling.
| dibt wrote:
| > You could have already realized losses on Bitcoin
|
| You could have already realized profits on Bitcoin. That's
| the parent commenter's point. It works both ways.
|
| The "study" only confirms the reader's bias.
| expazl wrote:
| Having an unrealized gain does not mean you made money if you
| cannot realize it.
| nullc wrote:
| > if you cannot realize it.
|
| If you do not, sure. But cannot? Bitcoin markets have been
| quite liquid for a long time. Even during run ups to peak
| price you can sell millions of dollars of Bitcoin without
| significantly moving the markets. Then you can simply wire
| the funds to your bank.
|
| It's essentially the same experience as selling a comparable
| amount of a popular ETF w/ a stock broker, except the bitcoin
| exchanges are somewhat more prone to waste your time with
| invasive and irrelevant requests for personal information.
|
| The implication that bitcoin markets are meaningfully
| illiquid at the level of individuals is weird and wrong.
|
| Now, if you want to talk some weirdo fringe 'crypto' stuff
| instead of Bitcoin, your mileage may vary-- some of it is
| reasonably liquid, some of it isn't. A lot of it is primarily
| or only traded at exchanges that don't support real USD, so
| to trade it for USD you have to first trade it for something
| supported at an exchange that has banking relationships
| (potentially something like tether if you like playing with
| fire-- but Bitcoin is probably a better choice). But that
| nonsense doesn't apply when dealing with Bitcoin.
| adolph wrote:
| All people hodling dollar are also losing money, no study needed.
| thecrash wrote:
| "Bitcoin has been around for decades..."
|
| With an opener like that, you have to wonder about the quality of
| the rest of the research that went into this article...
| ceejayoz wrote:
| 1.3 decades. More than one, less than two.
| JofArnold wrote:
| I don't know anything about Bitcoin tech but assuming it's
| roughly like Ethereum it's a negative sum game due to transaction
| fees/mining. So even in a bull market it's a fundamental property
| of the system that people will collectively lose versus fiat.
| Furthermore, the more they trade the more they will - on average
| - lose.
| blululu wrote:
| True but this critique more or less applies to real money as
| well. Inflation does seem to be a naturally emergent property
| of every healthy monetary system ever created so I don't think
| that this is necessarily a problem. And transaction fees are a
| fact of life. The objection here is a matter of degree more
| than of kind.
| JumpCrisscross wrote:
| > _this critique more or less applies to real money as well_
|
| Currency is transparent about being negative sum _per se_. It
| 's not designed to be held for long term, it's designed to
| create positive externalities by enabling trade. (The value-
| holding form of the U.S. dollar is the Treasury.)
| __s wrote:
| This is gone over in _Bitcoin is not a store of value_ :
| https://news.ycombinator.com/item?id=32892327
| egberts1 wrote:
| How correct. I pumped my entire two-hour's worth of lifesaving
| into Bitcoin and hardware for a cold-wallet and now, I have 23
| minutes worth.
|
| So glad that I didn't put my entire life-saving into this.
| sparkie wrote:
| I put 6 hours of work into Bitcoin in 2011.
|
| That's now a year and a half's salary.
|
| Gutted that I didn't put my life savings into it back then,
| although I pretty much have now (~95% of my net worth).
| xutopia wrote:
| Well that's a given knowing that the price went down drastically.
| That's like saying that the vast majority of those who invested
| in a market that just crashed lost money.
| harimau777 wrote:
| Is that true of other investments? My understanding is that
| someone who invests regularly in the stock market is likely
| ahead over a long period of time even if the market just
| crashed.
| bitlax wrote:
| But that's true of Bitcoin as well.
| MisterSandman wrote:
| It literally isn't.
| xutopia wrote:
| It actually is. You can see it here against other types
| of assets: https://dcabtc.com
|
| Over a 3 year period... 10$ a month and BTC actually
| comes up ahead of many other forms of investments.
| throwup wrote:
| Yep, this factoid goes in cycles just like the price. If anyone
| is interested in diving deeper, the indicator to look at is
| called MVRV (Market Value to Realized Value). During time
| periods when it's less than 1, the average investor is carrying
| a loss, and > 1 means carrying a profit. Historically every
| halving it has spent some time below 1, and this time around
| we're right on schedule.
|
| https://charts.woobull.com/bitcoin-mvrv-ratio/
| cr4nberry wrote:
| I followed the blog post this article provides[1], which leads to
| another blog post[2]. It's another bullshit article
|
| > Decentralisation was always a phantom. At most it's a way to
| say "can't sue me, bro." Every process in Bitcoin tends to
| centralisation -- because Bitcoin runs on economic incentives,
| and centralised systems are more economically efficient.
|
| How exactly does anything specific about bitcoin imply anything
| about decentralization in general? And how do we know that
| centralized systems are more efficient?
|
| These quotes sum up the author's thinking:
|
| > Bitcoin is not about the technology. It's never been about the
| technology. Bitcoin is about the psychology of getting rich for
| free
|
| > The marketing pitch is that the actual-money economy will
| surely collapse any moment now! And if you get into Bitcoin, you
| can get rich from this.
|
| This says all that needs to be said about the author. Cherry
| picking ridiculous examples, making broad generalizations about
| the interest behind bitcoin, this author has all this in common
| with the news media.
|
| I have a hard time taking anyone seriously who thinks it's their
| "moral duty" to shill for the central banks. These folks can
| churn out all the shitty blog posts and editorials they want, at
| the end of the day, they'll never be able to freeze wallets like
| they've frozen bank accounts. This is what upsets them
|
| [1] https://davidgerard.co.uk/blockchain/2022/08/20/proof-of-
| sta...
|
| [2] https://davidgerard.co.uk/blockchain/2021/06/27/bitcoin-
| myth...
| benj111 wrote:
| Ok, the comment under the first picture is
|
| >Bitcoin has been around for decades....
|
| Bitcoin came out in 2009, 13 years isn't decades.
|
| Thats before even getting to the main body of the article.
| psyfi wrote:
| Vast Majority of People Who Invest Lose Money
| bluecalm wrote:
| Deposits -> heavily negative sum game with a lot of scammers
| involved -> cash outs
|
| Who would have thought that the outgoing stream is thinner than
| the incoming one.
| PuppyTailWags wrote:
| Actual paper here: https://www.bis.org/publ/work1049.htm
| fpiacenza wrote:
| Can we take a look at stocks and other investement instruments at
| different time lentghs, you know just as a benchmark.
| saalweachter wrote:
| The S&P 500 looks to be up about 96% between 2015 and 2022
| (today), using the time range mentioned in the article.
|
| It also paid about a 2% yearly dividend over that time frame.
| staticman2 wrote:
| This makes sense because people will chase something that
| recently made money but at that point the easy money has already
| been made.
|
| It's not the same investment at super expensive prices.
| fundad wrote:
| how could the house always win in gambling and, curiously,
| cryptocurrency
| dybber wrote:
| Of course in a negative-sum game, most people will lose money in
| the end of the day.
|
| The $$ going in is equal to the $$ going out of the system.
| However, som of the $$ goes to miners as transaction fees.
| Therefore, for the non-miners, it will be a negative-sum game,
| where less money will go out of the system, than what the traders
| are putting into it.
| quantified wrote:
| Essentially red, black, and 0 + 00
| mrb wrote:
| Not at all. Here is a simple counter-example:
|
| A has some bitcoins, he sells a few to B.
|
| Later price increases, and A sells more bitcoins to B.
|
| In total, the same $ went in as the $ that went out, but both
| A's and B's wealth increased.
| Beltalowda wrote:
| So as long as Bitcoin's price keeps going up everyone can get
| infinitely rich?
| woojoo666 wrote:
| Where is A getting their bitcoins? If they didn't need to buy
| them, then they are miners, which seems to agree with GP's
| comment
| potatototoo99 wrote:
| I'm sure people in Lebanon, Turkey, Argentina, et. would
| disagree.
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