Bitcoin as an investment?

How do you feel about investing in Bitcoin?

I see some people say “$25,000 by end of the year, $million in 5 years!”

I really don’t know a whole lot about Bitcoin, but what do you think?

I think it’s a bad idea.

It’s a better investment strategy than playing slot machines. But if high risk and extremely volatile investments appeal to you I’m selling shares right now in my SDMB-based financial consulting firm.

Myself, I’m putting all my money into tulip bulbs.

I’ve considered investing a small amount of my disposable income. But with the understanding that it is highly speculative, high risk investment. Roughly on the order of what I would invest in Las Vegas on the craps table.

Think of it this way. The main selling points are that it is anonymous, untraceable (not totally true) virtual currency that isn’t backed by any government. And the primary investment base seems to be organized crime, terrorists, early adopter technophiles and speculators.

Any of that sound like a good investment?

Its good with basically investment ‘gambling’ money, very high risk as it could effectively disappear overnight with a stroke of a pen, or perhaps a exploit which makes it unsustainable.

I just saw my first ad for Bitcoin investments. The spokesman was Ron Paul.

A little vague, but the lower bound of that quote involves growth from $25K to $1M in a period of five years.

That means they expect your investment would give an annualized rate of return of 110%. Consistently, every year for at least five years.

Compare against conventional equities, which have a long-term historical average of about 11%.

The pricing of conventional equities involves some uncertainty/irrationality/speculation, but generally in limited amounts because people can point to objective measures (i.e. a company’s health and future business prospects) to determine, in rough figures, what should be a fair price to pay for a stock. The famous quote is that in the short term, the stock market is a voting machine, but in the long term, it’s a weighing machine. I suspect most people buying mutual funds for retirement aren’t doing that, but they can at least point to a general faith that the US/world economy will continue to grow, at least during their lifetimes.

So how do we do the same for BitCoin? Why is the price increasing? What makes it valuable in the first place? Why would we have faith that its price is going to continue increasing at all, let alone at a rate that makes their dollar value double every 365 days? I get that there’s a limited supply of them, which suggests that people believe demand for them will continue to rise. Why? Are they really so much more useful for business transactions than existing currencies (especially considering their volatile price history)?

I have no interest in buying bitcoins. I’d rather get rich slowly and reliably than try to get rich quickly and risk becoming poor quickly. If you bought/sold BitCoin at the wrong times, you might have lost 85% of your investment, or you might have quadrupled your money in a little over a year’s time. That’s a lot of risk/volatility. I could see throwing a handful of cash in there for entertainment’s sake, but there’s no way I’d want to count on that money being around in 5-10 years.

Sounds like gold in the pirate era. :stuck_out_tongue:
(non serious answer)

In the short term, though, it’s probably better than craps. I’ve got about $3500 I left in after using BTC to move my money from China when I moved back here. I regard it as safe to lose, but it’s worth about $17,000 right now. If it crashes overnight, then I’ll be a bit sad I lost the initial investment, but it will be my fault for not cashing out the initial investment, which I could do right now. Hmmm… maybe that’s not a bad idea, then literally everything remaining is zero risk.

The largest issue with BTC is liquidating it. Coinbase will only let me sell $15,000 per week. While I can move the BTC to any other company in a matter of minutes, they’re going to have transaction limits, too. If BTC were to hit, say, $25,000, then it would take me more than a month to have it all as cash.

And of course when selling it with a respectable company (as opposed to localbitcoins – cash on the street), you’ve got to report capital gains upon liquidation, and are subject to government reporting.

I suppose you can buy stuff with BTC directly and avoid all of this, but the local Lincoln dealer doesn’t accept BTC, and I’m guessing a home seller won’t accept them, and you’re pretty much limited to non-big-ticket kind of stuff.

Bitcoin investment looks to me like a speculative bubble. That is, the value keeps going up only because of a bandwagon effect: people who see the value increasing want to buy in, which only causes it to increase more. At some point the price will start to drop, possibly because of an economic downturn, or possibly because some big investor wants to cash in. When this happens, other bitcoin investors will panic, and the price will crash.

Even if you think this is a bubble, you might be tempted to invest in bitcoin and get out before the crash. This is what’s known as the “greater fool” theory - the idea that you’ll be OK as long as you can find someone dumber than you. It rarely works. The best way to deal with a bubble is to stay out of it.

My standard reminder - if you see an advertisement enticing you to invest in a particular instrument, THEY are selling, NOT buying. So, do you take their advice? Or do you look at what they are actually doing?

You should sell everything you own and invest it in Bitcoin, like this guy.

What could go wrong? :smiley:

So far that guy (if he did buy on Oct 11th) is up 20% or so.

I thought about buying like a grand worth when they were ~$10. I wish I had, but it’s pretty easy to decide after the fact. I think putting money in now you’re just as likely to lose it all as you are to double your money.

I mean…for all intents and purposes…

Speaking only for myself, of course -

No. No way. Hell, no. No Goddamn way. No fucking way. No way, no how. Nope. No, I ain’t gonna do it.

I see Bitcoin, as an investment, as all risk.

I’m old and retired, and focus on capitol preservation. But were I a young’un in the world today, I’d tell my (younger) self ‘gambeling is fun, but don’t bet what you can’t loose’.

If your 401-k is maxed out, and your kids got food, and if the wife is happy, and the mortgage is paid up, and you have 6 months of expenses in a liquid account, and the job is secure, and the credit cards paid off (not in that order) , then maybe, maybe, I’d think about it, if the car was newish, up to date on it’s preventive maintenance and the tires good, and the brakes more than fair.



Vegas is a much better investment than bitcoin, because you know exactly how it’s going to behave. Both are a gamble, but with bitcoin, you don’t even know the odds or the stakes. The word “investment” doesn’t belong anywhere in the same ZIP code as that kind of volatility.

With most avenues of speculation, you can at least look at past history to see how often your commodity has increased by X% over a span of Y years, over a history of centuries, and at least be able to estimate your risk. But bitcoin is too new for any of that to be meaningful.

Whole thing sounds like a scam to me, but what do I know?

I love this thread. Mark it. With SO many people poo-pooing it, that practically guarantees that it will continue to appreciate over long term as more and more of such people decide they were wrong and put their money into it.

Also, today buying bitcoin takes some effort. You have to figure it out, you have to confirm your identity - it is a lot stricter than just opening a Robinhood account or something. That will also change and will also bring more people in.