Breaky Bitcoin Blues

JohnnyFlash · 11-09-2018 4:57pm

This is an article showing a typical use case. Now this lad lost 120k, but the pattern is typical. Meanwhile the scam artists and tricksters have cashed out and are living the good life as a result.

https://money.cnn.com/2018/09/11/investing/bitcoin-crash-victim/index.html

JJJJNR · 12-09-2018 12:55pm

if you watched the video he reinvested in other coins, his assets have devalued but he still owns a ton of them.

12-09-2018 1:04pm

This thread reminds me of one my favourite videos.

https://www.youtube.com/watch?v=d3_DjiLLDfo

TheIrishGrover · 12-09-2018 1:41pm

There was no basis for their valuation. Not in hindsight, it was a VERY obvious bubble. currency needs a reference point: 1 unit equals x amount of a known factor - gold, silver, feckin' coffee for God's sake. These things were built on compute times which is constantly changing. I kind of feel sorry for people who were burned. Some people lost a lot of money but it doesn't take a rocket surgeon to work out that something that volatile is a bubble. I mean something that goes up 1000s of % in a few weeks/months is not sustainable. And the issue is, you ask anyone who got involved in it and they'd say: I know it's not sustainable but I'm gonna stay in juuuuuust a little bit longer and then pull out. Most people who bought were just seeing it as a "get rich quick" method: Buy low, hope as many people invest as possible, sell high before it collapses and tough sh*t to anyone who didn't get out in time.The only thing that did surprise me was that some companies initially got involved. But they pretty quickly backed out.

valoren · 12-09-2018 1:44pm

To go 'investing' 120k without the due diligence to have anything akin to a 'stop loss' is incredibly dangerous but even with that it's so price volatile that even stop losses can be ineffective. Interestingly in the article it states that he is at a 96% paper loss. So in effect he hasn't lost anything. He should keep them. He might never know what they might be worth in future.

The fear or missing out phenomenon is prevalent in bubbles and when seeing the price of something going up and up it leads to what was termed irrational exuberance.

If you are only looking at the price of something and looking to profit on the difference then you're speculating. You're not investing.

Bitcoin is pure speculation. The alt currencies are fertile ground for the travelling circuses of shysters and scammers who have zero compunction or empathy for ripping off the suckers with $ signs in their eyes and for whom a modicum of due diligence would save them from financial pain while the same shysters quickly move on to another get rich quick scheme. A quick rule of thumb for anyone looking to invest is that if a 7 year old can't understand your reason for investing in anything then be very wary. Mr 120k says in the article, ".....learning process (for bitcoin) was like solving the plot of a murder mystery." Red flag alert.

jodaw · 12-09-2018 1:52pm

The negativity surrounding crypto in beginning to build quiet nicely. After another massive devaluation has been exhausted, it might be just the right time to start buying again.

JJJJNR · 12-09-2018 1:58pm

TheIrishGrover wrote: »

There was no basis for their valuation. Not in hindsight, it was a VERY obvious bubble. currency needs a reference point: 1 unit equals x amount of a known factor - gold, silver, feckin' coffee for God's sake. These things were built on compute times which is constantly changing. I kind of feel sorry for people who were burned. Some people lost a lot of money but it doesn't take a rocket surgeon to work out that something that volatile is a bubble. I mean something that goes up 1000s of % in a few weeks/months is not sustainable. And the issue is, you ask anyone who got involved in it and they'd say: I know it's not sustainable but I'm gonna stay in juuuuuust a little bit longer and then pull out. Most people who bought were just seeing it as a "get rich quick" method: Buy low, hope as many people invest as possible, sell high before it collapses and tough sh*t to anyone who didn't get out in time.The only thing that did surprise me was that some companies initially got involved. But they pretty quickly backed out.

Of course there was a valuation, there value was based on the complete destruction of the dollar by an event like a nuclear attack from NC. or has that incident been wiped from your memory. Thats what caused the massive increase, the increases were almost in line with the testing that was done by north korea and Trumps tweets. So it wasn't a bubble it was people running scared thinking they wouldn't be able to buy a loaf of bread with a wheel barrow of dollars.

12-09-2018 1:58pm

valoren wrote: »

Interestingly in the article it states that he is at a 96% paper loss. So in effect he hasn't lost anything. He should keep them. He might never know what they might be worth in future.

I've been pretty wary of Bitcoin though my brother has got a few and is up a lot. He doesn't have any interest in buying or selling anymore.

On Reddit, I've seen this idea that you've just stated.. "May as well hold on to them." I disagree. The best thing you can do at any time is buy what you think will do best in the future, because it's bitcoin. The value is meaningless so there is no underlying reason to hold, other than to gamble. With regular stocks or something like a biotech, holding can make sense, but with arbitrary values, what's the point.

BrokenArrows · 12-09-2018 2:06pm

Jack Moore wrote: »

No I get how he got up to 900k
But 900k at peak is worth 300k now

Thats assuming he was invested in Bitcoin.
He may have held other alternative currencies which alot have declined massively. Stuff that traded around $20-30 etc now at a fraction of a dollar.

JJJJNR · 12-09-2018 2:16pm

What alt coin are you talking about, nothing that was 30 euro then is trading at a fraction of a dollar now, I've done the data science on this so dont bullsh*t

valoren · 12-09-2018 2:26pm

Deleted User wrote: »

I've been pretty wary of Bitcoin though my brother has got a few and is up a lot. He doesn't have any interest in buying or selling anymore.

On Reddit, I've seen this idea that you've just stated.. "May as well hold on to them." I disagree. The best thing you can do at any time is buy what you think will do best in the future, because it's bitcoin. The value is meaningless so there is no underlying reason to hold, other than to gamble. With regular stocks or something like a biotech, holding can make sense, but with arbitrary values, what's the point.

True.

I can't understand how you actually invest in bitcoin/alt currencies anyway.

I know that here when you buy stock it's held in your brokers custody 'street name' for you, that you don't own the stock but you're the ultimate beneficiary. That's bad enough for stock, much preferable to have direct registration rather than having the broker holding your shares but presuming it's quite similar with bitcoin? i.e. that someone physically owns the mined coins and you pay the asking price to become the beneficial owner? Or newly mined coins are traded on the market?

The whole thing is a murky head melt.

Even stocks which go bankrupt in time aren't as bad when examined.
Eastman Kodak went bankrupt in January 2012.

Let's take the bitcoin $120k investor and go back to 1986.
He decides to invest $100k in Kodak, a solid blue chip, photography and chemical giant but which will ultimately go bankrupt.
Does he lose the $100k?

Let's see.

The 100k invested at $26.82 per share bought 3,728 shares in Kodak on 2nd January 1986.

In October of 1987, shares split 3-2. That brought total share count to 5,592 shares. Great.

On January 4th, 1994, Kodak spun off the Eastman Chemical division. For every 4 shares held in Kodak, investors got 1 share in the spin off. With 5,592 shares of Kodak, you received 1,398 shares of the chemical business. Great.

In October of 2011, Eastman Chemical splits 2-1, bringing the total chemical shares to 2,796. Great.

In January 2012 Kodak declares chapter 11 bankruptcy. Not so great. The 5,592 shares are now worthless as the company delists.

So how is it that your initial 100k investment is now worth 452k??

Well you'd have gotten $173k from Kodak dividends since 1986.
Eastman Chemical shares would have churned out $47k in dividends since the spin off and the market value of the shares would be $203k

So I guess you're correct that holding onto bitcoin after getting burned is not the best idea. It generates nothing. It spins off nothing. It pays out nothing.

Obvious Desperate Breakfasts · 12-09-2018 2:29pm

Ciaran_B wrote: »

I know nothing about crypto but when I saw ads on the side of Dublin Buses selling Crypto services I knew the jig was up.

Indeed, once it goes mainstream, that’s it. Like lots of people buying multiple properties during the Tiger. There will always be a proportion of people who want to get rich quick so these pyramid schemes will always have some success. And you don’t really hear about the fallout because people who lose money don’t want to talk about it. Understandably enough, I suppose.

BrokenArrows · 12-09-2018 2:39pm

JJJJNR wrote: »

What alt coin are you talking about, nothing that was 30 euro then is trading at a fraction of a dollar now, I've done the data science on this so dont bullsh*t

Ah ok i may have exagerated a little but something like Nano traded at 34 and is now at 1.72. Its still a fraction 1.72/1

:D:D
That combined with him trying to trade his way back to profit could easily see that much of a loss.

Im sure there is more but thats the one that pops into my mind.

There are plenty of **** coins that once traded at a few dollars and now worth a few cents.
A quick scan of coinmarketcap shows them. https://coinmarketcap.com/currencies/wax/ for example is now at 0.05 and once was at $4. Thats 80 times its current valuation.

ZeroThreat · 12-09-2018 2:45pm

BrokenArrows wrote: »

Ah ok i may have exagerated a little but something like Nano traded at 34 and is now at 1.72. Its still a fraction 1.72/1 :D:D
That combined with him trying to trade his way back to profit could easily see that much of a loss.

Im sure there is more but thats the one that pops into my mind.

Nano is pretty much the typical '****coin' with no purpose or utility whatsoever.

Best way to make money from crypto right now is to short bitcoin on somewhere like bitmex.

Obvious Desperate Breakfasts · 12-09-2018 2:46pm

Aongus Von Bismarck wrote: »

A complete scam of course, and it just goes to shows what happens when large amounts of people who don't understand economics, the creation of wealth, and the systems behind it, attempt to 'get rich quick'.

That said, not everyone lost money. Over 90% of people did. I made some money off Bitcoin completely by chance. A number of us here at the bank in Frankfurt bought some of them a number of years back. We had intended to give them to one of C-Suite in the bank as a joke present - the 'future of money'. We didn't however, as he died of a massive heart attack before we had the opportunity to do so.

Anyway, we forgot about them, until last December, where we saw that each coin was valued at over 10k dollars a pop. We cashed them all in at 14700k a pop, which wasn't the height of the bubble, but no point getting greedy with this sort of thing, and ending up being a bag-holder/owner of worthless digital 'beany babies'.

I paid the required tax on the profits, and was able to purchase a small holiday home in West Cork with the proceeds. I also had enough left over to purchase a golf course membership down there, as well as a Paul Henry painting for the kitchen. So all-in-all, a pleasant experience.

Don't even bother reading about it these days. There's this idea that those of us who work in traditional banking are terrified of bitcoin. We aren't. It's silly libertarians playing silly games with silly virtual money.

Paul Henry? How middlebrow of you.

jodaw · 12-09-2018 2:48pm

900K in WeTrust at start of Jan at $1.30 would now be worth approx $13K today at $0.019c, so that is pretty close to 900K to 3K. Given the losses involved you may as well throw the 10K on a horse

Obvious Desperate Breakfasts · 12-09-2018 2:55pm

Deleted User wrote: »

One thing I would say to anyone thinking about investing in this stuff is stay out of the crypto forum. There seems to be an uncomfortable level of an almost desperate desire to get other people to invest while reassuring those that already have that everything will be fine.

If you’ve already bought in then, by all means, go in and join the positive chat about the choice you’ve made. Also, be sure to be ready at any moment to shout down any user who dares to question the merits of the coins. One was even banned quite recently who seemed to be speaking a lot of sense, posting copious quality links to back up his view but this didn’t go down well at all. Came across as a most measured and intelligent poster, in my humble opinion.

While I was once interested in getting into the crypto game I have largely been put off by the sheer number of over-zealous coin holders trying to get others to get in on the action.

I mean, how often do you see people trying to help perfect strangers make millions by buying into the product they’re already bought into?
Reminiscent of the types who’d rope you into selling products at those dreadful Tupperware parties.

That does sound like classic behaviour of people who have bought into pyramid schemes. To get money back on their investment, they need others to buy into it. And don’t care whether those below them in the pyramid lose out. These schemes bring out the worst in human nature, truly.

JohnnyFlash · 12-09-2018 7:30pm

That's a very valid point. The huge wave of hysteria that emerged in December and January was very fascinating to watch as a filthy statist no-coiner. From a human psychology perspective. The complete lack of critical thinking, the greed, the strong bang of libertarian codswallop running through the entire space. Mania, exuberance, and despair. There's definitely a few documentaries and movies going to be made about the entire space.

I mean there were coins valued at tens of billions of dollars that had no business model at all. Worth multiples of what companies like Uber and AirBnB raised during their venture capital rounds. Some of them copied the bitcoin code, changed a few variables, and went up hundreds of percent overnight.

Ethereum is still worth 17 billion dollars if you believe market cap (I don't by the way - think almost all the real money has left the system, and what is left is trading bots using fake dollars to milk the last of it remaining in the system). It had about 4000 users yesterday using the distributed apps built on it. Most of these are gambling sites and pyramid schemes built on a pyramid scheme. Through the looking glass.

Blockchain as a tech may have some niche use cases. IBM have their hyperledger technology which you could speculate may find traction in some industries. But it's a private blockchain, so it's not decentralised. You cannot have security, scalability, environmental sustainability, and decentralisation. There's no zero-trust model that allows for all 4. It's quite an old computer science problem. Blockchain doesn't solve it.

Finally, the impact of bitcoin on the environment is worth mentioning. It now uses more energy than Ireland, Austria, and Finland do. It uses more energy that 1 million transatlantic flights - planes, not people. It's a complete fiasco. And for what?

Debtocracy · 12-09-2018 8:01pm

Capt'n Midnight · 12-09-2018 9:17pm

valoren wrote: »

Even stocks which go bankrupt in time aren't as bad when examined.
Eastman Kodak went bankrupt in January 2012.
....

So how is it that your initial 100k investment is now worth 452k??

Well you'd have gotten $173k from Kodak dividends since 1986.
Eastman Chemical shares would have churned out $47k in dividends since the spin off and the market value of the shares would be $203k

Every market scam has been applied to Bitcoins , pump and dump to outright theft.

Six hundred bitcoin mining computers stolen in Iceland

Behold the Kodak KashMiner :pac:

Ipso · 12-09-2018 9:19pm

What are the shoe shine boys saying about bitcoin?

JJJJNR · 12-09-2018 9:27pm

JohnnyFlash wrote: »

That's a very valid point. The huge wave of hysteria that emerged in December and January was very fascinating to watch as a filthy statist no-coiner. From a human psychology perspective. The complete lack of critical thinking, the greed, the strong bang of libertarian codswallop running through the entire space. Mania, exuberance, and despair. There's definitely a few documentaries and movies going to be made about the entire space.

I mean there were coins valued at tens of billions of dollars that had no business model at all. Worth multiples of what companies like Uber and AirBnB raised during their venture capital rounds. Some of them copied the bitcoin code, changed a few variables, and went up hundreds of percent overnight.

Ethereum is still worth 17 billion dollars if you believe market cap (I don't by the way - think almost all the real money has left the system, and what is left is trading bots using fake dollars to milk the last of it remaining in the system). It had about 4000 users yesterday using the distributed apps built on it. Most of these are gambling sites and pyramid schemes built on a pyramid scheme. Through the looking glass.

Blockchain as a tech may have some niche use cases. IBM have their hyperledger technology which you could speculate may find traction in some industries. But it's a private blockchain, so it's not decentralised. You cannot have security, scalability, environmental sustainability, and decentralisation. There's no zero-trust model that allows for all 4. It's quite an old computer science problem. Blockchain doesn't solve it.

Finally, the impact of bitcoin on the environment is worth mentioning. It now uses more energy than Ireland, Austria, and Finland do. It uses more energy that 1 million transatlantic flights - planes, not people. It's a complete fiasco. And for what?

Bitcoins obviously

12-09-2018 9:46pm

Deleted User wrote: »

I've been pretty wary of Bitcoin though my brother has got a few and is up a lot. He doesn't have any interest in buying or selling anymore.

On Reddit, I've seen this idea that you've just stated.. "May as well hold on to them." I disagree. The best thing you can do at any time is buy what you think will do best in the future, because it's bitcoin. The value is meaningless so there is no underlying reason to hold, other than to gamble. With regular stocks or something like a biotech, holding can make sense, but with arbitrary values, what's the point.

Holding now makes absolute sense imo. What’s the point in selling now when you have lost 2/3 of what you invested for example? If you sell now you definitely aren’t going to recoup anything whereas at least if you hold you have some chance if things do recover. I’d rather risk losing the bit that’s left rather than realise a big loss by selling.

JohnnyFlash · 12-09-2018 10:00pm

Donovan Shapely Adventurer wrote: »

Holding now makes absolute sense imo. What’s the point in selling now when you have lost 2/3 of what you invested for example? If you sell now you definitely aren’t going to recoup anything whereas at least if you hold you have some chance if things do recover. I’d rather risk losing the bit that’s left rather than realise a big loss by selling.

Zero-sum stuff. Game theory and probability statistics 101.

Rats flee a grounded ship.

Austria! · 12-09-2018 10:05pm

I'm not saying you're all wrong, but there's been a lot of bitcoin obituaries that didn't age well.

JohnnyFlash wrote: »

Ethereum is still worth 17 billion dollars if you believe market cap It had about 4000 users yesterday using the distributed apps built on it.

Internet use was under 4000 people at one stage too. No one is valuing this based on its current use.

JohnnyFlash wrote: »

You cannot have security, scalability, environmental sustainability, and decentralisation. There's no zero-trust model that allows for all 4. It's quite an old computer science problem. Blockchain doesn't solve it.

Proof of Stake/sharding intends to solve it. Maybe it's not possible but there are some very smart people working on it so clearly they think it is.

Irish Kings · 12-09-2018 10:08pm

Ipso wrote: »

What are the shoe shine boys saying about bitcoin?

They're saying may as well hold onto it to see what happens.

Almost no one has bought bitcoin because they need to use it, or because they want to use it. People bought it in the hope of selling it when the price goes up sufficiently, but the big boys and early buyers were waiting on the masses to start buying it for speculation purposes as well, so they could cash out. It's a classic bubble. Yes people in the know early and willing to gamble can make huge amounts of money in a bubble, but only those people who are in early enough and able to sell on early enough to the loosers. Reminds me of the time everyone in Ireland thought they were going to get rich selling houses to one another.

You can do exactly the same stunt in a pub any night of the week on a small scale by selling beer mats to one another.
Same principle as any pyramid scheme.

wally1990 · 12-09-2018 10:21pm

Irish Kings wrote: »

They're saying may as well hold onto it to see what happens.

Almost no one has bought bitcoin because they need to use it, or because they want to use it. People bought it in the hope of selling it when the price goes up sufficiently, but the big boys and early buyers were waiting on the masses to start buying it for speculation purposes as well, so they could cash out. It's a classic bubble. Yes people in the know early and willing to gamble can make huge amounts of money in a bubble, but only those people who are in early enough and able to sell on early enough to the loosers. Reminds me of the time everyone in Ireland thought they were going to get rich selling houses to one another.

You can do exactly the same stunt in a pub any night of the week on a small scale by selling beer mats to one another.
Same principle as any pyramid scheme.

I’ve invested in crypto currencies for the main reason of believing in the technology behind bitcoin and the uses it can bring in the real world in years to come..

It’s early days and within the next 3-5 years we will probably see monumental movements and strives in the industry.

At the moment the monetary use of bitcoin Is non existence / pretty much which as I understand is point for this alternative currency , will it ever become a main stream currency ? Probably not ,/ nobody really knows

or it will take a very long time but we are onto something with the block chain technology

I do believe that industries will see the potential here and it will disrupt the commercial markets in years to come

JohnnyFlash · 12-09-2018 10:27pm

Austria! wrote: »

Internet use was under 4000 people at one stage too. No one is valuing this based on its current use.

Proof of Stake/sharding intends to solve it. Maybe it's not possible but there are some very smart people working on it so clearly they think it is.

Yes, there are very many clever people working on blockchain solutions that don't involve using as much electricity as possible to prove how much you care about making money from it. (All PoW solutions are ethically repugnant)

Proof of Stake, Byzantine fault tolerance, least trust models have all been proposed. This stuff isn't new. Merkle Trees have been around since the 70's. The maths behind all this is very simple. It does not scale though. Any 'off-chain' solution will be a database.

This is a classic case of an abstract solution not mapping to real world usage. Like Jorts, Communism, or Adidas Predator football boots.

StinkyMunkey · 12-09-2018 10:46pm

I know nothing about bitcoin apart from what the average joe does.

My understanding of pyramid scheme is, the first few investors make a killing. Then everyone invests and loses their bollox.

Maybe I'm as dumb as a stump, but no one seems to be able to fully explain what a bitcoin is and exactly what makes it worth anything fully.

Bitcoin to me seems like the biggest scam in the history of the world after religion.

What exactly is there to stop a bitcoin becoming worthless and the arse falling out of the whole thing? Can anyone explain that to me.

Bitcoin to me is a pyramid scheme for the tech savvy generation.

If it sounds to good to be true, it generally is.

That said, wish I'd been in at the start of the bitcoin scheme and bailed near its peak.

12-09-2018 10:55pm

JohnnyFlash wrote: »

Zero-sum stuff. Game theory and probability statistics 101.

Rats flee a grounded ship.

There is no grounded ship there. The probability of the top coins rallying again is higher than them completely tanking to 0.

I bough this coins with holding them for a fairly long time to see how high they would go, because they have dropped a lot doesn’t change that plan.

Your total obsession with being anti-cryptos is farcical at this stage.

Breaky Bitcoin Blues

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