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Investments in Crypto currencies

Discussion in 'Money Matters' started by Jerseymarc, Feb 8, 2021.

  1. Aromulus
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    Aromulus The Don Staff Member

    ???

    I cannot make my mind up on how to decipher that comment. o_O
    • Funny Funny x 1
  2. oss
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    oss Somewhere Staff Member

    Yeah he is right :D but my point is that he feels he is not protected if he can't do that :D that implies that he's not confident in the online security of his crypto currency in the first place :D

    I read the other day that right now Bitcoin is using as much electricity as the whole of Argentina, this may or may not be accurate but the power use is substantial and that is only ONE cryptocurrency, so I have additional reasons not to like it apart from just the trust and confidence issue.
  3. ChoiAndJohn
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    ChoiAndJohn Well-Known Member Trusted Member

    You have a point. @oss Personally I think all these blockchain-secured currencies were just a solution to a problem that didn't exist. There is nothing actually wrong with the current currencies that we have.

    At work, loads of people keep trying to think of uses for blockchain. I like this diagram from David Birch personally:

    [​IMG]
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  4. Jerseymarc
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    Jerseymarc Member

    Just like stocks etc do people invest because they like the company or to make money? Some people invest in crypto long term because they believe this will be the future. Others buy hold for days, weeks or months and sell. To say you can’t buy anything, does it matter? I’ve never had problems with banks, sending or receiving. Banks and governments have already excepted cryptos (capital gains tax) Crypto can easily be converted back to fiat instantly if you wish. Too much money and big companies involved for it to die, just my opinion.
  5. Jerseymarc
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    Jerseymarc Member

  6. ChoiAndJohn
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    ChoiAndJohn Well-Known Member Trusted Member

    People always invest in the hope of making more money. That's the difference between an investment and a gift.

    No. Governments have not 'accepted' cryptocurrency they have just quickly moved to assess taxes on monies originating from any investment in it. Its not correct to consider that to be acceptance.

    The concept will die if (and probably when) governments ban exchanges because if there is no way to exchange crypo & real money it will have no relevance.

    I would also point out that most of the bitcoins that exist are defined as illiquid. There is not enough liquidity in the exchanges to support them. In other words, not enough bitcoin is circulated to allow you to actually convert it to real money in an exchange. All these people who have built up vast portfolios of bitcoin in the hope of selling and becoming rich will have a nasty shock when actually trying to convert their bitcoin back to hard currency. Given that mining coin actually creates currency in an uncontrolled manner that therefore makes problems of its own in the financial system. Its not a viable long term system in its current form.

    Currency control is central to financial planning and fiscal policy. Why do you think governments limit the cash you can take out of the country?

    There is just no way - absolutely none - that any responsible government is going to allow a digital currency to really flourish and replace its own. How could the United States maintain sanctions on certain countries (which includes bans on financial transactions and currency exchange)? How could interest rates be set? How could inflation be controlled? How could the currency adapt to the different economic conditions in each country? Bitcoin as a global currency and the future is way more of a pipe dream than having one global hard currency.

    This utopian world with people paid in bitcoin and with no need for banks? Shops accepting it? No need for a bank account? Buy your house with it? This is a dream peddled by nerds who watch too much sci fi and don't get out enough.

    It's just not going to be allowed to happen. Governments and central banks go to enormous trouble to control money and their own currencies and they will not allow a digital currency to interfere with that process. There is no choice but to control this technology and it will just take a handful of pieces of legislation and it will be stone dead.

    The core problem with crypto is that the world doesn't actually need it right now. The only way it would flourish in my opinion is after the whole world actually agrees to a single currency and its in operation. That would be nice but I can't see it happening. People in Europe couldn't even all agree on using the euro.
    Last edited: Feb 19, 2021
  7. ChoiAndJohn
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    ChoiAndJohn Well-Known Member Trusted Member

    I also would make one last point. Remember when the Internet was invented and people raved about information for all and without limits or censorship? You will notice how the realities of government are starting to affect the Internet. Yes - there is censorship - yes there are rules on what you can post online - yes there is monitoring - yes there are sites you can't visit and things you can't see - and yes you can go to jail for breaking the rules. Did people in the 1990s visualise that people would go to jail over characters they type on a keyboard? Nope. But it happened anyways because government is all about control.

    Now governments are pondering breaking up or controlling Facebook, twitter and social media.

    Government just takes a long time to react to change that's all - but sooner or later cryptocurrency will be controlled.
    Last edited: Feb 19, 2021
  8. ChoiAndJohn
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    ChoiAndJohn Well-Known Member Trusted Member

    You might also want to research what other knowledgeable people think about bitcoin and cryptocurrencies. Bill Gates for example does not own bitcoin. Warren Buffet meanwhile refers to bitcoin as 'poison' and a 'worthless delusion' that will come to a bad ending.

    https://markets.businessinsider.com...nvesting-rat-poison-squared-2021-1-1029974898

    So in summary to the OP.

    'is cryptocurrency a good investment?'
    No. Its a risky gamble. That's not to say that you shouldn't have a dabble. I've messed with cryptocurrencies - but don't do it with money that you can't afford to lose - and don't get your hopes up that you're gonna get rich.
    Last edited: Feb 19, 2021
  9. Jerseymarc
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    Jerseymarc Member

    You my friend have a lack of understanding, I would suggest you do your research. I’m not here to argue or convince anyone. I guess if you’re stuck in your ways like Warren Buffet or Bill Gates that’s your choice. Personally I would expect bitcoin and the likes to correct 70- 90 % and many will be losers. I can only speak from my own experience, which has been very profitable. I like you will not change my mind. I’m not going to answer outdated questions, that may have been valid a few years ago.
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  10. ChoiAndJohn
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    ChoiAndJohn Well-Known Member Trusted Member

    I have a lack of understanding of currencies? That's funny. I worked in investment banking for years. Maybe your encounter with crypto has been profitable. Well done. That doesn't mean that it's a good investment, or that the concerns about liquidity, currency control, interest rates and anything else don't matter - just because you don't understand them.
    Last edited: Feb 19, 2021
  11. PorkAdobo
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    PorkAdobo Active Member

    If anyone thinks the concept of Crypto is going to disappear, then I think that is a lack of understanding.

    Without doubt, some of the cryptos floating around are going to end in tears. And what is the ceiling for BTC? Lord knows. How is a numpty like me supposed to make a rational judgement on that? But by the same token, how am I supposed to make a rational judgement about some shiny metals that humankind has valued for so long? Gold and diamonds are historically valuable only due to humankind's vanity.

    Gold and diamonds are desirable because we all believe it has a value, but we can make fake things that look like it with no issue. And the supply can be changed with the surprising massive find of gold in Turkey last December, whereas the amount of BTC in the world is known.

    At the end of the day, so many things of value (gold, currency, BTC) are magic beans - they are only worth something because we all go along with it. That’s not to say one of them won’t implode in value, but its digital nature is the only thing different about BTC.
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  12. ChoiAndJohn
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    ChoiAndJohn Well-Known Member Trusted Member

    I see your point however bitcoin and other e-currencies do not satisfy the test for a currency, they have zero intrinsic value. Their 'value' is derived like a pyramid scheme from persuading other people to buy it. The fact that the vast majority of bitcoin is illiquid is a huge red flag. The 'value' of bitcoin also fluctuates widely in a manner that does correlate with any financiak index or indeed gold, which makes it extremely difficult to hedge and manage risk. It does not behave like a currency. It behaves like a speculative bubble - because that is what it is.

    There is no point accumulating a "currency' that you can never sell (due to poor liquidity) - apart from to another speculator - and which you can not widely exchange fot goods or services. This means that anyone choosing to dabble in bitcoin accepts huge and unpredictable risk.

    Another risk is that governments will legislate against the exchanges, as they must - and as some countries have already done - and the bubble will burst. The main reason that people are interested in bitcoin at all is because its a bubble and people see the chance of making a quick buck from fools who don't understand basic economics.

    There is an old saying in finance. 'if you don't know who the fool in the market is - then maybe you are the fool in the market'.

    Finally, it is naive to speak about bitcoin in the same terms as drug store hobby investors speak about other currencies or even stocks or other commodities. They are not the same in many important ways. Bitcoin and other e currencies are a speculative gamble. Not a true currency and certainly not equivalent to a commodity such as gold.
    Last edited: Feb 19, 2021
  13. Jerseymarc
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    Jerseymarc Member

    Lack of understanding in crypto currencies yes. Sorry to say that most people that invest or trade bitcoin wouldn’t be asking advice of an investment banker.
    Last edited by a moderator: Feb 19, 2021
  14. Jerseymarc
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    Jerseymarc Member

    9o% or more of these crypto’s will disappear for sure.
  15. ChoiAndJohn
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    ChoiAndJohn Well-Known Member Trusted Member

    Precisely my point. There are gullible folks with no real understanding of markets in every market. Its thanks to people like this the bubble exists at all.

    If you believe that somehow the principles of enonomics don't apply and that bitcoin is a magical money machine then you keep on believing that and good luck to you.

    You asked for an opinion. I've given you one, based on many years of financial experience that you don't have. If you disagree I can't say it bothers me much. :)

    Edit. I also read one of your earlier posts and laughed. Large institutional investors see bitcoin as safer than the dollar? What a load of total horse-twaddle. I am very sorry but you have no idea what you are talking about.
    Last edited: Feb 19, 2021
  16. PorkAdobo
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    PorkAdobo Active Member

    Long term, BTC will not be this infinite magical money machine that current trends would lead you to believe. Eventually, it will reach its ceiling and probably behave similarly to how currencies currently operate. Even if central banks put a restriction on crypto, there will always be a black market. The convenience of crypto not just for the mafia but ordinary people who want a non-governmental organised financial instrument will always be strong.

    Those who were early adopters have struck a gold mine. I have joined in the middle of the race and only invested what I can afford to lose. I'll do alright out of it, but nothing life changing. Maybe it'll cover the ILR application in 3 years time (and also assuming that she does not initiate divorce proceedings before then)?

    When BTC reaches its ceiling and then flattens out at a more realistic level, I suppose people who join the party at that stage will have a shock. Will that happen this week? This year? Who knows. I think we are still someway off reaching BTC's true value.
  17. ChoiAndJohn
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    ChoiAndJohn Well-Known Member Trusted Member

    This is all opinion and I'm sorry to say it but its wishful thinking. If you knew how assets are actually valued you would appreciate how ludicrous your statement is. Every consider how a company is actually priced? Or why a bond is priced how it is? Hint. Its not intuition or wishful thinking. Its mathematics.

    Bitcoin is not claiming to be a simple payment processor to increase convenience. We already have PayPal, western union and dozens of others. It's claiming to be a currency. And that's ridiculous because it doesn't meet enough criteria to be a currency.

    Another problem is the ridiculous current assessment of 'value'. This is a problem in an unregulated immature market with few players. It all will end in tears just like the tulip craze did.

    https://en.m.wikipedia.org/wiki/Tulip_mania

    Bitcoin is a bubble driven by speculators. The end.

    Anyways I've had enough of this thread. You can only say so much to people who don't want to listen and if you believe that your snake oil and wishful dreams are more valid than financial knowhow and economics then good luck and enjoy. I hope you get rich. :)
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  18. ChoiAndJohn
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    ChoiAndJohn Well-Known Member Trusted Member

    PPS. This link will either encourage you to speculate, or will highlight the risks I mentioned, depending on which parts you ignore and which parts you pay attention to. A decent article:

    https://amp.abc.net.au/article/13158596
  19. PorkAdobo
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    PorkAdobo Active Member

    That article was fair. Crypto is absolutely not without risk. People, governments and financial institutions are still figuring it out.

    Something I haven't mentioned before is that the lawlessness of crypto is one of the advantages, but also a huge disadvantage.

    My wife had a few hundred quid invested via Coinbase. Verified account at the outset and linked to her bank account. Everyday, she looked on in glee as her balance went up and up. And then she decided she wanted to dabble a little more. XRP had some difficulties with the US authorities, and the price hit the floor. This way with a quick £50 flutter to see what happens.

    Except she could not. The account was suspended for new transactions! Wtf?! All she had ever done was her initial investment and nothing else. We had no email or message from Coinbase at all to let us know something was amiss. Getting an answer from Coinbase was more trying than getting a non-canned response than the Home Office. I eventually read several horror stories of a similar vein. Withdrawals still worked, thank God, so we effectively closed the account. Didn't want to risk Coinbase deciding she was a terrorist or something and seizing all the funds!

    She now has an account at Binance. She has been delighted watching her XRP nearly quadruple in value, alongside her BTC stash.

    Certainly for Joe Public users of BTC and other crypto, the risk of your exchange doing a runner with all your money is the biggest risk. I think that risk is more serious than the bubble popping (which In think will be a few years down the line).
  20. Anon220806
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    Anon220806 Well-Known Member

    The paradox of value. Or the diamond water paradox. It was a Filipino that drew my attention to that in a significant way.

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