Seriously, some time ago you could debate if you're an early adopter (winning from a raise in the bubble even if it pops later) or a laggard who'll only lose in it; but if you're investing after a random taxi driver has taken a mortgage to do so, then (hint-hint) you're not one of the early ones.
[1] https://steamcommunity.com/games/593110/announcements/detail...
What bitcoin is useful for is simply as a store of value -- as digital gold. In that regard it is working perfectly. It is a well defined property right on a good with limited quantity.
Given that there will be way fewer transactions for a store of value than for a currency, I am not as concerned.
Further, it makes sense for its value to soar as more demand increases for it as a store of value. I'm not saying it isn't a bubble -- it will likely correct at some point. But long term I think it will still hit $100K to 200K per coin given the limited supply and still increasing group of people who will use it as a store of value.
Investments have a 'Store of value' feature by default built into them.
For Bitcoin to be viable its value has to endlessly increase over time. Or you are simply better off storing your cash beneath your mattress.
Well, what else could it be?
I think slowly selling on the way up is a good strategy. For example everytime it doubles you sell 10% or 20% (depending on the risk you are willing to take). At https://bitcointalk.org/index.php?topic=345065.0 there's a better description of this approach and at http://bitcoinsavingsplan.com/ there's a calculator to check scenarios with different numbers.
Any other better approaches?
If I lose the current amount, i won't care and every time it goes to high, so I would care. I just go out. I don't need to stress about it and I don't have FOMO, because I have some.
Also, I set/adjust my limit orders every 3-4 days and hope one hits.
Timeouts and software glitches are hardly the point here. You can't sell it, unless you have a buyer. And you won't have a buyer because every one is trying to sell it. You are forced to hold it, because what else can you do?
As for your strategy, if it really keeps doubling, and you only take out 10-20% per doubling, you'll end up with 90% of your net worth in bitcoin, which seems unreasonable. But that comes down to a question: even if you give it high odds that it will continue to go up, if you're not certain of it, then you should probably want to accept some risk of losing future gains to avoid some risk of losing what you have.
If you are certain it will go up...you have bad judgment.
I decided to try to minimize my future regret. So I sold some, and kept more, and as it kept going up I sold more.
There's only one thing I regret: It reached a price that I thought was really sweet at the start of December (I don't remember which year). It was a really tempting price, but I didn't sell because I would pay too much of the gains in taxes. I wanted to wait until next year, when more of the profit would be in a lower tax bracket. Two days after I decided that, the price dropped dramatically.
The early transactions were at a much lower conversion rate so they would be of larger BTC that tended to raise the average $/txn. But if Bitcoin as a payment network were growing exponentially, we would expect a large proportion of transactions to be relatively recent and at recent valuations.
So either: A. Bitcoin is used for transactions of over $1000 on average, or B. speculation is driving up the valuation far beyond its utility.
In either case, it's clearly not about frictionless microtransactions anymore.
I mean, if I had made a killing out of the various petty crimes available to public officials and wanted to retire on that, what's my other option? Trying to ferry precious gemstones through customs?
I'd take the transaction fee, the challenge would probably be finding an exchange that would let you cash out that kind of money.
This is something I just don't understand about Bitcoin's value proposition.
> what's my other option?
I hear Oriental rug import businesses are popular.
> the challenge would probably be finding an exchange that would let you cash out that kind of money.
Even if, I hear the IRS is requesting transaction records from the major exchanges.
What's involved in processing a transaction?
https://en.bitcoin.it/wiki/Proof_of_work
I'm not well-versed on any of this, so I might be wrong.
"I thought of how Henry Ford called his broker and instructed him to 'sell everything' when his doorman or elevator-operator (anecdotes differ in detail) started telling him about stocks in 1929."
I got into Bitcoin back in 2010. Unfortunately I only have a small percentage of my Bitcoin "fortune" intact, having cashed out most of it below $100.
I'd buy them for shits and giggles but the transaction costs are ridiculous.
It's not wrong, buuuuut....
1001101's person is betting that it will, and I agree that it's a possible outcome. Wouldn't put all my eggs in that particular basket, but hey, maybe I'm wrong.
Thanks for sharing.
Whereas before those millionaires may have been reluctant to open an account with (i.e., send all their identity documents to) some unregulated crypto exchange, they already have brokerage accounts that can now or will soon be able to trade them.
All just to make up for somebody's bad investments?
If you want to know how stingy people are with their money, you have to only look at how they think about paying taxes.
Stop calling them tulips. The most “educated” answer is that you don’t understand them. Stop pretending you do. A thing like this is the first off, many rules of economics don’t apply.
"The price of land is solid, they aren't making more of it" - 2007
Tragedy of the commons. Even if I "want" the price of bitcoin to go up, any dollar I invest in Bitcoin will only increase the value that I actually capture by an infinitesimal amount.
No.
Once everyone is invested the pool of potential new investors has been exhausted and the bubble pops.
Bubbles are generally about Human psychology not about the underlying asset. Tulips, student loans, homes, internet domains, websites etc etc.
The problem there is really Human psychology. For that matter people still continue to take student loans, buy homes, buy tulips or whatever. Its just not at the bubble prices.