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Comment by avgDev | Hacker News Reader

I used to ride on the crypto hype train. Made quite a bit of money from btc. However, it is too risky of an investment. Most people that push crypto sound like pyramid scheme people.

At a party dude was telling everyone to invest in btc because it is the future, and it was $14k at the time. I explained that it is very risky and volatile and dude would just ignore whatever I was saying, even though I mined many cryptos, bought btc for 1 penny and had a better understanding of tech than him. 3-4 months later crypto was back to $6k and he never mentions it again with me around lol.

The point is many crypto businesses screwed people over (MtGox). Many people lost fortunes from private wallets due to malware, forgetting pw.

If I pay with a credit card I have level of protection. When I put my money in a bank the money is insured. Crypto is simply too risky as a way of storing money and trading.

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A serious % of btc is near pure cult. So much time and energy wasted for the prospect of quicksilver it's insane.

The value of any particular coin is pure marketing. Anyone can start a coin. There is literally an infinite supply. The only thing giving them vale us popularity, and marketing is what drives popularity.

Token price speculation (aka "crypto investing") is much more about marketing than it is about technology. This is why you see cult-like marketing attempts.

I'm not thinking of marketing attempts, more about the behavior of people. All monitoring that weird curve and doing random acts to grab bonuses nervously. Making up theories on the fly about what is going on or not. Listening to those who had luck or were there since long ago.

Another aspect, gambling (because most of it [trading] is gambling) can have immense distortion power over your brain. When you have money and high frequency random noise .. you're in for a nice emotional rollercoaster.

This note is legal tender for all debts public and private.

Is not pure marketing.

Fiat currency gets value from the fact that it is legally required ('by fiat') to use. There is no such requirement for tokens.

It's amusing how confused come of the cultists are at the price dropping with no reason, forgetting that it went up with no apparent reason either

Ignoring all of BTC's significant issues for a moment, there are a lot of groups in Bitcoin. One of those is the fairly average, tech-savvy want-to-be-investor, who has a little bit (but not a lot) of disposable income and wants to do something with it that's better than the 2% annual yield of ... pretty much everything else.

With BTC, you could buy in at almost any amount, get out whenever you wanted, and transfer fees were pretty low. Those aren't common traits for most other investment vehicles.

It's kind of a side effect of so much capital being locked up in a smaller and smaller percentage of the population. The folks closer to the bottom are clawing at anything that might improve their situation a little, even if it comes with a lot of risk.

The S&P 500 has a ~10% annual return (7% adjusted for inflation) as a historical average. 2% is what you can get in a savings account with no risk at this point.

Index funds/ETFs allow anyone to invest in the stock market starting with small amounts of money.

It's shocking how much of that gets eaten up by investment fees when you're only investing a small amount of money.

It's also amazing how small investment fees can become.

If you're losing much of that to fees, you're investing in the wrong funds with the wrong firms. Vanguard, Fidelity, Schwab: no fee, low-expense ratio total market index funds. In my target retirement fund, I'm paying $16 per year per $10,000 invested, and that's not the lowest ER fund you can find.

Many employees find themselves forced to select between a narrow selection of mutual funds from their employee provided RSP.

Unless they forego their employee contribution to the RSP, they have very little flexibility.

Low quality fund options in employer provided retirement account are a problem, but in the U.S. you can roll it over into a self-controlled IRA at whatever provider you like once you change employers, so for most people the number of years it'd be subject to those higher fee funds is not too high, at least.

I completely agree with everything you said.

But not everyone can do a triple flip with a half twist while navigating the financial system.

i.e. I think I reworded my original comment in reverse.

It's not very complicated at all, the issue is more a lack of education. Online personal finance resources and communities help a lot, but people still have to know to seek out that information.

And bitcoin has made 100000% in 9 years. Its all a matter of timing.

Bitcoin is up quite a bit, but it's total returns are negative as every dollar out is a dollar someone else up in and mining + transfer fees is a huge expense.

It's possible to win big at negative sum games, but by definition not everyone can.

One is investing, one is speculation/gambling.

Some people got very lucky. Some people lost their life savings.

In the stock market with diversified investments, even if the market crashes, historically you would have always recovered and then some within not very many years so long as you didn't do the stupid thing and panic and sell during the crash in an attempt to time the market.

«In the stock market with diversified investments, even if the market crashes, historically you would have always recovered and then some within not very many years so long as you didn't do the stupid thing and panic and sell during the crash in an attempt to time the market.»

Same with Bitcoin. There is no difference between the all-time SP500 chart and the all-time BTC price chart. In both cases, historically anyone who holds long enough ("within not very many years") eventually makes money:

• https://dividendtotalreturn.net/wp-content/uploads/2017/08/C...

• http://bitcoin.zorinaq.com/price/

I'm not saying people should dump their savings into BTC, just that your argument isn't a good argument to defend the SP500. An SP500 index fund is great for other reasons, namely: it has a great track record and you can't really go wrong with investing in ~500 of the biggest American companies.

This is a pretty ridiculous argument to throw your weight behind given that there is a significant difference in timescale: 61 years vs. 9 years.

...which is why I said it had a great track record :) The problem I had with your post is that you implied long-term BTC holders were not recovering their investment, which is plain wrong.

That wasn't my intended implication, I was suggesting just that in the long term there's a far greater track record of positive growth in the traditional stock market compared to Bitcoin.

That would depend on if you had a basket of stocks representative of the whole market and rebalanced your portfolio throughout a downturn (not common at all). Companies can and do go bankrupt. Historically, the same has been true of Bitcoin, where it always recovers to a new base.

Throughout this conversation I've been referring to index funds and the S&P 500.

Usually that same % doesn't understand the tech AT ALL. They repeat the same koolaid about "Money not managed centrally by the government"

Honestly I don't know. What part of bitcoin has any meaning in relation to trading ? Some people go deep, they understand pools, fees, advanced in ASICs, advances in bot tricks .. yet it feels super random.

> Crypto is simply too risky as a way of storing money and trading.

And when its not risky the price will be higher because so many other people will be storing and trading it safely.

Thats the real bet.

If it fits your risk profile then you have it, and probably have had it since 2012 because the fundamentals were the same then as they are now. If you weathered the risk back then you'll weather it now where its a lot less risk.

And if today's lack of risk still doesn't fit your risk profile, then you have to wait. Simple.

> If I pay with a credit card I have level of protection. When I put my money in a bank the money is insured. Crypto is simply too risky as a way of storing money and trading.

People actually realize that an anonymous, autonomous & decentralized system is not always desirable.

I've been a crypto investor started in 2013. I narrowly avoided MtGox by withdrawing my Bitcoins from it right when the rumors about withdrawal issues started.

If you have the efficient frontier model in mind, then you should know you shouldn't put too much money into it because the volatility of it is insane. My small early bets in Bitcoin and Ethereum worked out because the volatility turned out to work in my favor. But if they did go to zero it wouldn't have mattered much anyway. There're still other non-crypto stuff (e.g. tech stocks, ETFs) I invest into.

There're known ways to make risky investments work in a portfolio in the finance world - or else VCs wouldn't exist, coz nobody would give money to a VC to begin with. It's also a fact that most in the general public don't know about it. As a result, many public investors would see a Bitcoin as the same as a share in Google or Facebook - something to put money in. While in fact the attitude you take for each of these should be very different.

This would actually quickly lead to questions like how to protect public investors. Sure when Bitcoin drops or a startup fails everyone would be angry and people's instinct is to ban it, or at least make it available only to sophisticated investors. But then when things go well people would complain that only the VCs and hedge funds have access to the best investment options. I think the solution to this all is really investor education (modern portfolio theory isn't super complicated math) and better transparency. The latter can be done with better regulations of exchanges and ICO issuers. But the former has a long way to go.

«If I pay with a credit card I have level of protection. When I put my money in a bank the money is insured. Crypto is simply too risky as a way of storing money and trading.»

As always, the reality is not as black and white as you present it. Credit cards and fiat money certainly have advantages but they also have many drawbacks. Just to name a few: credit card fraud eats into merchants' profits, international money transfers are slow and crippled with high fees, bank accounts or cash can be frozen or seized by authoritarian governments, hyperinflation destroys savings, etc.

There are use cases where crypto adequately solves some of these problems that neither credit cards nor fiat money can solve. And, yes, crypto comes with a different set of drawbacks but that doesn't mean crypto is "too risky" for anyone to do anything with it.

Your assessment from investment side is sound.

Although I'd like to point out that bitcoin is now a rather small fraction of the whole spectrum of crypto economy.

Bitcoin as a main-stream pioneer served its purpose well, and now the focus is actually to provide equal-quality infrastructure for crypto to become a meaningful candidate for future economy.

That prospect certainly does not warrant the hype and money currently in the area on a case-by-case basis. But any such large-scale changes have to have a phase of rampant lock-in of wealth from general public so the society as a whole commit to support the development of the technology for some minimal amount of time.

I actually no longer regret my negligence to bitcoin, which for anytime between 2009 and 2014 can help me make a fortune from complete financial freedom to a year of income, now I see the society have committed a good amount of resources; and a substantial fraction of people are aware of the concept. It's not the time for engineers to start work hard and build the actual infrastructure.

That hopefully can deliver the actual value!

"Although I'd like to point out that bitcoin is now a rather small fraction of the whole spectrum of crypto economy."

What? It's over 50% of total crypto market cap. And a huge chunk of the altcoins are barely liquid.

A bit pedantic, but Bitcoin is a hair under 50%, unless you count Bitcoin Cash with it (about 4%)

I was looking for a chart of that actually, what is your source? My point was also, a big chunk of alts do not have a super liquid market, makes it hard to count them seriously in all aggregate market cap.

https://coinmarketcap.com/charts/#dominance-percentage

I do of course agree with your overall conclusion - Bitcoin is still the most dominant, it just doesn't have the majority of market cap (since late 2017)

>Although I'd like to point out that bitcoin is now a rather small fraction of the whole spectrum of crypto economy

Sure, if you're calculating market share using the metric "how many crypto coins exist?", which makes no sense.

No, just by the metric of market caps of fairly liquid coins (btc, bch, eth, sia, etc.). Bitcoin is the minority coin now.

Bitcoin has always been the largest coin, and in fact has increased it's dominance by ~20% this year.

Scroll to the botttom for the chart:

https://coinmarketcap.com/charts/

BTC is, by a _vast_ margin, the largest liquid coin, representing a hair under 50% of the market. So... what are you talking about?

Under 50% is the definition of minority.

For example, California is now minority-white, in that “white” is the reported ethnicity of less than 50% of the population, despite being still the largest sub-population.

Yeah, well there's no other coin out there which even approaches BTC's share, so calling it a "minority coin" is a bit disingenuous. You make it sounds like there are bigger players out there, which there aren't, and the entire point of your initial comment was to downplay the importance of BTC.

>Although I'd like to point out that bitcoin is now a rather small fraction of the whole spectrum of crypto economy

So really, a "rather small fraction"? c'mon.

Look, I don't know what to say. How is it disingenuous when it is the very meaning of the word? Now matter how you slice it, bitcoin is no longer a majority of whatever metric you use to measure crypto assets.

How about "plurality coin"?

I completely agree with you, but that guy could now point out that BTC did go beyond 14k and it may do in the future. Making him "right". That being said, I've encountered what you describe as well and it's mildly disturbing

It definitely attracts 'wrong' kind of people, but that doesn't mean idea is bogus. It needs more legitimate uses.

When there’s volatility there’s “alpha” to be had. If it was a flat lined chart, then no one would gain or lose which means 0% yield for an investment (my math could be wrong /s ).

The question is if you’re sophisticated or lucky enough to ride the variance on an upward direction.

Which is why it's not a practical currency. If it's a speculative investment I have many other options.

Cool.

What does that have to do with the SEC postponing its decision on whether to approve VanEck's ETF backed by Bitcoin, specifically?

That some of the recent gains are part of that same hype train, and the slump in light of recent ETF denials/delays is part of the same usual cycle.

> specifically

Bitcoin was already at 7500 much lower than its peak days before the decision

I'm aware. What makes the parent comment particularly relevant to VanEck's ETF vs all other threads about Bitcoin?

It's relevant to both. Put another way, there's nothing special about the VanEck ETF; it's just another (and there will be many more) piece of news in Bitcoin that drives up, then drives down, the price. To your bigger, implicit point, that the comment doesn't belong because it's not completely relevant, if we assume that's the case, that's the nature of a forum. How many Apple conversations dare to have comments about how the MBP isn't for developers, etc, regardless of the original point?

You're comparing the parent comment to other irrelevant comments elsewhere, in implicit agreement with me.

This article is about a specific ETF. How many people upvoting the parent comment understand that, say, the Winklevoss ETF was set to 0.01 BTC per share, whereas VanEck set each share at 25 BTC (which is something special); let alone the implications of such a difference?

I think it's been established on HN that Bitcoin = bad, we don't need to regurgitate the point on every thread about it. I come here for nuanced discussion, if I wanted black and white thinking I'd be reading plebbit.

Aside from the share size, none of the concerns brought up in rejecting the Winklevoss ETF have changed. How would the share size impact the SEC's decision in this regard?

A good point made on /r/bitcoin was that the SEC has access to the DOJ, even if through unofficial channels. The price manipulation inquiries have yet to be resolved. If the SEC gives the go ahead, and the DOJ inquiry results in negative price action, those who invested in the ETF, which likely includes institutional investors, take it square in the mouth after assuming all was safe due to the SEC action.

>How would the share size impact the SEC's decision in this regard?

Critical to the SEC's decision is investor access to the products, so that less knowledgeable investors are protected from unsound investments.

A higher share price restricts access to wealthier investors, the type that meet the SEC’s requirements for accredited investors.

That is just one difference between this ETF and the Winklevoss one, you were unaware of it (and the implications) but still regarded VanEck as not "special," further highlighting how pointless generic "Bitcoin = bad" comments are on threads about specific topics.

> You're comparing the parent comment to other irrelevant comments elsewhere, in implicit agreement with me.

No, I'm implicitly agreeing with the HN community: comments that are considered valuable are voted up, without any need for relevancy police.

>comments that are considered valuable are voted up

I don't believe you're naive enough to believe this is the whole truth.

If you are, take a look at this thread, where the parent comment (that you compared to other irrelevant comments) is the most upvoted.

Difference between what's considered valuable and what is valuable. Most communities lean a certain way. To little surprise, this community is also pro-open source and against the current US administration. My point is that whether or not a comment belongs is a product of the voting system.

"If I pay with a credit card I have level of protection. When I put my money in a bank the money is insured."

Just out of curiosity, what makes you think that insured transactions to verified parties will not occur at some point? Credit cards have evolved substantially from the days of paper imprints themselves.

What about the state of crypto right now leads you to believe they will _ever_ be a common form of currency?

> I used to ride on the crypto hype train. Made quite a bit of money from btc. However, it is too risky of an investment. Most people that push crypto sound like pyramid scheme people.

Yes, and it includes those that peddle professional services i.e. lawyers and accountants. Those are the people who add the veneer of legitimacy to this pyramid scheme. These are the people that need to get their hands slapped.

The really funny part is that the same firms would never touch penny stocks, pink sheets or sellers of unregistered securities because that's "dirty". Cryptocoins on the other hand, absolutely! They are all over it.

> I used to ride on the crypto hype train.

What crypto hype train? Most crypto, such as AES, RSA, Mersenne Twister and the SHA series of hashing algorithms were very carefully designed and vetted over a long period by professionals. There's not much hype there, just solid technology. That cryptocurrency thing seems to attract scam artists like moths to a flame, though.

> The point is many crypto businesses screwed people over

Like RSA making the backdoored Dual_EC_DRBG the default RNG in BSafe?

Time to just accept that "crypto" means cryptocurrencies and also cryptography, and interpret the context to understand which is being spoken. Here it is clearly cryptocurrencies. Moving on...

You're looking for the word: cryptography.

Neither cryptocurrencies nor cryptography are, by definition, the only crypto.

Are you being purposely obtuse?

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