After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors
nytimes.com
nytimes.com
> “I got too caught up in the fear of missing out and trying to make a quick buck,” he said last week. “The losses have pretty much left me financially ruined.”
I think it's distasteful to criticize the decisions that lead to someone's downfall, but maybe someone will read this and take heed for the future. If losing $19,000 will genuinely leave you financially ruined, cryptocurrency is way too high risk of an asset to get involved in.
I feel bad for him and hope nobody ends up in the same spot.
literally you and everyone on earth would do this
You don't need this; just sell a little at each ATH and you shouldn't have much to regret.
Of course it was nonsense, as anyone who'd read about previous bubbles could tell you. But it was a mad time last December.
Also, most of us are not deluded enough to think it going up to $100k+/BTC is a certainty; there are a number of reasons the larger BTC experiment/bubble could deflate for good one day. But there's also rational arguments for betting otherwise.
Investing requires more research and analysis.
I had friends at my old job joining Coinbase with the full intent of "investing" significant dollars on Bitcoin. Soo...yeah.
> Kim Hyon-jeong, a 45-year-old teacher and mother of one who lives on the outskirts of Seoul, said she put about 100 million won, or $90,000, into cryptocurrencies last fall. She drew on savings, an insurance policy and a $25,000 loan. Her investments are now down about 90 percent.
It is this fact especially where "advice" doesn't really help. I have not seen that coping with need, whether perceived or real is something people tend to do rationally. And, unfortunately, once you are in that situation, telling real vs perceived needs apart becomes just as difficult.
my opinion/theory is that our social ties and cultural norms are meant to allow us as a group to help individuals out of this, but that our current culture has subverted this norm. It seems self-evidently true that it is better attempt to meet the needs of individuals before the costs of their poorly judged actions force us to deal with the ramifications.
Edit: double negative removed.
$90k at 45 years old isn't great, but it isn't destitution.
People that aren't FOMOing are still making money. Many people are still up for the year.
Just requires more calculation and precision and that can remove an outsized influence of luck, just like every other market on the planet.
I think it is disingenuous to make an article about retail traders that had never entered the market, and not mention how institutional investors and accredited traders are faring. They don't care if the market sold off 80% if they got a 90% discount, as they're probably still up 100%.
He is young and learned his lesson. That's a lesson worth $19,000. It keeps you from doing what the Korean mother who lost her life savings, plus some, referenced further in the article did.
Stories like these are full of anecdote and short on facts, it's hard for me to know what to make of them.
In January they were saying to me "it's not a loss if you don't sell, right?" Literally 0 financial education.
and the more amazing thing to me was that they also didn't even want to know
the markets were moving too fast to learn anything, too fast to learn about the history, too fast to put any asset under scrutiny because there is another shiny new thing to trade with a cool name and interesting founding team
or as the ZCash employees and fans are programmed to say "the math is interesting and the cryptographers are highly regarded so--" THAT HAS NOTHING TO DO WITH THE CRYPTOCURRENCY TRADERS
I don’t think people losing tens of thousands are the norm but absolutely there is a never ending list of people who’ve lost most of what they put in, whether that was hundreds or low thousands.
But it's not that big of a mental jump to make, isn't college education also a kind of long-term gamble with debt? You take on huge debt to get an education that will maybe allow you to make a high enough income to pay back your debt in a reasonable time.
For some that gamble pays off, for others, not so much.
As a personal anecdote: I'm far from being wealthy, but I've always made sure to never have debt. A very good friend of mine, only a few years older, is right now going through personal bankruptcy due to some rather adventurous choices in his younger years.
But he still doesn't seem like he's learned anything. When talking about potential financial investments he always treats me like I'm some kind of millionaire as my good credit history, and meager savings, could easily get me very high loans.
It's like some people see their total credit limit, across several institutions, as their actual own capital in a very naive "As long as somebody is gonna give it to me, it's mine!" way.
[0] https://www.cnbc.com/2017/10/17/this-family-bet-it-all-on-bi...
https://www.reddit.com/r/Bitcoin/comments/1r88vl/need_advice...
Most people buy crypto because they believe the price will rise and they will be able to sell at profit. Investing is when you buy something that generates profits or utility, for example a share of a company or a house.
Cryptocurrency is largely a bubble of speculation and get-rich-quick hype with not much actual utility for most people beyond a lot of claims that don't ever really pan out.
There is no fast way to get rich if you are dumb.
https://www.bloomberg.com/news/articles/2018-07-26/love-isla...
At least with a stock you are a part owner of the company, and you get the rights inherent with that.
2011: $1->$30->$3.
2012: $5->$15->$10.
2013: $10->$270->$80.
2013-14: $100->$1100->$250.
2016-2018: $500->$20000->$6000 (so far).
If you buy 100 stocks and 10 of them go to 0 you are out 10%. However, if the other 90 stocks are up more than 15% then you have gained a little money.
But, if you buy 100 different stocks by hand then you pay 100 different transaction fees and have to keep track of them independently for tax etc.
There are tax advantages, but it's more complex than simply not paying short term capital gains on dividends.
Index funds require no special knowledge to build...just buy the S&P100 stocks in equal amounts and boom, so the fees for such a fund can be super low.
Because the American economy has historically grown. Buying an index of Austrian stocks on the eve of WWI would have been about as effective as buying cryptocurrencies.
If you think it's not indicative, then you're rejecting induction, the cornerstone of learning.
Consider how much money had to enter the market for the price to reach $20,000.
Now consider how much money will have to enter the market, after everyday “normal” people from outside of tech have lost hundreds or thousands, for the price to reach $250,000.
We saw $800bn for crypto at the height, and it's down to about $200bn at the moment.
Its not so much about how much money enters the market, but supply/demand for the underlying asset.
It will likely result in a lot of money flowing into the market via funds and investment houses where investors seek to diversify their investments.
That will probably bring the cryptocurrency market back up to $20K and above. It probably won't happen until 2019 or 2020, though. The SEC is still on the fence about it, but I see it as an eventual inevitability.
Sidenote: that last statement is often confused with "rent seeking", which is not the case at all with Bitcoin. Because it's virtually impossible to make more Bitcoin with your Bitcoin. There's no any sort of business that can give you a better return at the lower risk. So you don't live on the "rent", instead you live off "wasting your savings", although if you were patient enough for them to appreciate a lot and you spend <10% a year, you have a decent chance to keep the total value growing and not shrinking as time goes by. But you need to be frugal.
However the sort of mockery of people who do think that it's different this time (and I see it all the time, it's not just you) is sort of funny. As if people who don't have faith in Bitcoin are somehow the naive ones. As if it's established wisdom by now, proven time and again through the ages, that Bitcoin always bounces back and outdoes itself by a factor of 10.
Again, it's quite possible that it will. I'll likely buy in when I get around to it. But this attitude is just a little silly.
Just because miners are making more or less coins does not make them worth less or more. Miners choose when and if they release the coins to the market.
The reason you can't buy a share of Uber or SpaceX is, effectively, that those companies don't want your money. Both could easily do a public offering and admit you as a shareholder, but choose not to.
Further clarity: I'm "accredited", and I don't think I can buy a share of either company either.
P.S. I think it would be a very good idea to buy some Uber shares before their IPO. Maybe try EquityZen [1].
But sure, maybe Uber and SpaceX aren't the best examples. Not sure if I'd even necessarily invest in either of them myself, but I thought they made for relatable examples. For a more real-world case, I'd love to be able to invest some money with the solar funds run by Wunder Capital, and that seems a lot safer than crypto, but that's off-limits to people like me as well.
Regulations rarely work as advertised; however, their 'unintended' side effects do seem to be quite effective in terms of creating artificial barriers to prevent the working class from moving up.
And my unit wasn't affected by the click of death apparently.
I still do not really understand why this wasnt more successful (at least by the time CDs existed/were used)
For Iomega, it was because of terrible quality control, leading to fiascos like the Zip drive "click of death" (see https://en.wikipedia.org/wiki/Click_of_death#Iomega_Zip_driv...). A storage vendor whose products develop a reputation for frequent, catastrophic data loss isn't going to stick around long.
For MiniDisc, it was because MD didn't offer a clear leap up from what you could get from compact discs, and because Sony couldn't help but be Sony and go off and develop their own system while everyone else in the industry was using a different one (DCC: https://en.wikipedia.org/wiki/Digital_Compact_Cassette).
Never shilled or advised others to "invest" because the best time to sell is when everyone else is buying and I understand how pyramid schemes work.
Got took for a ride in every major ponzi, scam, etc prior to 2014 seeking interest... greed. Hello, hi! HN - I know you don't like the bitcoins.
I still think it looks like a big well-constructed scam designed to pull vast amounts of money from starry-eyed naive people and transfer it to a very small number of sharks.
Pretty spectacular fail right there.
Currently trying to apply the above life lesson to investing in weed companies. It's a bit more difficult though since they have more plausible substance so it's more murky in a way.
After the Bitcoin Boom: Hard Lessons for Crypto"currency" gamblers.
FTFY.
Undoubtedly many are, probably even a majority. But what makes you say everyone is? To me the probability of that is close to zero.
All the moves were textbook.
I often make better returns in a sideways crypto market than buy-and-hold gives me in the stock market.