Does anyone else feel like:
- they've missed an opportunity to get rich with minimal effort from crypto
- still have absolutely no interest in jumping in at this point?
- they've missed an opportunity to get rich with minimal effort from crypto
- still have absolutely no interest in jumping in at this point?
As my friend nicely put it: only way we could have gotten rich from BTC is had we bought it when it was pennies and forgotten about it up until last year
If the GP had sold 99% of his 3650 coins and kept 1% till now, that would still be $1.8m.
Alternatively you can set yourself a price threshold. For example, sell half your holdings every time the price doubles. Essentially this acts as a log function on your gains in exchange for lowering risk.
There's a ton of room for fine tuning a set of rules to manage risk, as long as you are willing to stick to them.
That's basically what the "hodl" meme is: just decide to not sell until you need the money or until the money could significantly change your life. Of course, that's not exactly a new "investment" idea: there's always been a big difference between day-trading and just buying stocks (and index funds, etc.) with the intention to hold essentially indefinitely.
There's just no way I see myself not getting out at $100k or say $200k. And I'm not risking my money on an investment that can 'only' do 2x or 4x. Bitcoin was cool as it could do 10x or 100x in the span of 1-2 years. But with the numbers where they're at and knowing myself, I'd cash out way before that.
In the end because bitcoin isn't being used by virtually anyone, and is only valuable because of the momentum/hype (i.e., the reason I'd buy it is only because other people buying it solely for the purpose of thinking even more others will buy it only for speculation and not use, and the price rises), it's just not an interesting investment for me long-term. Short-term it could be but I'd be as not surprised if it did -50% as if it did +50% in the next year. Not really interested in that kind of exposure, given that I don't think I'll ever hold enough to enjoy the extreme potential upside.
Wouldn't a better strategy be to e.g. wait until Bitcoin doubles (which you believe is likely to happen), then sell half (so that you get your money back, sans inflation)... and then for the following twenty years, sell 5% of the remaining Bitcoins each year?
The greatest risk is that maybe Bitcoin never doubles, and maybe you lose all the money you put it. But at the moment the price doubles and you sell half, so you get your money back... why throw away the chance of maybe getting insanely rich in the future?
Suppose you have 100k, invest 20k of it in bitcoin and it doubles. You now have 40k bitcoin and 120k in total.
You could say, sell half the bitcoin, you now still have 100k in other assets and 20k in bitcoin. Even if you lose the entire 20k, you'll never lose more than what you put in.
But what does it matter? Fact is, you still lose 20k if bitcoin goes to zero. The fact you already made 20k on it doesn't change that fact.
The source of your wealth should not indicate whether a loss is good or bad, or bearable or unbearable. At the end of the day, a loss is a loss. All your wealth goes into one big pot, you can't say 'this part is from savings, this part is from bitcoin'. It's just money, and losing it sucks.
Of course there is something to be said about reducing your exposure to bitcoin as you grow richer and need to take less risky bets. But that's only great after the fact that bitcoin keeps going up in price. If bitcoin goes down in price, it's of course a poor idea to sell slowly instead of all at once. Again, a loss of $X is a loss of $X.
At the end of the day, virtually everyone holds bitcoin not for the actual value of e.g. owning a small portion of Apple which sells something hundreds of millions of people use daily, profits, which flows back to you. Instead virtually everyone holds it simply because others are, and by doing so together, it keeps going up in price. You could apply the same to any other (scarce) good. Like a useless but rare metal. Or indeed, a useless copy-paste of the bitcoin software, to start a new crypto. Bitcoin's price isn't because it's valuable, it's because of a common idea to buy it because it'll make us rich. And that idea cannot hold true on anything but faith. Humans are pretty crazy and so I wouldn't be surprised if bitcoin goes to $200k within 2-3 years. But it's still an insane investment proposition to me. (coming from a person who held 100% of his net worth in bitcoin for 3 years or so, btw).
Which gets him off the hook for it not existing back then.
On one hand I made a few thousand from nothing. However if I held it I would have been a pretty rich right now.
I truly believe that bitcoin is something that cannot work, so I have not and will not reinvest in it. But the sting of it doing so much better does bother me at times.
If even half of Bitcoin holders at the time thought they'd make it big and held, how could Bitcoin have had the liquidity to gain value?
However, I do try to self adjust for that bias. When I mined the coins it was a neat concept, but bitcoin wasn't at all practical then and it isn't at all practical now.
I sold it all back then for a few reasons.
- I believed other tech nerds would come to the same conclusion.
- It would never reach main stream adoption because of how utterly impractical it actually is.
- I thought that governments would crack down on it pretty hard, pushing it further into the fringe communities.
I was definitely wrong about governments cracking down and the novelty of bitcoin has definitely caught the interest of many and that has caused many chain reactions of the price going up.
I still think bitcoin is basically useless, but I severely didn't properly estimate that just it being interesting would make it so valuable.
Bitcoin truly is extremely interesting, and the vast majority don't try to understand it at all. So while it may in fact be useless, that does not actually matter for the price to go up.
In the end the only thing I kick myself for was looking at it objectively. Bitcoin wasting untold amount of energy, low transaction rate, high wait times for confirmation, high transaction fees, ever growing public transaction history, long cryptographic identifiers for receiving and sending, and so on do not actually matter.
Not rebuying is because I still have hope that people will come to their senses. But my stubbornness has not made me rich.
As if there's a better alternative.
Sell to Elon maybe? ;)
The top reputable exchanges have daily liquidity in the billions https://coinmarketcap.com/rankings/exchanges/.
I still believe, as I did then, that Bitcoin is worthless because it's not scalable. I do think if someone can solve the scalability issues then decentralised currency is extremely valuable. But I've tried investing in those and they've all tanked. Crypto is entirely driven by speculation. There is very little real value.
But yeah, it sucks a bit to think if I would've waited until now I'd actually have what amounts to a life-changing amount to me. I just remind myself that I'm rich anyway. I have a warm house, enough food to make me fat, a home cinema, loads of computers and a fast car. So why would I lose sleep over it?
Or you'd have lost the hard drive. Maybe you encrypted it, forgot the password, and spend your evenings typing iterations of your birthday, middle name, favorite song, and 69 while you watch Family Guy reruns. There are things worse than not being rich.
Don't sweat it.
I bought BTC at $20. I sold at $1000. When I sold I had something like 1.95 BTC (had a bit of it stolen from poorly secured exchanges, lost some trying my hand at bot trading). Still happy with it because what I bought at the time with with it made me happy (Sonos speakers and photo gear). Would it have been nice to hold onto it until it was $50k? Maybe. But I have been enjoying the benefits of what I got for far longer.
Having said that, I think XLM is in a good position to jump up in price and I still have their free initial allotment.
I liquidated the remaining ~90 BTC until 2018 when it was approaching $10,000.
I have no positions in crypto anymore. Lot of people are going to be caught holding the bag now. It's not common to hear somebody moving a big chunk of their savings in to this "digital gold". I am worried that this is going to result in a lot of broken dreams. Doubly more worried about people over leveraged in real estate.
Bitcoin is a poor storage of value and the cognitive dissonance is profound-the more they hype it as "digital gold" the more it deviates from that description.
I realized that Bitcoin, cryptocurrency is largely a vehicle for money laundering, in particular moving money out of China, Russia and other similar countries.
There was buying his cousin's company, the bit with the SEC, selling not-a-flamethrowers. The guy he called "pedo guy" sued him but lost because apparently nothing Elon says is credible. There's a 20% chance he sees prison time by the end of the decade.
I have had this conversation with many a friend, who actually view Bitcoin as a Ponzi, and therefore decide not to play the game (a ponzi ca be lucrative if : a) you know it's a ponzi b) you're smart in your timing and not too greedy but it's still a crapshoot).
The real questions are:
- what if it isn't a Ponzi ?
- how much will your "won't touch it with a 10 feet pole" attidude cost you then ?Opportunity cost is likely better.
For those who want a low effort fairly safe hedge against inflation and currency changes an index tracker fund is probably the way to go.
A small percentage on risky investments is probably fine, but then you do have to choose the correct risky ones =)
I wish I had bought Tesla shares in 2011 too.
In addition, you have couple of major risks such as feds making it illegal or taxing it heavily or some other coin that Elon Musk starts preaching heavily. At this point, if you do have BTC, you should sell out at $70K-100K range just to be safe. If you keep holding after that then you are taking increasingly bigger risks but much less reward.
Dividing the total market cap by the total number of BTC relies on an incorrect assumption that BTC are never destroyed. But, in fact, we know that plenty of people have lost BTC keys. It's totally possible that the practical supply of BTC is far lower (e.g. 10%) than the supply of BTC on paper. In an extreme case (e.g. if less than 1% of BTC are actually usable), the paper market cap of BTC could exceed the size of the US economy, even while the true market cap is less than 5% (using your number).
The trick of bitcoin is that creates the illusion of value in its price in dollar (or other fiat) terms. There is no true underlying value. Note: bitcoin depends on the dollar because there is no independent bitcoin economy. So the price is simply what fools are willing to pay for it recently, what the last bid was. How much money has gone into the bitcoin black hole over time has almost no bearing on its price at any given instance besides hysteresis (i.e. the current instant price is near the last price).
Price is thus simply the dollar amount that people are willing to pay in the present moment for a bitcoin; there is no reason it could not go to $1,000,000 a coin if people are dumb enough to pay that amount.
This is why bitcoin is like a black hole. It is not an equity, since there is no underlying, fungible asset, i.e. ASIC miners can't be used for general purpose computation, bitcoin is not a share of ownership in anything, etc. The market cap of bitcoin is zero at all times regardless the price. The price provides an illusion of market cap or value but is not actually value in of itself. It exerts a pull on real money that can be used to fund productive or legal investment, like a black hole, but pouring money into Bitcoin does not give it value. Money can be destroyed, just like matter into a black hole and this is something cryptoholders will find out when (1) there is no greater fool left or (2) bitcoin soaks up so much real money that it has real economic effects, e.g. deflation, which results in a regulatory social clampdown or (3) there is a regulatory clamp down before that point due to recognition of bitcoins only real use case, illegal activities.
Or, you can continue enjoying your life the way you are without worrying what others are doing. Many times, they are only projecting one side of the story.
Jumping in now is a bad idea because it's at peak hype; never buy at peak hype. It MIGHT go up a bit more, but it won't be a 10x increase at this point - you should've bought a year ago in that case.
But a year ago, nobody could have predicted it would go up 10x.
That's what everybody said when it was $17k and crashed to $5k. I loaded up on it, now its $50k. I bet there were a lot of similar comments saying that it would never be 10x. I also seem to recall a lot of people 10 years ago saying TSLA was overpriced and they would never hit their production goals. Time will tell.
It helps that I have all my necessities well covered.
That scenario only holds if you go around blabbing about your BTC holdings ... why would you ever do something like that?
There were a number of robberies of people somewhat prominent in the early movement even on the assumption they still held some.
And I've repeated that thought on 1.000, 10.000, 20.000 and again now.
So yes, you are not alone in feeling this is a missed opportunity.
I personally hate the idea of bitcoin and avoided it for a long time, but I feel better having a little just to avoid the thought I let my personal feelings get in the way of an opportunity with a good risk/reward ratio.
Ahh, but the asteroid 16 Psyche is worth $10 quintillion and one day we'll mine it. That lets the BTC cap go 100,000x further than the world GDP.
[On a more serious note, note that GDPs have a time component and market caps -- or the amount of a currency in circulation -- don't. If each unit of money gets spent every month, you only need GDP/12 units of money in circulation; if each unit of money gets spent every 10 years, you need GDPx10 units of money.]
Once people stop having this mindset the price will stop rising.
A lot of people dismiss the possibility of a 10x rise in price and fixate on the 2x reduction. That kind of pessimism is hardwired in: humans have stronger loss aversion.
But if something has a 20% chance at 10x and 80% chance of 1/2x, that’s still positive EV.
Had I invested, I'd have wasted the coins long time ago, and would be just kicking myself daily or on suicide watch.
I'm not exactly interested in risking enough money for it to be worth it long term anyways.
Now if only I still had my original wallet...
I'm always tempted to make some kind of agent simulation, where all agents know they are in a bubble, but hope they can get out before everyone else. Then eventually the price pops and, pop.
But regardless of your opinion on crypto you haven’t missed your opportunities. Projects still 100x.
Next time it’s off everyone’s mind and not in the news, just pick 3 or 4 newer projects that have a decent sounding team, put $1000 in on each, and forget about it. Check back when everyone is manic again.
Had I spent £1k of spare cash then, I would now have enough to buy another house.
EDIT: And I’ve just now remembered that someone gave me £0.50 of BTC as a “thank you” on Twitter, which I sold to a friend for £25 and which is probably now worth £250.
I started putting a small amount into BTC each month on Coinbase. It’s money I can lose and that I would have spent on a vacation this year if not for COVID. I figure I’ll pull it out at the end of the year and if it’s gone up, then next year’s vacation will be a bit better.
I don’t understand BTC at all and consider it gambling. But like Nick the Greek said, the next best thing to gambling and winning is gambling and losing.
Just like when you go to Vegas: put $500 cash in your pocket, leave all other means of payment at home.
You'll either come back with $0 or more than $500.
In both case, you'll definitely have had $500 worth of entertainment.
Bitcoin is like that: only invest money you don't need (assuming you have any) and meantime, just enjoy the feeling of having your stomach crawl up to the back of your throat on the roller coaster.
You're also obviously allowed to enjoy yourself when/if you become rich.
The price fluctuations are wild, and because we're not talking megabucks (a couple of thousand USD equiv) and I'm not actually out of pocket in any real sense, they're fascinating to watch, and incur no great temptation to do anything with.
While Lumens are extremely unlikely to go the way of BTC, watching what's going on with bitcoins the past decade does make me want to just sit on these.