'I lost millions through cryptocurrency addiction'
bbc.com
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The “liquidated” terminology suggests he was doing leveraged swap trading.
This has nothing to do with crypto, aside from even more fun volatility.
Buying and holding crypto has no liquidation possibilities, and assets don’t drop to losing everything in 20 minutes. If it does you should buy the dip because its usually just a supply hack specific to that specific crypto.
Money doesn't work like that.
The UK is fairly lax in this regard. But its nothing to do with crypto trading because this wasn't spot crypto trading.
On manipulation, eh, yay volatility. Avoid leverage in volatile markets.
Second, even the exchanges are manipulating.
Investments are gambles but they have more substance than a quick roll of the dice as your investment affects the outcome.
Simply: the average long-term investor makes money. The average short-hold individual investor loses money.
More structurally: the U.S. economy and stock market have historically grown. They are a positive-sum game. There is no such fundamental gain in the stock market in the short term; it is a zero-sum game before transaction costs and negative sum after. The dynamic is similar for cryptocurrencies in the short term. The long-term crypto gain exists in the adoption pitch, i.e. to the degree new investors invest.
I don't trade very much at all, no disrespect intended.
The use of leverage/margin to buy more than one can reasonably afford is a good marker, in my opinion.
If you're borrowing money to play the market, you're gambling, not investing.
One difference between investing and gambling is that you can expect returns from following an investment strategy. Most day traders lose money. They can't predict short term future prices. What gains they get are through luck. Compared to investors who can have predictions about trends or specific stocks and who typically make money.
Yes, the derivatives market is insanity and probably shouldn't exist, but there are legitimate companies building business and generating wealth based on a real business plan.
Having been investing for the better part of 40 years, I've seen five big events happen, but in the long term bellweather and bluechip stocks have been non-casino investments. Don't let this recent every-ten-year cycle of hype (Doge, Crypto, GME) guide the intent of investing.
There is of course the question whether the instrument is currently priced correctly. That's why you diversify, ideally into uncorrelated investments so that misvaluations balance out on the upside and the downside.
Investing is the purchase of something you think will hold or rise in value. It is always possible the value could go to zero (Enron, for example), but by diversifying your investments, you can reasonably expect to avoid all of them going to zero.
Bitcoin, for example... hasn't crashed to zero (YET). So if you bought at $60,000 you would have lost about 40% of your investment, not all of it. You only realize gains or losses when you sell (which you can be forced to do if you are using leverage).
There is an old saying "The stock market can remain irrational longer than you can remain solvent", which I take to mean you should never use leverage.
This is obviously a high probability event in options trading.
Odds you'll walk away with nothing if you buy into Tesla? Close to 0. Odds you'll lose >50% of your money - not 0.
If you think buying into a global market index fund over a 30-year horizon has a decent probability of a negative real return - not to be rude - but you're a bit clueless about finance.
Sure, if you buy individual stocks - for any horizon - that's roughly "gambling". You could even call buying into the S&P for a <10 year horizon "gambling" - although, statistically, your chance of a negative real return is VERY low, and your chance of a positive real return is VERY high.
This isn't what normal people think of when they think of "gambling".
B) outside of the concept, there would then be the observation of a transaction having similarities to “a gamble”, daytrading has the similar probability of losing money.
Hope that helps.
In long-term trading you are buying a piece of the company. Your payback comes from the earnings of the company, either in the form of dividends or in the increased value of the company itself.
It's not a certainty, but it is a positive-sum game. The money you make comes from outside the market. You don't actually need the price to go up at all: a blue-chip company could distribute all of its earnings as dividends and have the price remain almost constant.
Day trading, by contrast, is a zero-sum game. Your profits come almost entirely from other day traders. Your decisions are made not by looking at the company's underlying fundamentals, but from the psychology of other people also selling stocks.
Day trading is not identical to gambling, and the uncertainty of long-term investing make it not entirely distinct from gambling. No analogy is ever perfect. But the positive-sum vs zero-sum aspects make day trading much more like "gambling" than long-term investing is.
Cryptocurrency is a negative-sum game. There is an inflow of cash into the markets, and two outflows: Regular traders cashing out, and miners cashing out. The market caps, the supposed dollar value of your holdings, it is all imaginary. The only thing that is real is money being paid in, and money going out.
And unless you sell and take your profits, that outflow is not going to you. It is going to someone else. And if you do, the money comes from somebody less fortunate.
The only ethical thing is to not get involved.
The problem, to me, isn't that people are allowed to invest their money freely in digital markets (regardless of asset). The problem is that so much money has been injected into assets that people feel (correctly) that they are falling behind if they don't try to play the game. The hidden inflation tax really harms people who lack a high degree of financial literacy or who lack the discipline required to make balanced, long term investments (i.e. a vast majority of people). For most of human history, saving was the key to building upper middle class wealth. Now, good luck with that as M2 grows by 20+% in a year and CD's are paying record low interest rates.
I think the problem is rather the fact that many people have unrealistic expectations. If the economy is growing at a rate of 1% annually, meaning the entire wealth produced in the country during a whole year grows by 1%, why do people think that their personal wealth should grow by 10%, 20%, 30% or more? It's not gonna happen.
Asset inflation benefits the wealthy, while bear markets improve wealth inequality, and printing money and QE reduces the corrective measure to wealth inequality to instead reduce the short term pain [1]. Consumer inflation is a tossup.
[0] https://www.usinflationcalculator.com/gasoline-prices-adjust... [1] https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...
Okay, then what is it? Obviously you have taken the trouble to measure inflation because you know it's not 2%. So tell us, what is the inflation rate? And show us your calculations please.
Cryptocurrencies are essentially distributed ponzi schemes (which are also illegal), with a side order of immense waste of electricity, waste of advanced manufactured goods, and enablement of ransomware.
Its getting to the point now where we need to begin contacting our democratic representatives and requesting that they ban them, and submitting citizen's petitions and direct ballot actions.
You identified the reasons of outflows and neglected to identify the reasons of inflows, or the magnitude of either.
Any supply and demand system is negative sum by your standard.
Remember to always ask “Did I just make a separate fictional higher standard for an asset class just because I don't like it?” If you create a criteria for crypto assets that no commodity, currency, equity, or property can meet, the question is why? Is it ignorance or intentional?
This is not the case commodities, currencies, equities or property. Those things have value outside of the market itself, while cryptocurrencies basically do not. They are in practice only used for trading.
If not, can you give it to me as it apparently has no value?
Whenever someone buys a stock someone else sells it, one's loss is the other's gain. That would make it zero sum but the company has the option to issue new shares, akin to the fed printing money or a new bitcoin being minted in a block, that makes both games positive sum.
For cryptocurrencies, there is no such underlying value.
I mean, you can buy a business with a coin, or you can buy an investment product, but that wouldn't be the coin.
That's not necessarily true. It's the same as the stock market. I could buy a stock or crypto token/coin for $1 and sell it for $2, while the person I bought it from paid less than $1 and the person who bought it from me sold it for more than $2. In other words, all three of us made money.
There's also the possibility that the other two parties lost money. But there's nothing unethical about buying something for a price someone is willing to sell it for or selling at a price where someone else is willing to buy it. I mean, not unless you think capitalism as a whole is unethical.
Yes, the three of you made money, but you're forgetting about the fourth investor. The fourth investor won't make money until a fifth investor comes and buys the coin. And so on, and so on. The revenue received by each investor always comes from a subsequent investor. So the OP was right. This is not true of stocks, as stocks do generate income.
I didn't forget. That fourth investor is not part of my transaction. The point of my comment was that OP's claim that all crypto profits come from someone else's pocket is false. Just like non-dividend stocks, sometimes that's true, and sometimes it's not. As I stated, it's possible that my seller and buyer could lose money too. The same is true for stocks.
> This is not true of stocks, as stocks do generate income.
Yes, dividend stocks generate income for their investors, but not all stocks pay dividends. On that note, some crypto coins/tokens pay distributions and interest too (let's call them dividend crypto for simplicity). Are non-dividend stocks equal to non-dividend crypto? In both cases, profit can only be realized by the investor when the share/coin/token price goes up. Is that ok? I think any Capitalist should say yes.
I'm not advocating for stocks or crypto, but there are some similarities that we have to acknowledge to avoid hypocrisy.
Yes, but your comment didn't contradict the OP's claim. The fact that an investor in cryptocurrency may not make a profit doesn't contradict the claim that all profits made by crypto investors come from later crypto investors.
And this is only similar to stocks superficially. Yes, some stocks don't generate an income, but a stock is claim on the company's equity and non-distributed profits are automatically integrated into equity. In a well-functioning market, the market price of the stock will adjust accordingly. Therefore it makes no difference whether the profits are distributed or not. What makes a difference is whether the underlying business is profitable. This is not to say that the stock market isn't susceptible to bubbles and speculation. Of course it is, but what sustains a stock's value is not speculation but an underlying business activity.
We don't need to invent new terms like "cryptocurrency addiction" it's just gambling!
But, I think it's normal to be skeptical though of new invented terms in general, since it can be used as propaganda to create fear or stigma about some very specific thing someone has an agenda of getting rid of. Cynical take: maybe someone trying to introduce the word cryptocurrency addiction has an interest in seeing the price go down, e.g. they're shorting it, etc. In the same way someone else might not want there to be stigma about crypto currencies, because they own some and want to see the price go up!
It's one of the most volatile assets anyone can invest in. The vast majority of people are investing in it are driven to it by hype alone.
This is gambling. There is no other way to describe it more generally.
People in media and elsewhere calling it "investing" hides the fact that the risk is not much better than betting on a few hands of blackjack.
And hey betting relatively small amounts at a casino OR on crypto is totally fine, go for it! Betting more than you can afford to lose it's just insanity.
the amount of guru groups with followers, neverending notifications of volatility, new ~revolutionary idea~
it can, and does, mess with people's mind a lot
Then we have people claiming the USD is no longer backed by gold, and that the old concept of 'a dollar note is a receipt for a dollar of gold that you don't physically own'. Can someone please elaborate why I can't go to the federal reserve with a million bucks and trade it for gold?
In the US the overwhelming majority of household's net worth is the equity in their home, which usually doesn't exceed the mortgage they still owe until rather late in life. A few people get lucky with hot real estate markets but to capture that you have to move into an undesirable cheaper area.
Financial literacy is a different issue, but to be absolutely clear, the Fed is not in the business of exploiting the poor. That's a very cartoonish characterization.
But yes, inflation is not targeting any socioeconomic class, and its purpose is mainly to force people with a lot of money to not just park it somewhere and instead keep it moving in the economy. The bank's advertised rates sound like a cruel joke? Go invest it! That's the point, the central banks are playing a perpetual game of "inception" where they make all of your decisions to not put your money in a savings account to seem like your own original idea.
It cant. The answer is because they said so. Just like you cant redeem it for state-hoarded lumber. See? A completely arbitrary example. “Why cant I go to the federal reserve with a million bucks and trade it for lumber?” You would ask “who told you that you could?”
There was a time when the US dollar could be redeemed for gold. That stopped almost 100 years ago, and all those people that avoid discussing money in polite company turned out to grow up completely ignorant on money topics. That’s it. I’m not saying that as an insult, I am saying that multiple generations of people did each other a disservice and have outdated understandings of the concept. The US dollar is not backed by and cannot be redeemed for gold.
It would be more productive to erase your concept of “backing” and “redeem for gold”, and start over from scratch, instead of trying to conform new understanding to those concepts.
Gambled it away. Not crypto's fault.