Vast Majority of People Who Invest in Bitcoin Inevitably Lose Money, Study Shows
gizmodo.com
gizmodo.com
> the report did assume that a user purchased bitcoin when they downloaded a crypto app.
Look directly at the blockchain, and instead find 49.4% of the addresses were in profit as of the time this article was published: https://www.yahoo.com/now/majority-bitcoin-addresses-now-los...
It looks like "inevitably" is more evitable than inevitable used to be.
[If anyone has a Glassnode subscription, the real-time readout is here: https://studio.glassnode.com/metrics?a=BTC&class=Addresses&m...]
Bitcoin as represented in the white paper was never portrayed as an investment vehicle.
It's fairly useless as far as currencies go. It literally fails at the first requirement: it's not a reliable store of value.
There are certain circumstances where I think it may make sense for someone to pick an alternative currency; I'm not arguing it is superior to the rest of them.
> Several crypto coins are a bad store of value over 1 week but a decent one over a couple hours.
What kind of (real world) transaction would need to rely on a cryptocurrency for value stability over a couple of hours time-span that wouldn't be served by fiat currency, which provides the same stability guarantees over that same time-span?
There is also a strong real world value in countries where local currency is less stable and secure than crypto. Not all places have access to USD or foreign currency.
There are interesting examples coming out of Argentina. Imagine living in a country where year over year inflation is ~100% and the government may periodically seize assets in your bank account.
I think it could make a useful underlying tool to enable this but to be used directly by end user customers it'd be a tough sell.
I've used Wise to transfer USD <-> CAD, if they use crypto to enable that (I don't think they do, but I guess they could), I couldn't really care less.
I don't think your run of the mill consumer is going to want to use crypto to do the same thing. With smaller amounts the difference in cost is probably negligible, with larger amounts you could theoretically save more to make the effort worth it, but you have higher pressure to have more "traditional" assurances that nothing goes wrong.
In what ways do cash bank transfers not work for international transfers or irrevocable payments?
Why would they do that? I've never had that happen to me when I send an international transfer.
But it's always been for innocuous things like "reimburse relative for vacation rental expenses"
Yes I was made whole but it was unpleasant and I happily would have eaten the ~.30 of litecoin transaction fees and 0.1% crypto exchange fee to avoid that. Not to mention the wire cost me $15 in the first place and not everyone has ready access to a bank with free wires.
Depending on which country it is going to, that seems like an amount large enough to legitimately trip over some checks. In the US itself, last I heard all domestic transfers over 10k get reported.
Getting locked out of your own money can cause major damage. I'm lucky that I was able to dig up another 100k. Someone else could have lost their 50k and be liable for hundreds of thousands more in liability to the seller.
In any case ACH can be clawed back and it is my understanding in some exceptional circumstance a wire can too. The point never was crypto is always superior, it may be conventional is better 99.9% of the time but that 0.1% means a use case remains.
Edit: after reading my comment I realized it might not be clear that bitcoin is astonishingly bad at imitating currency. Almost without exception trading it for goods and services is impossible.
If you dollar cost average your acquisition of Bitcoin it smooths out the conversion risk and if anything the value against USD goes reliably up over a 3+ year window.
Anytime someone speaks crypto to me now I feel like Adam Sandler floating past Clint Howard’s window in Little Nicky: I don’t want to be part of this, they don’t want me to be part of this, and all I can do is wish them luck while they tell me they don’t need it.
It was not.
If someone bought Bitcoin a year ago and wanted it to be a store of value, it is certainly not "whatever the holder wants it to be" for that person
A lot of currencies are not a good store of value the last 18 months.
They also seem to be a lot better at buying Bitcoin and Euros and S&P500, but a bit worse at buying lettuce.
No currency seems to be better at buying lettuce this year, though, perhaps the problem here is that there is a shortage of goods and labour...
Only a fool uses a currency that's experienced 5000% deflation?
Bitcoin is a long failed currency, I can't believe there are people still trying to push that notion.
Volatility is one thing, but deflation to a nonsensical degree means that using it as a way to pay for goods and services is heavily discouraged because of things like... having your $20 pizza be worth $165,000 if you had just not bought it.
You're making my point. It's not functioning as a currency anymore, it's an investment vehicle.
It'd be like if Forex was the main way that dollars got moved.
What the paper finds (and we can certainly quibble with any paper) is evidence that the majority of people who bought Bitcoin in the 2015-2022 period did so in patterns that suggest that they're interested in an investment asset, not in a currency.
But those addresses probably include most of the estimated 20% (or more) of Bitcoins that are lost (because they were usually lost when Bitcoin was less valuable).
In those cases the address hasn't lost money, but the person lost it all.
Sure, agree. But I don't think that's the topic here, the general harm/good done by cryptocurrencies, the submission is talking exclusively about profits or the lack of them rather.
If I invest 100 USD in Facebook and the stock gains double its value, I now have profits, no matter how bad Facebook is for the world.
And it seems there isn’t much to show on the good side, for all these negative externalities.
Apart from having insider knowledge in how cryptocurrency exchanges operate and their data, how could you possibly know this?
One address on the blockchain can belong to one or more users, just like one user can have one or more addresses on the blockchain, so being able to compare feels impossible even if you had insider knowledge/data.
Bitcoin on a centralized exchange cannot be traded for goods and services until explicitly withdrawn, unlike most brokerage accounts where cash is cash and many will even give you a debit card so you can spend directly from the account. This strongly decouples bitcoin and most other cryptos from the total money supply.
When you're on Binance and you send them one BTC as a block chain transaction, you are receiving one Binance!BTC that does not exist outside of that walled garden.
Just look at FTX - some 1.8B in BTC liabilities but zero BTC assets
This splitting hairs over "true" ownership ignores the fact that the original investor analysis done by GP here premised on chain transactions is still semantically wrong.
that still leaves us with "most".
everyone knows the theoretical issues and incompleteness of this statistics collection - since there is no single public or verifiable stat to use - its pretty new to be a person that chooses assume its more likely that people are having distinct addresses on chain, than assume its more likely they're on an exchange
kind of funny how we go full circle here, but okay. hope that helps your reasoning. this article has no way of making its claims either, so there's really no point of appealing to either authority or bolster any opinion.
The issue of one's "private" data then becoming part of a public dataset could be alleviated with deidentification, plus a better acceptance that when companies accumulate data about you, it's generally going to get exploited in some way or another.
Every cryptocurrency exchange would have to go bankrupt before you could make sweeping statements like that if so.
Is consistently proven to be a myth.
I'm curious: What is your source for this statistic?
For comparison: There were about 40M non-zero addresses earlier this year. See eg https://news.bitcoin.com/number-of-addresses-holding-btc-tap... [The current number is on Glassnode: https://studio.glassnode.com/metrics?%3Bm=blockchain.UtxoLos...]
FTX is one of the larger exchanges, and FTX bankruptcy headlines say they "may have 1 million creditors". See eg reuters.com/technology/ftx-officials-contact-with-us-regulators-filing-2022-11-15/
Edit: I'm trying to figure out if someone has actual stats or whether the statement is just intuitively guessing. There are so many bitcoin stats out there, it's hard to keep track of it all.
An exchange, when depositing or withdrawing to a user or another exchange, uses a ton of address, sometimes leaving behind very small amounts. Same with users. I'm sure 75% of non-zero address have very, very little BTC in them.
>I'm curious: What is your source for this statistic?
They have no reason to.
Unless the investor is specifically working on some HFT arbitrage scheme between exchanges, then they don't even need to move crypto out of the exchange.
Also given the complexity of rolling your own wallet, it's just a risk that's not worth it when KYC exchanges are relatively stable.
"You aren't a real real estate investor if you buy the brooklyn bridge from a guy on a streetcorner in Harlem" is true because the claim on the bridge was never credible, not because you never physically took possession of the bridge itself. You could argue that the exchange's IOU was never credible, but that's different from saying that any BTC-based IOU is made of lies.
If I buy some shares in a company that does things with [X], I think it makes sense to say that by doing so I'm "investing in [X]", even if I don't e.g. have the necessary license needed to directly own any [X].
Every trade has two sides, and transactions cost fees.
Someone can (and should) have multiple addresses. And most retail investors will actually keep the bitcoins in an exchange in order to not lose an obscene amount of money to fees when trading. So there isn't an 1:1 correspondence between addresses and people.
However, realizing the profit is a different thing. That will work only for a few who invested early and deinvest early. Basically, btc is a pyramid scheme, the only difference to other pyramid schemes is that this fact is not obfuscated. Every investor knows that he is buying a fundamentally worthless good, but is hoping that someone else will eventually pay him a higher price.
That works well until the market is saturated and no one is willing to buy btc any more. Then, the price collapses.
Thus: even if most investors today have made profit, that simply means that the bottom of the pyramid has not been reached. At that point, most investors will have made loss.
They gather stats on 213 exchange apps (187 identified from https://www.cryptocompare.com/exchanges/ + 26 tagged by Sensor Tower). They assume downloaders of any of these crypto apps buy specifically bitcoins, not altcoins. There is nothing to support this assumption. In fact, the majority of these exchanges especially from the list at https://www.cryptocompare.com/exchanges/ cater specifically to altcoins. People who want to buy Bitcoin will do so through Gemini, Binance, Bitstamp, Coinbase, and a few other trusted well-established exchanges. But the majority of this list of 213 exchanges is specifically used to access altcoin markets, because they don't even have a way to deposit USD. These exchanges require users to deposit crypto. So that doesn't match at all the study's authors assumption that the enduser installs these apps as a first-time bitcoin buyer.
Ignoring this glaring flaw, graph 1 charts downloads of crypto exchange apps per 100,000 people, and it is interesting as it reveals that the vast majority of users joined after Dec 2020, which was during or after the all-time highs of that year. In other words, they assume more users bought bitcoins in the last 2 years than in the first 10 of 12 years of bitcoin's existence. Anyone who bought bitcoins before approximately Nov 2020¹ is, of course, still in the green. If graph 1 was showing cumulative downloads instead of daily downloads, this would give a better breakdown of the number of users before and after Dec 2020.
¹ Except during a handful of days in Dec 2017-Jan 2018 when bitcoin was briefly above $17k.
And then, not counting people who bought and lost (wallet lost/exchange collapsed, etc).
And then, anyone who is still holding are under multiple risks: regulatory, markets tanking, taxation, fraud, exchange collapse, wallet stolen, etc.
What this paper finds is that (from 2015-2022), people tend to buy when BTC is making new peaks, and so they are buying high and then so far are not in a position to sell for a profit.
I strongly expect that if you tracked people who in the relatively recent past have bought any other asset that had a rise and then a big spike during the pandemic, you'd see something similar.
If in late 2021, I had two friends Alice and Bob, who were enthusiastic and so far successful in shoveling money into TSLA and BTC respectively, and who are both telling trying to convince me to follow their lead, how can I judge their suggestions? I can look at Tesla's quarterly reports, and rabbithole into information about other company's EV efforts, and see analysts try to make projections about future revenue. I'd be left with a lot of uncertainty, but I can make a good faith effort to try to judge what an appropriate price is based on future earnings, and whether the current price is too high or too low. With BTC one doesn't have that. Even if prices had increased lately, how would one judge whether that was high or low relative to where prices _should_ be? Today, after a period when prices have fallen a lot, are they high still? Would $10k be too high? $1k? About a decade ago it was roughly $11 and 2 years before that it was $0.20. There's no way to judge value, only price.
And people certainly forecast -- with varying success -- the future of BTC. You can read their analyses and disagree/agree with them.
This isn't to imply that BTC isn't a volatile and risky asset. Of course it is! But some people want to buy volatile and risky assets.
My point is not that BTC is volatile, but that it has no fundamentals. There is only the sentiment of other participants. Tulip bulbs can at least be planted.
Companies can go bankrupt and zero the value of their stock. Bonds can be defaulted on. Are you out there evangelizing how stocks and bonds are bad investments?
My objection to BTC is not that one can get burned. I don't know how to be more clear about this without repeating myself.
Suppose I start a new lottery and sell tickets. I announce nothing about the odds of any payout or perhaps even when the drawing will take place, but tickets are finite in number, and are transferable. If you can buy a ticket at auction, how much should you pay? In a different context, I hope people would complain that there is not enough information to answer. But on crypto exchanges, people seem happy to say "I just don't want to pay too much more than the last buyer."
In contrast, suppose my friend starts a raffle, selling tickets for a dollar, and makes clear that the pot is exactly one dollar per ticket sold. Yes, anyone buying a ticket can lose 100% of what they put in, but it's also easy to see that the expected value of a ticket is $1. If you have the opportunity to buy a 2nd hand ticket for less than $1, it's in some sense rational to do so, depending on your own risk tolerances. If I try to sell a ticket for $1.25, people can immediately see that it is overpriced. This is entirely consistent with the fact that the outcome for any particular ticketholder is highly variable.
The point of all this information being baked into the price of an asset is not that the market is particularly correct -- surprises certainly happen. It's that you don't really profit from all that knowledge. You say, "Oh, well, I know that this company has such-and-such a balance sheet." But everyone else knows that as well (and, in fact, knows more about the health of that company because they have access to semi-private information and/or just more expertise about that economic sector than you do), and if you go, "Hey, I want to buy this stock because their business seems strong," you already have to pay the premium for their business being strong, and their expected growth, such that you're pretty much purely buying risk now, not the strong company. If they profit, but not quite as much as expected, you lose money. Potentially a lot of money!
Meta is down 65% this year. That's on $27B in quarterly revenue and $4.39B in quarterly profit! And it's down 65%! Let's be real: you didn't look at Meta's financials at the beginning of this year and realize that your investment there would be down 65%. What's the floor on Meta? I mean, nobody actually knows. They have a lot of revenue, but you can always get a lot of debt and have that eat your revenue up. I'm inclined to be optimistic about Meta -- but so is the market, that's why it's at $310B market cap. If I buy now, could it lose another 65% value and be at a "mere" $100B market cap? Sure.
And yes, people with a lot more time, resources and information than I have bake a lot of information into their attempts to establish what an appropriate value is for a share of a publicly traded company. Nowhere in the preceding have I claimed an ability to out-predict wall street.
But the fact that people after examining the data can be left with real uncertainty about the future prospects of a company doesn't mean the data doesn't matter. The equivalent data simply does not exist for BTC.
Roughly, BTC is being used like shares in a company which owns no assets, has no revenue, gives no dividends, and writes no quarterly reports. Based solely on the price history, trading volume, number of shares outstanding (and constraints on shares issued in the future), and the press, people buy and sell it.
To pretend that this in no way limits the ability of people to price BTC in comparison to their ability to do the same for stocks, bonds or other traditional assets seems unhinged.
NRGV ("Energy Vault") was trading at a $2.4B market cap less than a year ago, and are now at $0.4B, still radically overpriced. Their product was an obvious scam before, then they pivoted to another obvious scam. The only way their stock could have any legitimate value would be if they still had $0.4B in cash, and could be prevented from squandering it. All perfectly legal, apparently.
Same for fusion startups. (It is just barely possible that Helion could have value.) Kyoto Fusioneering builds equipment to use in fusion startups' sham demos, and provides a conduit for dumb VC money into the pockets of startup founders and VCs who invest in it. All perfectly legal, apparently.
Irrational is contrary to efficient.
1. If you mean, "the market will not in fact go to the stock price that I think is correct in a time window that anyone can remain solvent for and perhaps ever," then what you are saying is you believe the EMH.
2. If you are instead saying that you are a small fish and big fish could play this scheme successfully, absorbing relatively small fluctuations, then, I mean, go pitch Jane Street in your brilliant approach of "look at the financials." (Obviously, you won't get anywhere because, spoiler warning, they already do this, and it's priced in).
Your conclusion in (2) does not follow. Jane Street works on a time scale of, at most, milliseconds.
We may be sure that Berkshire Hathaway, which does operate on longer time scales, holds no NRGV shares.
And I think the answer that is confident with reality is, "actually, they do, and price in that information, such that there's no alpha left from it. Perhaps people with particular knowledge and expertise can synthesize that information with other knowledge to make useful predictions, but for an average layperson, is priced in."
The system organization favors a few winning big, so the majority must ("inevitably") lose.
Non-zero-sum games require mechanisms that produce or unlock new value that becomes available to agents. An innovation lets a farmer produce more grain, such that the farmer makes more money and consumers pay less for the same amount of food. But a pile of transactions each of which just exchanges goods, fiat currency and crypto currency at varying prices does not produce net value.
Like, sure, on a whole-economy level, if nobody is creating value, then the economy isn't growing. But you aren't buying the whole economy, you're buying an asset, and that asset just needs to be desired in order for it to increase in value. There is no function where "if I gain money from BTC, you have to lose money from BTC." That's just... not at all how this works.
If you realize gains from BTC, it's because you sold it to someone else who bought your BTC, presumably with dollars, yes? The crazy stipulation of "token price monotonically increases" for some crypto currency implies that people are actually exchanging ever larger quantities of some other currency for that asset. Of course this means that the other currency is losing value.
When the dollar goes up against the pound, or vice versa, no one thinks it's because some magical process is creating net wealth.
One is "what moves the price of an asset." What moves the price of an asset is supply and demand. In the case of BTC, the supply is (generally) predictable and limited (though I guess someone could reclaim one of those early big wallets that are assumed to be lost forever or something). So demand dominates the BTC price.
Note that this is completely irrespective of whether Bitcoin does or does not generate real economic value (like, the production of more goods or services that directly improve the lives of other people).
If the economy as a whole (in terms of, now, real value that is actually delivered to people's lives) is shrinking or stable, then for Bitcoin to be increasing in value, something else has to be shrinking in value. But if the economy as a whole is growing, then it is possible for some of that growth to land in Bitcoin such that everyone with Bitcoin is better off than before, and nobody is worse.
Not true. Value gain=Revenue-Costs. Revenue for Bitcoin as a whole is 0. Costs are positive. Therefore it is negative sum.
Compare with Coca cola stock. Revenue>Cost. So it is positive sum.
Notice that there is no "cosmological constant" term. The rest of the universe gaining or losing value has no bearing on a specific stock or crypto
But of course bitcoin is technically negative-sum, because miners don't pay in, but do cash out. And, some fraction of coin is lost and so not cashed out. Whoever can't cash out donated their stake.
When it gets where it has been more or less constantly falling for long enough, and everybody wants out, it will fall at an increasing rate, and everybody still holding donated their stake, too.
Crypto bulls and bears oscillate between 1/2, as the market turns hot/cold. Gizmodo is very clearly selling confirmation to the anti-crypto crowd currently looking for narratives to support their use of statement 1).
Anyone who is hyper-confident in either direction is usually wrong.
Judgement about a particular subject should at the least rely on some detail about that subject. This is just an generalized appeal to the law of averages.
TL;DR - Armchair experts on either side of the argument make poor investors.
The lack of barriers to creating, marketing, and hype-selling a new project inherently makes 99% of the projects in this space "vaporware". The terms "grift, rugpull, scam" etc. are appropriate.
Unsophisticated retail "investors" (and hell, even sophisticated speculators just subscribing to 'greater fool' investing - e.g., most VCs) are focused heavily on the upside in these types of projects, because the measure of success is "money made". There are people who respond to this by writing off the space entirely - "It's a ponzi scheme", "scam city", "tulips", etc. All fun memes to tout the "I told you so narrative"
My personal belief is that there is the potential for "ethical alpha" (subjective, perhaps - primarily meant to differentiate from 'get out before it implodes' alpha) to be had by investing long-term in the remaining projects with the combination of development attention, enterprise buy-in, and scaling capabilities that could deliver meaningful value to end-users. I'm not going to get into a debate over which projects meet these criteria, whether they exist, or any other debate which likely will revolve endlessly with no resolution.
I acknowledge there are risks associated with the broader technology being adopted in a meaningful sense, but subscribe to a perspective that there is yet-unrealized value in its application.
I create value in the real world and use the euro to exchange it against something else of value, which is very convenient, but the euro itself is not the goal.
Call it unregulated crypto gambling or something, that would be more honest.
The $$ going in is equal to the $$ going out of the system. However, som of the $$ goes to miners as transaction fees. Therefore, for the non-miners, it will be a negative-sum game, where less money will go out of the system, than what the traders are putting into it.
A has some bitcoins, he sells a few to B.
Later price increases, and A sells more bitcoins to B.
In total, the same $ went in as the $ that went out, but both A's and B's wealth increased.
Some things that are actually zero-sum games are futures or options markets.
By this definition, BTC is NOT an investment. Neither is Gold or land (unless you rent it) or commodities. Buying those things is just "speculation". Speculating is fine. It can be useful for the market. You might even make money.
But please please, stop reffering to these things as "investments". They're not investments any more than my buying a hamburger.
It's the speculators with their completely off-chain normal finance hijinks that everyone gets upset and confused about. It's a shame that's what people think cryptocurrency is.
I don't think that's true, otherwise people wouldn't pile so much money into stock funds in their 401ks.
e.g. if you are very loss averse, you don't buy lottery tickets at all. You don't just buy the safest ones where you expect to lose the least.
e.g. lottery winnings are also affected by inflation.
There is nothing in need of rewrite. The original claim was about money, not currency. As money is defined as the assets, property, or resources owned by someone (i.e. wealth), we can substitute currency with any other asset. Let's use cars, as is convention, and works well as they tend to decline in value much like currency does.
So, you trade your car for a security. Some years go by and you decide you want a car again, track down the guy who you sold your car to, and offer to trade the security back for the car. He agrees and now you've got your car back. You didn't lose any cars. You are back to one car, just like you had originally. However, the car is scratched up a little, needs new tires, etc. and as such isn't worth as much as it was when you first traded it. And so, while you haven't lost any cars, you have lost money. The car isn't what it used to be; your wealth has declined.
You might not lose any currency in an exchange of assets, you might even gain currency in the deal, but that doesn't necessarily mean you haven't lost money.
Cash is the easiest investment to hold. If it were stable it would be very attractive, but it is not. The monetary system works hard to ensure that it isn't stable, with mandated targets to ensure that cash holdings lose money every year.
i.e. iff your security is worth fewer dollars than it was worth some period of time ago, it is losing money. The fact that dollars have also lost value during the same time means you've lost more money, not less.
I said no such thing...?
> iff your security is worth fewer dollars than it was worth some period of time ago, it is losing money.
And if it sells for more dollars than in the past, but not commensurate with the decline in value of those dollars, then you've still lost money. Less money lost than would have been by holding dollars, but still a loss.
This same crowd gets interested in Bitcoin at every ATH because of the news coverage. I got so many people asking me how to buy Bitcoin when it hit 20k in 2017 and 60k in 2021. That's when the vast majority of people buy.
Yes, if you put money in your 401k and don't take it out until retirement you will make money. That doesn't describe the vast majority of investors though
Doesn't it? My mother did it that way. Made regular payments into her selected cooperative low-risk mutual fund that built up a reasonable retirement pension. I know a lot of people that do that. I suppose the difference is that they don't think of themselves as investors.
I think you have a skewed view of the average investor. About 58% of Americans own stock, but only 35% of Americans own any outside their 401k. That means 40% of investors only have money in their 401k. I couldn’t find the numbers for how many of those investing outside of their 401k just owned index or mutual funds, but I even if it was only a small percentage it would mean a majority of investors aren’t buying individual stocks.
There is a vocal minority who invest speculatively. It makes sense that this number would seem larger than it actually is, because they are the ones who talk about investing. You don’t see questions or posts from people just investing in their 401k and index funds, but there are more of them than the speculators.
https://news.gallup.com/poll/266807/percentage-americans-own...
https://www.pewresearch.org/fact-tank/2020/09/25/few-in-u-s-...
Commodities and currencies (including crypto currencies) are not cash flow producing assets. There's no value in them that can't be accessed immediately, so no one's going to sell them to you for less than their long run worth.
People who buy a small number of individual stocks end up in a different situation. While their average return is positive, those results have a large degree of skewness (meaning most stocks stagnate or fall, but the meteoric rise of those that do well makes up for it on average). If you picked a random stock in 1992, you'd quite likely have lost money by now.
No, it's always true in zero sum games. The stock market is not zero sum. Beating the stock market is, which is why most investors don't beat the stock market. But that's different from losing principal in even nominal terms.
Investing in BTC is like buying shares of stock in a company that produces nothing and has high ongoing costs that are only paid for by continuing to issue new shares.
All of the people losing money on Bitcoin and crypto were trying to get rich quick and predictably got burned. Just like people who only hold a stock for a few days or try to get in on an option play like GME or AMC at the last minute.
I read this as: picking particular stock winners has been known for decades not to beat the market. Yet people still want to believe...
I don't think this is particular to crypto. Don't you see the same phenomenon with day traders? Something like 95+% are losing money, as I understand it.
To the later commentator: if you're investing in stocks and not beating the market average, then yeah, I think you should consider yourself to be losing money.
Contrast with cryptocurrencies where the value is only based on social consensus. Not being linked to an actual business means that sales can halt instantly and the floor is zero because people only make a disadvantageous transaction if they think it’s going to plummet.
Apart from the delays in clearing transactions, the high volatility, the absence of legal recourse when things go wrong, the computer security risks, the high complexity and so on.
I'm not going to replace paying in cash for groceries with bitcoin. But it definitely has it's place as a currency. It's pretty annoying that the only things people ever hear cryptocurrency have almost nothing to do with cryptocurrency at all.
Exactly, and then you realize there is a lot more difficulty using crypto as a currency than actual currency, and then think "that was dumb".
I'm probably one of the few people who has actually purchased real (legal) stuff with crypto (at least in one of the only ways that was really feasible at the time - converting crypto to a gift card at a real store). I remember waiting in the furniture store for nearly an hour hoping for my block to get confirmed to purchase a sofa. "Gosh", my non-tech spouse commented sarcastically, "this really is so much better than a credit card swipe where I'd be done in 10 seconds."
This is not true at all, unless you mean in the short term. There has never been a 20 year period where the S&P500 has lost money, and only a few 10 year periods where it has.
If you are a long term investor and you invest in a broad index, you will make money.
The stock market is not a zero sum game where on person has to lose for someone else to gain. The whole pie is getting bigger.
Neither in crypto ;)
And of course past performance does not guarantee future results.
What do you expect when you set out to explicitly ignore and bypass everything ever done to prevent this kind of thing?
They owned bitcoin-equivalent on investing apps. These investors didn't control their own private keys and have their own coins.
It's odd that people think the general use of cryptocurrency would be happening without them. The incentives to just use crypto as a means of transmitting value are exceptionally low, and before exchanges existed, mostly negative due to the difficulty of conversion.
Which is probably why only a small set of the criminally minded put any effort into using it as a currency in the first place.
Over a 3 year period... 10$ a month and BTC actually comes up ahead of many other forms of investments.
https://www.bitcoindollarcostaverage.com/
You would be up 60% if you DCAd for 5 years.
Bitcoin was _never_ about speculation, and it was never intended as a store of value. However, it was designed to be deflationary in nature due to having a maximum of coins ever mined, or, more strictly, cutting down the rewards to half every 210k blocks mined).
And if I had to choose (which I don't, as I save in USD), I'd still prefer saving in BTC than in my local currency.
People living in thirld-world countries understand this.
Hodlhodl for example, you can find someone locally to swap cash with bitcoin.
It does not participate in the trade, just finds you someone to trade with.
No. They're a seller and you are a buyer.
With a usd/btc trade, you are either the seller or buyer, depending on your perspective.
I use hodlhold to sell unwanted dollars.
The eggs? No. The chicken, maybe.
> With a usd/btc trade, you are either the seller or buyer, depending on your perspective.
OK, so again; the person upthread "that uses Bitcoin strictly to remove the middleman" is removing what middleman? Whether you're buying from a local or Coinbase, there's the same setup of buyer/seller.
Replacing the middleman I definetly do not want (the govt and local banks) for the ones I want.
Bitcoin is the only tool that lets me do that.
The only problem is that you have to trust them (both the sellers and the buyers) or you can get scammed. But, that's never happened in 10 years of doing this, and my own corrupt government is guaranteed to scam me no matter what.
Because of this, we'll all be stuck with POS Ethereum. Be sure to thank your favorite Maximalist for that.
Because of this, we'll all be stuck with POS Ethereum. Be sure to thank your favorite Maximalist for that.
Vast majority = well over 50%
Inevitably = 100%.
So, "Well over 50% of bitcoin investors lose money 100% of the time".
Huh?
50% of coin tosses are heads 100% of the time.
The adverb "inevitably" at best doesn't do anything in that sentence (not unusual for adverbs), and at worst looks as if the claim is being embedded that a heads outcome can somehow be inevitable.
I am shocked. SHOCKED!!!... Well, not that Shocked. [1]
Darmok and Jalad at Tanagra. Shaka, when the walls fell.
[0] https://www.youtube.com/watch?v=pjvQFtlNQ-M [1] https://knowyourmeme.com/photos/900923-futurama
Currency is transparent about being negative sum per se. It's not designed to be held for long term, it's designed to create positive externalities by enabling trade. (The value-holding form of the U.S. dollar is the Treasury.)
[0] https://www.in2013dollars.com/us/inflation/2022?endYear=2009...
Meanwhile, the S&P 500 is up nearly 500% since 2009.
If you do not, sure. But cannot? Bitcoin markets have been quite liquid for a long time. Even during run ups to peak price you can sell millions of dollars of Bitcoin without significantly moving the markets. Then you can simply wire the funds to your bank.
It's essentially the same experience as selling a comparable amount of a popular ETF w/ a stock broker, except the bitcoin exchanges are somewhat more prone to waste your time with invasive and irrelevant requests for personal information.
The implication that bitcoin markets are meaningfully illiquid at the level of individuals is weird and wrong.
Now, if you want to talk some weirdo fringe 'crypto' stuff instead of Bitcoin, your mileage may vary-- some of it is reasonably liquid, some of it isn't. A lot of it is primarily or only traded at exchanges that don't support real USD, so to trade it for USD you have to first trade it for something supported at an exchange that has banking relationships (potentially something like tether if you like playing with fire-- but Bitcoin is probably a better choice). But that nonsense doesn't apply when dealing with Bitcoin.
That's only true if people buy BTC and just hold without ever selling.
You could have already realized profits on Bitcoin. That's the parent commenter's point. It works both ways.
The "study" only confirms the reader's bias.
From bottom of 2018 to the first top in 2019, it went up 435%.
From bottom of 2019 to the first top in 2020, it went up 60%.
From bottom of 2020 to the first top in 2021, it went up 1553%.
From bottom of 2021 to the second top in 2021, it went up 133%.
You could capture the gains of the S&P500 with less time in the market with that volatility. If you don't think the volatility is something you're interested in managing in your portfolio, then say that. I just can't wrap my head around this buy and forget attitude. When ANY investment reaches 2 standard deviations, take profits!
Which?
> people
Who?
You should at least admit I'm asking relevant questions. You've provided no worthwhile commentary for the asset/subject of the thread.
Let's try a different perspective on your comment...
"Someone who bought SPY on October 11, 2008 and held, still lost money 5 years later."
It's actually WORSE because you didn't have a single opportunity to exit for profit in that time. While Bitcoin had MANY occasions where it was in profit during the previous 5 years.
I now see from your comment history that you are the typical HN commenter that hates on Bitcoin every opportunity, regardless of how factual or relevant your comment is.
With an opener like that, you have to wonder about the quality of the rest of the research that went into this article...
So:
Do people lose money when they invest into crypto? Yes.
Do people lose money when they invest into Bitcoin? No (if their timespan is 5+ years).
Put it another way, for Bitcoin to retain its price, an exponentially increasingly number of people need to invest in it. Such a structure, when graphed, looks very similar to a certain geometric shape
What about the people who "invested" their money by sending it to FTX while all the media were presenting SBF as the altruistic white knight of cryptocurrencies?
All the while puking on Coinbase's CEO because he implemented a "no politics" at work policy.
The NY Times has been coming up with hit pieces after hit pieces criticizing Coinbase but, follow the money trail, repeatedly presenting SBF as the savior of cryptocurrencies. SBF was, sure as hell, employing lots of people looking woke enough. Doing you think that has anything to do with the second biggest donor to the democrats being SBF through his mom's fundraising?
And then everybody act suprised that the "vast majority of people" are losing money?
Do you think everybody is that blind? If you read the latest article about SBF it's nearly as if he was presented as a victim. What about some talk about what's seriously going on?
Bitcoin is to SBF/FTX what natural gas is to Madoff/Enron. Let's stop wagging the dog.
Today it's $17,000.
Today it's at $17,000.
> Decentralisation was always a phantom. At most it’s a way to say “can’t sue me, bro.” Every process in Bitcoin tends to centralisation — because Bitcoin runs on economic incentives, and centralised systems are more economically efficient.
How exactly does anything specific about bitcoin imply anything about decentralization in general? And how do we know that centralized systems are more efficient?
These quotes sum up the author's thinking:
> Bitcoin is not about the technology. It’s never been about the technology. Bitcoin is about the psychology of getting rich for free
> The marketing pitch is that the actual-money economy will surely collapse any moment now! And if you get into Bitcoin, you can get rich from this.
This says all that needs to be said about the author. Cherry picking ridiculous examples, making broad generalizations about the interest behind bitcoin, this author has all this in common with the news media.
I have a hard time taking anyone seriously who thinks it's their "moral duty" to shill for the central banks. These folks can churn out all the shitty blog posts and editorials they want, at the end of the day, they'll never be able to freeze wallets like they've frozen bank accounts. This is what upsets them
[1] https://davidgerard.co.uk/blockchain/2022/08/20/proof-of-sta...
[2] https://davidgerard.co.uk/blockchain/2021/06/27/bitcoin-myth...
There are ~56 million 'millionaires' in the world. Not even half of them can ever own 1 bitcoin.
Many jobless/formerly jobless bums have >1 bitcoin.
Oh no dumb people are buying stocks and losing money what can we do?
Ok restrict it so that only people with a proven track record of winning can play the stock market.
What?! Same result just with different winners??
It's zero sum. What a pointless hit-piece of an article/"study".
>“Users [are] being drawn to Bitcoin by rising prices—rather than a dislike for traditional banks, the search for a store of value or distrust in public institutions,”
I'm convinced.
In other news, Foxes overwhelmingly support vulnerable hen-houses...
https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusion...
With any asset, stocks housing or whatever, the people who don't know much about it will tend to buy near the top when all the articles are saying so and so was up 30% this year and 120% over the last three. The time to buy is probably when the press are saying it's all over for so and so or a few moderate while after that.
Back then, the bull case (market-cap approaching M1) was orders of magnitude stronger relative to the price than it is today.
The bear case remains the same (you lose all your money tomorrow when the hash is cracked or your government bans trading in it).
The maxims of "price is what you pay, value is what you get" and "are you willing to buy this if the market were to stay closed for five years after the purchase?" have felt very helpful in guiding my decision-making.
It also paid about a 2% yearly dividend over that time frame.
Until (or even if) the markets become stable somehow, "investing" and cryptocurrencies do not belong in the same sentence, ever.
Those who consider bitcoin a ponzi have a view of bitcoin given to them by people who never understood it in the first place.
It's not an investment and never has been.
When did one ever 'invest' in dollars?
Most people just aren't investors. They don't read the rules, they follow the hype.
It's like, ok, so Tesla autopilot crashes sometimes. Let's write an article on rubber because Tesla is a car and the car tyres are made of rubber. Rubber bad!
I'm fully aware that I'm in "old man rants at cloud" territory here, but it baffles me that someone wastes the one life they have writing this stuff, and that people waste their time reading it. And sure, fair, I'm here writing comments on HN. Writing an article is a lot more deliberate than that.
Outside of the development mailing lists I don't think I've seen any actually useful or valuable discussion since bitcointalk forums in the early days.
So glad that I didn’t put my entire life-saving into this.
That's now a year and a half's salary.
Gutted that I didn't put my life savings into it back then, although I pretty much have now (~95% of my net worth).
It's not the same investment at super expensive prices.
Who would have thought that the outgoing stream is thinner than the incoming one.
>Bitcoin has been around for decades....
Bitcoin came out in 2009, 13 years isn't decades.
Thats before even getting to the main body of the article.
Hype is a compounding agent in wealth transfer.
If (unprofessional investor) doesn't have a strategy to find or invest in value, then the value they throw at it will invariably disappear.
{Further scam-tastic sales pitch here.}
{Nice-looking link to sucker-chute.pig-butcher.scam here.}
While those stock pickers come out positive on average, they usually do a little worse than if they had just purchased low-cost index funds.
It's always going to be true that the average Bitcoin buyer lost money even if people higher in the pyramid have made a lot of money
The majority of people in the stock market do lose, because it's psychologically hard to buy and hold. A common outcome is to hold for years in a 401k and then panic sell at a big dip, or family emergency. Another is to buy hot stocks on peak years (word of mouth) and then lose (happening right now).
The same is true in cryptocurrency. If all you did was DCA buy and hold bitcoin over the past 3-8 years you are doing just fine.
I am also not equating stocks and cryptocurrency. Stocks give you a right to cash flow and coins do not. However, similar psychological challenges hinder all investors.