
Will Bitcoin Make a Good Investment? - CitizenTekk
https://beth.technology/bitcoin-investment/
======
ziddoap
Seeing so many comments (some here, but in general everywhere) still trying to
argue and convince people that BTC has no value and you might as well burn
your money.

BTC has been around for a decade, how many more decades does it need to be
around before people will admit that hey, maybe, for some reason, this has
_some sort of value_?

People still arguing that BTC has _no use_.. 10 years of usage, adoption, and
rising value would seem to offer a different opinion.

Is it going to be around forever? Who knows. Maybe it goes bust tomorrow, I
don't know.

What I do know is this: people are willing to buy it, sell it, and trade for
it. The value goes up and down. To me, that makes it a currency that you may
be able to invest some money into. Maybe you make some money, maybe you don't.

I would even argue BTC falls under the traditional definition of invest, which
is:

> _expend money with the expectation of achieving a profit or material result
> by putting it into financial schemes,_

When people buy BTC, they are expecting to achieve a profit. BTC is a
financial scheme. Seems fairly cut and dry to me.

~~~
pmiller2
Ok, what can I buy with BTC vs what can I buy with USD? BTC is useless in
comparison.

What exactly do people mean when they say they expect to make money on BTC? Do
they mean they’ll get more BTC, or that they can sell it for USD or some other
currency? Why do you think that is?

~~~
ziddoap
I don't remember saying anything you can buy with USD you can buy with BTC. I
never even hinted that BTC was a replacement for USD in any sense.

I don't know about everyone else, but here's what I mean when I say you can
make money on BTC: Buy low, sell high.

~~~
pmiller2
You said people were arguing BTC had no use. I’m asking what I can use it for?

And, when you say buy low, sell high, low and high relative to what?

~~~
ziddoap
Do you want a literal list of things you can do with BTC? I feel like your
trying to draw me into an argument I never made. I don't think BTC is going to
replace USD, I never said it's going to replace USD. But you're in an
alternate reality if you don't think people are doing _anything_ with it. What
do you think people are doing with BTC? Just buying it and putting it into
cold storage forever?

And again, your second question is just baiting for an argument I never made.
Of course I mean relative to fiat currency, what else would I have meant?

~~~
pmiller2
Ok, what legitimate, legal use does BTC have where it has an actual advantage
over USD, then? If there is none, then that’s what I mean by “BTC is useless.”

My second question was getting at precisely the same point: that fiat currency
is strictly superior to BTC.

If you can’t provide a single legitimate use for it other than as a magical
money machine, I would take that as evidence that it’s useless.

~~~
ziddoap
It's odd that if something doesn't have an advantage over something else that
it's immediately useless. I also don't know where you think I said that BTC is
superior? Something doesn't need to be superior to have a use.

Why do you keep moving the goalposts? First, it's completely useless. Now it
might have a use, but if it's not superior it might as well be useless. Oh,
and now it has to be legal (in the USA? Mexico? Russia?).

To indulge you, here's a transfer of 194k BTC for $0.00[1]. How much would
your bank charge you for an international wire transfer of a few hundred
million dollars or more?

[1][https://www.blockchain.com/btc/tx/1c12443203a48f42cdf7b1acee...](https://www.blockchain.com/btc/tx/1c12443203a48f42cdf7b1acee5b4b1c1fedc144cb909a3bf5edbffafb0cd204)

------
juanbyrge
Bitcoin is not an investment. It has no underlying rate of return. When you
invest in stocks you get dividends. When you invest in bonds you collect
coupons. When you invest in real estate you collect rent. Bitcoin is
speculation. You are just hoping somebody comes.along and pays more for it
than you did. In that sense it's more like gold and silver.

~~~
liquidise
This strikes me as a somewhat semantic argument. Many stocks don't pay
dividends. Flipping houses would also fall outside of your definition of
investing. Buying gold has also been a relatively safe "investment" strategy
as well, speculation or not.

Every form of investment is, at its core, speculation on some level. If i pour
my savings into Apple and they tank, the dividends would pale in comparison to
my losses.

~~~
thtthings
Every asset that produces an Income or has a possibility of producing income
in the future is an investment. Everything else is speculation.

Buying a commercial property and renting it out is an investment. Buying a
house in the hope of selling it for more in the future is not investment.

Same goes for Gold, Bitcoin, momentum trading in stocks in not investment.
Buying a stock that does not pay dividend but is a real business that produces
something is an investment.

~~~
cookingrobot
By that definition startup investors are speculators not “investors”. That
seems like an overly narrow definition of the word, compared to how it’s
normally used.

~~~
marcosdumay
What startups are those that can never produce income? And why are people
working on them?

~~~
thtthings
How do you know they will never produce income? Can you see the future? If you
can, please tell me.

------
2bitencryption
Once thing I've noticed about Bitcoin is that there are many "alt-coins" that
seem to deliver better on Bitcoin's promises from a technical perspective, but
those coins are forever stuck in Bitcoin's shadow because BTC has that first-
mover advantage. And as a currency, the first-mover advantage is HUGE, because
who wants to convert their investments from a hugely popular coin to one that
could disappear tomorrow?

So everyone seems stuck -- we agree cryptocurrency can be an amazing idea, and
the first version of it is something of a technical (and economic?) miracle,
but now we're stuck with the V1 flaws forever (unless the group governing it
decides to 'fix' those flaws, but there's another issue, I don't want you
messing with how my money works...)

~~~
eugeniub
What first mover advantages does it have exactly? I know many people who have
bought bitcoins, but absolutely zero people who use it in their day to day
lives.

~~~
ziddoap
The first mover advantage in this case is the fact that early adopters of
crypto bought BTC, because BTC was all there was.

Now that those people already have BTC, they are less likely to purchase a
second coin. For one, they already have money invested in the space. Secondly,
BTC has shown that it has staying power - outlasting many altcoins which came
after it - which further solidifies BTC as the top contender (for now).

So, those already invested in BTC have little impetus to change from BTC to
another coin == a first mover advantage.

~~~
citrablue
Isn't it just as plausible that early adopters bought BTC because that's all
there was, then bought altcoins as they appeared in order to diversify their
crypto portfolio? It'd be interesting to find out if there are more investors
in "crypto" as a strategy versus BTC specifically.

~~~
ziddoap
I mean, of course that's plausible. If I gave the impression that it wasn't,
my bad. I was just hoping to clarify to eugeniub why BTC enjoys a first mover
advantage, and why first mover advantage has nothing to do with how often
"people use it in their everyday lives".

Assuming a limited amount of resources to invest, someone who is already
invested in X, is less likely to remove their money from that and invest into
Y, unless Y is _really_ good. All things equal, there is no reason to move
from X to Y if X came first and you already invested into X.

So, the first mover advantage for BTC is the fact that new coins need not only
be equal (in the eyes of the investor) to BTC, but better enough to convince
that investor to move out of BTC in favor of that coin. People who are, _in
addition_ , buying other alt coins are still solidifying BTC's first mover
advantage if they do not remove their investment in BTC in favor of something
else.

------
pmiller2
Not one word here about why BTC should be worth anything at all. Who cares if
someone spent time and electricity to mine it?

The USD is, along with every other major, government-backed currency, already
an almost 100% digital currency. I don’t see any advantage there. In fact, BTC
has the disadvantage of no major government backing it.

If nobody is required to accept it, and I can’t do anything with it otherwise,
what good is it?

~~~
sedeki
What exactly does it mean when people say that a currency is backed by a
government? ”Backed” to me implies, e.g., redeemable for gold which is clearly
not the case for the US dollar. Is it that the government issue bonds
denominated in that currency? But that has nothing to do with the money supply
per se...?

Please explain.

~~~
Pinckney
The US government accepts payment for taxes in USD. Even if an American wants
nothing to do with USD, and conducts all their exchanges through bartering,
they will need to acquire some at some point in order to make tax payments.
The value of USD can't fall to 0 as long as the federal government retains the
ability to impose taxes.

~~~
Udik
That sounds like a strange argument. Nobody can pay their taxes in gold, still
gold has a value, right? And on the other hand, the value of the USD _can_
fall to practically zero, as it happened to many other currencies before,
despite the governments of the respective countries imposing taxes in those
currencies.

Bitcoins are, of course, _nothing_. But it's a nothing that is pretty
guaranteed to stay, to be in rigidly limited supply, and that is easily
exchangeable. People give it a value that depends on their expectations of
other people's willingness to buy them. Would you buy 10 bitcoins from me at
$1000 each? I bet you would without hesitation. We're talking of giving a $1k
value to something that is useless and completely immaterial, yet you just
know it's an excellent deal.

~~~
pmiller2
Gold has value because it’s useful, among other things. That base level of
value is why people started making coins out of it in the first place. It’s
properties as a physical metal make it easy to store, transport, and protect,
all of which are good properties to have as a currency.

~~~
mopsi
Industrial demand is only half the story. The value of gold also lies within
the fact that unlike fiat currency, it cannot be created out of thin air.
Global stockpiles of gold are well known, annual production is small and
predictable.

This means that if you sell a car for gold, you can expect that gold to be
worth the value of a car a year or two from now. Fiat money does not offer
such assurance, it can lose most of its value almost overnight if government
turns on printing presses or fucks up in some other way (see Turkish lira or
Venezuelan bolivar).

Cryptocurrencies mimick the same properties of gold. Their "base value" comes
from the speed/ease of transactions and other useful features (eg cannot be
confiscated). Their supply is algorithmically limited and well-known in
advance.

~~~
pmiller2
Industrial demand isn’t the entire source of gold’s value, that’s true. I was
more referring to it’s usefuln being the source of its value 2700 years ago
when people started making coins out of it.

I would argue that, beyond industrial demand and use in jewelry, the thing
driving the price is primarily speculation.

> ...if you sell a car for gold, you can expect that gold to be worth the
> value of a car a year or two from now.

What you’re saying is that the car to gold ratio should be constant if your
understanding is correct, right? I don’t have data for cars, but I do for
houses, and your conclusion is false: [https://www.jmbullion.com/investing-
guide/pricing-payments/u...](https://www.jmbullion.com/investing-
guide/pricing-payments/us-house-to-silver-ratio-us-home-to-gold-ratio/)

Re:your criticism of fiat money, I would accept that if I lived in Venezuela,
Zimbabwe, or Turkey. But, I’m talking about specifically the USD and other
established currencies such as GBP and EUR. There is literally no danger that
the US, UK, or EU is going to experience hyperinflation short of near total
governmental collapse.

Oh, and if you think BTC can’t be confiscated, I have news for you:
[https://www.theblockcrypto.com/2018/11/07/analysis-the-u-
s-h...](https://www.theblockcrypto.com/2018/11/07/analysis-the-u-s-has-seized-
nearly-200000-bitcoins-to-date-global-confiscations-are-up-to-453000/)

~~~
mopsi
> What you’re saying is that the car to gold ratio should be constant if your
> understanding is correct, right?

No. I am aware that the value of gold fluctuates, but it is safer than many
national currencies, stocks of failing companies or overvalued real-estate.
The amount of gold in the world is known and stable and there's no way to
massively "print" gold to crash its value. This stable supply is mimicked by
algorithms built into cryptocurrencies. As long as there is demand for a
something, and there is limited supply of it, it will be worth >0\.
Cryptocurrencies satisfy both requirements: they are limited in supply and
have demand because of their usefulness (fast & cheap transactions).

> Re:your criticism of fiat money, I would accept that if I lived in
> Venezuela, Zimbabwe, or Turkey. But, I’m talking about specifically the USD
> and other established currencies such as GBP and EUR. There is literally no
> danger that the US, UK, or EU is going to experience hyperinflation short of
> near total governmental collapse.

No need for hypotheticals. The government of Cyprus confiscated 47.5% of all
holdings above 100 000 EUR in 2013 during its banking crisis.
[https://eu.usatoday.com/story/money/business/2013/07/29/bank...](https://eu.usatoday.com/story/money/business/2013/07/29/bank-
of-cyprus-depositors-lose-savings/2595837/) Cyprus is full member of the EU
and Eurozone, so these risks are not limited to corrupt and failing third-
world countries.

> Oh, and if you think BTC can’t be confiscated, I have news for you:

Most cryptocurrencies cannot be confiscated by network nodes like traditional
banking institutions can freeze or rewrite payments and accounts (see Cyprus
above). Only the one who has private keys controls the assets. This is a major
feature.

~~~
pmiller2
Can you spot the effect of the Cyprus bailout on the value of the EUR in this
chart? [https://www.fx-exchange.com/currencyimages/2013/eur/the-
year...](https://www.fx-exchange.com/currencyimages/2013/eur/the-year-
of-2013-eur-usd-exchange-rates-history-graph.png)

What happened immediately after that?

~~~
mopsi
If you sold a house for 300k the month before and then government confiscated
a third of it, I doubt the value of EUR was of much consolation.

Had the 300k been held in cryptocurrencies, the government would've been
powerless to seize a part of it.

~~~
pmiller2
I thought that was still responding to the stability of the Euro. You’re right
that if I had 300k EUR in a single, uninsured bank account, the government
could confiscate it. That still doesn’t address the fact that BTC can be
confiscated, as I pointed out previously.

You could have also taken the prudent measure of not having that much money in
a single bank account.

~~~
mopsi
> That still doesn’t address the fact that BTC can be confiscated, as I
> pointed out previously.

No, it cannot. No government can issue an order to seize 47.5% of everything
over 10 BTC (ca 100k EUR) from a list of accounts. Third parties cannot freeze
cryptocurrency accounts or rewrite their balances. That's the major innovation
of distributed ledgers (blockchain).

This is a fundamental difference compared to traditional banking where account
balances are just fields in a writable database.

At best, they can seize private keys that control accounts, but to achieve
that, they must confiscate personal devices (phones, tablets, computers) and
examine each of them with forensic tools. This is not viable on a large scale,
especially when considering that private keys are easy to hide with plausible
deniability (using encryption, steganography, memorization, etc).

News stories about "confiscated" cryptocurrency are nothing more than private
keys found on seized computers. No-one can take control over any account by
any other means.

~~~
pmiller2
> No-one can take control over any account by any other means.

I see. I suppose if the US government orders, say, Coinbase, to turn over
control of someone’s account, they won’t do it? You have an example of that
happening, right?

~~~
mopsi
Coinbase has no control over any cryptocurrency accounts besides their own.

Each cryptocurrency user generates a private key that becomes a wallet and is
used to sign transactions. These signed transactions are then broadcast to the
internet for balance keeping nodes to keep track of. They do it in a globally
distributed manner (no central entity) and earn rewards for their work (like
collecting a tiny fraction of the transaction as a fee).

The private key is never disclosed to anyone.

------
srib
Except for a small window around the peak in December 2017, if anyone bought
bitcoin anytime during its existence, they would be profitable now.

~~~
kartan
> Except for a small window around the peak

Most people bought during the peak, that's why it was a peak.

As any other pyramidal Scheme the only way to win is to be there first. Later
on you are just trying to put other people into the scheme to regain some
losses.

~~~
srib
> Most people bought during the peak, that's why it was a peak.

There is no cure for jumping in with your emotions and money into markets.

How is it any different from buying stocks at its peak? If you bought SPY
during 2008 peak bubble, you had to wait for 6-7 years to even break even!

------
jamisteven
Short answer: hell no. What gives currency value is how often people use said
currency to purchase goods, nobody uses Bitcoin, not to the extent of any real
currencies anyways.

~~~
zed88
By that logic, gold should be worthless. It isn't.

Bitcoin will probably never be a currency equivalent to fiat, but it surely is
a store of value in the long term.

~~~
baq
Gold has practical, useful applications. Bitcoin is pretty much wishful
thinking at best. I’m not sure if bitcoin is worth the CO2 emissions mining it
created.

~~~
Udik
> Gold has practical, useful applications.

Yes. But they don't remotely justify its value, which has been established
long before its technological applications.

~~~
Toine
They do, gold is rare and useful, supply and demand, that's all.

~~~
Udik
Bitcoin is rare too, and has supply and demand too, so what?

~~~
pmiller2
You left out “useful.”

------
kleer001
IMHO there's only one thing that makes Bitcoin valuable and that's human
emotion. And people LOVE Bitcoin, forever.

~~~
thefounder
They love it until they loose. It's same with the casino.

~~~
kleer001
Sure, and casinos are insanely profitable. Unless you fiddle with them too
much. One can bankrupt a casino, but it takes a certain insanity.

~~~
thefounder
The casino can refuse to pay so I doubt one can bankrupt a casino.

~~~
kleer001
I meant as a casino owner with over leveraging, the same way that individuals
can bankrupt themselves.

------
xiphias2
There's no such thing as secure third-party custody, as the insurance
companies (rightly) limit the amount of total insured Bitcoin volume.

For years I heared people talking about how important role institutions play,
but luckily so far Bitcoin remained people's money.

~~~
thefounder
People's money? The majority of bitcoin is held by various "people" but that
doesn't make it people's money.

------
rtempaccount1
Any article which talks about Bitcoin as an investment without mentioning (at
least in passing) the currently unregulated exchanges and the role of Tether
in the price, is missing a large part of the picture.

The current set of exchanges which are setting the price are totally
unregulated banks (effectively) and with Tether (a "stablecoin" that isn't 1:1
backed and which has been rapidly inflating it's supply) there are significant
concerns about how much of the price is really reflective of demand.

------
naveen99
Bitcoin forces reexamination of custody issues from first principles.

Do countries smaller than the largest 100 corporations really need their own
central banks ? And if they are themselves consumers of the ecb or the fed,
they have custody issues also.

Democracy is the custody of people’s power with elected representatives. With
immigration people can reallocate the custody of that power.

Not all people need 100% 3rd party custody of money.

Also, bitcoin makes it easy to detect theft and audit 3rd parties more easily.

------
thefounder
Let me translate that for you:

Would x spins on a slot machine make a good investment?

Btw I have 1.x bitcoin in my wallet. Not as an investment though.

~~~
ThatPlayer
If the slot machine had a > 50 percent chance of winning, yes.

Not saying Bitcoin is a good investment.

------
thtthings
check out what Munger says about bitcoin, speculate if you want but don't bet
the house on it!

[https://www.youtube.com/watch?v=NBVDqAHQ4-M](https://www.youtube.com/watch?v=NBVDqAHQ4-M)

------
dhosek
No.

------
pessimizer
I'm starting to turn the corner on this; if you can pick it up on one of its
lows, which are pretty extreme as far as I know, like 1/4 of peak, and hold
without regard for daily movement, you will probably make money.

I think Bitcoin is largely taking value from individuals trying to stash money
pilfered from the public in some way (usually through their public offices,
but sometimes through embezzlement, theft, or a previous illegal accumulation
that has to be moved in the face of imminent arrest), and opportunities for
this sort of large-scale theft come rarely. So upward movements are caused by
small groups and happen very quickly. After the theft is made, the first
priority is to get the money out of the country (or tied for first with
getting your children out of the country), then to get one's self out of the
country. The tolerance for loss in exfiltrating this cash is virtually
unlimited, in exchange for speed.

Small pops and falls caused by individual incidents will sometimes coincide
making a larger pop, and periodically some legal loophole (or prosecution
pressure) will open up in come country that puts a lot of people in this
situation at the same time. This is inevitable. The small pops are muted due
to the selling of previous market moving buyers. The big pops are virtuous
circles; they exhaust the supply of previous smugglers, who cash out, and the
resulting acceleration in the upward price movement filters to the media,
where knife-catchers step in. You probably want to time your sales to the
knife-catchers, anticipating the first articles reporting on the price rise.

There will always be western countries where you can cash out. There's no way
to suppress a currency designed for money laundering in a west that is
entirely financial services and intellectual property; there will always be
some official that can be bribed, or a country that needs the tax receipts.
Bitcoin can do to nations what Uber and AirBnB do to cities.

I'd bet the floor on bitcoin would probably be a good measure to determine
growth in the general world corruption rate; the more good pops, the more
people feel like they can hold a little bit longer.

Think of cartels burying cash in fields, and how much they'd be willing to pay
to make it spendable. The only other option is to burn it. Going into business
to help them from the comfort of your living room is not a bad business.

This article is not good, though, just nonsense reassurance mostly (bitcoin is
small, but things that become big start small, so bitcoin will be big.) Worse,
the _more_ large institutions are holding bitcoin, the _less_ benefit for
individual investors, not more, because they'll absorb the big pops, and do it
in a way that they end up holding an optimum amount of BTC all the time using
their international nature and their ability to shift losses to offset gains
for tax purposes (in short, regulatory arbitrage.) Bitcoin could ultimately
end up as an exclusive partnership between thieves avoiding capture and banks
avoiding taxes. A sort of high-speed virtualized real estate.

/flight of fancy

------
human_banana
beth.technology

Solid source.

------
Donzo
Yes. It will make a good investment:

[https://twitter.com/CL207/status/1142651211310485504?s=20](https://twitter.com/CL207/status/1142651211310485504?s=20)

50-100k a coin by December 2021 is what many are targeting this time.

