So now that you've lost everything, you still end up owing the IRS possibly hundreds of thousands of dollars.
It sounds like the article is mostly about those people: if you crunch the number the examples they give of people who are now wreaked purchased bitcoin at ~$3000. It's currently trading at over $10000.
(I suppose technically they could have just been day trading bitcoin, but given the price history it would have been somewhat difficult to lose money starting from a $3k price just by trading BTC/USD without additional leverage, except via taxes)
Moreover, even if your tax authority wouldn't currently have a way to know-- the penalties for cheating can be very serious so it's in your best interest to comply with your obligations.
This is essentially how all income/gains tax works in the west: Governments have very limited ability to catch people, but they scale the penalties so that the risk from audits and whistle-blowing are enough so that most voluntarily comply. After all, cash is quite anonymous especially for small amounts.
If you're constrained to spend your money only in ways that could never be found in an audit or revealed by a spurned lover, did you ever really have that money in the first place?
But yes almost all cryptocurrencies are pseudo-anonymous, including Bitcoin.
It's the altcoins that continue to get crushed right now against bitcoin. Many are still hitting all time lows against bitcoin as bitcoin's dominance has increased (officially) to 70% of the total crypto marketcap but probably higher in reality.
Marketcap is generally a pretty poor metric to use, as it can be gamed in various ways.
Bitcoin doesn't really have this problem - the trading volumes are much higher and there is a healthy OTC market for huge trades.
I've talked to loads of people with the same sort of story. Truth is that I never believed BTC could be worth what it is and in a way I still don't. I think its valuation is ludicrous given its economic design issues and scaling problems.
My take away from the whole saga is that it's totally debunked any notion that I had that markets or their participants are rational. I honestly find it a bit depressing. Maybe I should give up trying to do useful work and invent the next pet rock fad.
In a way the person who bought that famous pizza for 10,000 Bitcoin only lost "wealth" that wouldn't have existed without the buzz generated by that transaction.
But yes, this is not an answer that applies to deflationary currencies in general, nor to people who came later to Bitcoin than I did.
Edit: Although again, the only way Bitcoin can appreciate is if people do spend it. Tragedy of the commons.
hindsight is 20/20, but wow...
Briefly considered generating more but didn't bother.
>Borg told City Lab that they’re usually educated, with some assets in their portfolio, but are worried about their retirement. “They earn more than $60,000 a year, and have at least an adequate handle on technology,” reports CNBC.
I think this is very understandable from my perspective. I'm relatively young, smart and have a good job. I'm tech savvy, but I'm also numerate. Because I'm numerate I can look at the house I'd like to buy - it's £3/4/5m, I earn >£100k, but probably will never earn >£300k (numbers deliberately fuzzed for privacy reasons). So I look at my situation and say "I can never get to that house that I really want". It's not a mansion, it's just a nice detatched house in a good part of town.
From that perspective I completely understand this compulsion to start betting. The step from working middle class to comfortably well off is just an unimaginable step.
You can only be talking about London here because in most of the UK you can get a nice detached house in a good part of town for well under a million. Probably under half a million in most places.
Earning over £100k pa is also not "working class". You're earning several times the national average wage. If you're not feeling "comfortably well off" on somewhere between four and ten times the average wage, you might want to look at what you're doing with your money.
Just saying that even if they didn't get out, they still did marvelously.
BTC went from 4000 USD six months ago to over 10 000 USD today.
A lesson to us all, absolutely. Know damn well what you're doing (and prepare accordingly) before you start trading with someone else's money.
Put it another way, you should put 132x more money into stocks than you should Bitcoin. If Bitcoin were to steal market cap from the investment markets, you'd be well positioned for transition. If Bitcoin were to become worthless, you'd still be well positioned.
Bitcoin will one day become worthless but it may be a while before that happens. The speculation is whether the new universal currency will kindly be available to prior bitcoin holders as an airdrop or fork, or whether it will be a brand new cryptocurrency without any ties to Bitcoin. So far, no cryptocurrency has overtaken bitcoin and the next 10 by market cap don't look like they will overtake it soon.
Planning for the additional (and painful) tax complexity in advance is advised. If you don't how to do taxes yourself, it won't be fun to pay an bitcoin-specializing accountant $300-$800 each year because you bought Bitcoin once.
Finally in August 2017 I finally jumped in and made well over 500k Euro in profit, but I kept it too long so I lost 75% of that, I am really glad I took my initial investment out, even though it would have been worth more today.
I did not know anything about trading or reading charts when I started, it would have made a huge difference for me.
Since the beginning of 2018 I have invested most of my free time into understanding trading / markets and programming indicators and market analysis tools. I feel much more confident in trading now and for me it is a good way to make more money.
I like the proverb 'Give a man a fish and he will eat for a day. Teach a man how to fish and you feed him for a lifetime.'
Words to live by.
Tbf, way smaller tbh, but the pump shows no signs of decreasing over time, so we'll probably get there in the end. Crazy right
I surely do. I'm a Boglehead, I like to read that stuff.
If you are unsure of what happened (and why you should have been on the sidelines), please visit Bogleheads.org. You will learn that anyone can become relatively wealthy given a little discipline and a lengthy working life. It really works.
[yelling] Never put your own money in the show!