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Bitcoin

Is Bitcoin Becoming a Good Investment? (inc.com) 177

Posted by EditorDavid from the buying-low-selling-high dept.
The price of Bitcoin "is surging again," now up to more than $6000, writes Inc. columnist Eric Mack: In its decade-long history, the value of the pioneering cryptocurrency has actually followed a pretty reliable trajectory. That is to say, over the full term Bitcoin's value has only grown, much like many stocks, real estate and precious metals. It has seen dramatic run-ups in price followed by painful crashes, but it has consistently retained a significant portion of its previous gains each time it plummets. In other words, Bitcoin has reliably taken two steps forward and only one step back when it tanks. While the crypto captain lost roughly 75 percent of its value after peaking at a price of almost $20,000 per digital coin at the end of 2017, its lowest price from the last twelve months was still double where it stood in May of 2017.

Now, that price point is up again by 75 percent from its bottom in January, leading many to wonder if another great run-up in price could already be underway. If that turns out to be the case, and Bitcoin follows its historic pattern of increasing in price by an order of magnitude, we could be looking at $100,000 per Bitcoin....

A few other factors support the idea that this latest Bitcoin recovery should be taken seriously. As CNBC reports, institutional investors have taken an increasing interest in cryptocurrencies... Of course, there's still plenty of naysayers, headlined by Warren Buffet, who continue to maintain that crypto is nothing more than the latest bubble. But if that's the case, how many times will it burst and refuse to die only to come back stronger? While $6,000 is well below the 2017 high price, it's worth noting that the first time Bitcoin crossed the $6,000 point was in October, 2017.That was only two months before tripling in price to reach its peak. So when cryptos get up a head of steam, they tend to trigger all sorts of FOMO and go "parabolic."
A disclaimer at the bottom of the article notes that its author owns "a small amount of Bitcoin and a few other cryptocurrencies."

"Can't wait to see what the next few months hold for Bitcoin," his article concludes, "and the slew of cryptos that tend to follow its price chart."
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Is Bitcoin Becoming a Good Investment? More

Is Bitcoin Becoming a Good Investment?

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  • Still thinly traded. (Score:4, Insightful)

    by HornWumpus ( 783565 ) on Saturday May 11, 2019 @10:41AM (#58573896)

    Price is easily manipulated by miners 'trading' among themselves, as it was in the past and will be again.

    Has anybody been paying attention? The principle is sound, bitcoins implementation is broken.

    Basically, treat it like a penny stock. Spot the pump and dump, then dump before the pumper does.

    • Re: (Score:1)

      by Anonymous Coward

      All this talk of pumping and dumping is making me horny and needing to poop.

    • Re:Still thinly traded. (Score:5, Interesting)

      by Registered Coward v2 ( 447531 ) on Saturday May 11, 2019 @10:58AM (#58573952)

      Price is easily manipulated by miners 'trading' among themselves, as it was in the past and will be again.

      Has anybody been paying attention? The principle is sound, bitcoins implementation is broken.

      The challenge as I see it is liquidity. Can you dump several million, or even 500k at one time? If not, you're forced to ride the roller coaster as you try to collect your gains. More to the point, does the exchange have the cash reserves to cash out a significant portion of their holdings without having buyers on the other side? If not, assurances you have no withdrawal limits are worthless. I suspect most are relying on matching sellers and buyers for a small cut and a significant withdrawal would either bankrupt them or they would only cash in a smaller amount.

      Basically, treat it like a penny stock. Spot the pump and dump, then dump before the pumper does.

      Certainly, the challenge is to spot the dump and dump a large amount at one time; and then actually getting cash for a significant withdrawal.

      • The challenge as I see it is liquidity. Can you dump several million, or even 500k at one time?

        No.

      • Can you dump several million, or even 500k at one time?

        Nope, not as far as I can tell. There doesn't seem to be any place that will give you $500K in cash or gold or diamonds Bearer Bonds or whatever for Bitcoin.

        That, to me, is a red flag.

        I can't walk into my local car dealership and buy a car from them in Bitcoin, and the same goes for real estate or other tangible goods. Sure, there may be exceptions but that's what they are: exceptions.

        • You also can't pay a car or real estate in gold bars, that doesn't mean gold bars are worthless.

          • You also can't pay a car or real estate in gold bars, that doesn't mean gold bars are worthless.

            Oooh, I don't know...I bet there are indeed car dealers that would take gold bars (after an assessment) in exchange.

          • You also can't pay a car or real estate in gold bars, that doesn't mean gold bars are worthless.

            I can guarantee you gold bars are more likely to be accepted as payment for a car or a house than bitcoin.

            • Re: (Score:2)

              by PRMan ( 959735 )
              There was a guy on the BitcoinTalk forums in the early days that bought a Lambo for bitcoin.
        • The even bigger problem is that a large quantity of Bitcoins are held in a few dozen wallets. That makes Bitcoin prone to price manipulation.

          • The keys to those wallets may have been lost.

            The ledger is public. There's no reason to fear manipulation. Anyone can see those wallets are not being used for manipulation.

        • Re: (Score:2)

          by PRMan ( 959735 )

          Of course you can. If I had $1 million worth of bitcoin, I could go to pro.coinbase.com and trade it for cash right now in a single trade.

          Coinbase Limits [coinbase.com]

        • Can you dump several million, or even 500k at one time?

          Nope, not as far as I can tell. There doesn't seem to be any place that will give you $500K in cash or gold or diamonds Bearer Bonds or whatever for Bitcoin. That, to me, is a red flag.

          There are quite a number of places that will give you $500K in illegal drugs, dubious-legality weapons, and similar. Mind you, that's an even bigger red flag.

      • Re: (Score:2)

        by Dunbal ( 464142 ) *

        Liquidity is basically the number of transactions over time - ideally from different buyers and sellers. Lack of liquidity means there are not as many transactions, meaning there are no buyers and sellers. So you've basically defined the problem as "nobody wants bitcoin because nobody wants bitcoin". In a way, that's true. If more people wanted bitcoin, then more people would want bitcoin. However in no way does it give any insight as how to get from here to there.

        Dumping "a large amount at one time" and

        • Re: (Score:2)

          by PRMan ( 959735 )
          What are you talking about? People constantly trade 10 or even 50 bitcoins in a single trade all day long. I've even seen 100 at a time on occasion. You can set a limit and wait or trade into the market immediately and you can see ahead of time exactly how far into the market that would take you price-wise. So you would have a pretty close rough idea how much you would make (of course that can change in the split-second before you hit the button like all trading platforms, but shouldn't change much).

      • Re: (Score:2)

        by PRMan ( 959735 )
        Yes. You can trade for that much cash on CoinBase. It may take longer to get it out (daily limit on withdrawals), but I can't imagine many financial institutions that would wire you "several million" in one fell swoop without a ton of setup first.

    • So, obviously you are taking advantage of this easy-to-manipulate market and are raking in millions of $. Good for you, you winner.

      • 'Treat it like a penny stock'...that implies a strategy, but it also implies you're a fool for even trying.

  • No (Score:2, Interesting)

    by rsilvergun ( 571051 )
    bitcoin's price is mostly tied to speculation, money laundering and drugs. Speculation is just gambling on a "Greater Fool", gov'ts got wise to the money launder and are cracking down and throwing folks in jail and eventually we're going to legalize drugs. At the very least Marijuana (the only Dem running for President right now that won't legalize pot is Biden, for example).

    I don't think it'll ever go away since there's always gonna be some money laundering (it's useful for layering even if you can't u

    • > bitcoin's price is mostly tied to speculation ... Speculation is just gambling on a "Greater Fool"

      And that's why when someone asks "is Bitcoin a good investment", the answer is "no". Because whether Bitcoin is good or bad, it's a gamble based on speculation. It's not a bad investment, it's not a good investment, it's not an investment.

      You *invest* $10,000 in a machine which produces $200,000 of widgets. You spend some value (represented by money) in order to produce something of greater value.

      You *in

      • Re: (Score:2)

        by PRMan ( 959735 )
        I just finished putting one daughter through school with no debt. Working on the second daughter soon. Will put her through without debt if it continues to go up. It's been a great investment for me.

        • You must be a billionaire! Otherwise that's impossible. That's what I've read on Slashdot, anyway. How did you do it?

          How *I* did it is for my bachelor's I went to a state school, WGU.
          For my master's, probably the number two school in my field is Georgia Tech. Georgia Tech has an online master's degree that costs just a few thousand dollars - minus the $1,500 / year tax credit.

          How did YOU do it? Save $200 / month for several years? Did that investment quadruple over time?

      • Re: (Score:2)

        by DrXym ( 126579 )
        Bitcoin is about as sound an investment as a ponzi.
    • ALL currency's value is tied to speculation. The 'money laundering' is an insignificant % if shapeshift's data is any indication. Drugs were historically a driver of bitcoin price but haven't been in ages. You have no idea what you're talking about.

      • ALL currency's value is tied to speculation.

        I speculate that I'm going to have to pay taxes, therefore I keep some local currency. This is not a gamble I see myself loosing out on.
        Afaik very few people have stashed cash as speculation, it would only make sense if there was a high rate of deflation and I have never heard of anyone expecting to get rich doing so.

        • Of course there is currency speculation so I take that part back, but I highly doubt that it has a very strong influence in currency valuation. I can only think of Soros speculation against the fixed exchange rates of any notoriety.

          • Soros is one trader. The currency markets trade every day is probably at least 1000x what he does. He's a big fish, but he's only one fish in an ocean of such fish.

        • I speculate that I'm going to have to pay taxes, therefore I keep some local currency.

          You are free to do that. You can do both.

          Afaik very few people have stashed cash as speculation

          It's more about flows than stocks. The flow matters a lot.

    • Re: (Score:2)

      by PRMan ( 959735 )
      Yep. It's gone up $1000 a month for the past 3 months. Clearly draining off.

  • Price != Liquidity (Score:5, Insightful)

    by Rob Cebollero ( 242701 ) <thecenterfordece ... AT gmail DOT com> on Saturday May 11, 2019 @10:51AM (#58573926)

    There is no story for Bitcoin except "the price goes up," so it becomes an existential imperative to make sure that keeps happening.

    When distribution is even more comically concentrated in the hands of a small minority than virtually any other well-known commodity, replaying the bubble script over and over is the rational thing for them to do.

    • There is no story for Bitcoin except "the price goes up," so it becomes an existential imperative to make sure that keeps happening.

      When distribution is even more comically concentrated in the hands of a small minority than virtually any other well-known commodity, replaying the bubble script over and over is the rational thing for them to do.

      Of course. that allows them to cash out over time, dumping fewer amounts when the market is high and even buying back when it is low to drive it back up and sell. They don't have to worry about a huge crash since they can prevent a significant percentage of the coins from ever entering the market; all they have to do is ride the roller coaster over time. As long as there are greater fools to teach a lesson in basic economics and finance they are in business.

    • Re: (Score:2)

      by PRMan ( 959735 )
      Distribution is literally world-wide to millions of people. How is it "comically concentrated"?

  • As the disclaimers always say (Score:1)

    by Anonymous Coward

    "Past performance is no guarantee of future results. People can and do lose money. Before investing, obtain a prospectus and read it carefully."

  • Hell no (Score:2, Interesting)

    by Anonymous Coward

    Bitcoin is surging because the Tether/Bitfinix fraud has been exposed and Binance has frozen withdrawals. Bitfinex has been printing Tether out of thin air without anything backing it and then that Tether is used to buy Bitcoin, driving up the price.

    Sure Bitcoin is going up and probably will continue to until Tether is hut down completely but no one can get any real $$$ out of it. It's just wash trading between bitcoin and shitcoins driving the price. The exchanges will collapse when tether is shut down

    • Re: (Score:1)

      by Anonymous Coward

      Tether is fully backed up, just part of their bank account was frozen and probably they'll get it back. Binance has frozen withdrawls because of a hot wallet hack which they can absorb in a month's profits.

      Gotta get your facts right.

      • Re: (Score:1)

        by Anonymous Coward

        Tether is NOT fully backed. They changed their TOS recently (when they got caught) to say that instead of being backed 1:1 with USD they are backed by "cash equivalents". That means other shitcoins at best, or worthless loans at worst. Tether is a gigantic fraud.

        They have always refused to be audited. Why on earth would you believe a company that just sent $850 MILLION to a money launderer with no contract?

  • Sure it is (Score:2, Insightful)

    by OneHundredAndTen ( 1523865 )
    Until the next collapse, that is. Seriously, cryptocurrencies remain the realm of speculators, money launderers, and little else.

  • different this time (Score:3)

    by PopeRatzo ( 965947 ) on Saturday May 11, 2019 @11:16AM (#58573990) Journal

    Do you know the definition of insanity?

    https://youtu.be/OIfXdtml2gU [youtu.be]

    • Holy broken fucking clock, Batman; you actually wrote something that wasn't asinine... kudos; there's hope for ya yet.

      • you actually wrote something that wasn't asinine... kudos; there's hope for ya yet.

        I'm not the most beloved commenter on Slasdot for nothing, you know. But I welcome your belated support.

  • Betteridge’s law of headlines (Score:5, Insightful)

    by inking ( 2869053 ) on Saturday May 11, 2019 @11:24AM (#58574020)
    Any headline that ends in a question mark can be answered by the word “no”. If it is an unregulated, shallow market speculative investment-only commodity offered by Chinese and Eastern European brokerages without SIPC-like insurance, the answers is “definitely no”. Just open a Forex account and buy the Japanese yen at 500x leverage. Your odds of making it big are about the same.

    • Re: (Score:2)

      by mark-t ( 151149 )

      While it's obviously true in this case, I disagree with the notion that *any* headline that is a question can always confidently be answered with no.

      It's not an inviolable law, just a rule, and like most rules, there will be exceptions.

    • Re: (Score:2)

      by ezdiy ( 2717051 )
      >Just open a Forex account and buy the Japanese yen at 500x leverage.
      The attractiveness of bitcoin speculation compared to forex is precisely that you can play the game of chicken without any margin calls - the volatility is so drastic there's pretty much no need for leverage (though some exchanges do offer it for calm periods when the market goes sideways).

  • That's like asking if buying Dinar or AUD is an investment.

  • 2011, 2013, 2017 and now 2019. I just hope we don’t get a shortage of GPUs again this time. This is all speculation around Tether and Binance people trying to make money from the chaos. Just because bitcoin gets bubble cycles doesn’t mean that it is a good investment when the bubbles are going up. I expect another bubble around the next block halving time.

  • "Is Bitcoin Becoming a Good Investment?"

    Yes, if (like any other investment) you don't mind it becoming devalued and/or losing all your money.

    This is no different than buying shares in XYZ Company. Maybe it'll go up, maybe it'll fall through the floor.

    Please stop referring to Bitcoin like it has some Magical Secret Sauce that's unlike any other investment. It's worth whatever people will pay for it. Why is this sooooooo hard to understand?

  • ...to which the answer is no.

  • Dogecoin is a safe investment, because while it will never go up it will also never go down.
    If you want proof, check it's trading ratio history: one Dogecoin has always been worth one Dogecoin since the day it was released!

    • And what's a Dogecoin worth compared to anything non-Dogecoinian? In the 1920's, one could also make the exact argument that one German mark was worth one German mark; so what if it took a millions of them to buy some bread? A is A. Yours is a cyclical comparison that means nothing.

  • BItcoin is in the pump part of their perennial pump and dump cycle, no different than penny stocks.

  • "Good investments" are those which you can at least theoretically follow the logic behind. Bitcoin and the other cryptocoins are only good on random luck or if you've got enough others working with you to manipulate the system, as it currently is being manipulated. Unless you're pulling the strings its only useful if you know the intent of those pulling the strings.

  • As a short term currency, as in "transfer of value", there's nothing wrong with Bitcoin.
    You want to sell me something worth $50, and accept Bitcoin.
    I want to buy your something.
    I buy $50 worth of BTC and transfer it to you.
    You then give me the something.

    But the people trying to use BTC as an "investment" are simply gambling.
    When taking into account the instability and corruption of exchanges, and the general, periodic lack of liquidity, "virtual currency" like BTC is downright STUPID as an "investment".

    It's

    • Looking at bitinfocharts.com the average transaction cost today is a bit over $2 with the median cost slightly below $2, so unless you need the pseudonymity you could probably find a cheaper alternative.

  • Not in real dollars (Score:3)

    by dhasenan ( 758719 ) on Saturday May 11, 2019 @01:03PM (#58574510)

    People are mostly trading Bitcoin in terms of Tether, which was supposed to be pegged to USD, with each Tether coin attached to a real dollar. Tether turned out not to be backed by anything, so people are trying to get rid of Tether. The easiest way to convert it to another currency is to use it to buy Bitcoin. So the price of Bitcoin appears to be rising.

  • Considering that bitcoin rate has changed dramatically for several times it's not a bad idea to buy a small amount of bitcoin and wait until bitcoin price becomes much higher compared to the moment you bought it. So even if the price never rises it won't be a huge loss, but if it isn't the case - a (most likely a huge) win. Consider this, it isn't as bad as a casino bet, you can wait until you win. I did such things some time ago. But this is just my opinion, it's up to you.

  • Flop? (Score:1)

    by edis ( 266347 )

    Can it flop, making it it's final move? Certainly.
    It may be decent speculation and gambling toy, but I would not count thus potent virtual invention to be good investment.
    With extraorbitant valuation-upon-whims amplitude, its lower end seems to be missing liquidity.
    Owning it and securing its ownership have shown to have their complications as well.

  • For it to be a good investment, you want price to increase faster than other alternatives, and to not go down.

    Many bulls trumpet the fact that BTC's supply is constrained. It's an economic half-truth. Equilibrium price is the intersection of supply AND demand.

    It's much harder to predict what might drive the demand, so I stay away.

  • This is like asking if we should be on black.

  • It's not an INVESTMENT (Score:4)

    by CODiNE ( 27417 ) on Saturday May 11, 2019 @03:53PM (#58575144) Homepage

    Number one rule of investing... understand the difference between investing and speculating.

    Investments have fundamentals you can run the numbers on, calculate estimates, returns and basically have a steady rate over a long term.

    Speculation is you hoping it will change one way or the other with nothing behind it.

    Real estate, you can calculate mortgage payments, insurance, rental income, various expenses and know your Return On investment and other numbers with pretty good accuracy and can reasonably expect to earn 5-10% annual returns.

    Index funds long term you can invest and wait, depending on your risk portfolio you can expect 3-20% with less confidence the higher your risk.

    Speculation is... I buy a bunch of gold and hope the economy crashes making it worth 10x. (I'm not going to argue with gold holders, you may be right, it just doesn't historically grow much long term or at a consistent rate)

    Or
    I buy a warehouse full of Beanie Babies and hope they come back in style.

    Or
    I buy a digital currency and hope many others do as well so I can cash out. AKA "The Greater Fool" strategy.

    To summarize. Buying into Digital currencies is not investing, it's speculation.

    And there's nothing wrong with speculating. Just know the difference.

  • I occasionally visit casinos and play poker. Lately, I have noticed quiet a lot of "regulars" (not hard to pick them out) discussing bitcoin "investment strategies", sharing stories how much they made or lost, in the same manner as they share their slot machine adventures. The terms they use don't even make sense sometimes, like they read it in some spam email and believed it because it sounds scientific. Is it possible bitcoin schemers found a new playing field, targeting casino mailing lists?

  • Comment removed based on user account deletion

  • Is Bitcoin Becoming a Good Investment?

    Since bitcoin doesn't actually represent nothing tangible, why would it be a good investment?

    At least with stocks you get a fractional interest in actual tangible property.

    Just because other people may pay money for bitcoin, doesn't mean it's a good investment.

    Just because it uses "blockchain" doesn't give it value. To date, there is no example of a blockchain application that is superior to a non-blockchain application.

    Something that has no inherent value (or usefulne

  • It's up around $7000 today, with the low around $3500 a few months ago. Why didn't you tell us back then?

  • The primary differences between investment and speculation are the level of risk, timeline, and opinion vs. fundamentals.

    The risk level of crypto is high, which is obvious from the wild price swings. Most people are in it for short term, get rich quick chances. And, they're not basing their decision on any kind of investment fundamentals...ROI, P/E, assets, debt, etc., etc.

    If you're in crypto, you're just a gambler.

  • shame on you

    fool me twice....

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