Bitcoin crashes…

[blowlampParticipant @blowlamp]

Posted by John McNamara on 04/11/2017 12:14:42:

Tall trees don't grow forever.

I can't argue with that, although from little acorns mighty oaks do grow.

Bitcoins are divided into 100 million parts or eight decimal places (known as 1 satoshi), so if one bitcoin has a value of say £5000 then one hundred millionth of that is equivalent to £0.00005000 and is a reason why it's possible for much higher £/$ valuations. With 21 million bitcoins there's room for all to have at least a fraction of one.

Martin.

[Gordon WParticipant @gordonw]

Let's say bitcoin does crash- What is left ? Any precious metals ? Any land or buildings ? What proportion of your investment would you hope to get back ?

[blowlampParticipant @blowlamp]

Posted by Gordon W on 04/11/2017 16:52:37:

Let's say bitcoin does crash- What is left ? Any precious metals ? Any land or buildings ? What proportion of your investment would you hope to get back ?

For Bitcoin to crash in value would need an overwhelming number of its users to think utility was lost, but I don't know what set of circumstances would engender such thoughts.

If a crash did somehow happen, I would still have the bitcoins, they couldn't just disappear unlike what happens when a bank does a bail-in.

That said, once in profit, some people cash out the value of their initial bitcoin investment, leaving the residue in place to do what it will – many regret it though as the value continues to increase.

I don't own any precious metals because I can't imagine what I'd do with them.

Martin.

[John McNamaraParticipant @johnmcnamara74883]

Is "Investing" sic, in Bitcoins a wise place to place your hard earned savings?

Well that is a matter of opinion and no doubt many have made a handsome profit. Will the trend continue forever! The current Bitcoin chart is trending up into hyperbolic, the price is being driven by herd mentality, sooner or later there will be a pull back, and it can be a hard one, a 50% retracement is quite common.

Have a look at the gold price history chart link below, notice the hard and prolonged pullbacks.

**LINK**

Gold is another good example of how markets are driven by animal spirits a phrase used by John Maynard Keynes and later Professor Robert Shiller at Yale University to describe how markets behave.

**LINK**

Is Bitcoin any different from any other market? I would argue no, but that is just a personal view, in the end every individual investor has to decide what sort of risk is acceptable to them.

As far as bitcoin is concerned I will pass. I don't like the chart.
And more importantly I do not understand it, and this is another personal golden rule, never invest in something you do not fully understand.

If you must invest in Bitcoin what percentage of your assets will you be prepared to risk?
For those that may be interested the following paper from the Tasmanian School of Economics may be of interest, It discusses diversification as a means of reducing the impact of drawdown (When an individual investment fails)

**LINK**

Another golden rule…… Diversify

Regards
John

[blowlampParticipant @blowlamp]

Posted by John McNamara on 05/11/2017 06:06:59:

Is "Investing" sic, in Bitcoins a wise place to place your hard earned savings?

Well that is a matter of opinion and no doubt many have made a handsome profit. Will the trend continue forever! The current Bitcoin chart is trending up into hyperbolic, the price is being driven by herd mentality, sooner or later there will be a pull back, and it can be a hard one, a 50% retracement is quite common.

Have a look at the gold price history chart link below, notice the hard and prolonged pullbacks.

**LINK**

Gold is another good example of how markets are driven by animal spirits a phrase used by John Maynard Keynes and later Professor Robert Shiller at Yale University to describe how markets behave.

**LINK**

Is Bitcoin any different from any other market? I would argue no, but that is just a personal view, in the end every individual investor has to decide what sort of risk is acceptable to them.

As far as bitcoin is concerned I will pass. I don't like the chart.
And more importantly I do not understand it, and this is another personal golden rule, never invest in something you do not fully understand.

If you must invest in Bitcoin what percentage of your assets will you be prepared to risk?
For those that may be interested the following paper from the Tasmanian School of Economics may be of interest, It discusses diversification as a means of reducing the impact of drawdown (When an individual investment fails)

**LINK**

Another golden rule…… Diversify

Regards
John

Ignoring cryptocurrencies because of a lack of understanding could prove to be a bad move, so I do no more than suggest people do their own research on the matter.

As an individual, I consider it pretty dangerous to stay invested in Stocks & Shares, Precious Metals and Fiat currencies like the £ and $ as they are debt based, open to confiscation and totally manipulated.

Martin.

[John McNamaraParticipant @johnmcnamara74883]

Over the years there have been many so called hot investment Ideas. Some have been very successful. Others have fallen by the wayside to languish in oblivion. Yes with the benefit if hindsight we can muse over fish that got away. A pointless exercise in my view.

On the other hand we can be proactive and manage our affairs in such a way that our investments are more likely to survive in a downturn overall and that the cost of individual failures is ameliorated. This is why I posted a link in my previous post to an internationally cited and applauded paper on diversification as a means of reducing portfolio risk.

A properly considered trading plan takes a fair amount of time and research, there are numerous books on the subject they all start off with making up a list of available resources and goals.

In the past people like Peter Lynch suggested that a portfolio should be divided into maybe 8 – 10 parts.
**LINK**

His work was done when markets were conducted by calling prices across a room. Now that markets are conducted electronically transactions are almost made instantly. New research indicates that Diversification needs to be much greater, maybe 50 or more holdings, see the paper I posted previously or google portfolio diversification. The cost of buying and selling is now a fraction of what it used to be making it possible to make small purchases.

Beginners tend to concentrate on individual investment ideas, and ignore the attached risk of capital loss for doing so if the price drops. even doubling up in a falling market. One must remember it is impossible to pick the top or the bottom of a market. Another golden rule, "the trend is your friend" until it fails!

Experienced investors look for a more balanced approach they spread their risk and diversify over many asset classes. They have a plan and they stick to it.

All the above is just my personal view, I have been Investing in the stock market since the mid 70's.

Regards
John

 

 

Edited By John McNamara on 06/11/2017 03:57:48

Edited By John McNamara on 06/11/2017 03:58:51

[Martin DowingParticipant @martindowing58466]

Lets put some rational arguments regarding circumstances of possible Bitcoin crash and when would that commence:

1. Current situation may resemble Dutch "tulip fewer" of XVII century. If so, then this giant bubble will certainly go pop! with many usually young and inexperienced investors bashed badly.

2. Regulatory environment could easily turn against Bitcoin, due to its utility for tax and capital control evasion, money laundering, financing criminal activities etc. International agreements can be reached to interrupt/stop processing bitcoin transactions. ISP could face heavey fines and other other troubles for merely allowing their infrastructure to be used for sending/receiving bitcoin payments. Online exchanges can be outlawed and closed. Users can be prosecuted etc. That would relegate bitcoin to criminal underground and its value there is uncertain. If tranferring of bitcoins over Internet is successfully interrupted/eradicated due to some sort of filters (which would only need to determine that particular stream of data is actually bitcoin, no need to decrypt the code to seize assets) bitcoin would lose its utility and collapse to zero.

3. Global banking cartels could pump up bitcoin to $1million and more each or to any other suitable level, cash in profits and dump it to teach the mob that it is not worth to invest in any sort of "alternative money".

4. Due to increasing global tensions Internet could be splitted into a number of "mininets" with very little if any communication between each other and such situation allowed to spend the same bitcoin several times. At this point bitcoin is dead like a dodo.

5. Quantum computers (which already exist) got better and factorizing large numbers became trivial task. At this point bitcoins could be intercepted and seized in transit and that would be it.

6. Something better was devised and current edition of cryptocurrencies became obsolete.

7. Ivanka Trump was kidnapped and ransom have been demanded in bitcoins. It could be even false flag operation. That would be it.

8. Alternatively, who knows, maybe bitcoin is not at all gaining its value only dollar and other mainstreem currencies are collapsing? Maybe within few years bitcoin will be worth $ trillion but box of matches too?

Welcome to discuss/refute this points or offer alternative vievs including those proposing that bitcoin will never collapse.

Martin

[FarmboyParticipant @farmboy]

A currency is only valuable if you can exchange it for something you need. So far I have never come across a supplier of things I need who accepts bitcoins.

Maybe one day they will become the international currency we all use, or maybe the bubble will 'pop'. My modest savings are not sufficient to risk finding out for myself.

[SillyOldDufferModerator @sillyoldduffer]

Posted by Farmboy on 06/11/2017 09:28:45:

A currency is only valuable if you can exchange it for something you need. So far I have never come across a supplier of things I need who accepts bitcoins.

…

Ah, but exactly the same applies to most other recognised currencies too. My local shop won't accept Euros, US Dollars, or Scottish Banknotes. It accepts Credit Cards wherever they were issued, but not cheques even if when drawn on a British Bank in Pounds. Not sure if it's still the case, but for many years the US Dollar was easily forged well enough to fool non-Americans, and consequently treated with suspicion outside the USA.

There are plenty of examples of National currencies crashing, like the German Mark in 1918, the French Frank in the 1950s, the Italian Lire and the Zimbabwian Dollar which inflated by 79.6 billion percent one month in 2008.

I don't think Bitcoin is fundamentally different from any other currency: it's only worth anything while it's trusted, and trust is a delicate thing.

Dave

 

Edited By SillyOldDuffer on 06/11/2017 09:58:26

[FarmboyParticipant @farmboy]

Agreed. Currency is just a promise to pay the value shown. If you don't trust the governor of the Bank of England, don't use Sterling.

Maybe simple bartering is the best way forward

[SamsarandaParticipant @samsaranda]

Dave (aka SOD) how about the crash of the Pound Sterling in 1967 when overnight it lost 14% of its value, I remember it well as I was overseas serving in Trucial Oman at the time and paid in local currency. The Establishment looked out for us though, surprising as it seemed, and continued to pay us the same amount of local currency as though there had been no devaluation, so we didn't lose out, in fact we gained because the local British Forces Post Office charged the devalued rate for British Postal Orders which meant that we could exchange local currency for postal orders at the new rate and post them home to family to bank in the UK, meaning we gained 14% . Probably wasn't strictly legal but we all did it.

Dave

[Mike PooleParticipant @mikepoole82104]

From now on, the pound abroad is worth 14 per cent or so less in terms of other currencies. That doesn't mean, of course, that the Pound here in Britain, in your pocket or purse or in your bank, has been devalued.
Harold Wilson

[SamsarandaParticipant @samsaranda]

Mike I remember that piece of propaganda very clearly.

Dave

[Jon GibbsParticipant @jongibbs59756]

This graph reminds me of the dot com bubble – Greedy investors jumping onto a band-waggon that rolls for a while before something causes a realization that the valuations are overstated and then there's a readjustment to reflect more sensible valuations. Predicting that point near to the peak is pretty much impossible for your average investor.

I'm reminded of the adage "it's never a bad time to take profits".

Jon

[SillyOldDufferModerator @sillyoldduffer]

Posted by Mike Poole on 06/11/2017 10:57:33:

From now on, the pound abroad is worth 14 per cent or so less in terms of other currencies. That doesn't mean, of course, that the Pound here in Britain, in your pocket or purse or in your bank, has been devalued.
Harold Wilson

Ditto the referendum that may not be mentioned and which cannot be repeated. So far that's taken 20% off the pound…

Politicians – I love them all!

[martin perman 1Participant @martinperman1]

As somebody who has done nothing with his money except put in Banks and building societies what benefits does a bitcoin have, if you cant use it in shops etc whats it purpose and should I ever need any, very very unlikely, where would I get it from in the first place.

It would appear to me to be totally unregulated so how does it increase in value, why has it been allowed to exist and who monitors it.

Martin P

[Ady1Participant @ady1]

I don't think we ever really joined the EU, if you get on board (REALLY get on board) you join the Euro

We never came close, a half hearted attempt at the ERM was a disaster

No one in Europe has faffed about like the UK has, no one

We did trade and the other stuff but never really committed ourselves properly

[Ady1Participant @ady1]

It would appear to me to be totally unregulated so how does it increase in value, why has it been allowed to exist and who monitors it.

Those are the reasons it exists, it's raison d'être

It is truly independent

[Martin KyteParticipant @martinkyte99762]

Posted by Ady1 on 06/11/2017 11:28:14:

I don't think we ever really joined the EU, if you get on board (REALLY get on board) you join the Euro

We never came close, a half hearted attempt at the ERM was a disaster

No one in Europe has faffed about like the UK has, no one

We did trade and the other stuff but never really committed ourselves properly

Well clearly 34.74% of us did, 37.46% of us didn't and 27.79% were just not paying attention.

regards Martin

[Cornish JackParticipant @cornishjack]

What a totally depressing topic!! Of all the things to raise one's spirits, improve one's morale (or morals!!), improve society or generally add value to life, grubbing about with money must feature at the bottom. Its driver is greed and its accomplishment invariably entails someone else's impoverishment. Just one news bulletin, on any day, provides sufficient detail as to why much of the above discussion is degrading to principles of decency. While I, generally, subscribe to the idea of 'each to his(or her) own', this is one area in which I can find no human value.

Bill

[Mick HenshallParticipant @mickhenshall99321]

Don't know what a bit coin is and don't care, I agree with Cornish Jack

😪

Mick

[blowlampParticipant @blowlamp]

Posted by Cornish Jack on 06/11/2017 11:56:24:

What a totally depressing topic!! Of all the things to raise one's spirits, improve one's morale (or morals!!), improve society or generally add value to life, grubbing about with money must feature at the bottom. Its driver is greed and its accomplishment invariably entails someone else's impoverishment. Just one news bulletin, on any day, provides sufficient detail as to why much of the above discussion is degrading to principles of decency. While I, generally, subscribe to the idea of 'each to his(or her) own', this is one area in which I can find no human value.

Bill

Really? See here for just one way that Bitcoin benefits humanity.

People should understand more about Bitcoin and not just make assumptions as to why it exists.

Martin.

[martin perman 1Participant @martinperman1]

Posted by Ady1 on 06/11/2017 11:31:08:

It would appear to me to be totally unregulated so how does it increase in value, why has it been allowed to exist and who monitors it.

Those are the reasons it exists, it's raison d'être

It is truly independent

I am non the wiser as the above tells me nothing so I shall happily carry on as I am. "People should understand more about Bitcoin" very easy to say but not that easy to find out how it works, who regulates it and what it can be used for.

 

 

Martin P

 

Edited By martin perman on 06/11/2017 13:09:55

[blowlampParticipant @blowlamp]

Posted by martin perman on 06/11/2017 13:09:13:

Posted by Ady1 on 06/11/2017 11:31:08:

It would appear to me to be totally unregulated so how does it increase in value, why has it been allowed to exist and who monitors it.

Those are the reasons it exists, it's raison d'être

It is truly independent

I am non the wiser as the above tells me nothing so I shall happily carry on as I am. "People should understand more about Bitcoin" very easy to say but not that easy to find out how it works, who regulates it and what it can be used for.

Martin P

Edited By martin perman on 06/11/2017 13:09:55

If you viewed the link I included in my previous reply, you'll have seen that some Venezuelans are using Bitcoin to fend off starvation. When I found examples of its use, I started to do my own research and over time I got more comfortable with the concept. Self education is the key.

Martin.

[Gordon WParticipant @gordonw]

I've read the stories about mining bitcoin etc., and various " explanations " as to how it works, I am no wiser. I know I am thick but the whole thing smells.

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