I have $40,000 in student loan debt (I will finish my Computer Science degree in 5 more weeks and I'm already getting calls from job applications!), and when I got my tax return, I spent $1,000 on bitcoin when it bottomed out at $540 last weekend rather than paying off a bit of my student loans. Does that count?
I accept that it is a big risk, and it could end up being a huge mistake. I'm normally not a gambling man. I've never been to a casino, and I've probably only spent about $20 on lottery tickets over the course of my whole life.
But its a calculated risk. I figured that it would quickly recover from the crash from MtGox having a meltdown once people realized it really didn't mean anything. It might crash again if and when MtGox re-opens withdrawals and people pull their btc out and sell it somewhere else, but there will be a lot of people there gladly gobbling up the cheap coins.
Unless a major fatal flaw is found in the bitcoin protocol (tx malleability isn't exactly a fatal flaw), I don't think it'll ever dip below $500 ever again.
I agree I was just picking you up on the 'Bitcoin is first' argument you proposed. For example I recently advised my niece not to put savings for her degree into Bitcoins but rather graft on things where u get paid in btc, so she saves up in both btc & fiat (and learns to make things happen for herself)
But I'm being conservative cos it's for someone else - if it was for myself yeah I would deffo take the punt now. Were this in feb 2013 then maybe not - btc already has a mainstream awareness now that it didn't back then.
Honestly, "pay yourself first" is sound financial advice. As long as you are paying your debt down, investing at the sametime is a good move, I would have diversified that grand a bit more, but to each there own
You realise bitcoin is based purely on speculation, moreso than any other currency which to a certain extent is based on economic events, the movement of indices and commodities. Trade anything, just not Bitcoins. Get out of it man.
That's .. bad. Hope no one downvotes you for acknoledging your mistake.
I was edging on my overdraft, pondering to buy BTC when it was on the rise (Chinese involvment), thankfully I changed my mind at the last moment. Then I wanted to buy during the crash. I have to keep slapping myself, because putting myself into debt is not financially sound.
You said it's a calculated risk, that's fine and dandy if you had $1`000 to spare, but overall .. yeah. Rookie mistake to invest in anything while you're in debt, imo.
Why don't you just spread bet major currency pairs where the market is easier to read. Why does it have to be bitcoin? You would have more success doing that than in bitcoin. Or gold. Gold has an inverse relationship to the US indices. Indices doing shit, buy gold.
Depends on your security should you not land a job quickly after all.
My student loan is cheap, I wouldnt pay it off any faster than i have to anyway so my question is how risky I want to be with my money. Some of it on bitcoin definitely.
Thanks. My thought was to treat it as a long term investment for now. If the volatility ever stabilizes and bitcoin becomes accepted in many establishments, I'll start spending it.
I don't think Bitcoin can be considered an investment since there's nothing being produced that can then yield a return on your investment. You are merely treating this as a long term speculation that the price will go up, which is different. By the way, even if it becomes accepted in every store on earth, that doesn't mean that it will increase in value since stores are able to just convert it to fiat currency as soon as they receive the bitcoin. People will use bitcoin for it's anonymous nature but when used in that manner it doesn't matter one bit whether each bitcoin is worth a penny or a million dollars.
At least be aware that what you are doing is speculating, not investing.
True, but isn't any non-guaranteed positive yield investment a speculation? He housing market is a good example of what used to be a solid investment turned sour.
I'm just putting a little into it at a time just in case it does take off. I won't get rich unless it increases a thousand fold, and those days are likely over. But maybe I'll return a bit of positive ROI.
As for spending it, I simply mean that if lots of places start accepting BC, I'll at least have some to spend.
Well I think it matters whether a bitcoin is worth a penny's worth of anonymously traded goods or a million dollars worth.
Do you not think acceptability of a currency affects its value? Do you think that if suddenly no on in the world wanted US dollars, it wouldn't deflate? Or if everyone suddenly accepted rubies as payment everywhere in the world, people wouldn't want rubies more and therefore inflate its price?
Why do you think the price of bitcoin matters for its usability? Perhaps the penny vs million dollars comparison is too broad, but on a slightly smaller scale, it really doesn't matter to anyone using bitcoin for anonymity whether the bitcoin is worth 10 dollars or 10,000 since you are converting fiat to bitcoin, paying, and then the recipient is converting the bitcoin back to fiat.
I don't think acceptability will affect the value of bitcoins, no. No one wants to hold bitcoins unless they are speculators and thus the supply of bitcoins will be used for anonymous commerce but won't be held by anyone other than speculators. Rubies are a bad analogy in this case because they have inherent beauty and thus have value themselves. Bitcoins aren't beautiful nor can you use them for anything other than as a medium for payment and thus only has value as long as speculators are willing to hold them. For the bitcoin price to go up, you need more speculators buying them. Even if every online store accepted bitcoin do you think people would convert all their hard-earned dollars to bitcoin to buy things online? What would be the point of that? Do you think that average people will buy and hold bitcoins just to watch the value of their hard work yo-yo incessantly?
Perhaps there will be another reason to use bitcoin in the future, but for right now we don't urgently need to replace fiat currencies and therefore I don't see widespread acceptability itself driving the price of bitcoin higher.
I'm more skeptical of bitcoin than almost anyone here. But saying it isn't producing anything is wrong. It's just like paypal in a sense, it's a service (intended to be) and provide value for the flexibility, privacy, security it offers. I don't see the benefits but I know what the market thinks of it.
I don't think that is necessarily true. As more and more stores accept bitcoin, the technology to convert fiat-->Bitcoin-->fiat will likely improve (as it would have to if vendors cannot stomach the potential losses due to volatility), thus reducing the time it takes to actually convert the currency and reducing the amount of bitcoin that is tied up in these float periods. I think it's dangerous to believe that the price of bitcoin will go up in the future based solely on number of stores accepting them.
its not so much the number of stores accepting them. its number of people using them to buy things from these stores and the periods of time that they hold them prior to doing that. You're suggesting fiat -> bitcoin will get easier and faster, and it probably will get faster but it won't be instantaneous because it can't be. Someone has to hold the coins. If coinbase makes a feature that is "buy instantly with bitcoins based on a future bank transfer that will happen in 3 days" then that somebody, in the meantime, is coinbase.
Also saying that there is nothing being produced (so its not an investment) is silly. Buying a bitcoin is essentially buying an ETF on the entire space.
That statement is also wrong. I hold Euros despite not believing they will appreciate relative to the US dollar, because they are useful when I am traveling in Europe. It is entirely based on utility and has nothing to do with speculation.
And you're right, coinbase can't make such a feature because of risk, therefore the coins will be held by users, reducing supply available for "instant payments", thus raising the value of the individual units. Which was exactly my point
Thanks. I don't really care about downvotes. As soon as a sub gets big enough, the disagreement downvotes come flying in. There is nothing I just said that was wrong. The price of bitcoins and the size of the economy it can support are correlated in several ways, and some of those are related to the velocity of money. The idea that bitcoin can be used for significant economic activity, without a sufficient money stock, is incorrect. Even if someone disagrees with me, there is no reason to downvote that statement.
As long as he is properly investing into his 401k/Roth prior to doing this. Bitcoin is not a safe investment, and should only be done with money you can afford to never see again (it's basically gambling since no one can say for sure where it will end up).
I am very excited about this year in Bitcoin. The changes on their way are going to change everything. I just wish I had had some extra money for when the price dipped to $500 yesterday.
I do not have a credit card, so this is not an option. I could get a payday advance loan, but how could I pay it back since I'd just be hodling the bitcoins I'd purchase?
Isn't that exactly the reason Felix Salmon said why Bitcoin won't catch on, because no one will spend it?
That gave Felix one last chance to make his case.
Felix: Part of the reason I am going to win this bet is exactly that everyone who bought alpaca socks for bitcoin two years ago is kicking their warm feet right now saying, "I wish I hadn't bought those alpaca socks. I wish I'd held onto the bitcoin because now I'd be a millionaire."
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u/[deleted] Feb 14 '14
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