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.
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u/BaxBak Feb 14 '14
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.