'I lost millions through cryptocurrency addiction'(bbc.com)
bbc.com
'I lost millions through cryptocurrency addiction'
https://www.bbc.com/news/uk-scotland-57268024
77 comments
Yeah, you have to be exceptionally stupid and just unworthy of much money if you manage to liq your only capital all at once within 20 mins.
Day trading is gambling and futures / puts are worst regardless of the asset being traded.
Futures are great, if used right. Too much leverage kills always.
In some article, there was a mention that in the 80s, 400x leverage was common practice.
I agree but I don’t know how to stop it without just driving it underground.
The difference is that crypto trading is entirely unregulated, and the markets are massively manipulated.
Leveraged swaps - the kind of “futures” used in the crypto markets - are known to regulators around the globe.
The UK is fairly lax in this regard. But its nothing to do with crypto trading because this wasn't spot crypto trading.
On manipulation, eh, yay volatility. Avoid leverage in volatile markets.
The UK is fairly lax in this regard. But its nothing to do with crypto trading because this wasn't spot crypto trading.
On manipulation, eh, yay volatility. Avoid leverage in volatile markets.
First, the exchanges aren't in the UK and do not follow any regulations.
Second, even the exchanges are manipulating.
Second, even the exchanges are manipulating.
Please explain how day trading is gambling but long term trading is not? It seems in both cases, you are gambling on the price going up.
> how day trading is gambling but long term trading is not
Simply: the average long-term investor makes money. The average short-hold individual investor loses money.
More structurally: the U.S. economy and stock market have historically grown. They are a positive-sum game. There is no such fundamental gain in the stock market in the short term; it is a zero-sum game before transaction costs and negative sum after. The dynamic is similar for cryptocurrencies in the short term. The long-term crypto gain exists in the adoption pitch, i.e. to the degree new investors invest.
Simply: the average long-term investor makes money. The average short-hold individual investor loses money.
More structurally: the U.S. economy and stock market have historically grown. They are a positive-sum game. There is no such fundamental gain in the stock market in the short term; it is a zero-sum game before transaction costs and negative sum after. The dynamic is similar for cryptocurrencies in the short term. The long-term crypto gain exists in the adoption pitch, i.e. to the degree new investors invest.
I think "gambling" implies that there are decent odds that you'll walk away with nothing.
This is obviously a high probability event in options trading.
Odds you'll walk away with nothing if you buy into Tesla? Close to 0. Odds you'll lose >50% of your money - not 0.
If you think buying into a global market index fund over a 30-year horizon has a decent probability of a negative real return - not to be rude - but you're a bit clueless about finance.
Sure, if you buy individual stocks - for any horizon - that's roughly "gambling". You could even call buying into the S&P for a <10 year horizon "gambling" - although, statistically, your chance of a negative real return is VERY low, and your chance of a positive real return is VERY high.
This isn't what normal people think of when they think of "gambling".
This is obviously a high probability event in options trading.
Odds you'll walk away with nothing if you buy into Tesla? Close to 0. Odds you'll lose >50% of your money - not 0.
If you think buying into a global market index fund over a 30-year horizon has a decent probability of a negative real return - not to be rude - but you're a bit clueless about finance.
Sure, if you buy individual stocks - for any horizon - that's roughly "gambling". You could even call buying into the S&P for a <10 year horizon "gambling" - although, statistically, your chance of a negative real return is VERY low, and your chance of a positive real return is VERY high.
This isn't what normal people think of when they think of "gambling".
You got a lot of answers, but I don't think any of them are adequate, so I'll try to be clearer.
In long-term trading you are buying a piece of the company. Your payback comes from the earnings of the company, either in the form of dividends or in the increased value of the company itself.
It's not a certainty, but it is a positive-sum game. The money you make comes from outside the market. You don't actually need the price to go up at all: a blue-chip company could distribute all of its earnings as dividends and have the price remain almost constant.
Day trading, by contrast, is a zero-sum game. Your profits come almost entirely from other day traders. Your decisions are made not by looking at the company's underlying fundamentals, but from the psychology of other people also selling stocks.
Day trading is not identical to gambling, and the uncertainty of long-term investing make it not entirely distinct from gambling. No analogy is ever perfect. But the positive-sum vs zero-sum aspects make day trading much more like "gambling" than long-term investing is.
In long-term trading you are buying a piece of the company. Your payback comes from the earnings of the company, either in the form of dividends or in the increased value of the company itself.
It's not a certainty, but it is a positive-sum game. The money you make comes from outside the market. You don't actually need the price to go up at all: a blue-chip company could distribute all of its earnings as dividends and have the price remain almost constant.
Day trading, by contrast, is a zero-sum game. Your profits come almost entirely from other day traders. Your decisions are made not by looking at the company's underlying fundamentals, but from the psychology of other people also selling stocks.
Day trading is not identical to gambling, and the uncertainty of long-term investing make it not entirely distinct from gambling. No analogy is ever perfect. But the positive-sum vs zero-sum aspects make day trading much more like "gambling" than long-term investing is.
Gambling is trading money for a chance to win more money. Day traders use various market mechanisms to spend money for a chance at earning much more money.
Investing is the purchase of something you think will hold or rise in value. It is always possible the value could go to zero (Enron, for example), but by diversifying your investments, you can reasonably expect to avoid all of them going to zero.
Bitcoin, for example... hasn't crashed to zero (YET). So if you bought at $60,000 you would have lost about 40% of your investment, not all of it. You only realize gains or losses when you sell (which you can be forced to do if you are using leverage).
There is an old saying "The stock market can remain irrational longer than you can remain solvent", which I take to mean you should never use leverage.
Investing is the purchase of something you think will hold or rise in value. It is always possible the value could go to zero (Enron, for example), but by diversifying your investments, you can reasonably expect to avoid all of them going to zero.
Bitcoin, for example... hasn't crashed to zero (YET). So if you bought at $60,000 you would have lost about 40% of your investment, not all of it. You only realize gains or losses when you sell (which you can be forced to do if you are using leverage).
There is an old saying "The stock market can remain irrational longer than you can remain solvent", which I take to mean you should never use leverage.
Markets are somewhat like the opposite of the weather. It's possible, if done correctly, to predict long term trends but not short term. There is too much volatility to know what will happen today even if you can guess about a few years from now. Company X may indeed be a good company and undervalued for reasons Y and Z but the price could still go down tomorrow even if it will probably be up a year from now.
One difference between investing and gambling is that you can expect returns from following an investment strategy. Most day traders lose money. They can't predict short term future prices. What gains they get are through luck. Compared to investors who can have predictions about trends or specific stocks and who typically make money.
One difference between investing and gambling is that you can expect returns from following an investment strategy. Most day traders lose money. They can't predict short term future prices. What gains they get are through luck. Compared to investors who can have predictions about trends or specific stocks and who typically make money.
There are still people who purchase stocks for dividends, based on their track records, performance, and financials. Starbucks, Target, Ultra, ... these are bellweather stocks that pay dividends and and actually act like businesses, and not casinos.
Yes, the derivatives market is insanity and probably shouldn't exist, but there are legitimate companies building business and generating wealth based on a real business plan.
Having been investing for the better part of 40 years, I've seen five big events happen, but in the long term bellweather and bluechip stocks have been non-casino investments. Don't let this recent every-ten-year cycle of hype (Doge, Crypto, GME) guide the intent of investing.
Yes, the derivatives market is insanity and probably shouldn't exist, but there are legitimate companies building business and generating wealth based on a real business plan.
Having been investing for the better part of 40 years, I've seen five big events happen, but in the long term bellweather and bluechip stocks have been non-casino investments. Don't let this recent every-ten-year cycle of hype (Doge, Crypto, GME) guide the intent of investing.
If an instrument is priced correctly, that is to say at the risk adjusted net present value of its future cash flows, then it absolutely will go up in the long term as it returns cash (dividends, buybacks) and as cash flows that are still in the future come closer to the present so become more certain and more valuable (time value).
There is of course the question whether the instrument is currently priced correctly. That's why you diversify, ideally into uncorrelated investments so that misvaluations balance out on the upside and the downside.
There is of course the question whether the instrument is currently priced correctly. That's why you diversify, ideally into uncorrelated investments so that misvaluations balance out on the upside and the downside.
They're similar, but day trading can fuel a gambling addiction, especially when untrained investors start to try and recoup their losses by taking bigger risks.
A) it depends on if the concept of gambling is a pejorative term for you or not. Like, is it important for your personal and social standing for there to be a difference?
B) outside of the concept, there would then be the observation of a transaction having similarities to “a gamble”, daytrading has the similar probability of losing money.
Hope that helps.
B) outside of the concept, there would then be the observation of a transaction having similarities to “a gamble”, daytrading has the similar probability of losing money.
Hope that helps.
Cost, or drag, is also much higher with day trading. You will pay transaction fees more often. And day trading means you are paying higher taxes more frequently. Holding means you are profiting off of money that would go to taxes if you sell.
Day traders are gambling on surface noise. It's not much different than roulette. Long term investors have some notion of longitudinal value accrual and stability.
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Where does one draw the line here? Isn't it possible some day traders are just quicker at noticing trends that are typically the domain for long term trading?
I don't trade very much at all, no disrespect intended.
I don't trade very much at all, no disrespect intended.
>Where does one draw the line here?
The use of leverage/margin to buy more than one can reasonably afford is a good marker, in my opinion.
If you're borrowing money to play the market, you're gambling, not investing.
The use of leverage/margin to buy more than one can reasonably afford is a good marker, in my opinion.
If you're borrowing money to play the market, you're gambling, not investing.
Short term price movements are random, long term stocks go up.
I consider the major difference among them is that if you’re putting money into something long term then that’s more of an investment-
Investments are gambles but they have more substance than a quick roll of the dice as your investment affects the outcome.
Investments are gambles but they have more substance than a quick roll of the dice as your investment affects the outcome.
All profits anyone makes on cryptocurrencies comes out of the pockets of other "investors". A lot of them will be like this, addicted people who were lured in by dishonest promises.
Cryptocurrency is a negative-sum game. There is an inflow of cash into the markets, and two outflows: Regular traders cashing out, and miners cashing out. The market caps, the supposed dollar value of your holdings, it is all imaginary. The only thing that is real is money being paid in, and money going out.
And unless you sell and take your profits, that outflow is not going to you. It is going to someone else. And if you do, the money comes from somebody less fortunate.
The only ethical thing is to not get involved.
Cryptocurrency is a negative-sum game. There is an inflow of cash into the markets, and two outflows: Regular traders cashing out, and miners cashing out. The market caps, the supposed dollar value of your holdings, it is all imaginary. The only thing that is real is money being paid in, and money going out.
And unless you sell and take your profits, that outflow is not going to you. It is going to someone else. And if you do, the money comes from somebody less fortunate.
The only ethical thing is to not get involved.
That is reductive and doesn't make it negative sum.
You identified the reasons of outflows and neglected to identify the reasons of inflows, or the magnitude of either.
Any supply and demand system is negative sum by your standard.
Remember to always ask “Did I just make a separate fictional higher standard for an asset class just because I don't like it?” If you create a criteria for crypto assets that no commodity, currency, equity, or property can meet, the question is why? Is it ignorance or intentional?
You identified the reasons of outflows and neglected to identify the reasons of inflows, or the magnitude of either.
Any supply and demand system is negative sum by your standard.
Remember to always ask “Did I just make a separate fictional higher standard for an asset class just because I don't like it?” If you create a criteria for crypto assets that no commodity, currency, equity, or property can meet, the question is why? Is it ignorance or intentional?
The only inflow is people sending money to exchanges, as the tokens being traded and created have zero intrinsic value.
This is not the case commodities, currencies, equities or property. Those things have value outside of the market itself, while cryptocurrencies basically do not. They are in practice only used for trading.
This is not the case commodities, currencies, equities or property. Those things have value outside of the market itself, while cryptocurrencies basically do not. They are in practice only used for trading.
What is the intrinsic value of a currency outside of trading then?
Are you planning on trading the money in your bank account?
If not, can you give it to me as it apparently has no value?
If not, can you give it to me as it apparently has no value?
> All profits anyone makes on cryptocurrencies comes out of the pockets of other "investors".
That's not necessarily true. It's the same as the stock market. I could buy a stock or crypto token/coin for $1 and sell it for $2, while the person I bought it from paid less than $1 and the person who bought it from me sold it for more than $2. In other words, all three of us made money.
There's also the possibility that the other two parties lost money. But there's nothing unethical about buying something for a price someone is willing to sell it for or selling at a price where someone else is willing to buy it. I mean, not unless you think capitalism as a whole is unethical.
That's not necessarily true. It's the same as the stock market. I could buy a stock or crypto token/coin for $1 and sell it for $2, while the person I bought it from paid less than $1 and the person who bought it from me sold it for more than $2. In other words, all three of us made money.
There's also the possibility that the other two parties lost money. But there's nothing unethical about buying something for a price someone is willing to sell it for or selling at a price where someone else is willing to buy it. I mean, not unless you think capitalism as a whole is unethical.
> In other words, all three of us made money.
Yes, the three of you made money, but you're forgetting about the fourth investor. The fourth investor won't make money until a fifth investor comes and buys the coin. And so on, and so on. The revenue received by each investor always comes from a subsequent investor. So the OP was right. This is not true of stocks, as stocks do generate income.
Yes, the three of you made money, but you're forgetting about the fourth investor. The fourth investor won't make money until a fifth investor comes and buys the coin. And so on, and so on. The revenue received by each investor always comes from a subsequent investor. So the OP was right. This is not true of stocks, as stocks do generate income.
> Yes, the three of you made money, but you're forgetting about the fourth investor.
I didn't forget. That fourth investor is not part of my transaction. The point of my comment was that OP's claim that all crypto profits come from someone else's pocket is false. Just like non-dividend stocks, sometimes that's true, and sometimes it's not. As I stated, it's possible that my seller and buyer could lose money too. The same is true for stocks.
> This is not true of stocks, as stocks do generate income.
Yes, dividend stocks generate income for their investors, but not all stocks pay dividends. On that note, some crypto coins/tokens pay distributions and interest too (let's call them dividend crypto for simplicity). Are non-dividend stocks equal to non-dividend crypto? In both cases, profit can only be realized by the investor when the share/coin/token price goes up. Is that ok? I think any Capitalist should say yes.
I'm not advocating for stocks or crypto, but there are some similarities that we have to acknowledge to avoid hypocrisy.
I didn't forget. That fourth investor is not part of my transaction. The point of my comment was that OP's claim that all crypto profits come from someone else's pocket is false. Just like non-dividend stocks, sometimes that's true, and sometimes it's not. As I stated, it's possible that my seller and buyer could lose money too. The same is true for stocks.
> This is not true of stocks, as stocks do generate income.
Yes, dividend stocks generate income for their investors, but not all stocks pay dividends. On that note, some crypto coins/tokens pay distributions and interest too (let's call them dividend crypto for simplicity). Are non-dividend stocks equal to non-dividend crypto? In both cases, profit can only be realized by the investor when the share/coin/token price goes up. Is that ok? I think any Capitalist should say yes.
I'm not advocating for stocks or crypto, but there are some similarities that we have to acknowledge to avoid hypocrisy.
> The point of my comment was that OP's claim that all crypto profits come from someone else's pocket is false.
Yes, but your comment didn't contradict the OP's claim. The fact that an investor in cryptocurrency may not make a profit doesn't contradict the claim that all profits made by crypto investors come from later crypto investors.
And this is only similar to stocks superficially. Yes, some stocks don't generate an income, but a stock is claim on the company's equity and non-distributed profits are automatically integrated into equity. In a well-functioning market, the market price of the stock will adjust accordingly. Therefore it makes no difference whether the profits are distributed or not. What makes a difference is whether the underlying business is profitable. This is not to say that the stock market isn't susceptible to bubbles and speculation. Of course it is, but what sustains a stock's value is not speculation but an underlying business activity.
Yes, but your comment didn't contradict the OP's claim. The fact that an investor in cryptocurrency may not make a profit doesn't contradict the claim that all profits made by crypto investors come from later crypto investors.
And this is only similar to stocks superficially. Yes, some stocks don't generate an income, but a stock is claim on the company's equity and non-distributed profits are automatically integrated into equity. In a well-functioning market, the market price of the stock will adjust accordingly. Therefore it makes no difference whether the profits are distributed or not. What makes a difference is whether the underlying business is profitable. This is not to say that the stock market isn't susceptible to bubbles and speculation. Of course it is, but what sustains a stock's value is not speculation but an underlying business activity.
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To be fair, cryptocurrencies do have genuine cash flows as well. People who need to launder money out of the criminal economy or out of oppressive economic regimes will be willing to pay a considerable cut to do so, and that money goes to "investors" as well as to miners.
Is normal stocks any different?
Yes, it's different. Owning a stock is like owning a business. Unlike a coin, a business generates a profit. This means you don't have to sell the business to another investor in order to profit from it.
What if you look at a proof of stake coin, where the business is generating profit. And the business buys back coins to bring profit to owners.
Also considering staking.
Crypto is not all bitcoin copies, it is an evolving concept.
A proof of stake coin is still a coin. It's not a business. A business is an activity consisting in making products and/or services and selling them in the market for a profit.
I mean, you can buy a business with a coin, or you can buy an investment product, but that wouldn't be the coin.
I mean, you can buy a business with a coin, or you can buy an investment product, but that wouldn't be the coin.
Example:
A company creates a coin with a maximum amount of coins, the service they sell is valued by customers, the money from customers is used to buy their own coins back and destroy them.
It is not just coins, there are services tied to coins.
Proof of stake only gives you new coins, not actual value. You may or may not be able to trade those additional coins for value, but that does not matter here.
Yes, you invest money and (ideally/mostly) they produce wares worth more money. Positive sum.
That's not what positive sum means. Both stocks and crypto are positive sum though.
Whenever someone buys a stock someone else sells it, one's loss is the other's gain. That would make it zero sum but the company has the option to issue new shares, akin to the fed printing money or a new bitcoin being minted in a block, that makes both games positive sum.
Whenever someone buys a stock someone else sells it, one's loss is the other's gain. That would make it zero sum but the company has the option to issue new shares, akin to the fed printing money or a new bitcoin being minted in a block, that makes both games positive sum.
The newly issued shares represent a share in the underlying value of the company, which has increased.
For cryptocurrencies, there is no such underlying value.
For cryptocurrencies, there is no such underlying value.
A company value is part speculation.
If everyone sold their stock would the bottom price be high because of inflated value?
Cryptocurrency value is entirely speculation.
The most ethical thing to do is to ban the formal exchange of cryptocurrencies. The same way that the USA bans online gambling.
Cryptocurrencies are essentially distributed ponzi schemes (which are also illegal), with a side order of immense waste of electricity, waste of advanced manufactured goods, and enablement of ransomware.
Its getting to the point now where we need to begin contacting our democratic representatives and requesting that they ban them, and submitting citizen's petitions and direct ballot actions.
Cryptocurrencies are essentially distributed ponzi schemes (which are also illegal), with a side order of immense waste of electricity, waste of advanced manufactured goods, and enablement of ransomware.
Its getting to the point now where we need to begin contacting our democratic representatives and requesting that they ban them, and submitting citizen's petitions and direct ballot actions.
Yes, absolutely. HN for some reason does not want to hear it, but this is the cold hard truth of the matter.
If someone is consistently profitable/market making/etc., then they are making the market less volatile than it would be if it consisted solely of retail gamblers like those described in the article. But the same can be said of popular stocks, which are actually more volatile than the most liquid cryptos nowadays (GME, AMC, etc.).
The problem, to me, isn't that people are allowed to invest their money freely in digital markets (regardless of asset). The problem is that so much money has been injected into assets that people feel (correctly) that they are falling behind if they don't try to play the game. The hidden inflation tax really harms people who lack a high degree of financial literacy or who lack the discipline required to make balanced, long term investments (i.e. a vast majority of people). For most of human history, saving was the key to building upper middle class wealth. Now, good luck with that as M2 grows by 20+% in a year and CD's are paying record low interest rates.
The problem, to me, isn't that people are allowed to invest their money freely in digital markets (regardless of asset). The problem is that so much money has been injected into assets that people feel (correctly) that they are falling behind if they don't try to play the game. The hidden inflation tax really harms people who lack a high degree of financial literacy or who lack the discipline required to make balanced, long term investments (i.e. a vast majority of people). For most of human history, saving was the key to building upper middle class wealth. Now, good luck with that as M2 grows by 20+% in a year and CD's are paying record low interest rates.
An inflation rate of ~2% doesn't really harm anyone, especially not the lower end of the socio-economic spectrum.
I think the problem is rather the fact that many people have unrealistic expectations. If the economy is growing at a rate of 1% annually, meaning the entire wealth produced in the country during a whole year grows by 1%, why do people think that their personal wealth should grow by 10%, 20%, 30% or more? It's not gonna happen.
I think the problem is rather the fact that many people have unrealistic expectations. If the economy is growing at a rate of 1% annually, meaning the entire wealth produced in the country during a whole year grows by 1%, why do people think that their personal wealth should grow by 10%, 20%, 30% or more? It's not gonna happen.
SPX grows 8% a year (6% when adjusted for GDP growth), US real estate increases 3.8%, and bank interest rates pay FAR less than even "reported" CPI, which is a joke of a metric almost entirely weighted by oil prices, which are not determined by a free market [0]. And that's before the insane levels of money printing and spending we've seen this year, which show no signs of being undone, even as the country opens back up. Inflation isn't 2%. People like you lose a lot of relative wealth to the "smart money" by thinking that's true, and it isn't fair to have a system that exponentially benefits financially smarter investors (an inflationary environment). Barring an improbable windfall or significant income growth, a responsible, hardworking person can't meaningfully improve their financial situation by saving all their money in the bank, which is a sad reality.
Asset inflation benefits the wealthy, while bear markets improve wealth inequality, and printing money and QE reduces the corrective measure to wealth inequality to instead reduce the short term pain [1]. Consumer inflation is a tossup.
[0] https://www.usinflationcalculator.com/gasoline-prices-adjust... [1] https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...
Asset inflation benefits the wealthy, while bear markets improve wealth inequality, and printing money and QE reduces the corrective measure to wealth inequality to instead reduce the short term pain [1]. Consumer inflation is a tossup.
[0] https://www.usinflationcalculator.com/gasoline-prices-adjust... [1] https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...
> Inflation isn't 2%
Okay, then what is it? Obviously you have taken the trouble to measure inflation because you know it's not 2%. So tell us, what is the inflation rate? And show us your calculations please.
Okay, then what is it? Obviously you have taken the trouble to measure inflation because you know it's not 2%. So tell us, what is the inflation rate? And show us your calculations please.
Here's a good approximation [0]. Didn't mean to insult your intelligence. That's just consumer inflation, by the way. Asset inflation is a different beast that is better measured in terms of wealth inequality. I'd recommend you digest the links in my original post if you're interested in the topic.
[0] https://www.lynalden.com/inflation/
[0] https://www.lynalden.com/inflation/
This is a gambling addiction, full stop.
We don't need to invent new terms like "cryptocurrency addiction" it's just gambling!
We don't need to invent new terms like "cryptocurrency addiction" it's just gambling!
It's a specific kind of gambling addiction, in the same way saying someone has a 'heroin addiction' could have just been described as a 'drug addiction'. If you say someone has a gambling addiction, the mental picture is probably someone going to a casino to gamble. A 'cryptocurrency addiction' changes the mental picture to someone sitting in front of their computer watching numbers go up and down. The word refines the mental image for someone else.
But, I think it's normal to be skeptical though of new invented terms in general, since it can be used as propaganda to create fear or stigma about some very specific thing someone has an agenda of getting rid of. Cynical take: maybe someone trying to introduce the word cryptocurrency addiction has an interest in seeing the price go down, e.g. they're shorting it, etc. In the same way someone else might not want there to be stigma about crypto currencies, because they own some and want to see the price go up!
But, I think it's normal to be skeptical though of new invented terms in general, since it can be used as propaganda to create fear or stigma about some very specific thing someone has an agenda of getting rid of. Cynical take: maybe someone trying to introduce the word cryptocurrency addiction has an interest in seeing the price go down, e.g. they're shorting it, etc. In the same way someone else might not want there to be stigma about crypto currencies, because they own some and want to see the price go up!
I think you make a great point but not calling it what it is, "gambling", elides the risk inherent in investing in crypto.
It's one of the most volatile assets anyone can invest in. The vast majority of people are investing in it are driven to it by hype alone.
This is gambling. There is no other way to describe it more generally.
People in media and elsewhere calling it "investing" hides the fact that the risk is not much better than betting on a few hands of blackjack.
And hey betting relatively small amounts at a casino OR on crypto is totally fine, go for it! Betting more than you can afford to lose it's just insanity.
It's one of the most volatile assets anyone can invest in. The vast majority of people are investing in it are driven to it by hype alone.
This is gambling. There is no other way to describe it more generally.
People in media and elsewhere calling it "investing" hides the fact that the risk is not much better than betting on a few hands of blackjack.
And hey betting relatively small amounts at a casino OR on crypto is totally fine, go for it! Betting more than you can afford to lose it's just insanity.
one tiny aspect about cryptocurrencies that doesn't exist anymore on other assets: the hype
the amount of guru groups with followers, neverending notifications of volatility, new ~revolutionary idea~
it can, and does, mess with people's mind a lot
the amount of guru groups with followers, neverending notifications of volatility, new ~revolutionary idea~
it can, and does, mess with people's mind a lot
member492(1)
There's a chicken and egg problem with cryptocurrency. If I want crypto, I need to go to an exchange and trade some fiat for it, which would imply that cryptocurrency is inherently gold-backed like the USD.
Then we have people claiming the USD is no longer backed by gold, and that the old concept of 'a dollar note is a receipt for a dollar of gold that you don't physically own'. Can someone please elaborate why I can't go to the federal reserve with a million bucks and trade it for gold?
Then we have people claiming the USD is no longer backed by gold, and that the old concept of 'a dollar note is a receipt for a dollar of gold that you don't physically own'. Can someone please elaborate why I can't go to the federal reserve with a million bucks and trade it for gold?
I guess the main problem here is why are you starting with the idea it can be traded for gold?
It cant. The answer is because they said so. Just like you cant redeem it for state-hoarded lumber. See? A completely arbitrary example. “Why cant I go to the federal reserve with a million bucks and trade it for lumber?” You would ask “who told you that you could?”
There was a time when the US dollar could be redeemed for gold. That stopped almost 100 years ago, and all those people that avoid discussing money in polite company turned out to grow up completely ignorant on money topics. That’s it. I’m not saying that as an insult, I am saying that multiple generations of people did each other a disservice and have outdated understandings of the concept. The US dollar is not backed by and cannot be redeemed for gold.
It would be more productive to erase your concept of “backing” and “redeem for gold”, and start over from scratch, instead of trying to conform new understanding to those concepts.
It cant. The answer is because they said so. Just like you cant redeem it for state-hoarded lumber. See? A completely arbitrary example. “Why cant I go to the federal reserve with a million bucks and trade it for lumber?” You would ask “who told you that you could?”
There was a time when the US dollar could be redeemed for gold. That stopped almost 100 years ago, and all those people that avoid discussing money in polite company turned out to grow up completely ignorant on money topics. That’s it. I’m not saying that as an insult, I am saying that multiple generations of people did each other a disservice and have outdated understandings of the concept. The US dollar is not backed by and cannot be redeemed for gold.
It would be more productive to erase your concept of “backing” and “redeem for gold”, and start over from scratch, instead of trying to conform new understanding to those concepts.
It’s not a “claim.” It’s legislation, meaning the law. The US stopped backing up dollars with gold decades ago. I don’t know of any country still on the gold standard, certainly no large economy.
https://en.wikipedia.org/wiki/Gold_standard
https://en.wikipedia.org/wiki/Gold_standard
USD is not backed by gold, mainly so the federal reserve can print money to control inflation. And, if necessary, indirectly tax the poor or financially illiterate by devaluing their savings.
Mild inflation generally aids the poor, as they have little to no savings and substantial debt.
In the US the overwhelming majority of household's net worth is the equity in their home, which usually doesn't exceed the mortgage they still owe until rather late in life. A few people get lucky with hot real estate markets but to capture that you have to move into an undesirable cheaper area.
Financial literacy is a different issue, but to be absolutely clear, the Fed is not in the business of exploiting the poor. That's a very cartoonish characterization.
In the US the overwhelming majority of household's net worth is the equity in their home, which usually doesn't exceed the mortgage they still owe until rather late in life. A few people get lucky with hot real estate markets but to capture that you have to move into an undesirable cheaper area.
Financial literacy is a different issue, but to be absolutely clear, the Fed is not in the business of exploiting the poor. That's a very cartoonish characterization.
I view the "inflation = stealth tax" to be hyperbole. Like, a comparison to something everyone hates for emphasis.
But yes, inflation is not targeting any socioeconomic class, and its purpose is mainly to force people with a lot of money to not just park it somewhere and instead keep it moving in the economy. The bank's advertised rates sound like a cruel joke? Go invest it! That's the point, the central banks are playing a perpetual game of "inception" where they make all of your decisions to not put your money in a savings account to seem like your own original idea.
But yes, inflation is not targeting any socioeconomic class, and its purpose is mainly to force people with a lot of money to not just park it somewhere and instead keep it moving in the economy. The bank's advertised rates sound like a cruel joke? Go invest it! That's the point, the central banks are playing a perpetual game of "inception" where they make all of your decisions to not put your money in a savings account to seem like your own original idea.
"Jake lost millions of pounds trading cryptocurrencies. "
Gambled it away. Not crypto's fault.
Gambled it away. Not crypto's fault.
I lost more than I will ever have.
I really wonder what kind of hospital treatment is given to people who suffer from gambling with cryptocurrencies specifically (as opposed to casino gamblers).
The “liquidated” terminology suggests he was doing leveraged swap trading.
This has nothing to do with crypto, aside from even more fun volatility.
Buying and holding crypto has no liquidation possibilities, and assets don’t drop to losing everything in 20 minutes. If it does you should buy the dip because its usually just a supply hack specific to that specific crypto.