Bitcoin

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Malinois000
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Re: Bitcoin

Post by Malinois000 » Wed Aug 16, 2017 8:10 pm

pokebowl wrote:
Tue Aug 15, 2017 11:17 pm
Malinois000 wrote:
Sun Aug 13, 2017 2:18 pm
What do you think about Bitcoin and Cryptocurrencies? Investing or gambling?
Gambling, at least in the context of how its been hitting the news lately. I see the positive uses of cryptocurrencies and I do see the negatives. In terms of using them as speculation vehicles I am not opposed to it, though its nothing ground breaking in that context and I do get a tad insulted both here and on other community forums I frequent when the usual "passionate" community that surrounds cryptocurrencies attempts to up-sell these platforms as something they are not and often times coming off as snake oil salesmen (or women) in the process. During the last 50% pop in value several years ago, the comments towards cryptocurrency speculation was entirely different than it is today from those same corners of the internet.

Right now I'd argue several cryptocurrencies have gone mainstream and are currently in a speculation bubble and many are jumping in for a quick buck and performance chasing. I myself if I wanted to invest in cryptocurrencies, I'd look to invest with the companies developing or adapting the technology to other areas directly. Otherwise I'd use the cryptocurrencies as intended and only as a means for product exchange. In my opinion it doesnt follow the Boglehead mindset, introduces much unneeded risk, and overall is not where I want to park any large amount of my assets.
Thoughtful comments - thanks!

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HomerJ
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Re: Bitcoin

Post by HomerJ » Wed Aug 16, 2017 8:46 pm

Jonathan wrote:
Wed Aug 16, 2017 3:17 pm
tadamsmar wrote:
Wed Aug 16, 2017 3:10 pm
Two Aussies were convicted of insider trading in the currency markets:

http://www.financemagnates.com/forex/an ... margin-fx/
Hmmmm, I don't know if that's a great example of "insider trading" per se:
Hill had abused his position as a Commonwealth public official by deliberately accessing the ABS database, the judge said, copying by hand highly confidential, embargoed information and then passing it on to Kamay.
Hey I know, let's get the definition from a dictionary! That solves all these debates. :)
the illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.
Whoops, it appears you are being intellectually dishonest. :(

Jonathan
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Re: Bitcoin

Post by Jonathan » Wed Aug 16, 2017 11:01 pm

mnaspbh wrote:
Wed Aug 16, 2017 5:53 pm
chargebacks are entirely possible and have happened before.

The fees are a fixed rate, not percentage based
Fixed rate fees? Chargebacks? Are you talking about bitcoin?

Jonathan
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Re: Bitcoin

Post by Jonathan » Wed Aug 16, 2017 11:24 pm

HomerJ wrote:
Wed Aug 16, 2017 8:46 pm
Hey I know, let's get the definition from a dictionary! That solves all these debates. :)
the illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.
Whoops, it appears you are being intellectually dishonest. :(

That definition refers to a stock exchange, and not a currency exchange. There's no such thing as "insider" information in a currency exchange.

More proof:

Image

Valuethinker
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Re: Bitcoin

Post by Valuethinker » Thu Aug 17, 2017 2:41 am

Jonathan wrote:
Wed Aug 16, 2017 11:24 pm
HomerJ wrote:
Wed Aug 16, 2017 8:46 pm
Hey I know, let's get the definition from a dictionary! That solves all these debates. :)
the illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.
Whoops, it appears you are being intellectually dishonest. :(

That definition refers to a stock exchange, and not a currency exchange. There's no such thing as "insider" information in a currency exchange.

More proof:

Actually, there is.

Forgest Investopedia. University students are not allowed to cite wikipedia-- investopedia is useful but not an authoritative source.

The question is whether it is feasible. The chief Foreign Exchange dealer of the Bank of England was suspended as part of an investigation into rigged FX dealing-- price quotes-- by traders at commercial banks.

If you know where a Central Bank is going to intervene on a currency, then you have access to inside information. And there have been plenty of cases of same.

that would also be true of knowledge of a major buyer or seller eg of the NZD (probably harder to move Cable ie GBP: USD in that way, for a private entity-- but maybe not impossible).
Last edited by Valuethinker on Thu Aug 17, 2017 2:53 am, edited 1 time in total.

Valuethinker
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Re: Bitcoin

Post by Valuethinker » Thu Aug 17, 2017 2:53 am

Jonathan wrote:
Wed Aug 16, 2017 3:17 pm
tadamsmar wrote:
Wed Aug 16, 2017 3:10 pm
Two Aussies were convicted of insider trading in the currency markets:

http://www.financemagnates.com/forex/an ... margin-fx/
Hmmmm, I don't know if that's a great example of "insider trading" per se:
Hill had abused his position as a Commonwealth public official by deliberately accessing the ABS database, the judge said, copying by hand highly confidential, embargoed information and then passing it on to Kamay.

Actually it is a perfect example of Insider Trading.

Valuethinker
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Re: Bitcoin

Post by Valuethinker » Thu Aug 17, 2017 2:54 am

Jonathan wrote:
Wed Aug 16, 2017 5:02 pm
Merchants may prefer it over credit cards because there are no fees or chargebacks. Remember, the transaction time for bitcoin may be slow compared to credit cards, but the settlement time for credit cards is around 1 month (the time after which you cannot do chargebacks).

Look at some of the larger bitcoin transactions. People are moving tens of millions of dollars in 15 minutes, for less than $1. That ability may not be useful to your average Joe, but it's definitely valuable.
When the miners cannot make profits from creating bitcoins, what will incentivize exchanges to act as such?

Valuethinker
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Re: Bitcoin

Post by Valuethinker » Thu Aug 17, 2017 2:57 am

Nate79 wrote:
Tue Aug 15, 2017 2:28 pm
Every sentence I read written by someone trying to support why they are buying bitcoin reinforces my believe that they are gambling and speculating.
The things that make it feel like gambling:

- the win-lose nature of any transaction. There's only limited societal value being created here (so far!): the ability to finance illegal or tax evasion transactions, ability to avoid exchange controls (again, illegal activities)

- the absence of any reasonable yardstick for value - the marginal cost of production of a new bitcoin doesn't do it

- the absence of any source of return for the investor (again, see win-lose) other than speculative movement in price

- the cult-like enthusiasm it generates (OK, that's a characteristic of investment markets as well, at times)

mac808
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Re: Bitcoin

Post by mac808 » Thu Aug 17, 2017 6:42 am

Valuethinker wrote:
Thu Aug 17, 2017 2:54 am
Jonathan wrote:
Wed Aug 16, 2017 5:02 pm
Merchants may prefer it over credit cards because there are no fees or chargebacks. Remember, the transaction time for bitcoin may be slow compared to credit cards, but the settlement time for credit cards is around 1 month (the time after which you cannot do chargebacks).

Look at some of the larger bitcoin transactions. People are moving tens of millions of dollars in 15 minutes, for less than $1. That ability may not be useful to your average Joe, but it's definitely valuable.
When the miners cannot make profits from creating bitcoins, what will incentivize exchanges to act as such?
Miners will always be able to create Bitcoins. The 21 million Bitcoin limit as I understand it is artificially imposed by a single line of source code, which the miners can agree to increase at any time (of course, doing so now would shake confidence in the system, reduce prices, and therefore be a net negative to them - but this will not always be the case).

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tadamsmar
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Re: Bitcoin

Post by tadamsmar » Thu Aug 17, 2017 7:18 am

Jonathan wrote:
Wed Aug 16, 2017 11:24 pm

That definition refers to a stock exchange, and not a currency exchange. There's no such thing as "insider" information in a currency exchange.

More proof:

Image
You are misreading the article. The article is merely claiming that insider trading in FX is a not a crime. This fact is eyebrow raising and gives the impression that FX is the Wild West as the article says.

Perhaps that is true in some jurisdictions, but apparently not in Australia if that article I posted is correct, it says that the two men were charged with insider trading.

It's true that merely using inside information in sports betting is not a crime (whereas game fixing is a crime). But leaking information violates NCAA rules and can lead to termination of employment.

Bookies hate insider trading in sports betting. They can't refer it to the FBI if they detect it. There is some indications that the refer it to organized crime enforcers.

Jonathan
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Re: Bitcoin

Post by Jonathan » Thu Aug 17, 2017 10:07 am

I don't know what to tell you guys about insider trading and currency markets. I believe that Australian situation had also to do with stealing information from a bank? You're trying to present a far-end edge case as an example of a standard, and it's not convincing. This looks like Escalation of commitment, and I don't think we'll reach consensus by further debate. Anyone wanting to know more can simply Google insider trading forex.
Valuethinker wrote:
Thu Aug 17, 2017 2:54 am
When the miners cannot make profits from creating bitcoins, what will incentivize exchanges to act as such?
Again: exchanges make money from trading fees, not from mining. When bitcoin is no longer mine-able, obviously, miners can't profit from mining. I'm not sure what you're saying here. You might also like the original bitcoin white paper if you're curious about the fundamentals.

Again: miners are not incentivized to do anything that would lower the value of bitcoin. Valuethinker - you might want to play around with being a bitcoin miner, and buying/selling on an exchange. Yes, you're not going to make millions, but you'll get a good feel for the dynamic. You're allowed to dislike bitcoin as an investment, but still be intellectually curious about it enough to play with it.

I'm not exiting the thread, but it does look like we're going off the rails here. I do occasionally have people PM me questions about bitcoin, and anyone is welcome to do so if they don't want to jump in the thread, or would simply prefer a private conversation.

Nevertheless, at very least, we made it to 3 pages this time. Not bad! :sharebeer

Kuznec
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Re: Bitcoin

Post by Kuznec » Thu Aug 17, 2017 10:19 am

What's wrong with insider trading, if you know something that other bidders do not know, then it's a sin not to use it.

mac808
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Re: Bitcoin

Post by mac808 » Thu Aug 17, 2017 10:21 am

Jonathan wrote:
Thu Aug 17, 2017 10:07 am
When bitcoin is no longer mine-able, obviously, miners can't profit from mining.
Not to nitpick but it's worth restating: miners can heavily influence how Bitcoin functions, and miners and exchanges together (and there seems to be much overlapping ownership) can almost totally control how Bitcoin functions; that is to say, they can (and likely will) make changes to ensure that Bitcoin is mine-able forever (e.g. raising the 21m coin cap, and preventing scheduled increases in difficulty). Given the realities of hard forks, Bitcoin (and most crypto currencies) have no immutable rules and are really just "whatever the majority of participants and stakeholders think they should be at any given moment in time". Fascinating stuff.

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tadamsmar
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Re: Bitcoin

Post by tadamsmar » Thu Aug 17, 2017 12:20 pm

Kuznec wrote:
Thu Aug 17, 2017 10:19 am
What's wrong with insider trading, if you know something that other bidders do not know, then it's a sin not to use it.
"Because insider trading undermines investor confidence in the fairness and integrity of the securities markets, the SEC has treated the detection and prosecution of insider trading violations as one of its enforcement priorities."

https://www.sec.gov/fast-answers/answersinsiderhtm.html

redstar
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Re: Bitcoin

Post by redstar » Thu Aug 17, 2017 12:54 pm

Valuethinker wrote:
Thu Aug 17, 2017 2:54 am
Jonathan wrote:
Wed Aug 16, 2017 5:02 pm
Merchants may prefer it over credit cards because there are no fees or chargebacks. Remember, the transaction time for bitcoin may be slow compared to credit cards, but the settlement time for credit cards is around 1 month (the time after which you cannot do chargebacks).

Look at some of the larger bitcoin transactions. People are moving tens of millions of dollars in 15 minutes, for less than $1. That ability may not be useful to your average Joe, but it's definitely valuable.
When the miners cannot make profits from creating bitcoins, what will incentivize exchanges to act as such?
Miners will still be incentivised to mine blocks for the transaction fees they receive, they just won't receive any new generated Bitcoins.

Valuethinker
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Re: Bitcoin

Post by Valuethinker » Thu Aug 17, 2017 4:36 pm

tadamsmar wrote:
Thu Aug 17, 2017 7:18 am
Jonathan wrote:
Wed Aug 16, 2017 11:24 pm

That definition refers to a stock exchange, and not a currency exchange. There's no such thing as "insider" information in a currency exchange.

More proof:

Image
You are misreading the article. The article is merely claiming that insider trading in FX is a not a crime. This fact is eyebrow raising and gives the impression that FX is the Wild West as the article says.

Perhaps that is true in some jurisdictions, but apparently not in Australia if that article I posted is correct, it says that the two men were charged with insider trading.

It's true that merely using inside information in sports betting is not a crime (whereas game fixing is a crime). But leaking information violates NCAA rules and can lead to termination of employment.

Bookies hate insider trading in sports betting. They can't refer it to the FBI if they detect it. There is some indications that the refer it to organized crime enforcers.
Ahhh

The U.S. legal doctrine on insider trading arises from a failure of fiduciary duty to shareholders, e.g. by company officers.

That's not true in other countries. In the UK it is just illegal. Trading on material price sensitive non public information.

So you can b unassociated w a company and still be an insider trader.

There is a big scandal 're fx fixing in London. 40 per cent of daily world trades or about 3.1 trillion dollars a day, trade thru London. More than New York.

Caladan
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Re: Bitcoin

Post by Caladan » Fri Aug 18, 2017 10:37 am

People have been predicting the demise of bitcoin for years now. I purchased a few 5-6 years back for a very small amount apiece and decided to sit on them forever. I haven't regretted it yet, to say the least. :beer

I think the crypto trend is going to get harder and harder to ignore. I used to play individual stocks with a very tiny portion of my portfolio (and follow boglehead strategy for the other 95%+). Honestly though, I realized I was playing the individual stocks for fun and a chance of more upside. No individual stock has the upside potential of crypto though IMO. So honestly I sold all my individual stocks and am looking to get more into the crypto space. Even if its just a few dollars from each paycheck or whatever, its something. Plus its fun and interesting to me so whatever.

looking
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Re: Bitcoin

Post by looking » Sat Aug 19, 2017 7:40 am

y Gauss44 » Tue Aug 15, 2017 2:13 pm


pls show me step by step how to buy and sell the bitcoin please

looking
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Gauss44

Post by looking » Sat Aug 19, 2017 7:43 am

Gauss44

show me step by step how to buy and sell the bitcoins i want to buy Bitcoin now and im new

Valuethinker
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Re: Gauss44

Post by Valuethinker » Sat Aug 19, 2017 8:28 am

looking wrote:
Sat Aug 19, 2017 7:43 am
Gauss44

show me step by step how to buy and sell the bitcoins i want to buy Bitcoin now and im new
This is most assuredly not the place to get that kind of knowledge. There are any number of online guides-- google it?

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tadamsmar
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Re: Gauss44

Post by tadamsmar » Sat Aug 19, 2017 9:38 am

looking wrote:
Sat Aug 19, 2017 7:43 am
Gauss44

show me step by step how to buy and sell the bitcoins i want to buy Bitcoin now and im new
I set up an account at Coinbase.com and tried to do a credit card transfer to the account. The first card I tried rejected it. The second (Wells Fargo) sent me a phone alert to confirm the transaction, so I was able to buy some bitcoin that way.

That was my experience. I don't know much more about it.
Last edited by tadamsmar on Sat Aug 19, 2017 1:14 pm, edited 1 time in total.

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grayfox
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Re: Bitcoin

Post by grayfox » Sat Aug 19, 2017 12:20 pm

Malinois000 wrote:
Sun Aug 13, 2017 2:18 pm
What do you think about Bitcoin and Cryptocurrencies? Investing or gambling?
Cryptocurrency is the future of money. Our lives will be recorded as a series of transactions written in The Blockchain.
The Blockchain is public and can be read by anyone.
The Blockchain is permanent and will persist long after we are gone.

The Blockchain is an immutable Ledger, therefore the Blockchain is infallible.
It can contain proof of wrongdoing and can be used to judge people accused of crimes.
The Blockchain is de-centralized and will be everywhere and will know everything about every one of us.

All our good deeds and all our sins will be written in The Blockchain.
Gott mit uns.

looking
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Re: bitcoin is crushing hard now

Post by looking » Thu Sep 14, 2017 10:45 pm

bitcoin is crushing now finally

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sperry8
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Re: bitcoin is crushing hard now

Post by sperry8 » Fri Sep 15, 2017 2:26 pm

looking wrote:
Thu Sep 14, 2017 10:45 pm
bitcoin is crushing now finally
And the next day (today) it's bouncing right back. The volatility in Bitcoin and Alt-coins is amazing. Seems like it could be a day traders paradise.

I still don't own any cryptos... although I have opened accounts. Some friends have made 4x in very short order. It's hard to stop listening to them. But crashes like yesterday remind me why I must tune out the noise.
Certainty is a requirement of ignorance. | Humbling Contest results: | 2016: #121 of 610 | 2015: #18 of 552 | 2014: #225 of 503 | 2013: #383 of 433 | 2012: #366 of 410 | 2011: #113 of 369 | 2010: #53 of 282

Malinois000
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Re: Bitcoin

Post by Malinois000 » Fri Sep 15, 2017 8:32 pm

I don't know if it's the future or not; however, I continue to accumulate both bitcoin and ethereuem. I've been and continue to be a buy and hold, dividend investor, yet investing a small portion in the cryptocurrencies is so interesting. Quite a ride and I have a sense it will pay handsomely in the future. We will see.

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birdog
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Re: Bitcoin

Post by birdog » Fri Nov 17, 2017 8:53 pm

arcticpineapplecorp. wrote:
Mon Aug 14, 2017 1:48 pm
When you own companies that are profitable, those businesses grow in size. You receive dividends which when reinvested buy you more shares. If you buy 1 bitcoin, in 100 years you'll still just have 1 bitcoin. The value of that bitcoin may be more than you paid for it. But that's still gambling, not investing. Because you're receiving no earnings/dividends.
If you buy 1 share of Berkshire Hathaway , in 100 years you'll still just have 1 share of Berkshire Hathaway. Are you saying that is gambling and not investing?
The height of cultivation always runs to simplicity -Bruce Lee

jb1
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Re: Bitcoin

Post by jb1 » Fri Nov 17, 2017 9:32 pm

Mind is blown at the people who are 100% against bitcoin or cryptocurrency.

Im 27, have a 3 fund thatll make me ~7%. Thats great. Id rather take 10k, money I can always make back and put it in cryptos (which ive done). Imagine in 10 years where its at? Had you taken that 10k at 7% in 10 years its 19k. In 10 year check the crypto market. BTC ETH and LTC amongst others will be huge.

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arcticpineapplecorp.
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Re: Bitcoin

Post by arcticpineapplecorp. » Fri Nov 17, 2017 10:16 pm

birdog wrote:
Fri Nov 17, 2017 8:53 pm
arcticpineapplecorp. wrote:
Mon Aug 14, 2017 1:48 pm
When you own companies that are profitable, those businesses grow in size. You receive dividends which when reinvested buy you more shares. If you buy 1 bitcoin, in 100 years you'll still just have 1 bitcoin. The value of that bitcoin may be more than you paid for it. But that's still gambling, not investing. Because you're receiving no earnings/dividends.
If you buy 1 share of Berkshire Hathaway , in 100 years you'll still just have 1 share of Berkshire Hathaway. Are you saying that is gambling and not investing?
A few problems with your line of questioning. Let's take the errors in your question one at a time:

If you own 1 share of Berkshire Hathaway today, I honestly don't know what you'll have in 100 years, nor does anyone else. The company, like most, probably won't be around in 100 years. Most companies don't stand that kind of test of time. So not really a great example to use.

That being said, your question really is "If you have 1 share now of Berkshire Hathaway, all you'll ever have is 1 share", right? Again, this may or may not be true. Not to get semantic, but it's quite possible that once Warren's no longer at the helm the next CEO/board may decide to start issuing dividends (which would result in additional shares built up over time).

O.k., let's stop being fancy and just ask, "What if Berkshire never as long as it exists ever declares a dividend? Then you'd only ever have just 1 share of Berkshire, right?" True. However, there is no denying that regardless of whether dividends are issued, a company can continue to grow. The company can be more valuable because it PRODUCES MORE STUFF than it did in the past. Or in the case of Berkshire Hathaway which technically produces nothing since it's a holding company, it can own companies that PRODUCE MORE STUFF. It can OWN MORE COMPANIES. It can continue to expand. If these businesses are well run, that's increasing profits for those businesses over time. Those profits flow to you, the shareholder...not in the case of dividends, but in the form of capital gains in the form of higher share prices (share prices tend to follow earnings. Rising earnings leads to higher share prices over time and lower earnings leads to lower share prices).

One bitcoin will never PRODUCE MORE BITCOINS over time, right? That's the difference. Businesses grow over time. They produce. They expand. Correct me if I'm wrong but unless there's some change, there will only ever be 21 million bitcoins, right? (source: https://www.google.com/search?q=how+man ... refox-b-ab) So there will never be MORE than that, right? There are no limits to growth of a company (we see companies like Apple, Saudi Aramco (once public), etc. getting to 1 trillion market cap...and still no limit to growth). Bitcoin has a limit to its growth. Satoshi Nakomoto made sure of that. The value of those coins may increase (or not). There's no way to know. It's a speculation, a gamble. Not an investment. That's the difference.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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heathshuler
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Re: Bitcoin

Post by heathshuler » Sat Nov 18, 2017 5:20 am

By the way, Bitcoin has in essence provided dividends through its growing pains. Specifically, the "forks" it has experienced have resulted in Bitcoin holders being credited with as many forked coins as the number of Bitcoins they held at the time of the fork. As far as I understand it, each fork is an attempt to introduce advanced coding, but you can't just do away with the existing blockchain data, so forked coins are added in a parallel version of it. For Example, if you had 2 Bitcoins (BTC) at the time of the "Bitcoin Cash (BCH)" fork, you now have your original 2 Bitcoins, plus you were given 2 Bitcoin Cash coins. Then there was the "Bitcoin Gold (BTG)" fork and the same crediting process applied (now you have 2 coins each of Bitcoin, Bitcoin Cash, and Bitcoin Gold). There was expectation of a Segwit 2x fork, but it was ultimately cancelled. Who knows how long or how many of these could occur as the technology tries to keep up with the transaction base. Fundamentally, I think this could be considered as going against the "there will never be more than 21 Million Bitcoin" creed because now there will eventually be 21 Million each of BTC, BCH, BTG, and whatever other versions are created, and that could hurt the price because the supply is now greater. For now though, the price seems to be getting boosted by increased demand to get in on Bitcoin (for whatever that individual/group/company's reasoning may be), and all the while alternative Bitcoin versions are being credited, depending on how you hold them, you can sell them at an exchange for whichever version you prefer. That is why I see this process as a dividend....because yes, you purchased 2 BTC (current market value: $16k), but if you go exchange the 2 BCH you were credited (current market value: $2.5k) and the 2 BTG you were credited (current market value: $300) for more BTC, now you have 2.35 BTC (current market value: $18.8k)--- a 17.5% dividend.

Its technology, its press, its adoption, its price speculation, the regulations it is subject to, etc. are changing so rapidly, and there are so many levels of understanding what Bitcoin is and how it works and why I need or want it, it's impossible for anyone to state with certainty what is going to happen to the technology and its associated value.

For now, I am enjoying the ride and have invested only what I'm willing to completely lose. If you have interest in buying even a fraction of BTC (yes, you can buy less than 1.0 Bitcoin), the easiest way is:

1. Purchase at the Coinbase website
With this step, you now have Bitcoin in your name. You can stop with this step and probably be ok, but there are a couple more steps to increase your control and security...

2. Transfer coins to GDAX. This is is the online exchange run by Coinbase. Once you have Bitcoin on Coinbase, you can transfer it over to GDAX instantly without any fees. With this step, you are basically minimizing the fees associated with sending your coins in Step 3....

3. Send your coins from GDAX to the hardware wallet (small handheld device) you've purchased directly from its manufacturer (e.g., Ledger Nano S, Trezor). Now you are the only one that owns your coins because you (through having them on your hardware wallet, not sitting on the GDAX online exchange owned by Coinbase) are the only person with the "Private Key" to use those coins.

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birdog
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Re: Bitcoin

Post by birdog » Sat Nov 18, 2017 5:38 am

arcticpineapplecorp. wrote:
Fri Nov 17, 2017 10:16 pm
birdog wrote:
Fri Nov 17, 2017 8:53 pm
arcticpineapplecorp. wrote:
Mon Aug 14, 2017 1:48 pm
When you own companies that are profitable, those businesses grow in size. You receive dividends which when reinvested buy you more shares. If you buy 1 bitcoin, in 100 years you'll still just have 1 bitcoin. The value of that bitcoin may be more than you paid for it. But that's still gambling, not investing. Because you're receiving no earnings/dividends.
If you buy 1 share of Berkshire Hathaway , in 100 years you'll still just have 1 share of Berkshire Hathaway. Are you saying that is gambling and not investing?
A few problems with your line of questioning. Let's take the errors in your question one at a time:

If you own 1 share of Berkshire Hathaway today, I honestly don't know what you'll have in 100 years, nor does anyone else. The company, like most, probably won't be around in 100 years. Most companies don't stand that kind of test of time. So not really a great example to use.

That being said, your question really is "If you have 1 share now of Berkshire Hathaway, all you'll ever have is 1 share", right? Again, this may or may not be true. Not to get semantic, but it's quite possible that once Warren's no longer at the helm the next CEO/board may decide to start issuing dividends (which would result in additional shares built up over time).

O.k., let's stop being fancy and just ask, "What if Berkshire never as long as it exists ever declares a dividend? Then you'd only ever have just 1 share of Berkshire, right?" True. However, there is no denying that regardless of whether dividends are issued, a company can continue to grow. The company can be more valuable because it PRODUCES MORE STUFF than it did in the past. Or in the case of Berkshire Hathaway which technically produces nothing since it's a holding company, it can own companies that PRODUCE MORE STUFF. It can OWN MORE COMPANIES. It can continue to expand. If these businesses are well run, that's increasing profits for those businesses over time. Those profits flow to you, the shareholder...not in the case of dividends, but in the form of capital gains in the form of higher share prices (share prices tend to follow earnings. Rising earnings leads to higher share prices over time and lower earnings leads to lower share prices).

One bitcoin will never PRODUCE MORE BITCOINS over time, right? That's the difference. Businesses grow over time. They produce. They expand. Correct me if I'm wrong but unless there's some change, there will only ever be 21 million bitcoins, right? (source: https://www.google.com/search?q=how+man ... refox-b-ab) So there will never be MORE than that, right? There are no limits to growth of a company (we see companies like Apple, Saudi Aramco (once public), etc. getting to 1 trillion market cap...and still no limit to growth). Bitcoin has a limit to its growth. Satoshi Nakomoto made sure of that. The value of those coins may increase (or not). There's no way to know. It's a speculation, a gamble. Not an investment. That's the difference.
Got it. So no dividends doesn't actually equal gambling as your previously asserted.
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Valuethinker
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Re: Bitcoin

Post by Valuethinker » Sat Nov 18, 2017 6:32 am

arcticpineapplecorp. wrote:
Fri Nov 17, 2017 10:16 pm
birdog wrote:
Fri Nov 17, 2017 8:53 pm
arcticpineapplecorp. wrote:
Mon Aug 14, 2017 1:48 pm
When you own companies that are profitable, those businesses grow in size. You receive dividends which when reinvested buy you more shares. If you buy 1 bitcoin, in 100 years you'll still just have 1 bitcoin. The value of that bitcoin may be more than you paid for it. But that's still gambling, not investing. Because you're receiving no earnings/dividends.
If you buy 1 share of Berkshire Hathaway , in 100 years you'll still just have 1 share of Berkshire Hathaway. Are you saying that is gambling and not investing?
A few problems with your line of questioning. Let's take the errors in your question one at a time:

If you own 1 share of Berkshire Hathaway today, I honestly don't know what you'll have in 100 years, nor does anyone else. The company, like most, probably won't be around in 100 years. Most companies don't stand that kind of test of time. So not really a great example to use.

That being said, your question really is "If you have 1 share now of Berkshire Hathaway, all you'll ever have is 1 share", right? Again, this may or may not be true. Not to get semantic, but it's quite possible that once Warren's no longer at the helm the next CEO/board may decide to start issuing dividends (which would result in additional shares built up over time).

O.k., let's stop being fancy and just ask, "What if Berkshire never as long as it exists ever declares a dividend? Then you'd only ever have just 1 share of Berkshire, right?" True. However, there is no denying that regardless of whether dividends are issued, a company can continue to grow. The company can be more valuable because it PRODUCES MORE STUFF than it did in the past. Or in the case of Berkshire Hathaway which technically produces nothing since it's a holding company, it can own companies that PRODUCE MORE STUFF. It can OWN MORE COMPANIES. It can continue to expand. If these businesses are well run, that's increasing profits for those businesses over time. Those profits flow to you, the shareholder...not in the case of dividends, but in the form of capital gains in the form of higher share prices (share prices tend to follow earnings. Rising earnings leads to higher share prices over time and lower earnings leads to lower share prices).

One bitcoin will never PRODUCE MORE BITCOINS over time, right? That's the difference. Businesses grow over time. They produce. They expand. Correct me if I'm wrong but unless there's some change, there will only ever be 21 million bitcoins, right? (source: https://www.google.com/search?q=how+man ... refox-b-ab) So there will never be MORE than that, right? There are no limits to growth of a company (we see companies like Apple, Saudi Aramco (once public), etc. getting to 1 trillion market cap...and still no limit to growth). Bitcoin has a limit to its growth. Satoshi Nakomoto made sure of that. The value of those coins may increase (or not). There's no way to know. It's a speculation, a gamble. Not an investment. That's the difference.
The point with BH is they buy back shares.

Thus 1 share is an increasing share in the future profits stream.

Buffet explained this in a letter to shareholders: buybacks v dividends are equivalent.

What matters is long term profits growth.

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arcticpineapplecorp.
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Re: Bitcoin

Post by arcticpineapplecorp. » Sat Nov 18, 2017 9:15 am

birdog wrote:
Sat Nov 18, 2017 5:38 am
Got it. So no dividends doesn't actually equal gambling as your previously asserted.
yes. and thank you valuethinker for saying what i tried to say in a much more succinct way.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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