Punx0r wrote: ↑
Jan 02 2018 7:00pm
Appreciate some stocks are traded speculatively, but ostensibly Amazon et al are raising capital to invest in growing the business/building infrastructure that will hopefully eventually result in a highly profitable business capable of paying dividends. The "real" value of the stock would then be increased. It might well fail instead, but there is at least a chance.
Amazon didn't make a profit on paper for a long time because Bezos was busy reinvesting nearly every penny into the business.
This is something that is very important to know when looking at an investment. This will not show in most short form analyses of business numbers. So you can't just rely on looking at graphs to be informed enough to buy.
Punx0r wrote: ↑
Jan 02 2018 7:00pm
Buying bitcoin at present, though, seems very much like buying a tulip bulb. It will never be useful, you just hope someone else will pay more for it in the future (they themselves hoping they can sell it to someone else and it suddenly seems like a Ponzi scheme).
Unless I have overlooked something, and bitcoin might at some point in the future have a real use, such as occasionally transferring large amounts of wealth (house purchase, moving investments?)
Bitcoin is very useful for doing pretty much everything banks and other financial institutions can do, but with less limiting factors in the way. Last year i had to do an international wire transfer to China to buy a large amount of electric bike parts. The fee on $3000 USD was something like $40 USD. I also spent 30 minutes at my local credit union doing the wire transfer. There were papers to fill, faxes to send, and multiple people involved. It was ridiculous. it also took multiple days to clear before the parts could be shipped.
Using a currency like ethereum, i could have clicked 'send' from my wallet and expected the money to go from my wallet, to the seller's wallet in an average time of 30 minutes. The fee to me would have been lower, and the seller would not have to pay as high of a currency conversion rate.
Here is a screenshot from a public transaction tracker site, showing a transaction i just made from my ethereum wallet, which my mining rewards are stored, to bittrex, the cryptocurrency exchange i use. ( I want to buy some Stellar Lumens today! )
As you can see, the fee is around 1-1.5 percent. Ethereum's TX fees are actually not that great at the moment, but it didn't help that the size of my transaction was very small. The larger the transaction, the smaller the fee tends to be.
Just consider a company like Visa. They may very well handle the most transactions of any company. Visa makes 15 billions a year just nipping people with tiny fees left and right. This nips into the profit margins of nearly every business on every continent. Settlement is actually slow, as well. Some people think that bitcoin is slow, with transactions taking up to a day.. well, 24 hours is actually the shortest time you're going to actually receive money from your credit card vendor. A more typical time is an entire week. Also, international visa fees are around 2-3%, which is a lot.
Most cryptocurrencies are also great stores of value, even if the value swings like mad due to speculation. Pretty much every government created ( fiat ) currency is eroded by inflation, which means that the only way to keep your money's value is to invest in bonds, the stock market, or whatever. A majority of cryptocurrencies are deflationary.
Cryptocurrencies also internationalize money. You can deposit and withdraw anywhere around the world. Nobody stands between you and your money. It's not unlike an old school swiss bank account..
So cryptocurrency does have a lot of applications. It is useful today. I have bought and sold things with bitcoin, ethereum, and even the obscure vertcoin.
Like you say, bitcoin 2.0 or another crypto currency may well work as a useable currency and so have "value" as a useable thing and be a sensible investment. But at that point the original bitcoin will surely become worthless and thus prove it was nothing but a bubble?
Nobody really knows. Cryptocurrency is still at the bleeding edge. So many different groups are trying all sorts of different ideas on how a cryptocurrency should work. My prediction is that bitcoin will be completely usurped this year. I have not seen any signs that the development team has anything in the oven to change that.
And bitcoin fell from almost 90% of cryptocurrency useage down to 35% in 2017. It's price increases have slowed down a lot as well. It's not something i would put any of my money in.
Punx0r wrote: ↑
Jan 02 2018 7:00pm
I find the crypto currencies interesting and look forward to finding out how they work out, but I honestly don't understand the behind-the-scenes workings nearly well enough to think I could hope to make an informed decision about investing in them. I mean, to invest smartly in bitcoin you need to be abreast of the internal politics and in-fighting, right?
That's exactly the right attitude to approach any investment. Jumping in for the quick money and not reading up beforehand is exactly how 75% of investors lose their shorts. Yes, there is a lot to know, and a lot to keep up on. It can become an obsession and part time job very quickly. I jumped right into the game after a year of reading investment books and found that this market is wilder than the stock market by a factor of 10 or maybe 100, but a lot of the same strategies ( buy, hold, and when your emotions run high, DO NOT MAKE A MOVE ) professed by greats like Peter Lynch and Warren Buffet actually work in this space.
There are also many magnitudes of FUD and hype of utter garbage, compared to stocks. Pumps and dumps galore. Out of the thousand or so cryptocurrencies, there are only a dozen or so that are going to be worth a shit.
I wouldn't recommend anyone make this their first investment. Start out with something safe and boring like a vanguard index fund ( which returned 21% this year, by the way! ), which is literally the pet rock of investments, as it tracks the entire market and you don't need to spend every day with your nose planted in a copy of the wall street journal or really even think about it at all.
People get stupid with single stock investing though, and they get even more stupid with crypto... however, the crypto market is in a boom and is very forgiving when it comes to mistakes.
Me? i take the index fund approach. My portfolio is diversified amongst the top currencies. During this big correction, i saw my small share of bitcoin dive down ~40% but my other currencies actually held pretty well, and in the past 4 days, i've seen the non-bitcoins blow way past previous highs before the correction. So glad i stayed in while others were jumping out of buildings on december 22