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As Value of Cryptocurrencies Falls, a Lot of New and Risk-Taking Investors Are Suffering Immensely (nytimes.com)
After the latest round of big price drops, many cryptocurrencies have given back all of the enormous gains they experienced last winter. The value of all outstanding digital tokens has fallen by about $600 billion, or 75 percent, since the peak in January, according to data from the website coinmarketcap.com. The New York Times: The virtual currency markets have been through booms and busts before -- and recovered to boom again. But this bust could have a more lasting impact on the technology's adoption because of the sheer number of ordinary people who invested in digital tokens over the last year, and who are likely to associate cryptocurrencies with financial ruin for a very long time. [...] By many metrics, more people put money into virtual currencies last fall and winter than in all of the preceding nine or so years. Coinbase, the largest cryptocurrency brokerage in the United States, doubled its number of customers between October and March. The start-up Square began allowing the users of its mobile app, Square Cash, to buy Bitcoin last November.
[...] Kim Hyon-jeong, a 45-year-old teacher and mother of one who lives on the outskirts of Seoul, said she put about 100 million won, or $90,000, into cryptocurrencies last fall. She drew on savings, an insurance policy and a $25,000 loan. Her investments are now down about 90 percent. "I thought that cryptocurrencies would be the one and only breakthrough for ordinary hardworking people like us," she said. "I thought my family and I could escape hardship and live more comfortably, but it turned out to be the other way around."
[...] In the United States, Charles Herman, a 29-year-old small-business owner in Charleston, S.C., became obsessed with virtual currencies in September. He said he now felt that he had wasted 10 months of his life trying to play the markets. While he is essentially back to the $4,000 he put in, he has soured on the revolutionary promises that virtual currency fanatics made for the technology last year and has resumed investing his money in real estate. "I guess I thought we were 'sticking it to the man' when I got on board," Mr. Herman said. "But I think 'the man' had already caught on, and had an exit strategy."
[...] Kim Hyon-jeong, a 45-year-old teacher and mother of one who lives on the outskirts of Seoul, said she put about 100 million won, or $90,000, into cryptocurrencies last fall. She drew on savings, an insurance policy and a $25,000 loan. Her investments are now down about 90 percent. "I thought that cryptocurrencies would be the one and only breakthrough for ordinary hardworking people like us," she said. "I thought my family and I could escape hardship and live more comfortably, but it turned out to be the other way around."
[...] In the United States, Charles Herman, a 29-year-old small-business owner in Charleston, S.C., became obsessed with virtual currencies in September. He said he now felt that he had wasted 10 months of his life trying to play the markets. While he is essentially back to the $4,000 he put in, he has soured on the revolutionary promises that virtual currency fanatics made for the technology last year and has resumed investing his money in real estate. "I guess I thought we were 'sticking it to the man' when I got on board," Mr. Herman said. "But I think 'the man' had already caught on, and had an exit strategy."
Those two anecdotes are stories of people hoping to magically get rich quick. The outcome is unsurprising.
Surprising Exactly Nobody...
Well, OK, surprising the poor suckers who bought into this high-tech reinvention of the classic pump-and-dump I guess, but no-one else.
Kim Hyon-jeong, a 45-year-old teacher and mother of one who lives on the outskirts of Seoul, said she put about 100 million won, or $90,000, into cryptocurrencies last fall. She drew on savings, an insurance policy and a $25,000 loan. Her investments are now down about 90 percent. "I thought that cryptocurrencies would be the one and only breakthrough for ordinary hardworking people like us," she said. "I thought my family and I could escape hardship and live more comfortably, but it turned out to be the other way around."
Am I supposed to feel sorry for this person? I make a comfortable living (80k USD) and in lat e2017 I bought 350 dollars worth of Ethererum. By January I sold it all because even I, a non-college educated computer nerd could tell this shit was way too toxic to consider a 'long term' investment. Don't be an idiot like Kim.
Have you heard about investing in tulip bulbs?
"National Security is the chief cause of national insecurity." - Celine's First Law
Pumps piss for them. I would just settle for getting my eight bitcoins back.
A sucker I mean. This should be a lesson for the next round of "get rich quick" vaporware.
Whether stock market or a casino, gambling is taking high risks so nobody should be surprised if they lose their shirt. If you buy into something that returns significantly more than what you can borrow money at, of course it's high risk (or else the bank lending you money would buy those same investments instead of lending you money).
I kinda hate jumping onto the bandwagon, but investing in anything on the basis of "someone dumber than me will buy it for more than I paid" always leads to the greatest number of people learning the hard way that they're the dumber someones.
Tuition can be wickedly expensive in the school of hard knocks.
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It's not all bad.
All these crypto-miners have fostered better GPUs, and have driven demand for more generating capacity in the power grid. And now that it's over, the rest of us can use these for useful purposes.
So thank you, early adopters. Sorry that the inevitable happened to your wasted energy.
"Nine times out of ten, starting a fire is not the best way to solve the problem." - my wife
"It will pay dividends."
Why do you think people still use that phrase for anything that will reward you in the future? "Spend your youth living healthfully, and it will pay dividends to your future happiness." That phrase is part of the idiomatic vernacular, because the only reason to buy was at one time to get in on that sweet, sweet cut of the real profits, known as dividends.
Of course, just like robbers broke into banks "Because that's where the money is", so too did the federal government begin ransacking dividends for tax monies; dividends are taxed higher than capital gains. The result has been obvious: A shift away from investment in dividends; people now invest in capital gains (and, often, that's all even well established companies offer), and thus the Greater Fool Theory has become the foundation of the entire U.S. stock market—the only alternative mechanisms for actually making money are relatively complex schemes for gambling, such as stock options, which are too difficult and dangerous for the average person.
"I thought that cryptocurrencies would be the one and only breakthrough for ordinary hardworking people like us,"
And yet you were throwing debt at what was essentially a "get rich quick" scheme? That's not ordinary nor hardworking, that's just idiocy.
The price is low because bitcoing has no value. Have you not read the 49 comments above yours? Do you not "get it"?
If you're thinking of getting in because the price is lower you're the greatEST fool of the GTF.
E
How does the currently bearish press resemble (or not) that after the previous Bitcoin bubble, or the one before that? Also, to those who enjoy citing tulip mania, how many bubbles did tulip mania go through before it crashed, and what as the approximate peak market cap of each bubble?
Transaction times and transaction fees are awful and not at all competitive with credit (let alone cash), and there is no clear way to address either problem. In fact, it looks like both problems will only get worse as bitcoin becomes more popular. Until both problems are solved, bitcoin is worthless as a currency because it can't be used like other currencies can.
in the last 47 years of my life. It always comes down to this. once the mass media hype starts and ordinary people are dragged into the next financial get rich quick scheme in the masses, it is better to get out if you are into something.
The pattern is usually that you get lots of press reports, that you should invest, that this thing is a totally new economy which works differently, that you are stupid if you do not invest. Once those reports crawl up, you can expect a crash between the next three months and a year.
I have seen this with the dot bomb bust, with the housing bubble etc... and the patterns 1929 were exactly the same, when Kennedy went out of the stock market 1928 because he got stock advices from people working on the street.
Also the bomb cycle always is the same, it starts to go down, the financial press and others are screaming hold... then it recovers slightly everyone is yelling it just was a hickup and then it goes down again everyone screams you have to hold and then over and over again with a few upwards pumps along the road. The people screaming hold, usually are the ones connected to the big investors selling big time to get out while everyone thinks they can recover.
Buying opportunities are when prices are artificially low, Prices aren't low they are actually still quite high for the value as a lot of these badly burnt gamblers exit the market as the debts they incurred take their toll, the prices will likely continue to settle as those people exit and are unlikely to return. It will also scare off a lot of other suckers.
Don't believe short sellers FUD.
Not when it's easy for almost any company to create a new currency. There are more cryptocurrencies than there are real currencies.
If gold-standard libertarians were worried about governments printing money - well now we have your paradise where governments aren't in control of most forms of currency. Taking into account the ICO scams, how's your regulation free paradise working out now?
Those who do not learn from commit history are doomed to regress it.
Well, more reasonable prices anyway. I built my first PC from scratch last year, rather assembled. When I shopped for graphics cards I could not find what I wanted at a decent price thanks to the cryptocurrency miners. I ended up after much searching online buying a decent next lower tier graphics card at a good price. The card wasn't what I wanted but good enough.
At the rate the miners were going they were actually putting out as much carbon dioxide as a small country, not good. Let's hope for our sakes that crypto currencies won't created another bubble for our wallet's sake and our environment's.
"You'll get nothing, and you'll like it!"
Don't believe short sellers FUD.
Didn't your doctor say you need to get more sleep?
Whenever taxi drivers start giving you investment tips, it's a bubble.
Coincidentally that was when Wall Street approved and began Bitcoin futures trading.
One is a transaction medium. The other is store of value.
They are very distinct.
A currency, crypto or otherwise is a good transaction medium if, well, it lowers the cost of transactions. It need not be very stable in the long run, as long as it is convenient to use for a payment and be converted to something else at a rate that the holder accepts. Some crypto currencies satisfy the requirements for this category quite well.
But none of the crypto currencies satisfy the most important requirement for being a store of value. For that, you need a currency that has a monetary authority behind it and that authority is both committed and has the resources to maintain the value. For decentralized money instruments like the crypto currencies, this isn't true, and their value will fluctuate a lot depending mostly on demand for transactions and speculation.
So yeah, if you "invest" in a crypto currency be aware that it may jump a lot, especially in the long run. And that you may get burned, just like you will if you "invest" in the currency of a small country that lets it float freely.
Except that the crypto will be a lot more volatile.
EoM
I owned a considerable amount of bitcoins which I had mined a few years before. When the price jumped to $19 000 in December 2017, I judged that this speculative madness couldn't continue any longer and decided to turn my BTC into cash. Turns out I was right.
Unless you're shorting, the maximum you can lose is your initial investment. Which makes investing a dirt-simple risk proposition, since you automatically know before you invest your money exactly what's the maximum you could lose (all of it). So the amount these people have lost and are suffering is precisely measurable, and was precisely measurable before they ever invested.
If you borrow money to invest (loans or leveraging), or short stocks (where the maximum gain is the value of the stock, while the maximum loss is potentially infinite - the inverse of buying stock) without understanding the risks involved, it's your own fault.
I've bailed out friends and family members with loans - basically invested in them. But it's never affected me financially if they don't pay me back because I made each loan assuming they wouldn't pay me back and I would take a 100% loss. If they do end up paying me back, that's a bonus.
Totally agreed about market cap. You're not right about the amount that was into crypto though. The major exchanges only made 4 billion in 2017 from fees alone. there was definitely much more "invested" though from the average joe.
People joining pyramid game late are taking heavy losses while those at the top cash out.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Ponzi schemes are built on the greed of their victims.
It's not rocket science, but some people are just too dumb to ever learn even when it's spelt out in the simplest terms.
An Investor is someone who puts his money into something that will actually create something long-term after careful consideration, and hopes for it to succeed, and make a long-term profit, while knowing it will be some time before it pays off, in which he will probably lose some money.
Those crypto currencies, and also Wall Street these days, is nothing but a bunch of gamblers hoping to make money out of thin air, and jump from one sinking ship to another.
What really scared me was the number of people that were throwing big money in at the top. Some of these people were very smart people and they basically dropped $30-50k.
They don't talk about Bitcoin so much anymore, and I don't ask.
So where are they guys on /. who were advocating buying in February, March, and April, stating that BTC was worth north of $100,000?
Did they cash out? Are they still buying now? What are their outlooks for the currency now?
Help! I'm a slashdot refugee.
Bitcoins is a bit like pumpkins. Pumpkins are also a great investment, but you want to sell before Halloween.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
The value of a commodity is what someone else is willing to pay for it.
Are you willing to pay 6 grand for a bitcoin? If not, why do you think someone else is?
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
The reason why it takes a while for large sums is protection against money laundering. Without that in place some of the powers that are will quickly come down upon you and end your financial game.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
No. People selling at 20k is smart. Greed is people buying at 20k.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Cryptocurrencies won't have corrected adequately until they have a negative valuation. Whatever their greater than or equal to zero value is right now, it's still much too high.
Cryptocurrencies are completely worthless, and always have been, except to the morally bankrupt people above the bottom of the pyramid who knowingly suckered in the people below them. It stuns me how this was not obvious to everyone from the very beginning.
And the people who mortgaged their houses to burn it in the market are immense fools. My heart bleeds for them and their families, but that was immensely idiotic. My brain can't even comprehend that degree of stupid.
Risk-Taking Investors take risks. News at 11.
aaaaaaa
It also helps control check kiting.
Cryptocurrency's anonymity attracted criminals from the get go. So I'm not surprised that cryptocurrency markets turned out to be even more a den of snakes.
The similarities between non-voting, non-dividend paying stocks and units of crypto are many. People get involved in both because they are games in which one can win money, with a suitable helping of luck, and maybe skill. Kind of like blackjack. Less like poker. Some people win. Most lose.
The key to these things - including also the art market - is the belief that there is a pool of demand out there for the item. Prick that belief and the game spins down.
I can't feel bad if someone decides to take all their savings and loans to invest in anything.
"a 45-year-old teacher.... She drew on savings, an insurance policy and a $25,000 loan."
You know things are about to go tits up when "investors" such as these start crawling out of the woodworks.
Risk takers take risk. News at 11.
Don't fight for your country, if your country does not fight for you.
There is a difference between "value" and "price".
What was falling was the PRICE of cryptocurrencies, not its value.
Now, arguably, since cryptocurrencies are, well, currency, the "price" and "value" are identical. Which would mean that the value fell along with the price.
Nonetheless, it is more accurate in general to use "price", especially when it's doubtful whether "value" applies....
"I do not agree with what you say, but I will defend to the death your right to say it"
I just hope Elon builds the rocket in time.
He's completed it! For some reason it looks a lot like a submarine with rocket fins bolted on, but I'm sure it's the real deal... Elon even said that anyone who doesn't like it is a pedophile.
- First they ignore you, then they laugh at you, then ???, then profit.
some make money, but most lose it.
With dollars, you can stuff them in your mattress for a year and when you come back they'll purchase about the same amount. That's a good thing. You shouldn't have to take a risk just to store value. A currency that does its job ought to suck as a high-yield investment.
Maybe now we can get cryptocurrencies back to their best use, which is purchasing drugs on the dark web.
When the price goes up, there's a lot of advertising to sell it to dopes, and when the price goes down, you hear nothing about it.
Who would have ever predicted that the price of digital currency would start to come into line with its value?
Put back 10% of your winnings into lower-cost ALT coins... just in case.
#DeleteFacebook
"I have made hundreds thousands dollars all the time."
All what time?
"make instant millionares overnight! "
Which is it, instant, or overnight? I only want instant, overnight is much too long - not enough return on my investment.
"Guaranteed investment."
But guaranteed to do what?
FTFY
I'm fairly averse to bitcoin for all the reasons previously expressed n /.; though I can't help but wonder if this is a good buying opportunity while the price is 'low'... Time will tell I suppose.
I was reading an article this morning that the price has spiked again.
Only a matter before it falls again too. It's a gamble with more risks than just going up and down. You can lose money due to a technicality or to theft; but there is money to be made- it's just high risk.
"That's the way to do it" - Punch
I was very lucky. Got it all into Bitcoin in November or so and left December 10, 2017. Made more than 150% in roughly a month with a bit of trading. A week after, the thing crashed here. I was very...very lucky, nothing more than that. Currently, I have nothing invested anymore.
You've just described pretty much all technology. People are not supposed to be investing and getting rich in the long term and there is nothing wrong with rewarding those who took the burden of investing in mining systems or time, yes it didn't cost heavy cash investment but it wasn't nearly so simple to mine and get set up when you could do it with a cpu. It cost time and effort, it cost a great deal of time and effort to develop the system. Early adopters profited because they took risk and gambled on something when it wasn't certain it would catch on.
If you are a speculator whose interest is just making a quick buck I agree with you, this isn't the right place to do it. If you are a people looking for a superior solution to currency this is exactly where you should look.
People have voted and crypto-currency isn't going anywhere. In the US most of the adopters have been financial and other institutions wanting to flip the blockchain on its head to destroy privacy and outliers thus keeping our nobles in power and speculators who wanted a quick buck. These are exactly the people who should lose by betting on Bitcoin.
Crypto veterans and true enthusiasts have seen this happen before. The 2014 bear market lasted over 2 years. They are not worried.
It is disappointing however to see posts like this and the usual replies.
Those people mentioned taking loans or thinking about sticking it to the man are just pathetic and they deserve what they got. If it wasn't bitcoin, it would have been the dotcom bubble or something else.
Particularly the Korean woman who lost 90%. That could only have happened if she invested in shitcoins, probably expecting higher gains than typical.
When something goes parabolic, a heavy correction is inevitable and that is irrespective of the value of the asset, whatever you may think it is. Anyone who fails to understand basic concepts has no business investing in anything.
And again, nobody focuses on actually learning what the tech is about, how it can be useful and why. All they care about is making money fast and easy. I'm sorry it doesn't work that way and it's not bitcoin's fault. There is only one way this could go for people like them.
The others, who know why they put their money (not more than they can afford) into bitcoin and actually bothered reading up before doing so are not worried.
In the end, if you believe that bitcoin has a future and adoption will increase, today's marketcap is far too small, and (longterm) increase is inevitable.
If you believe it's just the latest craze and will die out, you should never invest a penny in it.
"I guess I thought we were 'sticking it to the man' when I got on board," Mr. Herman said. "But I think 'the man' had already caught on, and had an exit strategy."
Not quite. "The man" is still invested in hard currencies and real stocks. "The man" for the most part never needed an exit strategy, because they were never in to begin with.
Nope, no sig
What I mostly saw from small investors was folks who had a small amount of savings (under $50k, often _well_ under $50k...) and were nearing the age where they couldn't work anymore. Buddy of mine's in that boat. Not a lot of skills. Not a bad guy just kind of a flake. Hard worker but hard work can only take you so far. Parents are still alive and a pretty big burden on him too. He got stuck taking care of them in a town with no jobs.
He threw a little of his savings at crypto because he's desperate and doesn't know what else to do. It's not "someone dumber" it's "maybe this'll work, and I've got very little to lose". It's like buying a lottery ticket. It's desperate hope of the kind that we wouldn't need if we had a better safety net and retirement system.
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multiple studies have shown people under high stress make poor choices. It's one of the reasons the cycle of poverty exits.
As for bad investments, the rich make them all the time. 80% of startups fail and they make their money on the 20%. The difference between a rich man and a poor man is the rich man can spread risk around in such a way to always make a profit. They're like bookie.
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They are talking about what they believed, not about what information was actually available. That is also why they claim to be victims. They are victims of their own cluelessness only, not in any other way.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
With the modification that you don't know when Halloween is until afterwards.
I think a better comparison would be to an asset bubble similar to tulips, 1990s tech stocks, 2008 housing crisis, etc. There is some value in bitcoins, and perhaps more general cryptocurrencies, but the market has clearly not yet figured out how to effectively evaluate and price them yet.
Go look at a gold chart and now use a stock picker to search through ETFs, if you search for lower beta or moderate growth ETFs there are tons of them that will make you much more money on anything except short term scales and have rarely lost any signifiant value.
If you have a nice diverse portfolio with gold I guess that's on you maybe you know something that I don't but the very existence of the uneducated gold fetish investor means that the price of gold could do anything at any time.
To illustrate this point let's say I invested in gold at a really good time, 16 years ago. My highest interest savings account pays 5%. You would have only double the money in gold vs the savings account. This is best case, also you would have gotten to enjoy the roller coaster, watching gold's value increase several times over around 2011 and then rapidly lose half of that, you having no idea when it would stop.
You need to invest broadly for stability, ETFs, mutual funds, etc. Not individual stocks or commodities. Even then stocks like Visa are still by far much better and more stable than gold by a long shot.
If you're investing in gold I suggest you spend an afternoon looking through a stock picker, learn what beta and p/e ratio means and look. Don't read blogs, don't listen to cnn or fox or reddit. Then when you have an idea of the investment options that are out there evaluate your reasons for investing in gold.
Gold is a stupid investment.
Most (responsible) currency traders are taking advantage of arbitrage, not speculating on currency. Naturally people like that do exist, and there may even be people who are successful at it - but that is a byproduct of our use of multiple currencies, not the reason for it.
Currencies are not an investment.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
If you stuffed $50k under your mattress about 5 years ago, it is now worth $46,347.31 in terms of purchasing power 5 years ago; by "saving", the government has stolen $3652.69 in just 5 years.
Inflation risk is just another risk to be considered
If an investment appears in the pages of tabloids then you'd better be shorting. No news here, just simple greed. Hope all the dealers on the darknets didn't get stung too badly, they were the only ones actually using it!
If you put 100,000 bolívares fuertes on the table on Monday, today they'd be worth 1 bolívar soberano. Maybe less.
When they came for the communists, I said "He's next door. Take him away. Goddam commies."
The 1849 'gold rush' was about convincing a lot of white Americans on the eastern half of the continent to move to California. President Polk had just acquired California from Mexico as spoils of war, and the US needed a lot of white people to move there fast to occupy it.
That's just the risk of investing in socialism.
Putting it under the mattress is not "savings". That's being the fool. Put it in the bank. Up to $250k, your savings are protected by the federal government. Even if you die, the US government will find your next of kin and give them that monies.
Do the same at other governments and see how it works out.
Seriously, why is basic investing & savings knowledge even a discussion on Slashdot?
Thatâ(TM)s not socialism. Itâ(TM)s a dictatorship. Thereâ(TM)s a difference.
No, the gold rush was about people mining gold. That's why they call it a gold rush. No gold, no gold rush.
The gold rush was then taken advantage of by president Polk who encouraging people to move there yadda, yadda, yadda...
I ignore Anonymous Coward posts. If you want to discuss something, that's awesome. Log in.
I'm so glad I entered into bitcoin, made 150% profit over my investment and left one week after the crash with all my original money and profit intact. All of that in like a month or so. Many did not have the same luck. Money exchanged hands quickly in december and january...
I am sitting here smiling. I did not participate in the cryptocurrency craze. I knew there was money to be made, or lost, but making money with cryptocurrency (not mining, but investing) felt unethical to me, so I didn't participate.
I am smiling at the karmic experience going on here. Many who were "investing" were trying to get something for nothing.
"Someone needs to talk to the tree of liberty about its ghoulish drinking problem." by ohnocitizen
Unfortunately this is in the nature of risk taking. If you invest in something that has no risk, there will be little return. It is how things have always and ever worked.
By the time we average schmoes heard about cryptocurrency, the big guys were exiting taking their profits from our enthusiasm.
"There is no god but allah" - well, they got it half right.
I don't know if I should laugh or be sad...
You haven't written a check.. so they aren't a thing...
What businesses do you know that don't use at least some checks?
You are a moron who is convinced the world is the size of the bubble you live in..
Scared of the new thing? Don't worry, it won't bite you..
You don't sound like you disprove of Bitcoin, you sound like you are terrified of it, terrified of something you don't understand..
I'm not making a call on cryptocurrencies either way. No pro or con. I don't know enough about them.
Won't someone think of the internet meth dealers!
A dictatorship of the proletariat.
Led, of course, by people who've appointed themselves the vanguard of the proletariat.
Funny how that always works.