Slashdot Mirror
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.
Have you heard about investing in tulip bulbs?
"National Security is the chief cause of national insecurity." - Celine's First Law
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.
Warning: This signature may offend some viewers.
"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.
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.
Whenever taxi drivers start giving you investment tips, it's a bubble.
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.
and have driven demand for more generating capacity in the power grid.
Yes by consuming the same energy as the industry, commercial and residential activities of a nation with 18million people at a time where emisisons and energy waste is considered critical, all the while bolstering the startup of decommissioned dirty power while the world is being screwed.
This planet is fucked. I just hope Elon builds the rocket in time.
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.
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.
Actually, short term capital gains and unqualified dividends are taxed at ordinary income rates. Long term capital gains (stocks held longer than 1 year) and qualified dividends (stocks held for more than 60 days in a 121 day window around the dividend distribution) are taxed at preferential rates, as low as 0% depending on your income bracket but at 15% for a good portion of the population.
https://finance.yahoo.com/news...