Author Topic: Does Bitcoin have the potential to replace fiat?  (Read 1126 times)

Offline M3dusa

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Re: Does Bitcoin have the potential to replace fiat?
« Reply #15 on: 23 02, 2021, 04:12:58 am »
See, that's the problem. You should understand the difference between investment and speculation. Speculation is highly risky, so you can lose your shirt quickly, but investment is about steadily growing your wealth over time while controlling your risk of loss.
I'm sensing a misunderstanding in here, we should both agree that any investment in any market is essentially speculative due to external factors that are beyond anyone's prediction no matter how efficient you are on spotting trends or how familiar you are with the enviornment, but again, these don't really pose a threat to your investment if you have done your homework and have an actual strategy to know when to enter, when to get out, where to set your stoploss and eventually when to take a loss, jumpship and move on.

These predictions are based on Technical analysis, Fundamental analysis and Sentiment analysis. In a nutshell, these analysis grant the investors a heads up on emerging trends which after keeping an eye for certain movements that you as an investor have already predicted based on how the market should behave in such environment, you make the call on whether to get in, look for another coin or wait it out till another trend emerges.

You can decide to gamble with crypto trading. Sometimes you will win, and other times  you will lose. It's gambling. But in the long run, Bitcoin will likely crash and burn, as several Nobel laureates of economics have predicted.
I really don't get your point on how trading crypto is any different from trading stocks, please elaborate on this point.

Compare this with investing in something like S&P 500. You can steadily grow your wealth over the next decades. You put in $50.000 after saving and working hard, and later you take out $500.000+ without lifting a finger. And if you decide to continuously invest over the years, you can easily retire as a millionaire – or even as a multi-millionaire.
I see, so you're looking for something to make you money off without lifting a finger, however, I fail to see how can you be so sure that the company you pick won't crash. Imho, you need to put in the effort on both crypto and stocks investments and have a solid strategy of your own to follow.

Which path is better: retiring as a millionaire  OR risking to lose your shirt with crypto trades,  living off govt pension as a poor old man?
How about retiring as a millionaire in a couple of years instead of decades?

Now don't get me wrong: maybe you're a master crypto speculator. Maybe you're a master of financial wizardry who can beat the market with crypto. Beating the market is a feat that even hedge fund managers struggle to achieve.

But likely you're not. In the long run, hardly anyone beats the market.
Absolutely not, I'm just a newbie that's still figuring out what's up, though I have a financial background since it's my major afterall.
But again, there's countless trading styles and you don't need any speculations if you know how to read a chart. (pls don't twist my words, of course you don't just check one chart or only check charts).
I do have one comment on "beating the market" though, as a trader you don't aim to beat the market, you aim to ride along with it.

That's why crypto should only be a small part of someone's investment portfolio because of its risk. 10-15% tops. The rest of the portlofio should be way more conservative.
I couldn't agree more to be honest, I'd even go as far as to say you should only use 0.5-1.5% if you aren't an expert. Never go higher than 10% of your networth no matter how confident you are bois, you can still be a millionaire with that.

If you want to get rich, start a business and work hard. Become a top expert in your field and charge high fees. Crypto is gambling right now. Depending on your timing, you may win, you may lose... who the hell knows?
Dude, I'm not sure how many time I have to say that it's the same as investing in stocks in principle but with way more profits.
And I still don't get why would you assume that anyone would put his money in either if he doesn't know a thing about them, in that case, that's the definition of gambling.

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Let me clarify with an example that'll be at least  familiar to the CIT audience.

We can compare the price of AMD stock with the price of Bitcoin. AMD provides value to customers in the form of high-end graphic cards,  CPU and other PC equipment.

AMD has been very innovative  with the Ryzen lineup and RX 6000 series cards. As a result they've been agreesively increasing their market share for years. And the price of their stock natually went up .

In the case of AMD, there's a  cause-and-effect relationship between the stock price and increased customer value made possible by innovation.  AMD is now making better cards, more affordable CPU's, and they're reaping the benefits as the PC market rewards them.

That's what's driving the price of the AMD stock; there's a direct cause-and-effect relationship between the increased price and increased customer value. People are benefiting and using those innovations in the real world.

Compare that to Bitcoin. What drives the price of Bitcoin at the moment?
Speculation drives its price – not customer value as in the case of AMD.

People are buying Bitcoin solely because they think the price is going to increase. As more people demand Bitcoin, its price is indeed going to to go up.  Then even more people are going to buy it, in hopes of getting rich quick.

When a high price point is reached and there are no more buyers for Bitcoin, we can expect a crash of enormous proportions as people massively start to sell in panic

It's a bubble. Real estate and  stocks and are no immune to bubbles, and at times they should also be avoided when they become overvalued as in the case of Bitcoin.

The problem with Bitcoin is that its price is massively overvalued right now thanks to corona uncertainty. Bitcoin is about to crash.

"Bitcoin has been characterized as a speculative bubble by eight winners of the Nobel Memorial Prize in Economic Sciences: Paul Krugman,[12] Robert J. Shiller,[13] Joseph Stiglitz,[14] Richard Thaler,[15] James Heckman,[16] Thomas Sargent,[16] Angus Deaton,[16] and Oliver Hart;[16] and by central bank officials including Alan Greenspan,[17] Agustín Carstens,[18] Vítor Constâncio,[19] and Nout Wellink.[20]"
I've already granted you that bitcoin is a bubble, although I see it that it's just starting to form and you see that it's about to bust, how about we put bitcoin out of the equation for now, let's talk about the other cryptocurrencies that have tangible products, Altcoins.
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Offline domi

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Re: Does Bitcoin have the potential to replace fiat?
« Reply #16 on: 23 02, 2021, 09:06:41 am »
I really don't get your point on how trading crypto is any different from trading stocks, please elaborate on this point.

I'm talking about investing in something like an index fund which is representative of the market. The difference is simple:  with stock market there's a track record of consistent growth that goes back more than a century. The underlying stocks usually provide direct value to customers, but some individual stocks can still be overvalued.

Nonetheless, in this case we are not putting our eggs in one basket, so even if individual stocks underperform, we rely on the performance of the entire market. There's mitigation of risk.

How about retiring as a millionaire in a couple of years instead of decades?

Unless they are already millionaires, people need to gamble most of their savings in hopes of getting rich quick with crypto. Not a wise choice considering the risk.

I'm not saying it's impossible, but even if they get extremely lucky, they can still lose their money next time they perform high-risk trades. So the overall return wouldn't be impressive.

It makes more sense to invest money in a less risky way. Index funds represent the overall market (e.g. S&P 500), which has been going up for a very, very long time. You will almost certainly make money if you stick to it. There's no gambling. Buying real estate is another way to perform a lower risk investment.

In comparison, gambling with crypto can be fun, if it's only a small part of one's portfolio.  But we have people who put their entire savings into it, and that's just wrong.
These predictions are based on Technical analysis, Fundamental analysis and Sentiment analysis.

These financial tools don't guarantee anything when it comes to risky trades. That's why most day traders lose money in the long run.
« Last Edit: 23 02, 2021, 09:28:38 am by domi »