Topic: Bitcoin is NOT a replacement to the Stock Market/ traditional investments - page 3. (Read 545 times)
November 12, 2020, 12:26:14 PM
Bitcoin and cryptocurrencies in general is a great alternative for stocks and traditional assets, but certainly not something that one can go 100% on if they aren't well-versed on trading and handling their finances. I also find it quite irresponsible for most people biased on bitcoin to literally just tell people--especially the noobs--to just buy bitcoin and nothing else. Oftentimes this is what leads to people losing their money because they aren't that knowledgeable enough to weigh the risks associated with this move, therefore spelling disaster in their finances should crypto goes down the drain. Though of course, you cannot blame those who made their fortune on bitcoin and crypto alone to recommend buying such instead of traditional assets. It's how 'success stories' are crafted, after all, and you need to have those floating around in order to have more people buying the same bags as you do.
November 12, 2020, 12:13:40 PM
Does anyone even say that Bitcoin is a replacement for stocks? I never heard such thing. But how can you argue that Bitcoin is not an investment, if people invest in it?
Bitcoin is a currency/commodity, of course it's not backed by real world business, just like gold and oil aren't backed by them too. Bitcoin is a risky investment, but so are stocks, especially those with smaller capitalization or if a trader decides to use leverage and other instruments. I can even be sure that more people lose money with stocks than with crypto, since stocks are more popular.
When I see people say their investment portfolios are solely made up up cryptocurrencies I cringe. The stock market is made up of stocks ( companies that have gone public and issue shares ). Stocks are backed by actual businesses. These business offer a service or tangible good. Bitcoin/cryptocurrency is simply digital currency. Bitcoin is not backed by an actual real world business producing goods and or services and that's the important difference people need to understand.
Bitcoin is a currency/commodity, of course it's not backed by real world business, just like gold and oil aren't backed by them too. Bitcoin is a risky investment, but so are stocks, especially those with smaller capitalization or if a trader decides to use leverage and other instruments. I can even be sure that more people lose money with stocks than with crypto, since stocks are more popular.
Yes, I see people all the time stating cryptocurrency is a replacement for stocks. ( ex https://bitcointalksearch.org/topic/m.55456951 )
“More people losing money with stocks than with crypto”.. there’s no comparison here. Two entirely different things and the stock market has far more money in it, been around far longer etc. A weird statement to make coming from someone who says they realize there’s a difference between the two.
Edit: this post is more so for those who don’t understand the financial world very well. Not those who do.
November 12, 2020, 12:01:20 PM
Does anyone even say that Bitcoin is a replacement for stocks? I never heard such thing. But how can you argue that Bitcoin is not an investment, if people invest in it?
Bitcoin is a currency/commodity, of course it's not backed by real world business, just like gold and oil aren't backed by them too. Bitcoin is a risky investment, but so are stocks, especially those with smaller capitalization or if a trader decides to use leverage and other instruments. I can even be sure that more people lose money with stocks than with crypto, since stocks are more popular.
When I see people say their investment portfolios are solely made up up cryptocurrencies I cringe. The stock market is made up of stocks ( companies that have gone public and issue shares ). Stocks are backed by actual businesses. These business offer a service or tangible good. Bitcoin/cryptocurrency is simply digital currency. Bitcoin is not backed by an actual real world business producing goods and or services and that's the important difference people need to understand.
Bitcoin is a currency/commodity, of course it's not backed by real world business, just like gold and oil aren't backed by them too. Bitcoin is a risky investment, but so are stocks, especially those with smaller capitalization or if a trader decides to use leverage and other instruments. I can even be sure that more people lose money with stocks than with crypto, since stocks are more popular.
November 12, 2020, 11:45:34 AM
I think it's important to first note that inherently bitcoin is NOT an investment. Now of course like all other forms of currency, it has become an investment, and or something you can "trade". With the bitcoin price rise of late, where a lot of people have been doing well making money, I thought this was a perfect time to discuss this.
When I see people say their investment portfolios are solely made up up cryptocurrencies I cringe. The stock market is made up of stocks ( companies that have gone public and issue shares ). Stocks are backed by actual businesses. These business offer a service or tangible good. Bitcoin/cryptocurrency is simply digital currency. Bitcoin is not backed by an actual real world business producing goods and or services and that's the important difference people need to understand.
This is similar to the "Gold or Bitcoin" discussion. Gold is a physical asset, it is used for jewelry, used for electronics etc. It has real world physical aspects. Now it does have some similar features. Both are considered "assets". Both have become investment "hedges"...but inherently they are two completely different things.
A proper investment portfolio should really have 3 aspects ...short , mid, and long term "buckets". Short Term would be things like your checking account. Mid Term would be things such as savings accounts ( pro-tip..always use online banks such as Ally Bank for savings accounts. They offer MUCH higher interest rates than traditional brick and mortar banks such as Chase/Bank of America etc), online trading accounts such as TD Ameritrade/E-Trade etc. Long Term would be things such as your IRA/401k etc.
Now as long as you have these 3 Buckets established, then "investing" in bitcoin/cryptocurrency can make sense. It's important to try and throw in some of those "home run" type investments in your portfolio. These types of investment you go in to with the realization that they are volatile and could easily lose it's entire value quickly. However they can certainly help your portfolio tremendously when they "hit". Normally you want to keep around 5-10% of your portfolio in assets such as these.
Now of course all of this depends on ones net worth, salary, current and future budget etc.
As a licensed Investment Advisor by trade I say all this with well over a decade of experience. I see too many people with unrealistic expectations and thoughts on bitcoin and cryptocurrency as an investment. Yes Bitcoin and many crypto coins have performed well and people have an continue to make good money from it ..but that DOESN'T mean it's a replacement for traditional investments. Countless people have already lost their life savings by treating cryptocurrencies as traditional investments and will continue to.
Note: I realize not everyone has access to traditional types of investments.
When I see people say their investment portfolios are solely made up up cryptocurrencies I cringe. The stock market is made up of stocks ( companies that have gone public and issue shares ). Stocks are backed by actual businesses. These business offer a service or tangible good. Bitcoin/cryptocurrency is simply digital currency. Bitcoin is not backed by an actual real world business producing goods and or services and that's the important difference people need to understand.
This is similar to the "Gold or Bitcoin" discussion. Gold is a physical asset, it is used for jewelry, used for electronics etc. It has real world physical aspects. Now it does have some similar features. Both are considered "assets". Both have become investment "hedges"...but inherently they are two completely different things.
A proper investment portfolio should really have 3 aspects ...short , mid, and long term "buckets". Short Term would be things like your checking account. Mid Term would be things such as savings accounts ( pro-tip..always use online banks such as Ally Bank for savings accounts. They offer MUCH higher interest rates than traditional brick and mortar banks such as Chase/Bank of America etc), online trading accounts such as TD Ameritrade/E-Trade etc. Long Term would be things such as your IRA/401k etc.
Now as long as you have these 3 Buckets established, then "investing" in bitcoin/cryptocurrency can make sense. It's important to try and throw in some of those "home run" type investments in your portfolio. These types of investment you go in to with the realization that they are volatile and could easily lose it's entire value quickly. However they can certainly help your portfolio tremendously when they "hit". Normally you want to keep around 5-10% of your portfolio in assets such as these.
Now of course all of this depends on ones net worth, salary, current and future budget etc.
As a licensed Investment Advisor by trade I say all this with well over a decade of experience. I see too many people with unrealistic expectations and thoughts on bitcoin and cryptocurrency as an investment. Yes Bitcoin and many crypto coins have performed well and people have an continue to make good money from it ..but that DOESN'T mean it's a replacement for traditional investments. Countless people have already lost their life savings by treating cryptocurrencies as traditional investments and will continue to.
Note: I realize not everyone has access to traditional types of investments.
Jump to: