Topic: Bitcoins long-term investment is dangerous. (Read 841 times)

That is actually "the point" that many people are missing. Bitcoin can only succeed or expand its user base when people "invest" in it. If people "invest" in it, they expect higher prices. If they expect higher prices, they will eventually try to get out and take their profits. That cycle is the source of Bitcoin's volatility.

But Bitcoin was originally meant to be not an investment but a currency. A currency is not an investment. A currency must be stable and have the "unit of account" function.

On my first Bitcoin meetup, an university professor (economist) from my home town threw in the following statement: "If we could launch Bitcoin on a new planet and base all our commerce on it, then it could work". Implicitly that means: Now that we integrate it into the actual economy, where people only "are in for the profits", it won't work. Because people will use it for speculation and not really as a currency.

I think he was a bit pessimistic, but I think also that the Bitcoin community should do more for a more stable price. That would not mean that "investors" could not profit. That's why some posts ago I made the proposal to divide Bitcoin in "shares" and "currency" (it won't be easy, but perhaps with the upcoming PeerAssets it will be possible).

What kind of booze are you on?
All investments have unstable price. If it has a stable price, then what's the actual point of investing if the price is just going to be stable at all?

Again, how would this be the doom of bitcoins? The supply isn't exactly diminishing as there are newly mined coins everyday and we won't come to the day that the actual blocks mine-able will be gone. With the increasing demand, that only proves the fact that bitcoin will continue to grow even healthier as there will be more support.

Bitcoin is not really deflationary, but your first point seems valid because we all expect a rise in demand.

The problem is that the very unflexible supply design, which by many people is seen more as a feature than a bug, may cause volatile periods every couple of months. Bitcoin is behaving like a stock actually, not like a currency, and it may do so even if price and volume is 10x or even 100x higher - because everytime there is good news, people will try to buy in to make profit - that is even more true in a zero-interest economy like the actual Euro zone.

My favourite concept to fight volatility would have two pillars. First, we should separate "Bitcoin shares" from "Bitcoin currency", like BitShares has done it, but without the fixed peg. "Bitcoin shares" should be the actual Bitcoins, and "Bitcoin currency" an asset class with a more flexible supply (e.g. an annual inflation rate between 0 and 10% depending on demand). Second, I would like to see mechanisms that allow a "descentralized backing" of Bitcoin "currency" with goods and services.

That design would have the advantage that people that are in for the money can buy "Bitcoin shares" and hope for a deflation (or price increase) with some risk. But people who want stable currency could use the "currency" token.

well if volatility is tamed that means the deflation that was built into it kicks in. people are reluctant enough to spend it now in case it goes up. if going up is borderline guaranteed by deflation then everyone's gonna be spending the currency that's losing value, not gaining.

there is always be a risk on every investment especially for digital currency but several weeks ago i was read a thread at here that somebody else could holding his bitcoin 2,5 years and he has already get profit from his long term investment but might be from those story you could considering that investment bitcoin for long term is not always be bad

yes indeed there is currently no certainty regarding the price of bitcoin. bitcoin has no stable prices .To long period of time is indeed risky. but if you want to invest in the short term, the bitcoin is a very appropriate choice.

Good thing if we're invested NOW then isn't it.

Bitcoin price will be volatile for years. The market cap is extremely small so it's easy for rich people to move the market and shake the tree. Bitcoin will need to have a market cap north of a trillion dollars (in today's value) for stability to even be close to attainable.

That's why there are big whales that always starting a trend. They can cover your concern.

Here's how it goes, price is unstable because of them. With just one big push to push or pull the price, people can easily dragged and taking the ride of what they started. And because that is usual happenings everytime there is a price trend, your concern about increasing demands will somehow can minimized everytime there is a huge bearish activities. So it's just a rotation.

We all know that whether it's for short or long term goals, bitcoin investment has an associated risk.

Could you specify of what kind of problems you're talking about?
Furthermore  without risk no reward!I think everybody here understands that.
In terms of price fluctuation what do you expect of such a tiny market with such low liquidity compared to other traditional markets?!
Bitcoin will continue to have huge volatility for many many years.At least it will be an upwards volatility in my opinion which will bring lots of speculators and investors in the coming years.

Diminishing supply and increasing demands are two things that would make it a very worthwhile investment imo...

I agree that the price is a bit unstable at the moment, but this will be more clear after all the halving speculation is gone.

Most likely we will stabalize around 600-700 post halving for a while, maybe after a nice boost before the actual event.

ok about the unstable price but what diminishing supply are you talking about?
new coins are being created every day with every single block that is mined so the supply is growing!


what situation?
how can unstable price and increasing demand lead to doom of bitcoin, i don't really get the relationship here


you said all that to get here?
i don't see any problems with the technology that bitcoin can't cope with. if you are referring to the block size, then the number of unconfirmed transactions show that there is no current urge to change anything right away.
and in the future if the problem persists then it would be problematic.


investing in bitcoin can always be dangerous and risky but you can't say anything for sure about the future because anything is possible.

I think it will, but probably not the coming decade, too much volatility still.  But in time I expect the volatility to be equal to or lower than most fiat currencies.

I don't think it's gonna become a currency ever. It might be used as a medium of exchange but most are gonna keep it as a way to store and transport value.

I agree that the unstable price is a major problem.

I have already often pointed it out: If Bitcoin wants to be a real currency, it must work as a unit of account. That means: You must be comfortable to get your salary in Bitcoin, even if you are not part of the richest 10% (because in this case, it wouldn't matter for you if your salary one month is 10% lower).

That Bitcoin could become a "world currency" is part of the "story" that Bitcoin bulls are selling to potential investors. But: how to become a world currency if one of the most important functions of money (the unit of account function) is not working properly? And these periodical bull runs and buy panics - that lead to sell panics after a new top is hit - are the source of the volatile price. So a solution to the volatility problem must take this into account and try to discourage "pro-cyclic" speculation.

If it was not risky then it wouldn't be reward and you wouldn't ave chances to get rich.. Also there are no real risks in the long term, we will solve all the problems thanks to Lightning and improvements like segwit, all of those scaling problems are just FUD.

there are always risks of seeing the price go down heavily while people expect the price to only increase in the long term. but you are being too negative here. this volatility allows me as trader to make profits alongside the fact that i am holding my coins for the long term. also, the lowering supply won't affect bitcoin that much since nowadays the majority of the coins are already mined. don't forget the fact that a lot coins are off the market. if the price at some point goes up to very high levels, these coins will find their way to the market creating a flood of sell orders. enough coins for everyone.

Due to the unstable price of bitcoin and the diminishing supply and increasing demands the current situation may lead to the doom of bitcoins in the future. If problems in bitcoin industry will not be solved earlier and technology cannot cope up with the demands towards bitcoin then its right time to say that long term investment is dangerous. Today is the best time to invest in bitcoins but be wary also of the risk that lies ahead.