Topic: Should i allocate 100% of my savings to bitcoin ? - page 4. (Read 8037 times)

Bitcoin isn't a black swan. It's more like an albino squirrel 

If you feel you have good reasons and evidence that a certain 'surprising-to-other-people' thing will happen I don't think it's really right to call it a black swan. Plus, even if you are just like "Oh, that would be unlikely" that doesn't make it a black swan. We know monetary revolutions happen. We know technology can change how payments are made. Plus we know that normal people are willing to use bitcoin. So the 'bitcoin revolution' will just be more of the same.

I'm guessing less than 10%

y = 100x -15(1-x) =0
Gives x = 0.0148

So if (1) and (2) are the options the chance of (2) needs to be at least 1.5% to be profitable. If the target price for 2 is larger than $1k smaller percentages are possible.

Do you believe the chance of Bitcoin failing is larger than 98.5%?

I'm not intending to say I think one is more likely than the other (although it's not hard to guess which my money's on).  In terms of black swan events though, as far as I can see nothing other than 'more of the same' is required for Bitcoin to continue on a trajectory towards widespread adoption whereas something else (either one of the possibilities being talked about or something entirely different and unforeseen) would be required for Bitcoin to fail and lose all of its value.

One of the characteristics of black swan events (as I understand it from the Wikipedia entry) is that it's not easy to calculate odds of an event (not a specific event but any event that would have the outcome being assessed) occurring.  I don't think one of these is necessary for Bitcoin to succeed to the extent implied in CurbsideProphet's post whereas I do for it to fail.

I can't remember who it was said 'All big decisions are made with insufficient data' - the argument being if there was sufficient data it wouldn't be that big a decision!  

What percentage does he suggest?

Thanks for introducing me to the 'black swan event' concept.  I'm far from understanding it properly but reckon it's worth getting Taleb's book to check it out properly (would you recommend the original 2004 book -which I like the idea of because it was prior to the 2008 financial crisis - or the later 'The Black Swan'?).  It sounds to me like one of those concepts which at first seems to describe nothing new but could well be a concept that draws to itself enough distinct characteristics so as to give the concept the power to allow us to see and understand certain things better.

Your use of it in the case of Bitcoin is intriguing me in that you're saying 'It will likely take some sort of black swan event in order for Bitcoin to reach [high] numbers'.  An example from the Wikipedia entry of black swan events is the rise of the internet yet it is also talking about these things from the perspective of 'the observer'.  To those who were around the net and playing with html in 1996 I would say the rise of the internet was not a black swan event (it was neither one prior to that because it hadn't had the global impact nor since because to those who were around its rise was not unexpected).

I'm guessing if Bitcoin rises as the internet did, with respect to the financial and political worlds who know very little about it, it will indeed be seen to have been a black swan event, yet to many of us here now there would be no major surprises were it to become massive and have huge implications on the way the financial and political worlds work.  And should it do so then Bitcoin being valued at $100 and $1,000 USD are merely markers predicted and expected to be passed along the way.

From this perspective I would say it's getting to the stage where a black swan event such as large-scale unprecedented actions by financial/political powers or out-of-the-blue technologies would be required to prevent this from happening.

Again, I stress I am new to the concept but from what I do understand I read the Bitcoin situation very differently from you so would appreciate any further comment you'd like to make on it with respect to the black swan theory.

But by that logic you're 50% likely to lose money as you are to make money in any investment, in which case investing is pointless.

Dollar cost averaging just provides a simple way to buy more when it's cheap and less when it's more expensive, without having to spend your whole life doing analysis, or beating yourself up when you call the bottom wrong.

It will likely take some sort of black swan event in order for Bitcoin to reach some of the numbers being predicted here in this thread and elsewhere on the forums.  If you subscribe to this, just read Taleb's book, he even tells you what percentage of your investment portfolio should be allocated toward black swan events. 

http://en.wikipedia.org/wiki/Black_swan_theory

I was pretty lucky to widthraw most of my coins from bitcoinica right before they got hacked, and lost only about 70BTC. That taught me to keep them to myself. Bitcoin is very risky investment by itself, so no need to invest them further, especially when price is rising more than 100% per year. Just by holding them I'm getting more than enough for me.

Yes I do. I've sold my house and been buying at $5, $10 and $13 but I'm a reckless student now so I can afford to lose it all.  

I did some mistake daytrading so now I'm only buying and holding.

Never invest what you can't afford to lose. If you're risk adverse try to diversify especially if you have a family to feed, a mortgage or near retirement. Even if I invested some money with BTCST and GLBSE I've been lucky enough to withdraw just in time. This taught me that most bitcoins should stay untouched on a paper wallet. Now I'm keeping away from all "investing" opportunity denominated in bitcoins.

Spaceman_Spiff, you are correct about my signature, fixed that!!

yep, he wants a millibit

I have gambled with my savings and lost before, and believe me its not a happy place to be. Now, for myself, I am reasonably sure that in a years time Bitcoin will be up between 50 and 150% and there is little else that you could invest in that would bring you that return. And I would say little so certain as well.  

But the nature of investments are that everyone is trying to work the magic, and because of this, things are not always what they seem. Risk is hard to assess, you need to include risk of swindle as well as risk of failure. Mass public opinion often turns out to be 100% wrong. My opinion for what its worth is that bitcoin is pretty solid, but be aware that it has suffered massive drops in value before, and if you happen to buy just before one of those your savings will be in trouble. Put everything into Bitcoin? No, do not do that. Its an experiment, and its not even your experiment. Keep some of your savings elsewhere and then in the very unlikely event that something happens to bitcoin, you will not be a completely broken man.

Thats my 2 cents.

Yes you would, markets are unpredictable on the short term and in a buy and hold scheme allocating all your net worth to one single asset exposes you to two risks:

1) People make mistakes and your analysis could have been incorrect. Spreading your wealth across multiple assets and asset classes makes it exponentially more unlike that a mistake in your analysis casues your entire net worth to evaporate.
2) Markets are irrational and can remain irrational for a very long time while humans have quite a limited lifespan. Spreading investments also helps alleviate this risk.

Of course you shouldn't spread too thin because you are sacrificing return by spreading.

Remember the two rules of investing:

1) Do not lose money
2) Do not lose money

A percentage-wise drop in price needs a larger percentage-wise rise to compensate.

If you did it a month or two ago you would not have regretted the decision, I don't feel like coins are going up much more they went up to fast.

Yes and make sure you buy at full leverage too! 

I hope it is clear I am joking.

I will give you one of the best advices out there: never go full retard, man.