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Ante comments on Open Thread, April 1-15, 2013 - Less Wrong
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Comments (254)
Yes!
The comment is from hacker news thread about Bitcoin hitting $100. It would be cool to have him also expand more on bitcoin itself which he seems to regard as destructive but not necessarily doomed to fail? Here he entertains the idea about combining NGDP level targeting (which I don't understand) with the best parts of Bitcoin. This all sounds very interesting.
I downloaded a Bitcoin client a couple weeks and was going to buy a few bitcoins, but the inconvenience of having to get a Mt Gox account or something made me keep on putting that off. Whoops. Hopefully this'll teach me to be less of a procrastinator.
You think that's bad? I considered buying a ~hundred Bitcoins after the last crash, when they were going for at less than $1, but could never be bothered. :-)
Bitcoin is a form of currency that's supposed to be used. Now that so many people jump on the speculation train, and the rest mostly hold onto their bitcoins in the hope the price keeps rising, the practical viability of bitcoins can be called into question. I saw a stick of RAM for sale for the equivalent of over a thousand dollars. For a currency to rise so fast is terribly disruptive, and the rise (lack of supply in relation to demand) itself creates a vicious circle, since the faster it rises the more many bitcoin holders are tempted to further keep their bitcoins out of circulation.
If the price is then calculated by only the very small portion that's up for sale (with the rest being held for often speculative purposes) - compared to a lot of prospective buyers like you who want to join the gold rush - what do you think could easily happen once some people start cashing in, the price drops, seeing the price dropping more people want to cash in, and suddenly there's a very large portion up for sale, in conjunction with a loss of interested buyers (most don't buy into a falling market, tautologically)?
My advice, which I may even follow myself: buy at 100, sell at 150, never look back.
Well... what I expected to happen when I downloaded the client was for the value of bitcoins to stay about the same (as it had done in the last couple months of 2012) or to rise by 10%-ish per week (as it had done in the first couple months of 2013). If I had bought some when they were at 50-ish, I would definitely be selling most of them now. And right now I don't feel buying something that costs 20% more than it did literally yesterday.
Forgive me for stating the obvious: this sounds like the sunk cost fallacy. There's a cost in that you did not buy coins when they were cheaper, and though this does affect how you feel about the issue, it shouldn't (instrumental-rationally) affect your choices.
I did buy coins when they were at ~40$, and I was then regretting that I hadn't bought more when two weeks earlier they were at 10$. When they were at 70$ I chose to buy some more -- and I regretted not buying more when they were at 40$. But both my buy at 40$ and my buy at 70$ were good ones.
Now bitcoins are at around 141$ to 143$. Whether to buy or not buy at this point should depend on an estimation of whether the price is going to go up or down from here -- and your estimation of how soon and how far the price of bitcoin is going to rise or crash from this point onwards. There's always a risk and a chance.
I was going to reply “Actually, I meant it in the sense that given that their price has changed so quickly, I don't trust their price to not fall by 40% while I'm sleeping”, but I'm afraid that that would just be a rationalization. (I might buy some if their price doesn't change so much in the next couple days.)
Okay, then let me just warn people in general that transferring money from a bank to the usual bitcoin exchanges (mtgox, bitstamp, etc) may by itself take a couple days -- they don't tend to accept some of the faster methods like paypal.
That's what prevented me from owning bitcoins yesterday afternoon while their price halved.
This delay has both accidentally helped and hindered me in the past -- it helped when it prevented me from buying in at 30 before the first crash in 2011; it had hindered me now, when I couldn't buy in at 90 as I had wanted before the price rose to 140.
My bitcoin transactions during the last couple months have perhaps gotten me a 5000$ gain (or so) on the whole. It's sad to think that I could have gained four times as much if I had sold one day earlier than I did; still I came out of this round benefitting, as I did back in 2011 (back then I had perhaps gotten a 2000 or 3000$ gain).
Now, I'm debating with myself whether to reinvest the money I got on bitcoin, or if the price is going to drop further... (it's currently around 70$ in the exchanges which are still open like bitstamp.net)
You see that cute nice near-vertical drop around 15:00 UTC yesterday? That was while I was on the bus on my way home, when I had about 0.42 bitcoins on bitcoin-24.com (I'm not crazy enough to play with more money that that at the moment). #$%&. (By this morning, I had somehow managed to get back all of the value through sheer luck by repeatedly selling and buying at the right times. Now bitcoin-24.com is down, and I don't know whether that happened before or after my offer to sell most of the bitcoins I had left at €80/BTC was accepted. (From this graph I guess I was lucky.)
So do you have a to-do list that you wrote down "buy a few bitcoins" in? If not, maybe you didn't actually procrastinate; maybe you just forgot.
I don't.
More like, first the former, then the latter. ;-)