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AlexSchell comments on Why you should consider buying Bitcoin right now (Jan 2015) if you have high risk tolerance - Less Wrong Discussion
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If you look at net worth counterfactuals, the person deciding whether to borrow money to buy BTC is facing the same decision as someone who is already in debt and is deciding whether to buy BTC or use the same money to pay off some of their debt. If you think leveraged investments in BTC are unwise, you should also categorically advise people with any amount of debt to not buy BTC.
I thought it is a given that if you have debt you should spend all your disposable income paying off the dept. Unless, of course, you can safely invest somewhere where the interest is higher than that of your debt.
The advice here is to treat it as if you bought consumer goods, or vacation. Paying off your debt instead of going on vacation seems like a really elementary advice in personal finance. Unless, of course, you are sufficiently certain that not going on the vacation will result in a mental illness or something.
I'm curious.. Is there any data about how much personal debt LWers have?
Essentially, if your condition for investing in bitcoin is that it should only be done with money you are happy to lose, then you have proved it is not a good investment, rather it is a game you are playing and are willing to pay to play. Like going to Las Vegas.
I agree, people who are in debt should probably pay off their debts first. Bitcoin is the definition of a risk investment. You only buy with money that you can afford to lose 100% of. You must accept that a 100% loss is possible.
Surely this is just a risk calculation, and depends on many factors.
Currently debt is cheap, so high risk, high return investments make some sense if the expectation is good.
Paying down debt if it is cheap is a silly mistake.
You can still make good returns on the stock market betting that the market is risk averse, we have feeble brains.
Currently the cash you have is probably denominated in a conventional currency which also carries risk, we just tend to assume our own currency is some sort of fix point.
I'll probably have had been buying bitcoins if my wealth was in Roubles, although the Rouble has rallied recently I believe, especially if I was dodgy character with difficulty finding a reliable bank in the West.
Deciding if I should buy BitCoins if I have cash in a reasonably stable currency is another question. Interesting question is when to start buying Roubles, you know eventually Putin will die, or the war will be over.