Re: Another reason bitcoin will succeed: US to target Putin's $40 billion stash

Ok if I bought in a few months ago at 800 - 900 USD I would now be at a 50% loss. Is that a store of value? No, it's not.

This is the sunk-cost fallacy: http://en.wikipedia.org/wiki/Sunk_costs

Billionaire Bob moved a portion of his wealth into bitcoin as a hedge to reduce the variance of his wealth moving forward in time. He could have had his assets siezed and the dollar-collapse event could have happened. The fact that it didn't doesn't mean that the hedge was unwise. In fact, if he reanalyses the situation from today moving forward, he may conclude that he should actually now move more wealth into bitcoin.

If you buy fire insurance on your house and it never burns down did you waste your money?

Nice argument sir. You're correct.

If you invested a lot in gold before the price collapsed, is that a store of value?
Stop looking at bitcoin the wrong way, this can happen with just about anything.

I'm enjoying vodka on my last day off and I'm lacking in the ability to really articulate what I mean. Better to concede.

Quote from: twiifm on April 21, 2014, 11:01:15 PM

@ Peter R

That analysis has so many flaws

(1) You assume that Bob has only 2 choices (BTC yes or no) when he could diversify his portfolio in many asset classes

(2) Standard deviation is determined by using historical data not random numbers projected into the future

(3) Probability isn't randomly calculated like that. 5% lose all money vs 95% not lose all money? Say what?

(4) I think someone else defined "store of value" = low volatility. I'm not sure how you are defining "store of value". Sounds like you are saying BTC is a store of value because it could go to x20 or not. This sounds like a "speculative" bet not a "store of value" bet. You are speculating that demise of USD will drive up BTC price.

(5) Buying BTC is not a hedge against USD. That's not how hedges work. A hedge is when you take trade AND you also take the opposite of that trade to mitigate your risk. The easiest way to hedge is using options. But there is no options market on BTC so the point is moot

"but I have never found a rational case where it is not wise to store at least a small portion of your wealth in bit coin"

How about in the case the price crashes and you lose your money? If you have the assumption BTC will forever go up in price then by all means invest. But don't claim that the price can't crash or even go to zero.

This is a bit more what I was leaning towards.