Re: DCA, the most convenient way to increase your bitcoin as an investor.
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From what I am reading within your response, so far, is that there are not ONLY objective limitations involved in our assessments about "what we can afford to lose" but also several objective limitations too that even involve how convinced we are about the investment thesis of the asset (in this case bitcoin) as compared with other places that we might be able to put our money (investments or otherwise).
Surely there are levels of complications of anyone's financial life that become more complicated if a person has to support a family or even if they have a business with uncertain cashflows. The more complicated our financial life and our obligations, the less that we are able to set aside cash for investing 4-10 years or longer.
Yes exactly. I get that to be as objective as possible is the least you can do to provide some guidelines so to say, but we still have to cope with different circumstances that we might again evaluate differently. Now over-individualization (neologism?
) is not the way here and I think you are giving more than just subjectively given guidelines. You are giving actual examples, pure maths, which is convincing and then people can decide whether they think, say DCA, is a model to follow. But indeed risk perception and risk reality can be in discrepancy and I believe that those more educated - on average of course - suffer from a smaller gap between perception and reality.
Bitcoin is an incredibly hard to understand asset if you are not somewhat into a wide multidisciniplary spectrum of theoretical and applied scienes. I am not saying you have to be a geek, but if you are someone without critical thinking abilities, or the general interest in understanding the world, ask questions about systems, read the news in more than one newspaper, etc. etc. Bitcoin is tough for those people and they are more into a casino when they go for it and this is still fine for as long as they do at least have a strategy in place. But what's the chance that people can follow strategies, judge risks properly, assess the gap between perception and reality, distinguish between subjective and objective, etc.
It is, but sometimes a very unique door opens in front of your eyes while you are not set up to put serious money into it. Now I know that DCA from the very early days on would have generated a fortune even with small amounts on a weekly or actually monthly basis.
DCA involves whatever amount that you have available, and so what are we talking about when we are talking about early days? You want to do two cycles or more? Two full cycles would put us at September 2016. And, maybe a reasonably small amount could be $50 per week? If you invested $50 per week over the last 8 years, you would have had invested ONLY about $21k, yet you would have nearly 3.8 BTC, so yeah, it might not exactly be fuck you status levels of money, yet that is partly a choice in regards to how aggressively a person might want or be able to be in the event that they could have had higher levels of investment based on their discretionary income or not... Of course, you can keep those dates the same, and adjust the numbers up or down in order to figure out what a reasonable budget for you might have had been... so doubling the weekly DCA amount to $100 would double the amount invested to $42k and the amount of BTC to 7.6, and surely those are not bad places to be.
Of course, if we go back to your own forum registration date of July 2011, we could lower our investment amount to a mere $10 per week and be rich as fuck from that kind of a timeline and those kinds of relatively modest DCA amounts. That would be well more than 142 BTC for only $4,700 invested.**
**The calculator only allowed me to calculate 9 years at a time, yet most of the performance of the investment comes from getting into the investment early.
No no no, it is not about convincing me. I am a full Bitcoiner and I am not looking back regretting too much (although I'll be honest, sometimes I do). My point was that "don't invest more than you can afford to lose". What do you do when a door like bitcoin opens in front of your eyes and you have a clear mind and are 90%, 93%, 95.5%, 97% .... convinced that this is it. This is revolutionary, but you only have 20 bucks in the bank. Would it be irrational to take a risk that rationally you can't afford to lose? When at the same time you know this is unique, this is not Samsung or Apple, black or white, this is new. And it can't be stopped (as far as you entrust yourself to be able to tell because it is still pioneer tech to say the least).
So to say, I am looking back because I would like to know your answer how you would have proceeded with too few pennies in the bank when actually you know this thing within one arm's length is going to be huge. What's the right call to make then?
But the truth is that bitcoin was such a different thing from all other investment opportunities that hardly anyone could be fully rational about it. It was quite an adventure back then because it was literally impossible for the average Joe to see and understand whether there are bugs or backdoors or what the weaknesses are of such a network. I would argue that the chances for bitcoin to go from 60k to 600k today is at least as high as bitcoin going from 600 USD to 6,000 USD back then because it stood the test of time.
Well? Now you seem to be talking about late 2016 when you are referring to starting from $600. I personally consider that there were more and more onramp options available with the passage of time, and depending on your location would affect which kinds of options were available and the extent to which they might be cumbersome to set up.
Countless of opportunities and we are not contradicting each other here. Quite the contrary and I am telling everyone the same you say here and everywhere, without actually pushing someone to buy something they are not convinced of. I consider myself a 97-98% bitcoin maximalist. But I tell them if they feel they are missing a train, then go by DCA or if you can afford, go with whatever you feel comfortable with.
Let me ask you: did you learn your lessons at some point with shit coins or have you been a pretty much maximalist from day one you found out? With all due respect, while experience led me to my today's thinking, I'd be surprised if anyone knew bitcoin is the truest and authentic version of this "new movement". Not sure what the best words would be here, but you get the point.
The network accumulated so much value that most likely the best hackers in the world already tried their luck and attacked the network from whatever angle they might have seen an opportunity. That is something nobody really has to be afraid about today.
The attack vectors have changed over time, and surely some threats now are less relevant as compared to some of the older threats, but threats still exist, especially Sim swaps and social engineering.. and maybe even the various kinds of attacks from regulators regarding restricting on/off ramps, self-custody and threatening KYC creates other kinds of attacks that could still undermine aspects of the strength of bitcoin's investment thesis, yet from differing angles. For sure, even though institutions are getting more involved, Bitcoin is not free from attacks and/or risks...including poor people sometimes needing to be concerned about how to manage their UTXOs if they might be wanting to employ a lot of lower cost transactions on the blockchain that might become unspendable at certain points in the future.
Or even the ways that mining pools are currently operating contributes to a certain amount of centralization risks in bitcoin.
The ability to cope with a loss is a function of the ability someone has to dig their ways out of a hole in case of a bad outcome. It is not necessarily the cash someone has in the bank. That's where everyone should be realistic about their own terms. Can I somehow cope with the risk I am taking? I think one very important aspect to consider is whether second or third parties would be affected if someone decides to take a risk. Of course nobody should force themselves into insolvency risk taking behavior, but there might be a few occasions in life where shifting the boundaries at least somewhat can make sense. Maybe EV (= expected value) plays an important role as well.
Yeah, if any of us leave our coins with third parties, they might be risking our coins, yet also the ways that third parties take risk with other people's money can also screw up the price for others or even contribute to changes in the whole bitcoin ecosystem in regards to regulations and supposed ways that regulators may be proclaiming to be wanting to "protect" us.
Yes the attack vectors are very diverse and sometimes the most trivial can turn into the most existential. KYC... This is probably one of the fiercest weapons opponents of decentralized technology, which fosters equality, have - as long as they are in power.
Thanks for the detailed response and looking forward to read more!
