Why don't you just tell us instead ?

BCX,

So who is DoubleC?

I'm asking here and not in a PM cause I'm not sure if you're trying to say it's Baritus.

Thanks.

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.

@ 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. 

Incorrect. Other recognized stores of value are real estate, stocks, and gold. Those have all suffered 50% draw downs at times.

The definition of store of value you are using is not the generally accepted one. If you pick your own definitions you can support almost any argument.

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

And this shows you never even took the time to read my post.  I said the results appear to hold for all sets of rational assumptions I've come up with to date.  Bitcoin is a store-of-value tool that can reduce risk.  

Please, find a set of reasonable assumptions where it wouldn't be wise for Bob to move at least a small portion of his wealth into bitcoin.  Argue your case mathematically.  

Deadbit, what do you mean by "short term" in this context?  I want to be clear what you mean exactly. What time frame are you referring to?

The only point we appear to be in agreement on is that no one can predict the future with certainty.  But I think you do believe you can predict the future, otherwise you would also agree that bitcoin is useful as a store of value.  

Consider Billionaire Bob.  For simplicity sake, Bob has exactly $1 billion in US treasury bills and no other assets.  He is vocal in his support for small governments, is concerned about US unfunded entitlements and its effect on the dollar's reserve status, and was recently an innocent victim of a politically-targeted IRS probe.  He knows skeletons can be found in any closet.

Bob wants to maintain his wealth 10 years into the future.  He analyzes the situation and concludes the following probabilities:

P(lose all money) = 5%
P(not lose all money) = 95%

To simplify the math, assume the treasuries pay zero interest and inflation is zero (unless the dollar-collapse event occurs).  10 years out, Bob's wealth has expectation value and standard deviation:

= 0.05 x (0) + 0.95 x (1000) = $950 million
stdev = sqrt(0.05 x (0 - 950)^2 + 0.95 x (1000 - 950)^2) = $218 million

Now Bob discovers bitcoin.  He sees that bicoin's success is more likely if either of his two fears come true (the USD collapses or confiscations of private wealth increase in frequency).  He calculates that if the event he fears happens, that bitcoin is likely to be 20X as valuable.  If the event doesn't happen then he doesn't care about the price of bitcoin as he was just using it for a hedge anyways.  

He moves 5% of his wealth into bitcoin.  10 years out, Bob's wealth has expectation value and standard deviation:

= 0.05 x (20 x 50) x + 0.95 x (950) = $953 million
stdev = sqrt(0.05 x (20 x 50 - 953)^2 + 0.95 x (950 - 953)^2) = $11 million

In other words, Bob can decrease the variance of his wealth 10 years out with little change to its expectation value by employing bitcoin as a store of value.  

You can repeat similar analyses using all sorts of probabilities and assumptions and add all sorts of complexities, but I have never found a rational case where it is not wise to store at least a small portion of your wealth in bitcoin.  If you can think of one and mathematically argue your case, please let me know.  

I believe this simple analysis illustrates my point.  Bitcoin is useful as a store of value.  

Care to explain this argument?

The only difference I see between 'investment vehicle' and 'store of value' is volatility.

Edit: and longevity.  But I don't think that is in question.

i warned people not to believe the hype and loose loads of money by going all in on this now, at the same time buy a small amount you are happy with

i think this is fare advice to give some balance to the massive hype around BC - how many comments are warning people to be careful (which is obvious at this point) compared to the reams of 'next bitcoin' comments

i never said this may not be 'legitimate' - i only said my comment was deleted was legitimate, which i stand by now?

if you went over to the wc thread and i was on there and you asked the questions i did, i would answer like a normal person what i thought the unique value of WC was (not a great deal but some lol) rather than get 'shirty' and insult you as then i and the coin would look stupid?

duh...it doesnt concern you that legit, on topic comments are being deleted because the mod thinks they might not be 100% bullish on whitecoin?  a comment giviing an opinion the price will go down in the short term and questioning impact of whitecoin...........should be deleted?

in terms of being compulsive, its called due diligence.  i placed some BC orders for the first time today

whats scary is the community members who are so defensive when asked basic questions, accuse people of trolling for doing so and generally can't talk about the coin like a normal investment and delete any comment that isnt 'towing the line' - plus the fact that everyone thinks this is a sure thing lol - so i bought a few anyway but if this becomes bagholder fiasco (which its 50/50 to be honest after my chats today) i didn't sell the family silver.

Allright. Thanks for your reply. I'll see whether I receive my DGC back. You really need to be at the beginning of the bubble ;P.

I think DGC is going great. If you check the charts of last month, it looks like we've achieved a higher stable value. I'm sure the value will increase more soon .

I gave it a try with 50 DGC. Let's see how this goes .

It's like a Pyramid right?

Bitcoin price on the day of Mr Cuban's comment (22nd Nov 2013) was high of USD 890

today it is USD 495, so if I had listened to Mr Cuban's comments I would have lost over 50% of my investment as of today.

whereas any number of the competitors I could have increased my investments (as I did thanks)

so whats your point?

Before this comment gets deleted like my other post, I am just making an observation for the benefit of people coming here deciding whether to invest after hearing all the hype, like I am.

Actually, consolidation on high volume is a VERY healthy sign.  I would be totally stressed if Blackcoin kept moving up without consolidation.

Have patience.  The coin has a very healthy chart!

Just the usual. People who bought coins at a cheaper price are selling. Happens every now and then.

I personally think it's mostly a big holder slowly dumping his coins (the same guy who tried to cause a mini crash yesterday). Eventually the sellers won't have anymore coins they are willing to sell at this price.

We are stuck at 50K.......exactly like when trying to break 40K.....

Imagine that tomorrow everyone knew for a fact that bitcoin would no longer increase in value.  But they also knew that it would no longer decrease in value.  1 BTC would forever buy the same basket of goods.  What would happen?  Aggregate demand would increase simply due to bitcoin's useful properties as a store of value.  But of course if aggregate demand increases, so must the price.  

The only reason the price of bitcoin isn't much higher is because people believe it could also be a lot lower.

I'm not sweating anything, I went all-in on Bitcoin long before China did. Financially speaking, I'm WAY ahead, and I'll hold like I've always done.

You should also know that, statistically speaking, there is something like a 93% chance that I'm smarter than you. Now sit your ass down.

On top of that Uncle Sam would probably "find" some weapons of mass destruction real quick if a country adopts BTC as a currency. Heck, look at Iraq, when they tried to adopt another fiat than USD (EUR).