Please tell me about Bitcoin... the Good, the Bad and the Ugly.

[shadypines]

What is it? Is it a scam? BIL has got involved so I'm a bit concerned as he has a history of being rubbish with money. Thanks

Someone I worked with early on invested a small amount and made some good money (10's not 100's of £000's) he did research it.

I think it's probably dangerous if you go headlong into it and not sure of the returns are the same this far along the line.

It just crashed by 25%

It's a legitimate new currency that is a genuine investment. However the concept isn't proven yet and there is very little use for it at the moment (as in you can't easily spend it like other currency).
I have some money invested in crypto (including bitcoin) but only what I can afford to loose. It's very risky as it will either fade away into nothing as a failed experiment or become the way to spend online (international transactions cost much less than traditional banking and happen instantaneously). If it works, the price will skyrocket but until then the intrinsic value is virtually nothing. I would strongly advise to only invest spare money and think of it akin to gambling.

It's a relatively new concept, anyone investing now would be considered an early adopter.
That said last year saw huge gains because large institutions are now investing in it on a massive scale.
I've doubled my money since October by buying Bitcoin, Etherium and Link.

I bought about £600 of Bitcoin in 2015 just for fun and it's now worth over £100,000 which is pretty amazing. I bought it through Coinbase and will probably sell it eventually to pay off our mortgage.

Bitcoin was originally supposed to be a fully decentralised currency that takes power away from banks and governments. All types of money (fiat currency) are controlled by governments so a lot of people don't like the implications behind that. That was the reason I bought some after listening to various YouTube videos and podcasts on the concept behind it. However it soon became more comparable to stocks or gold where people were just buying to sell at a higher price.

The big money that can be made with Bitcoin is mostly gone. However you can still make a small profit by buying and selling small amounts. I bought another tiny amount of BTC (£200) just before Christmas and now it's worth around £500.

Bitcoin itself is definitely not a scam however it invites a lot of scammers due to many people not understanding the nature of it. The only two platforms you should really be buying from are Coinbase (higher fees but recommended for beginners and very easy to use like online banking) or Binance (lower fees but slightly more complex and suitable for people with trading experience). Both are huge companies with sufficient compliance and insurance to ensure you cannot lose your Bitcoin in the event of a hack. The following things are common scams so make sure your BIL is not doing one of those:

• Buying crypto from online ads or people on social media accounts promising to help you. Any in-between agent or trader are almost definitely scammers.

• Buying "bitcoin futures" or other types of investment that are not actually bitcoin itself. These are basically betting on the future price of bitcoin and have nothing to do with bitcoin itself. This is volatile and not recommended for people with no experience.

• Buying bitcoin from cash machines, start-ups or other gimmicky services. Bitcoin cash machines are actually popular in developing countries with unstable local currencies but are definitely nowhere near useful in the UK or any Western country.

If he had invested some money directly into Bitcoin then advise him the following:

• NEVER lose the logins to your account. Write it up and place it someplace safe. The chances of you forgetting your own password is far far higher than someone breaking in your home and finding a scrap of paper and knowing it's for your bitcoin account. Unlike banks who will obviously grant you access with ID, bitcoin accounts are lost forever without the password. This includes any 2-factor authentication apps that are required during login. If you switch phones, make sure you check all the logins work before deleting the old phone.

• If you really need money now, then sell half as soon as the price goes up by an increment you're happy with (£200, £500, £1000 etc). Obviously Bitcoin is not worth anything unless traded back into real money.

• Don't regret your losses and don't gamble by not selling if you already have money problems. This is probably the biggest issue your BIL might have if you say he has a "bad track record" with money. Many people go into bitcoin thinking it will make them rich quickly but regret it when they sell early and the price goes even higher. Or they never end up selling which could pay off far down the line but that won't help them with any current financial problems.

• Never spend more on Bitcoin than you can afford in real money. Some people might be intoxicated by "how much their Bitcoins are worth" and end up spending all their real money on crypto. This is very dangerous because it goes without saying that the market or price could crash in a year and you do not want to drag yourself or your family into debt as a result of something so bizarre and trivial as Bitcoin.

• Be extra careful if you have a history of gambling. Goes without saying that cryptocurrencies are not suited for those addicted to the highs and lows of making "easy money".

Hope this helps! Bitcoin can be a fun side hobby, but needs to be treated with caution.

@GalaxyCake - great advice. The only caveat I would make is, please think twice before using coinbase..they frequently freeze accounts for no apparent reason ('thisismoney' have several articles on this). There are loads of reputable exchanges, binance, bitstamp, kraken, etc.

Bitcoin, as usable technology, is outdated, however it now being viewed as a store of value (similar to gold). I wouldn't say that the big returns are out of the question, but your probably looking at max 5 -10x over the macro scale (10 years). There are however a whole range of crypto that can give you better returns (link, ada, dot, etc), but these do come with higher risk.

I certainly wouldn't invest a large portion of my portfolio in crypto, but then that largely depends on you appetite to risk. Financial advisor suggest no more than 1%.

@GalaxyCake Great advice

But

"Obviously Bitcoin is not worth anything unless traded back into real money."

Bitcoin is as real as money gets. Bitcoin is priceless.

This isn't Bitcoin as such, it's another crypto currency but a true story which illustrates how easy it is to be sucked in and part with your money for something which to be honest we don't understand.

Fascinating pod cast.

www.bbc.co.uk/programmes/p07nkd84

Thank you all for taking the time to reply, you've been really helpful.

Place marking, as I have became obsessed with crypto currency in the last couple of days. The trouble is- I have about 20k, but they have been sitting in my bank account for good 5y, doing nothing, so I am v tempted just to invest. I will not need this money in the next 10y.

[quote doubleaces89]@GalaxyCake - great advice. The only caveat I would make is, please think twice before using coinbase..they frequently freeze accounts for no apparent reason ('thisismoney' have several articles on this). There are loads of reputable exchanges, binance, bitstamp, kraken, etc.

Bitcoin, as usable technology, is outdated, however it now being viewed as a store of value (similar to gold). I wouldn't say that the big returns are out of the question, but your probably looking at max 5 -10x over the macro scale (10 years). There are however a whole range of crypto that can give you better returns (link, ada, dot, etc), but these do come with higher risk.

I certainly wouldn't invest a large portion of my portfolio in crypto, but then that largely depends on you appetite to risk. Financial advisor suggest no more than 1%.[/quote]
I just made an account on coinbase! 🤦‍♀️ I'll not use it and set up something else in that case. Looking forward to watching and having a dabble.

[quote Badadabing]This isn't Bitcoin as such, it's another crypto currency but a true story which illustrates how easy it is to be sucked in and part with your money for something which to be honest we don't understand.

Fascinating pod cast.

www.bbc.co.uk/programmes/p07nkd84[/quote]
I've been listening to this, fascinating as you say. That is what got me first interested.

Have I killed another thread?! 🤦‍♀️😂

Just thought I would report back, after 24 hours I''m £2.24 up! Whoop! I only invested £30 plus the £1.99 to buy.

Where do people recommend buying it?

Its like marmite as the saying goes. There are people adamant that it will eventually become a viable currency and those adamant its the latest tulip or dot com bubble.

Personally I dont think its viable as a currency its far too volatile and its not especially fast when you look at the transactions per second.

If its not going to end up as a currency I cannot see any point to it. Other than being used as another metric to gamble on.

@IthinkIm

Where do people recommend buying it?

Because its quite difficult to earn it.

Very few employers pay in bitcoin, so you usually earn in fiat then buy it.

@JellyBabiesFan

Its like marmite as the saying goes. There are people adamant that it will eventually become a viable currency and those adamant its the latest tulip or dot com bubble.

Personally I dont think its viable as a currency its far too volatile and its not especially fast when you look at the transactions per second.

If its not going to end up as a currency I cannot see any point to it. Other than being used as another metric to gamble on.

Currencies have several properties

• store of value
• unit of account
• medium of exchange

Bitcoin is not nearly as good a medium of exchange as some other cryptos, but its an excellent store of value over the long term, and its the primary unit of account within the crypto sphere.

but its an excellent store of value over the long term

What underpins the 'value' of bitcoin?

Ethically I can't bring myself to invest into crypto currency as the energy used to mine and store them is a huge waste and detrimental to the environment.

This thread about covers it:

twitter.com/smdiehl/status/1350874922495733761?s=21

@JellyBabiesFan

but its an excellent store of value over the long term

What underpins the 'value' of bitcoin?

Maths

Maths

What are you on about? How can 'maths' underpin the value of something?

@JellyBabiesFan

Maths

What are you on about? How can 'maths' underpin the value of something?

When I own 1btc, I know - for certain - that own 1/21m of all the bitcoin that there will ever be in existence. Maths guarantees that there will only ever be 21m bitcoin.

Those bitcoins come into existence at regular intervals (approx 10 minutes) at an emissions rate that halves approximately ever four years. Maths ensure that this happens through the application of energy (through computers).

The bitcoins cannot be duplicated once created as there is a record going back to the every first bitcoin ever mined of when the bitcoins were created and where they have gone. This is again secured by maths.

Bitcoin has value because it is finite. No-one can create any more of them, but they are infinitely divisible - you can transact with 0.000000000000000001 of a btc (or less), so even the tiniest amounts of value can be stored.Bitcoin can be transferred anywhere in the world in a matter of minutes. Again the maths of bitcoin enables this.

Compare with gold, commodity money. Gold is scarce, is created through energy, has a record of sorts (in jewellery, bullion, sovereigns etc), but is limited in its divisibility or portability.

Compare with fiat, government money. Fiat is not scarce, it can be printed at will,, it is extensively recorded, and limited in its divisibility (think of all those 1ps down the back of the sofa that are effectively worthless).

The maths of bitcoin means it can be trusted far more than any government, and that it can be retained and exchanged much more easily than any quantity of gold

@lillg

" However the concept isn't proven yet and there is very little use for it at the moment (as in you can't easily spend it like other currency)."

There are lots of ways to spend it. Through Amazon, in shops with a btc debt card, pay bills through third party services, buy flights. It is cumbersome but its doable.

Remember tho that we live in the West, with banks on every high street and full access to savings accounts, loans, pensions, etc. The places where it is really taking off dont have that. With bitcoin you dont need a bank, you are your own bank.

With bitcoin you dont need a bank, you are your own bank

Doesnt make it any easier to access. You are still reliant on the holding company.

Bitcoin has value because it is finite

I could go out and hire a blockchain consultant and create something called crapcoin and limit it to ten coins. Rarity will not de facto give crapcoin value.

In my opinion Bitcoin only has value because people are buying in on the assumption further down the line somebody else will want to buy it for more money. The problem being eventually you will run out of people wanting to buy.