I find this hilarious when many European banks have lost 98% of their market caps and individual stocks have just as much volatility in many cases. Maybe the investor warnings should be more even.
You're not wrong about stock volatility, but I think the point that there aren't any mechanisms for safety at all are fairly valid still:
"Investors who are out of pocket will not be able to rely on the Financial Ombudsman Service to settle complaints or order compensation from offending firms. Consumers are also unlikely to be covered under the Financial Services Compensation Scheme, which covers losses up to £85,000 on fully regulated accounts and investment products including pensions."
You also can't, say, sue BitCoin for securities fraud (or, more realistically, be part of a class-action lawsuit) like you could against a company that you own stock in[0].
Again, I'm not trying to say that stocks are "safe", but it's also true that you have more protections investing in them than you do with Bitcoin (at least for now).
I see what you're saying but this is still a bit ridiculous. You sue a company when malpractice occurs, that is not possible with btc. It simply exists. Its like saying you dont have investor protections when you buy oil or corn (unless we are talking about the exchange, and by the article I'm not sure what they're getting at).
Here are some possibilities for malpractice with Bitcoin: Exchanges lying about transactions, pricing, Exchanges refusing to allow or unable to allow extracting wealth stored in bitcoin, Exchanges front-running, Exchanges stealing money, 51% attack by miners, Governments expropriating wealth 10 years later claiming back taxes for undeclared earnings, Developers changing the rules of the currency (which are encoded in the client) and persuading enough to go along with it, Currencies which the price of Bitcoin is closely tethered to lying about their reserves... I could go on, but the entire edifice is built on confidence, and once that confidence evaporates for a second time, it's going to be very hard to recover.
There is a lot of risk investing in bitcoin, it is nothing like commodities, that's just the latest identity have dreamed up for it after it completely failed to live up to the hype of the previous identities first as a currency outwith government control, then as a distributed trust-free database, then as a foundational layer for myriad apps, and finally as a 'commodity' which nobody actually uses (unlike other speculative commodities like oil or corn which usually have a use value which the current value fluctuates around).
You do in fact have lots of protection when you buy other commodities, in the form of rules against cornering the market, rules against fraud, insurance, regulators etc. Look up the silver corner or similar episodes for what happens when markets in commodities are completely unregulated, as we see in the Bitcoin market at the moment.
Theres a lot of inaccuracies in here and it just kind of looks like things being thrown at a wall and hoping they stick. For instance front running is done by HFT in the equity markets so I see a double standard there. "exchanges lying about transactions" - what? 51% attack by miners, do you actually know what that is? What the impact is and how much it would cost to carry and sustain that?
Nursie: Oh sure, I thought he was talking about like your trades on the exchanges being misrepresented or something. Weve known about the wash trading for probably 6 years now. Theres aggregators that eliminate the wash trading volumes. Its mostly asian exchanges that are competing for business. theres still a lot of organic volume. Yup theres going to be bad actors that occurs all over finance.
While you could argue with some specific points I'm sure, this was just a laundry list off the top of my head of reasons why btc is not some inert commodity which can't possibly allow malpractice - the bitcoin ecosystem is overflowing with bad actors and shady companies all trying to profit from the goldrush, from mtgox in the past to bitfinex now.
I agree there are bad actors all over finance, which is precisely why finance and banking is so heavily regulated, in a way that btc is not, and that lack of proper auditing and controls is what makes btc incredibly risky as some sort of investment IMO and utterly unlike commodities like oil or corn as an asset.
Bitcoin is neither a useful currency, nor a reliable store of value, nor a good way to share data, nor a foundational layer for an app ecosystem, nor a commodity. It has been sold as all those things and more, but it has succeeded at none of them and I fear in this latest mania a lot of people will lose much of their money.
All Im going to say is that quite a few heavyweights disagree with you both on the tech and investing front. I disagree with you as well. I think btc is a store of value. At the end of the day its going to be up to the individual.
The volumes on many exchanges (particularly the less reputable ones) have been faked a lot. Also exchanges have several times been found not to have the reserves to actually cover the customer accounts (i.e quadriga).
Depends what exchanges. Most fake volume occurs outside the 10 largest exchanges by userbase. Coinbase, Gemini, Bitstamp, Binance, etc are unlikely reporting inaccurate volume. Volume aggregators like CMC, Coingeko, and Messari have mostly kicked out suspects.
Deutsche Bank: a high of $146, it now trades at $11. AIG went from $1,913 to $40. HSBC 75% loss, Barclays 85% loss. All across the world its the same story.
In Europe one got MIFID II and MiFIR a few years back that makes it so that everyone wishing to buy certain investment stuff have to pass a small knowledge test beforehand or show that they have understand the risks etc. So here this goes for most financial instruments and not just Bitcoin. I'm allowed to buy mutual funds at my trader, but in order to buy options I have to complete this tutorial to unlock that, for instance.
At least in the UK bank deposits up to £85,000 are protected by a government scheme, so you can't lose all your money. I expect the FCA would offer the same "be prepared to lose all your money" advice to anyone who wanted to invest in a single stock too.
Because this ‘currency’ is volatile like a small cap stock. This is the thing I always get a runaround about from Bitcoin advocates. Some say it’s a great currency, some say it’s a great investment. Well, by definition if it’s good at one thing, it’s bad a the other. Investments should provide good long term appreciation, and currency should be stable ideally not fluctuating in the double digit percentages in a given year. Bitcoin, you’re a fun experiment, but what’s the point of your existence?
People who have bought e.g. a pizza with bitcoin are examples of what NOT to do with Bitcoin. The very fact that Bitcoin holders expect it to rise in value makes it unsuitable as a medium of exchange.
I guess for the same reason you implicitly compare BTC to USD or EUR, it needs to be compared to something to give it a value as it does not have an underlying one
I have a huge box full of precious photography film. Slide stock, Kodak Portra, beautiful B&W by Ilford... I should store it in a freezer but that would make holding costs high, and there's a going market for good and bad film at any condition (there's CVS-brand film on ebay)...
These rolls have the capacity to produce beautiful imagery in my incapable hands, and I know them to have great value -- my 120 format Portras smoke anything in your digital quiver when it comes to displaying beautiful people in outdoor-sized frames.
I can pretty much sell a handful of Ilfords in 2-3 weeks and buy my wife a nice steak dinner. Is it money?
I've seen many claim that mathematically the stock market is more of a game of chance than a poker tournament, yet the latter is what is most often covered under gambling laws and the former is not.
Bitcoin has essentially no intrinsic value. If people only used it as a currency, not as a speculative "investment", the price would be orders of magnitude lower.
Stocks are much "safer" because the intrinsic value is often similar to the market price.
Gold and some stocks (Tesla) are somewhere in between. They have intrinsic value but people also buy it speculatively so the price is way higher than the intrinsic value.
People use Bitcoin as a form of gold 2.0. Thats why the MC is where it is. Nobody in their right mind is making a cash flow case for btc unless you include lending which actually makes a decent return.
It's true that people use it as gold 2.0 and it's the bull case. But, the value is approximately 100% speculative. If people for some reason decided they will only use it for transactions and not as investment, most of the value would disappear.
"Investors who are out of pocket will not be able to rely on the Financial Ombudsman Service to settle complaints or order compensation from offending firms. Consumers are also unlikely to be covered under the Financial Services Compensation Scheme, which covers losses up to £85,000 on fully regulated accounts and investment products including pensions."
You also can't, say, sue BitCoin for securities fraud (or, more realistically, be part of a class-action lawsuit) like you could against a company that you own stock in[0].
Again, I'm not trying to say that stocks are "safe", but it's also true that you have more protections investing in them than you do with Bitcoin (at least for now).
[0]:https://www.bloomberg.com/opinion/articles/2019-06-26/everyt...