Thursday, April 11, 2013

The Kind of People Going Into Bitcoins Because of Irresponsible Commentary

The below comment was posted under the commentary by Jeff Tucker, whose advice in the commentary was after the first leg of the crash of the bitcoin price, "We should all count our blessing and, most of all, have fun and enjoy the ride!". On March 30, I warned about Tucker's over-enthusiastic promotion of bitcoins:
With Tucker's open ended commentary, he is setting up a situation where novice investors get too enthusiastic and plow all their money into bitcoins, which if things don't go right, could result in massive losses.
Here's the commentary at Tucker's site by Sabrina Liukin:
This is the story of how an newbie trader (though well schooled in Austrian Economics & monetary theory) became a total basket-case idiot today and lost over $400 in gains and $200 of my original investment that I really didn't have to lose. If only I had just sat their and waited for my original sell order at $230 to go through because obviously "Pending" means your sell order will be executed eventually at the market price you clicked sell at.... I would be in the black, and not feel like a total fool at the moment.

Yeah, so I was part of the panic today... well I sort of caused a little panic of my own. When I tried to sell today at 230, the transaction didn't get executed immediately like i'm use too seeing. It said pending, and I have never seen "pending" before. So I thought (because I'm an idiot and a newbie) that the price had dropped farther before my sell order went through and that "pending" meant that it wouldn't go through until the market rate was back to the price I was trying to sell at. So I hit cancel on the order, but the order was still listed (when you click cancel, one thinks that the order should go away and no longer be listed), and I had bitcoins still losing value (I bought in in the in the mid and upper hundreds) and I felt that we would soon be approaching my break even point. So I tried to place another sell order and I got "pending" once again... now I was getting really worried. I tried to cancel that order and and I entered a sell price close to my break even point... yet agian pending and the other two orders were still listed as pending. So now i'm freaking out thinking oh crap oh crap, these orders aren't going through because i've placed multiple orders and I don't have enough BTC to process them all. Once again hitting cancel didn't appear to do anyting so I thought well maybe if I try to send my Bitcoins to my wallet on my computer then back to MtGox it will cancel the orders and I can try to sell again. That took 20 minutes to confirm and get my BTC back on Gox. Doing that seemed to have erased the 3 pending orders I had ha. I placed another sell order... this time market rate was right close to my break even point... and yet again "Pending". Now i'm losing it.... I was convinced something was wrong or that I did something wrong so I sent some BTCs to my account on BTC-e where I had bought a few Litcoins. 5 minutes later it was there and boom I sold at 132. I still had btc on Gox and I had previously entered a sell price at 125 because I thought that the Buy/Sell prices were being shown on Gox weren't keeping up with what Bitcoins were actually buying and selling for because the price on Gox was much higher than what I was seeing on BlockChain and the Moodys chart . At this point I figured that there was nothing I could do anymore and so I just sat there and watched the value drop to $105 while I had all these pending orders. Eventually, my sell order went through. But because I had clicked cancel on the selll orders I had originally tried to make at $230 $210, $190, & $160 (even though they didn't clear off my order history & still said pending) the orders were actually canceled because clicking cancel does actually cancel the order....... finally my sell order at $125 went through because well I didn't click cancel on that one.
I think BTC is fantastic (and it may actually have a future we just don't know yet... even as a hard money gold & silver person, I hope BTC gains a foot hold), but right now I can't buy food or pay my rent with it. I just don't have the money to risk at the moment. Everyone who has the money to invest into BTC, I wish you all the best.

The only investment I feel comfortable advising everyone to get into, with full enthusiasm, is nickels. If there is massive price inflation nickels ( which are made up of 25% nickel and 75% copper) will climb in price, just like silver dimes and nickels have.

The  1946-1964 Roosevelt Dime now contains silver that is worth over $2.00. The 1932-1964 Washington Quarter contains silver now worth over $5.00.

There is zero downside in nickels. If there is no price inflation, simply spend the nickels. How's that for a safe investment, with no downside?

But, Jeff "Bitcoins are better than gold" Tucker's tag team partner NS Kinsella, during our debate, mocked my advice about the safe, conservative investment.


  1. Kinsella has also mocked the nickels thing on his site, of course without actually citing any valid reason that nickels are a "stupid" investment.

    This attack just plays at how investing in nickels might sound silly on the surface to the layman, and says a lot about Kinsella and the arguments he often makes.

    1. Glad he went on the record.

      IMO Mises needs to jettison that dunnage.

  2. "I hate bitcoins. I love gold. I dislike it when people praise bitcoins over gold." - Wenzel.

  3. Translation:

    "I hate bitcoins. I love gold. I dislike people who praise bitcoins over gold." - Wenzel.

  4. They have definitely been hyping Bitcoin, even though it's easily the most dangerous place to put money, and has the highest political risk of any holding.

  5. I do not understand the "aha" moment. Bitcoin today, at ~$120 is higher than it ever was in March or at any time before that. It spikes, then dives, and somehow it is deemed dangerous relative to "money" - that centrally controlled, infinitely debased fiat paper.

    Tucker can say whatever he wants, to the best of my knowledge he's not contracting, not offering any guarantees. He's not selling 10% returns. What is wrong with being openly pro-Bitcoin, promoting it, or saying it will take off? Is it less dangerous to say that gold will take off - a lot of people say this, shall we "aha" them all?

    Freedom can be vulnerable. Sometimes it is inherently so. A man can drive a car into a marketplace. Does this make the marketplace dangerous? Will people stop using that marketplace? It is for individuals to decide.

    Bitcoin has vulnerabilities also. One of which is: it's new. When gold was first discovered, perhaps some shunned this different looking rock, while others coveted it; isn't it likely there were massive, organic spikes in the value of gold as individuals appraised and settled. It's almost certain this happened; yet it did not invalidate gold. Also, imagine if, during those precarious moments in the now long and storied career of gold, the iron central bank had actually realized its danger. Might it have even labored against gold?

    I like that Bitcoin exchange is not (currently) centrally controlled. I also realize this makes it somewhat vulnerable to open manipulation or attack (like gold). I expect some challenge to the Bitcoin code, and I hope for innovation.

    We'll see. :)