China bans new Bitcoin deposits

I feel pretty ill. Thought you'd all enjoy the schadenfreude, and perhaps learn from my example: "How to ignore Sam Altman and lose more than half your money."

http://blog.samaltman.com/thoughts-on-bitcoin

EDIT: I'm holding onto my coins. But, now that China is strongly incentivized not to invest in Bitcoin, it's going to be a very slow climb back to $1106. And at the end of that long road (I'd say at least several months, but what the hell do I know, right?) I get to look forward to: "Yay. I've lost $0. I've also gained $0."

EDIT2: Oh, nope! It just fell from $520 to $500. So, at current market prices, my $11k is now $4,780. Of course, we've all seen bitcion dip and quickly rise again. It's just very... interesting... to me that within the timespan of writing a HN comment, I'm down another $320.

Yes. Interesting. That's the word. I'm interested. In learning from my mistakes.

FYI, that -$5,900 was enough to pay off my car loan in its entirety, or all of my (admittedly small, relatively speaking) credit card debt.

Oh well. I'm going to go build a product and sell it now.

EDIT3: The market rose from $500 to $540, so that means I've earned back $474! And since my last edit was an hour ago, that must mean I'm earning $474/hr writing HN comments in my pajamas! Why hold down a programming job when you can write HN comments fulltime for 4x the wage? Quit tomorrow, sell everything you own, and invest it all in bitcoin immediately!

optimiz3• 13 years ago

Have an upvote for your sorrows. It takes guts to admit that in public.

rdegges• 13 years ago

Sorry for your luck. If I were you, however, I'd hang onto the Bitcoin you have.

If it continues to gain adoption, those coins will rise in price again (don't let temporary drops get to you too much).

Good luck!

corin_• 13 years ago

Who knows, maybe the example to learn from is not getting scared when you go from $11k to $5.1k and waiting for a month until it's up to $20k. On the other hand, maybe it's that you should sell having only lost $5.9k rather than wait until that $5.1k drops to $5.10.

Fuxy4• 13 years ago

Depends on your wager. If you think bit-coin will never rise again sell now and walk away wounded.

But that wager makes no sense at all since people accidentally delete there wallets all the time and there's a limited supply of bit-coins.

If you factor in time bit-coin can only go up as long as people are still using it and i have confidence bit-coin will reach wide adoption.

kybernetikos2• 13 years ago

You suggest that the lesson should be based on the outcome, but actually in the presence of significant random noise/unknowns, that's not always true.

It's quite possible to make bad decisions that turn out well and good decisions that turn out badly.

To learn the correct lessons, he needs to work out if his original plan was sensible given what he knew (or could reasonably find out) at the time and he's just unlucky, or if the decision to invest was reckless or based on inadequate or wrong information.

Having said that, it's so easy to deceive ourselves, that I've heard people say that it's a good idea to work out what would falsify your assumptions before investing.

The decision he made was either a good one or a bad one based on the information available to him at the time. That will be true regardless of whether he becomes a billionaire in the next month or goes entirely broke.

The true lesson to be learned is not dependent on the outcome.

pontifier2• 13 years ago

I anticipate your feelings being quite widespread. I only had $200 in them after cashing out, but I've still felt terrible when the price drops. It's rather odd. This is the first time I have ever participated in an actual exchange market with volatility and all. I built a trading bot, and was making a couple of dollars a day trading my 0.17 BTC. A few weeks ago I was feeling suicidal based on not buying some a couple of years ago when it was $10. My family has been having a rough time, and I kept thinking that I had missed my chance to pull us out of the hole we are in.

This is a crazy and interesting time to live in, and I'm glad I'm still here even if Bitcoin didn't make me rich.

eclipxe• 13 years ago

U.S.A. Suicide Hotline 1-800-273-TALK (8255). Remember, it's just money.

mcv2• 13 years ago

You can't change the past, man. I also regret not buying them years ago, but I can't change that. Look to the future.

Personally, my future looks good enough even if I never buy any bitcoin. If buying bitcoin makes you worry and possibly risk depression and suicide, you'd better stay out. Yes, other people are getting rich somewhere, but that doesn't have to mean anything to you.There's always someone getting rich somewhere. There's always someone winning the lottery. Do you terrible when someone bought a lottery ticket and won millions? That stuff just happens. Let it go.

If you've got a job paying more than $50k per year, you're still in the richest 1% of the world. Don't worry so much. You're doing very well.

DustinCalim3• 13 years ago

Be here now.

rwallace2• 13 years ago

I know what you mean. I never did buy into Bitcoin because when I became aware of it in 2012, I looked at the historical price chart and thought the bubble had come and gone in 2011 and I'd already missed my chance to get rich.

Ended up pointing out to myself, hey if I had the power to go back in time, I wouldn't spend it going back to 2011 to get rich, I'd spend it going back to 1920 to kill Hitler. If I don't feel bad about not being able to do that, there's no point feeling bad about not getting rich on Bitcoin either.

As you say, it's a crazy and interesting time to live in.

marvin• 13 years ago

Don't kick yourself for not trying to speculate yourself out of economic difficulties. Things can just as well go the wrong direction if you try to do that.

erikpukinskis• 13 years ago

You just have to pick a target. I feel confident that Bitcoin is worth $10k, so if I bought at any price below that, I should feel good about where I am.

If you don't decide what you think something is worth, your subjective experience of investing in it will be a rollercoaster. If you do choose a price target, then you know where you stand at all times, and whether you should buy or sell.

kybernetikos2• 13 years ago

If you do choose a price target, then you know where you stand at all times, and whether you should buy or sell.

As well as choosing a price target, you should choose a set of situations that will falsify your price target so you aren't committed to losing all your money on one bet if you're wrong.

Fuxy4• 13 years ago

Give it time. Don't sell just now. Had a similar situation and just choose to wait.

Made a nice profit a year later.

chii• 13 years ago

Or, the price could plummet even more. Money invested needs to be disposable, otherwise, it's just too risky an investment right now.

sheetjs• 13 years ago

learning from my mistakes.

what was your rationale for investing in the first place? Was it following some person on the internet? Or was it because you believed in the bitcoin craze? Or was it because you believed that Chinese demand would drive up BTC? Or some other reason?

The way to learn from your mistakes is to sit back and understand why you bought BTC in the first place, and then try to understand what went wrong (treat this like a scientific experiment)

tlrobinson2• 13 years ago

Sorry, but if you didn't realize this was a strong possibility, you didn't do enough research. I'm cautiously optimistic about Bitcoin, but this has happened before and will happen again.

alexeisadeski3• 13 years ago

So say we all!

Nursie2• 13 years ago

> Sorry, but if you didn't realize this was a strong possibility, you didn't do enough research. I'm cautiously optimistic about Bitcoin, but this has happened before and will happen again.

I agree entirely BUT I can see how someone might be misled by all the bitcoin cheerleading.

meritt• 13 years ago

BTC will hit ~$400 before it stabilizes and resumes upward progression.

mcv2• 13 years ago

That sounds reasonable. I've got some money sitting here waiting for something to invest in. I didn't want to get into bitcoin at $1000, but $400 looks pretty reasonable considering past performance.

Still, if China is really getting out of bitcoin, how much does that past performance still eman?

qq662• 13 years ago

What's the reasoning behind that?

mtrimpe• 13 years ago

It's so cool to see you going the emotional roller coaster of your first big investment mistake.

And it's even for an amount you can afford to lose in the long run! You're a lucky man. That's much better than betting the house after losing your job in your mid-life crisis.

Just take the opportunity and pay very close attention to your emotions and what triggers them. Awareness of that is what will make you a better investor in the long run and, whether we invest time or money, we're all investors in the end.

SwellJoe5• 13 years ago

For what it's worth, I'm looking at this as a buying opportunity. I put everything I had available into BTC during rise to $1000+ (I first invested early, so I'm just about breaking even right now, though if it drops any further, I'll be showing a loss). But, I've got a paycheck coming in soon, and it looks like prices are gonna be nice enough for me to buy a couple more BTC with that money.

I'm longterm bullish on BTC, so a low price is an opportunity to buy, not a time to beat myself up for timing the market wrong. Of course, I could be wrong in my bullishness. It could all fall apart, or one of the other cryptocoins could prove to be "the one" (though I tend to think most are just also-rans and can and should be ignored). But, I'm absolutely confident a cryptocurrency, of some sort, is absolutely the future. It's one of those unstoppable forces, I think, and as long as the number of people preferring it to USD (or other fiat currencies) keeps rising, the real value (not the exchange value) of BTC is going to keep going up. I want as much of that future as I can afford.

JumpCrisscross2• 13 years ago

I put everything I had available into BTC

Please don't do this. No matter how confident you are in your investment thesis it doesn't ever justify 100% allocation into a single asset - that implies infinite confidence.

ejhong• 13 years ago

The sad thing is that the right time to invest is when things are looking bleak (and I think we may still have a ways to go down) but most people are drawn in when the price is high. So for those of you on the sidelines, I think we may have some good opportunities to get in during the coming months.

whywhywhy5• 13 years ago

If you believe in bitcoins, hold onto it.

It's only a loss if you sell it now and never buy bitcoins again, or if this is the highest price bitcoins will ever reach.

andyhmltn• 13 years ago

You haven't lost anything until you sell. I'm confident it'll start going back up at some point (it's starting to get a lot of vendor attention)

Just hang in there :)

wyager• 13 years ago

Wait a year.

skriticos2• 13 years ago

You need patience with Bitcoin. It does swings like this all the time. The last spike topped out at around 250 in spring this year and then dropped to 100 for some time. Then as you know it recently spiked at 1200 and now is down again. Hold it two years, and if you don't have a 10x increase, you can decide it was stupid. Deciding now is indeed stupid, so I would advise against it. Take a deep breath, see it as a risk investment and look what's coming ahead. And never judge based on a few weeks of data.

RutZap• 13 years ago

Don't worry; it will rise again. It's already at $550. If you keep on to your BTCs, in a few months it will get back to $1100+. At which point I would suggest you sell some of it and get some money back; $11k seems like a lot of money; the first rule of trading would be to invest as much as you can afford to lose :D

n0mad01• 13 years ago

maybe this will cheer you up a bit: i bought after the last bubble burst, but still to high at a rate of 150$. BTC continued to fall and dumpled around 100$ for months, but i decided to hold on instead of selling with a loss.

The decision has paid off, i sold at ~1000$.

BrandonY• 13 years ago

I'm not a financial expert, but I might suggest that paying off you credit card debt is probably the strongest investment you can make right now.

nasmorn• 13 years ago

Thats a sure return of 15% or something. I dont think any investment can get better ex ante.

hackerboos2• 13 years ago

Forgive me but why would you save money in a mutual fund and not pay off a car loan. Surely the interest on the loan is much higher than the interest you were getting from the fund.

Prior to buying the coins that is.

Kliment• 13 years ago

Also, the gain of paying off the loan is tax-free, whereas any gains from asset value fluctuation are subject to tax.

Jtsummers2• 13 years ago

Can't speak to GP, but my car loan interest rate is below the annual return on my mutual funds for the past several years. Depending on the deal you can get on your interest rates it can make sense (1.49% APR, after the 3 years I'll have paid less than 1 extra car payment as interest, or 1/36th the value of the loan as interest; any fund that rode out this recent stock market increase well will easily beat that).

cpwright• 13 years ago

At least recently, new cars loan often have interest in the range of <3%. I have one car loan at 0.9%; and my last two before that were at 1.9% and 3.9%.

But I think most importantly, a mutual fund is much more liquid than a car (or a house).

If I had the choice between pre-paying $11,000 towards a car loan and sticking money in the bank; I would probably choose to stick it in the bank or a mutual fund. I always have the option of paying down a car loan if I want, but once I pay it down, I no longer have the cash. Stuff happens, and the utility of having the cash is more than potential savings from not paying a small amount interest for a few years.

seppo0010• 13 years ago

Think that Bitcoin is a zero-sum game. For anyone to gain a dollar, somebody has to lose it. So it's a risky business.

aayushranaut• 13 years ago

Mint sharing what are you building?

qq662• 13 years ago

One problem I notice in looking at your linked comment is that your $1,500 prediction was based on no rationale whatsoever. That makes it more of a wish than a prediction.

flexie• 13 years ago

Sorry to hear that you lost money.

Bitcoins are up against some really big competitors called nation states and supranational unions. It's almost like trying to run a private army. Once you get big enough to impose a threat you will be outlawed, one way or the other. There is no power, no legislature behind bitcoins, so bitcoin holders will lose the regulatory game.

Nation states use their traditional currencies in monetary policies and they depend on their currencies for tax revenues. Not being able to control the amount of bitcoins and not being able to tax them effectively because they flow outside of institutions that can be controlled and because transactions are encrypted means that the bitcoin is a threat to nation states.

Danish tax authorities are currently looking into how bitcoins should be taxed and I think they will follow the Norwegian example and tax them as assets. Most important governments will eventually make life hard on bitcoins either by outlawing them flat out, by out-taxing them or in other ways.

wouaouw• 13 years ago

http://bitcoincharts.com/charts/mtgoxUSD#rg1460ztgSzbgBza1gS...

How did you expect the price to keep climbing ? Now you need to wait a few weeks/month until we go back to the normal trend.

ronaldx• 13 years ago

The fact that you're interested in minute-to-minute changes probably illustrates that this quantity of Bitcoin is too risky an asset for you to hold. Good luck.

ra• 13 years ago

Stop watching the price, make sure your private key is backed up somewhere safe, and forget about BTC for a few months / years.

The worst thing you can do is sell now. BTC is extremely volatile, it might go down to $100, but one day it'll be $1,000 again.

mdemare• 13 years ago

You don't know that.

option_greek• 13 years ago

The main problem with Bitcoin is the lack of hedging opportunities. Without real derivatives (priced in dollars), it is difficult to protect one self from loss in the event of adverse movement in price. This is also the difference between a established currency and an amateur one.

dgregd• 13 years ago

Newton's niece Catherine Conduitt reported that he "lost twenty thousand pounds. Of this, however, he never much liked to hear…" This was a fortune at the time (equivalent to about £2.4 million in present day terms

So you're in good company.

http://en.wikipedia.org/wiki/South_Sea_Company#Quotations_pr...

tokenadult• 13 years ago

The market rose from $500 to $540, so that means I've earned back $474! And since my last edit was an hour ago, that must mean I'm earning $474/hr writing HN comments in my pajamas!

Your sense of humor is worth its weight in gold. I've just bookmarked your comment as a reminder of "survivorship bias," how people can look back at any arbitrarily chosen period of their lives as evidence of their successful reasoning and planning.

Yeah, being a bit older than most participants here and remembering earlier gold booms and busts, and earlier technology stock booms and busts, and so on, means that I'm a bit less excited at each new Best New Hack Ever™ that comes along. Hot-blooded younger people will continue to ignore me, but that too has happened often enough in the past that I don't let it get to me. Good luck in building your product. I'll be glad to buy new products built by young people as they gain wisdom.

To all our friends here: "Markets can remain irrational a lot longer than you and I can remain solvent"[1] is still good investment advice.

[1] https://en.wikiquote.org/wiki/John_Maynard_Keynes#Attributed

JumpCrisscross2• 13 years ago

remembering earlier gold booms and busts, and earlier technology stock booms and busts

A favourite pass-time of mine is reading old business and financial newspapers. I remember vividly the bubbling joy and aching pain I felt as the EU and European Monetary Union came together, as in the shining future The Economist saw for the citizens of 1920.

That juxtaposition of exuberant optimism and the knowledge of cold reality has been a good template for walking through possible outcomes as if they are known eventualities. The process tends to leave one considerably soberer than at the start.

kappaknight2• 13 years ago

You're probably not a good candidate for day trading.

I'm in a similar boat as you though so... dem feels.

dobbsbob• 13 years ago

You're not supposed to 'invest' in bitcoin. I just use it to buy/sell goods and services online and cash them out immediately. Btw your coins are worth 2-3x the USD price in Argentina so go there on vacation.

dirtyaura• 13 years ago

Don't sweat about your mistake. Money comes, money goes.

Lessons learned: timing investments is really hard. Trying to buy from the bottom can be equally stupid.

Personal story: I got a bit of play money when we were acquired. Naive me thought that I understand how the world works. The first months of finance crisis had just happened. In US and selected European countries real estate prices had dropped, but in Finland market hadn't crashed. I reasoned that they eventually will, and it's a bad time to buy an apartment, but a good time to invest to finance stocks because they had already crashed. Among other investments I bought some Citibank stocks -"they are the largest, thus probably the safest". Boy I was naive.

Real estate prices in Finland never crashed, Citibank's free fall had just only started.

vinceguidry• 13 years ago

Or you could buy another $10K worth of bitcoins now, then when you break even on the first set, you'll be up $10K.

But can you stomach the possibility of throwing good money after bad? After all, other states could start following China's example.

dil8• 13 years ago

Bitcoin is a threat to the Chinese government's control over the populace so it's not surprising to see this...

wtpiu• 13 years ago

Am I the only one whose link has "Authorized=false.html?"...?

Can't get to the article...

Mchl• 13 years ago

An article behind paywall? I'm sorry but I'm disappointed

thkim• 13 years ago

This move seems obvious. Bitcoin's popularity has far more negative consequences for Chinese government (or any other government) than benefit. Bitcoin might topple the dollar hegemony if popularized, which might be what China wants, but central banks lose their power to control the money flow in the system. Why would any government want that? Any money goes into Bitcoin is essentially money gone offline right now so it reduces tax revenue and adds noise to national statistics. Bitcoin or any other crypto-coin has real chance of adoption only when it's sponsored by government.

vitobcn• 13 years ago

I am not so sure that no governments would like to sponsor cryptocurrencies. Obviously, not states with dominant currencies for the reasons you mentioned, but I could see other countries jumping into the opportunity of altering the status quo.

SwellJoe5• 13 years ago

This is an interesting take on it. I assumed all governments would want to destroy Bitcoin (once they see its impact), but that really only applies to nations that have a dominant currency to defend, as well as a need for inflationary debt-based currency to support massive deficit spending for war and/or empire building (so, the US, China...maybe nobody else).

SwellJoe5• 13 years ago

"Bitcoin or any other crypto-coin has real chance of adoption only when it's sponsored by government."

While I agree with your assertion that governments have no reason to support Bitcoin, I don't believe it follows that government sponsorship is necessary for the success of Bitcoin. I suspect most people betting on Bitcoin are aware that at some point, governments are going to act forcefully to kill Bitcoin, and the fallout will be utterly unpredictable.

But, I don't think it's something that can be put back in the bottle. We're crossing into uncharted waters here. Nothing like Bitcoin has ever happened before...so, we don't know how it's going to play out. I'm bullish even with the expectation that major world governments will collude with current financial elites to kill Bitcoin, because I suspect there is no way they can actually kill it.

jasonwocky2• 13 years ago

governments are going to act forcefully to kill Bitcoin, and the fallout will be utterly unpredictable.

I don't think so. I think it's quite predictable that, if that happens, Bitcoin will lose. In the sense that it will ultimately become a cryptocurrency also-ran. Something else will probably rise to take its place after it's been bloodied, something designed to be resistant to whatever response the world's governments bring to bear.

seanmcdirmid5• 13 years ago

Bitcoin might topple the dollar hegemony if popularized, which might be what China wants

Why would China want this? The current system works in their favor, even they admit RMB isn't ready to be a world currency yet by disallowing full convertibility.

but central banks lose their power to control the money flow in the system

Exactly. Also, this is a big loophole over the RMB's non-convertibility limitation/feature.

rahimnathwani3• 13 years ago

Who is taking the other side of the trade with these Bitcoin/RMB exchanges? I mean, I often come across people who have RMB but want USD. Far less often do I come across people who have USD but want RMB.

DustinCalim3• 13 years ago

This. I can see many governments banning Bitcoin before it rises to it's full potential and then the governments accepting it.

xfour• 13 years ago

Well now, let's hope after all this we can find a stable price, so people can actually use this stuff as a mechanism for transferring money, though I suppose with this China crackdown it's losing some of that appeal even. I guess we're stuck with Western Union forever, nice pivot btw. Telegrams were pretty cool though.

seanmcdirmid5• 13 years ago

You do know that RMB is not fully convertible right? This is just the government cracking down on a forex loophole; you can still buy bitcoin in China with your $50K/year USD exchange limit (available to all Chinese citizens, foreigners with tax receipts). Of course, you have to take a hit on forex now.

shadowmint• 13 years ago

ft.com, source of all amazing paywalls.

Here's the same content from a non-paywall provider: http://www.scmp.com/business/banking-finance/article/1384688...

retube2• 13 years ago

Yeah I don't know how they get away with breaking Google's sacrosanct rule of not sticking content behind a paywall that they make visible to Google.

gabemart2• 13 years ago

Anyone visiting from Google sees the full article with no paywall.

You can test this yourself:

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&c...

lucb1e• 13 years ago

Cannot read article. Paywall.

omegant2• 13 years ago

Now with this temporary crash what will happen to the farms that heavily invested in ASICS, and that with difficulty will be mining at a loss in weeks? (honest question)

gokhan2• 13 years ago

What makes you say temporary?

omegant2• 13 years ago

I guess that bitcoin´s price will continue to rise steadily and reach 1000$ again in some time. Maybe years, maybe months, I don´t know.

ars• 13 years ago

As long as they are making back their electrical costs they have no choice but to continue. Their expensive machine is a sunk cost and they can't return it.

MattyRad• 13 years ago

By "ban", I assume they mean "made illegal." The former of course being a euphemism for the latter. A couple questions come to my mind as such.... How will China enforce such a ban? Can China physically or technologically bar access to Bitcoin deposits?

Regardless of the Chinese government's ability to effectively enforce such a ban, the price of Bitcoin has begun another wild (and fascinating) price fluctuation period.

gokhan2• 13 years ago

For serious entertainment, Bitcoin markets now are great places to try some day trading rodeo. Instant buy/sell with lots of drama and reasonable depth. Stick with your stop-loss strategy and it's a real adrenalin rush. I trade a small amount up and down and even made 40% profit for the last two weeks just by trying to catch bottoms and selling a little higher. Cheap entertainment IMO.

locusm• 13 years ago

Same here, done OK just watching the BTCWisdom charts with a few basic indicators. Its good fun...

DustinCalim3• 13 years ago

Yes, Bitcoin dropped 40% today- but keep in mind that on any average day it swings 20%.

If you invest because you believe in the underlying technology, you'll have to ride out the volatility waves until it matures(or dies).

But, it's going to take more than people holding onto their bitcoins and waiting for the value to go up- people need to spend them on things for it to work.

haakon2• 13 years ago

20% swings over the course of a day is not at all average, and is in fact seen as quite dramatical.

ck2• 13 years ago

If your digital currency relies on governments accepting a competing currency their own currency - you are going to have a bad time.

bitmania• 13 years ago

Check the latest update at http://www.cryptocurrencylive.com/

aabalkan• 13 years ago

Why are you even posting a news site requires paid subscription? I cannot read this article!

gabemart2• 13 years ago

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&c...

userulluipeste• 13 years ago

The Chinese are just against the trend of leaking Yuan's value to Bitcoin (hence the RMB->BTC restriction), not against the Bitcoin itself. People are still free to bring value in China through Bitcoin! ;)

China bans new Bitcoin deposits

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