New answers tagged

0

Cryptocurrencies are like gold: Not worth anything on its own (but see below), increasing the global quantity costs time and money. That's the reason why cryptocurrency "mining" is considered analogous to gold mining. From this perspective, buying cryptocurrency should be considered the same as buying gold, which most people do not consider an ...


-1

In some countries value held in cryptocurrencies is legally considered to be an investment. For example, where I live there is no capital gains tax on investments, so if I earn large sums of money speculating with cryptocurrencies then I earn this tax free. But if I gamble on some website and win the same amount of money, then I have to pay a tax over my ...


1

Investments generate a return on the capital invested that’s not dependent on appreciation in their capital value. Stocks, bonds and real estate all do that. Foreign currency doesn’t do it directly, but it does when held in an interest-paying account. Bitcoin does not generate a return, and that’s why it’s a speculation rather than an investment If you ...


8

People don't see cryptocurrencies as proper investments because they are new. This is not entirely unreasonable. Proper investments like stocks, bonds, commodities, gold and real-estate have 100+ year track records, and their fundamentals are well understood. In contrast cryptocurrencies are less than 15 years old. You can't look at the long term track ...


14

Do you consider tulip onions to be a proper investment? This is not a rhetorical question. Rather it is a question, which answer has to be informed by history: The first historical record of an economic investment bubble popping leading to a crisis is the "tulip crisis" of the Netherlands. In its time, investors (called florists) bought tulip ...


3

Fiat currencies can be volatile although they are backed up by a government's central bank which has gold and other kinds of reserves. Cryptocurrencies are not backed up by any banks, so when they crash they can crash to 20% or less, and no government will try to save their value. Shares and companies all represent physical goods and estates in the real ...


29

Imagine a doomsday scenario and consider: what is stopping the value of the investment from going to zero? You mentioned four investments: Real estate: if everyone suddenly decided your house is worthless and won't buy it even for $0, you can still live in it, rent it out, or sell the land. Stocks: let's say you own Microsoft stock. If everyone suddenly ...


9

If you own a house, then that house is creating economic value by providing people a place to live, and you will be receiving money in exchange for providing that value. Stocks and bonds are more complicated, but ultimately, their increase in value (generally) comes from companies creating economic value, and having an external revenue stream because of ...


58

Stocks, bonds, and real estate all have the advantage that they are investments in underlying assets that are expected to become more valuable over time. Economies grow over time which means that, broadly, companies become more valuable over time and, broadly, land becomes more valuable over time. Sure, there is volatility. And there will be winners and ...


Top 50 recent answers are included