Bitcoin miner - page 145

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prostotrader:

The way I see it, an investment is an investment to make a profit with as little risk as possible.

In lotteries, the risk is too high to consider it an investment.

Why? There are high-risk investments. For example, in start-ups.

Just like in the lottery (well, or nearly so), 1 in 100 shoots out.

 
Maxim Romanov:

You, with your experience, should be the one to explain.) I will write for others what is different, in simple terms. As written above, it differs by expected payoff, but it is not clear, mathematicians invented some expectation. It is clear: we have bitcoins, let them be worth $ 6000 and have fallen from $20K. We estimate the probability of asset bankruptcy in the nearest investment horizon, let it be a year. The subjective estimate is that there are many people employed in the system and there is a high probability that the asset will not go bankrupt in the next year. I would give a 90% probability. But the upside potential is estimated to be at least 20k, but I was estimating up to 50k. By buying at 6k, we are betting that with 10% probability we will lose the entire amount in case of bankruptcy or increase by 50/6=8.3 times. We take a small amount (small relative to the rest of the portfolio) and invest it in a risky asset. If we carry out 100 such operations, we will lose 10 times (if the probability of bankruptcy is 10%) and earn 90 times. We will lose 10 times $1000 and 90 times earn $8300. 90*8300-10*1000 =$737,000 total profit for 100 such operations. But the portfolio can also contain less risky assets. If we take the AAA-rated asset, its probability of bankruptcy in the next year is virtually zero, but its growth potential is low, it means that we can invest a larger sum in it.

So it turns out that the estimated expectation of investment in a risky asset is positive and even if it goes bankrupt, the other 10 will put it in the black.

But with the lottery... the probability of winning is always less than the probability of losing. The default expectation of a lottery game is negative, which is the very essence of the lottery. Many people have the misconception, "if I buy 10,000 tickets I'm almost guaranteed to win". NO, the more tickets you buy, the less chance you have of winning. If the profit of the organization of 10%, then at the end of 10000 games for 100 rubles on average will remain in the minus 100 000r. The more tickets you buy, the closer you get to that deficit. If you buy the whole draw, you are guaranteed to be at minus 10%.

Basically, the whole difference is in the risk assessment. If we just buy cryptocurrencies for some unknown price, it's not an investment but a lottery and it doesn't matter what you play, a ticket sold at the post office or a stock traded on the exchange, you will be left with a loss of more than 50%). You may be lucky locally... But local luck and a focus on steady income distinguishes the player from the specialist. Even if our risk estimates are wrong, erroneous, even if we lose on the investment, but we have counted and tried to assess the risks, we can just take the mistakes into account next time. It is also possible to invest in a lottery ticket if you know the algorithm for generating tickets.

The degree of risk determines whether my investment is an investment or not?

Expectation will not be able to relate to the asset as a whole (lottery/crypto), it is a measure of strategy. If you buy/sell crypto haphazardly, there will be an inevitable drain, just like buying a lottery.

But to say that investing in something is an investment just because I managed to make money from it is wrong, in my opinion. Because there are also those who buy the lottery "on the system" and also believe they are making money.

OK, we know about the physics of the lottery, it's designed for its creators to win.
But what do we know about crypto? Why is there a belief that it has inefficiencies that make it guaranteed to make money?

Well, we ended up going from "you need to understand the mathematical difference between investing in an asset and a lottery" to "Investing in a lottery ticket is also possible". That's what I was asking about.

 
Andrey Khatimlianskii:

The degree of risk determines whether my investment is an investment or not?

The expectation of return will not apply to the asset as a whole (lottery/crypto), it is a measure of strategy. If you buy/sell crypto haphazardly, you will inevitably lose, just like buying a lottery.

But to say that investing in something is an investment just because I managed to make money from it is wrong, in my opinion. Because there are also those who buy the lottery "on the system" and also believe they are making money.

OK, we know about the physics of the lottery, it's designed for its creators to win.
But what do we know about crypto? Why is there a belief that it has inefficiencies that make it guaranteed to make money?

Well, we ended up going from "you need to understand the mathematical difference between investing in an asset and a lottery" to "You can invest in a lottery ticket too". That's what I was asking about.

There is a pattern in crypto that people buy and sell it to each other and some of them don't know what they are doing, they just play. Some friends of mine had friends who sold their flats and bought bitcoins at 18k during previous growth wave. Thanks to people like that, there's profit there). They pay for the income of traders and investors. In fact, it's clear that it's a pyramid scheme, but no more so than everyone else around.
I've taken bitcoins at 6k, just for the purpose of a long-term investment, but at an amount I'm prepared to lose. But at 35k, no longer willing to take, because the potential profit is not that great.
The general approach distinguishes investment from lottery and the type of asset. A lottery ticket is not an asset, it cannot be sold to anyone. The money has to come into the system from somewhere to be able to make money.
And to say it's an investment based on what I've earned is certainly not true.
 
Maxim Romanov:
There is a pattern in crypto that people buy and sell it to each other and some of them don't know what they are doing, they just play. Some friends of mine had friends who sold their flats and bought bitcoins at 18k during previous growth wave. Thanks to people like that, there's profit there). They pay for the income of traders and investors. In fact, it's clear that it's a pyramid scheme, but no more so than everyone else around.
I used to take bitcoins at 6k, just for the purpose of long-term investment, but for an amount I was willing to lose. But at 35k, I'm not ready to take any more, because the potential profit is not that great.
The general approach differentiates investment from lottery and the type of asset. A lottery ticket is not an asset, it cannot be sold to anyone. The money has to come into the system from somewhere to be able to earn money.
And to say that it is an investment based on what I have earned is of course wrong.

You can sell a lottery ticket. But depreciated crypto is unlikely.

Anyway, I understand, there is no difference. You can invest.)

 
Honestly - it's very funny to read that crypto is a scam and a pyramid and who knows what else from people who trade on forex
 
Andrei Trukhanovich:
Honestly - it's very funny to read that crypto is a scam and a pyramid and who knows what else from people who trade on forex

I don't think that's what I was talking about.

The application of the term "investment" to gambling was surprising. Forex, too.

 
prostotrader:

The way I see it, an investment is an investment to make a profit with as little risk as possible.

And in lotteries, the risk is too high to consider it an investment.

I categorically disagree. It absolutely does not matter how risky the asset is. It is the proper assessment of risk that matters. By correctly quantifying it, you can construct an investment in it with as low a risk as you like. For this purpose, there are generally recognised econometric techniques, e.g. constructing a portfolio lying on an efficient front or on a Sharpe Straight, which balances the risk between the risk-free rate and the risky asset.

The actual investment differs from "avos..." precisely in the ability to identify that risk. Therefore, "investing" in bonds of third-tier companies can be a much riskier exercise than investing in the same bitcoin.

As for lotteries, there is nothing to talk about. The winning probabilities have long been known. The beneficiaries of these "lotteries" are also appointed from amongst their own. You can read the details in the novel "1984". The whole technology is described there in detail.

 
Andrey Khatimlianskii:

I don't think that's what I was talking about.

The application of the term "investment" to gambling was surprising. Forex, too.

+1!

 
Andrey Khatimlianskii:

I don't think that's what I was talking about.

The application of the term "investment" to gambling was surprising. Forex, too.

What's the question, is the answer)))) Generally, bitcoin and lottery are different things, even just in terms of volume. Quantity turned into quality. He certainly will not be allowed to die (or his death will be strongly resisted) because of the volume of investments).

And about the lottery and how it differs from an asset, you know enough judging))) In any case, the lottery is an asset to its organisers. Even for the thimbler.))) It's just a job.

 
Vasiliy Sokolov:

Categorically disagree. It absolutely does not matter how risky the asset is. It is the correct assessment of risk that counts.

Your point is clear, when you invest $1, things are very different when your investment is $100,000 or more...

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