Discussion in 'The Bar' started by websaway, Jun 6, 2021.
if I bought bitcoin in april for 45k pounds and it is now worth 25k pounds where has my 20k gone.
To the person you bought it from for £45k, you only lost the £20k when you chose to sell at a loss.
Thanks for your reply and I'm sure that old chestnut would have made me feel much better but the question was " where has my 20k gone" ?
Like all currency, the "market" sets its value, you bought when the market said it was worth £45k and you sold when the market said it was worth £25k so the person that has your £20k is the person you bought from.
So actually did not sell it , it was spent, that is after all what it's for.
The question is where did the 20k go ?
You're creating a problem that doesn't exist, sell or spent is the same thing, you disposed of your Bitcoin when the market rate was lower than at the time you bought it. You could flip the question and say I bought Bitcoin when it was £25k and now it's worth £45k where did that £20k come from.
That's fine but where did my 20k go. I don't want to expand the issue it's been exhausted on this forum. I am simply asking for opinions on where it went . 40% , did it just disappear ?
You exchanged £45k for 1 Bitcoin, at that moment ALL of your £45k went or "disappeared" and instead you had one Bitcoin.
Your £20k goes no where. I Bitcoin is still one Bitcoin.
You could have bought it for £10k and its now worth £25k, you cant ask where did £15k came from either. Its still 1 Bitcoin.
Bitcoin is a store of value and that goes up and down depending on what is happening with any other store of value you peg it with.
You bought a house for £100k and its now £150k, you don't ask where did £50k came from, its market value of the asset at the point of transaction(either buy or sell) in relation to what you peg it with, in this case GBP.
Like any other store of value, it fluctuate with market condition and scarcity of it. So 1 Bitcoin is still one bitcoin, regardless of what its worth in GBP or USD or NGN.
It’s just like saying, If I buy a domain name for £45k and then I sell for £25k, where has that £20k gone?
Is it though, It's a domain name single transaction between two people I fully know who the 20k went to, or I can find out. Plus you can't spend a domain name. So the question is simply what happened to my 20k, so far the answers have at best been vague or philisophical.
Well that's an interesting theory, it's a store of value because it's always going to be one bitcoin and presumably that equates to the fact that it will always be exchangeable for 1 bitcoin. OK, however the question is simply what happened to my 20k, where did the 20,000 sterling go, it existed when I bought the crypto.
The value is relative. This is a silly question.
Your £20k did not go anywhere, it does not exist physically, it only exist in Bitcoin relation to GBP at the time of transaction.
Also, another person exchange £10 for 1 Bitcoin in 2014 but today 1Bitcoin is now £20k, where did the rest came from? No where, value of asset are relative to what you peg it with.
1Bitcoin is still 1Bitcoin, but time and demand set the exchange rate in whatever currency you want.
It still exists.... someone else has it though.
If you bought 1 bitcoin at 10k and sold at 30k, the difference is 20k. That isnt realised though until someone exchanges 30k cash for that bitcoin. Then you have the extra 20k plus the 10k back you initially paid. Its the same as buying or selling anything...oil, futures, sand, boxes of fish, whatever.
It exists in the market and will be permanently passed round between buyers and sellers or, in the case of a crash, will be finally lost in the hands of the final holder.
If you buy a bitcoin for £1 and sell it for £30k - person B now owns the bitcoin and has invested £29,999 into the market (although £30k of his own money). He then sells it for £50k - person C now owns the bitcoin and has invested £49,999 into the market (person B got his £30k back so there is now £49,999 inserted into the market on that one bitcoin). If person D sells it for a loss at £30k there is now £29,999 in the market because the other £20,000 loss has been borne by person C). If the market collapses person D loses £30k which is the amount in the market plus the original £1. Buying/selling in a market is simply shuffling loss until the music stops. If the music never stops the potential losses are constantly in the market and provide the opportunity for trade.
Welcome to the sunk-cost-fallacy - and what have you got when it goes to zero? The answer is nothing.
If you own a real physical asset like fine Art, Gold, Silver, property, land even a Rolex you have a something, this is why Bitcoin is not "digital Gold" or a true store of value its just a token it has no use.
At the moment you can see from the stock markets this week investor money is flowing back out of crypto and back into true stores of value like your Gold and Silver etc. Bitcoin will be 20k then 10k within 12 months which will be a great buying opportunity, I'll definitely pick some up then.
Is it a stupid question though, how can it fall by 40% in such a short period of time ?
Its a volatile market. That in itself attracts a certain type of speculative trader. Oil, gold, silver, stocks... all can be massively volatile based on the politics of foreign countries, natural disasters, global pandemics, anything. Its not really different. Its just a different set of conditions that can trigger.
When a lot of people sell (or a few big fish sell a lot) the price moves down. The prices are controlled by a handful of people that have enough holding to put it wherever they want. Whereas large markets such as the ones Dee mentioned cannot be heavily affected by one or two single players the crypotocurrency market is easily moved. What we see now is often collusion between them to appear outward as though the market is rocketing or plummeting and they can catch the retail traders leaping in or out to try and catch the trend. There is a lot of money that can be made on these moves - but if you *react* to the price you will lose ultimately as it's artificial.
Separate names with a comma.