How would one up one's chances of being in on the next Bitcoin?
December 1, 2013 11:19 AM   Subscribe

If you put a couple of hundred dollars into Bitcoins before they took off, you'd have made a pretty penny by now. Most of us didn't because, for one thing, most of us had never heard of virtual currencies before Bitcoin hit the big time. There must be similar cheap, long-shot speculations floating around now that hardly anyone's heard of. I realize no one on MeFi is going to be able to tell me what the next Bitcoin is going to be, but where might one go looking for it? What websites, blogs etc. should I be reading to have a better shot at being in early on the Next Big Thing?
posted by zeri to Work & Money (13 answers total) 4 users marked this as a favorite
 
This is gambling.

Sure, some folks have made some money. Others have lost enormous sums, and there's pretty good arguments that the bottom is going to fall out of bitcoin at some point and lose lots more, because it doesn't really serve any great purpose.

Furthermore, for every bitcoin-style success, there are many, many, many more false starts and without some sort of specialized knowledge it's impossible to pick a winner out of the vast horde of losers.

Do you have money to invest? Invest it in an indexed fund.
posted by kavasa at 11:48 AM on December 1, 2013 [5 favorites]


I've met a few people who did very well on The Next Big Thing, and what they all have in common is they had ownership stakes in The Next Big Thing. Whether it was home construction during the boom, a mom-and-pop dialup Internet service provider, DVD, e-commerce, video on-demand... all of them spent thousands of hours on the road, networking, managing, doing technical grunt work, and getting their hands dirty.

If you want to be a Next Big Person, you have to help decide what The Next Big Thing is going to be and keep busy with it.
posted by infinitewindow at 12:01 PM on December 1, 2013 [2 favorites]


your use of the term "the next bitcoin" suggests that either the current bitcoin is going to die (which should teach its aficionados a lesson) or there will be a multiplicity of digital currencies, with its own attendant problems. you wanna get in on the ground floor of something? artificial, test-tube meat is still on the ground floor, but it may be a one-story building.
posted by bruce at 12:03 PM on December 1, 2013 [1 favorite]


I am going to join the people who are dissuading you from pursuing this.

I was going to add that if you want to treat it as entertainment and/or a learning opportunity with a token amount of money involved to keep it interesting, then go ahead. On further reflection though, I think even that is folly, because it will likely suck up way more of your time and attention than it should given the money at stake, while give you a distorted view of investing.

You can still treat it as a learning opportunity, but only if you get off to a more constructive start. I'll suggest exploring cognitive biases & logical fallacies and the way they influence and skew decision making. There is decent information available on the web. If you prefer a book, I started "Thinking Fast And Slow" and it seems pretty good so far. You'll also want to learn about forming an investment thesis, and using a portfolio approach to mitigate risk.

I am sure there are blogs that cover some of the topics I've mentioned, I can't recommend any, except, maybe, Asymco. The author "shows his work," as he analyzes business and markets. I am sure there are also blogs devoted to talking about "the next big thing." Some of them may even be good, but my guess is that either they are going to be wrong more often than they are right, or there is going to be a big gap between what they are talking about, and anything as easily actionable by a small relatively unsophisticated investor. At the very least, you are going to have to connect a bunch of dots on your own before you get to the point of buying $100 worth of X.
posted by Good Brain at 12:17 PM on December 1, 2013


This is "the next bitcoin": https://litecoin.org/

And yes, it's gambling, and a great deal of people that think they "made money" on it haven't added up the money spent on equipment and electricity and calculated what that amount would have grown to in a more classic investment. Hint: it isn't the same, and it isn't less.
posted by bizwank at 12:21 PM on December 1, 2013


The first mention of BitCoin on Metafilter was May 18, 2011, when they were trading for about $8. The first mention after you joined was February 4, when they were trading for about $20. It's not about reading the right website, it's about paying attention to the right things. Or being lucky, however you want to think about it.
posted by one_bean at 12:24 PM on December 1, 2013 [2 favorites]


Response by poster: To clarify, I'm not thinking about making a substantial investment, but about putting a small amount of money into some long-shots just to see what happens. I know that the chances are I'll lose that money, and I'm OK with that.

It's not about reading the right website, it's about paying attention to the right things.

I know -- what I'm asking is what specific things it might be a good idea to pay attention to.
posted by zeri at 3:11 PM on December 1, 2013


I know -- what I'm asking is what specific things it might be a good idea to pay attention to.

I think you're looking for someone to say "plastics", but it's not that simple. The vast majority of people who got in on The Next Big Thing either did it a) by accident b) were associated in some way with it's creation or c) because they were successful in making it the next big thing.

I know someone who was a very early adopter of bitcoin. He spent a year being absolutely obnoxious about how awesome it was and how we should all be using it. Then when it seemed like nobody else was going to jump on the bandwagon, he sold his bitcoins (for a tidy, but not even remotely substantial profit) and moved on to something else.
posted by RonButNotStupid at 3:38 PM on December 1, 2013 [1 favorite]


I know -- what I'm asking is what specific things it might be a good idea to pay attention to

I suggested some topics for research above, but I'll go even further and spell one out for you:
H I N D S I G H T - B I A S / F A L L A C Y
When I was in college, I thought: This online thing is going to be big, I should invest in it, somehow, but how could I pick the right stock? I had the brilliant idea that I could invest a bit in every online service, because, I assumed, the overall gains would offset the losses. Now, understand, this was about 1989-90. There wasn't really any commercial internet, and my college didn't even have an Internet connection yet. My own experience with networked computing was limited to slow, unreliable email, USENET and watching someone FTP open source software from Stanford during a summer job in a lab.

About a decade later, I made one of my last investments in an individual stock: I bought a bit of Apple at or near the bottom of their stock price. My reasoning was that Apple seemed to be getting its shit together, that consumer-oriented computing was going to be big, that Apple was one of the few companies that had the right mindset to do really well with consumers, and finally, that considering all of the above, Apple's price was cheap.

So, in hindsight, I look pretty brilliant. Apple has done well for me, well enough to more than make up for the stocks that didn't go anywhere, and the ones that tanked completely. Of course, I know that I almost didn't buy the stock at all, and probably wouldn't have if my wife hadn't encouraged me to, and my wife wouldn't have encouraged me to if I hadn't thought to share my thinking with her. And even then, we could have been wrong, or we might have sold too soon. We may still end up selling our few remaining shares too late.

As for that online thing? It worked out reasonably well for me, but not because I made smart investments in stocks in the late 80's. I never went through with it, which is just as well, because even though my insight was valid, and my strategy was reasonable, none of the available stocks that I'd identified did very well. The only stock from roughly that time frame that would have been (in hindsight) a sure thing, was Cisco, and I'm pretty sure they didn't IPO until after I got distracted from my investment schemes by needing to graduate. My interested in online stuff ended up paying off because it got me my second job after graduating, but, even in that regard, hindsight suggests I could have made better choices.

I'll also point out that in both cases, I had something you don't seem to have. I had an investment thesis, a hypothesis about how the world worked that was informing my investment ideas. At this point, your investment thesis seems to be that there are things that you don't know about yet, which you don't have any idea how to find out about, but which, if you can find out about and invest in, will end up making you more money than it costs you in money (and don't forget your time). That isn't much to go on. I think you'd do about as well burning money. Actually, I bet you'd do better burning money, because I can imagine that there is some way to get people to pay to watch you burn money.

So, if you are really interested in this sort of thing, I really, really think that the first thing you need to do is embrace what people here are trying to tell you, that your initial assumptions are wrong, very very wrong, but that's Ok, you've got to start somewhere.
posted by Good Brain at 5:34 PM on December 1, 2013 [5 favorites]


what I'm asking is what specific things it might be a good idea to pay attention to.

I would suggest you take out a sheet of paper and create a list of all areas where you have knowledge/skill/talent/experience/education that would likely put you at the 90th percentile of the general USA population. Then, from this ragged and varied list, go back and circle the top 15-20 subjects that have the largest capitalization potential ($$$).

In your free time, stay abreast of new information that relates to these subjects. If you learn of something that might be promising, then that is a possible "long shot" for you to consider. I could give you some ideas from my own expertise, but since our skill sets most likely do not overlap, you would just be gambling on my words.
posted by 99percentfake at 8:56 PM on December 1, 2013 [2 favorites]


If you are looking specifically for pyramid schemes, then there are plenty of those floating around. The best way to make bucks with those is to be on the starting end. With the power of the internet and the huge number of gullible people that can be found there you shouldn't have problems starting one and cashing in quick. It does tend to be illegal for obvious reasons.
posted by JJ86 at 7:31 AM on December 2, 2013


I think there was a Doris Day movie back in the 60's where she was a housewife who somehow came to the attention of the marketing group of a food manufacturer. She was saying things like "all the moms at the playground are talking about these great new recipes for tuna fish, so I think it would be a good idea to invest in tuna fish right now". And it worked - the company made tons of money.

The point was that she had special knowledge of things going on in her daily life and she noticed those things and then associated it with investments. So that's one piece of advice for you: pay attention in your daily life and see if anything sticks out as a potentially popular thing.

And just for an extra bonus for you: I've been thinking the same things as you whenever I read about graphene sheets. I'm convinced that it's going to be a huge thing and I want to get in on the ground floor. But when I asked about it over on reddit/investing, they gave me all the same answers that you are getting here. And I looked around and found out the same things that Good Brain outlined above: it's too early to know exactly where to put money for that potential future. And I am not "in the know" for that industry to be able to tell when will be the right time and where will be the right place. So I'll probably miss it. But hey, if you decide to invest in graphene and it takes off, please feel free to shoot me a percentage of your earnings.
posted by CathyG at 10:19 AM on December 2, 2013


[I'm thinking about] putting a small amount of money into some long-shots just to see what happens. I know that the chances are I'll lose that money, and I'm OK with that.

In generally I agree with the advice given by others, i.e. that it is best to invest conservatively, that you can't outguess the market, that it's counter-productive to chase bubbles, etc.

But I haven't always followed that advice myself, and I've done pretty well a few times. I also enjoy watching investments go up and down. It's exciting and fun (provided of course my ability to pay rent doesn't depend on it).

So how do you increase your chances of doing well with a speculative investment? By investing in what you know. Find a small or medium-sized company that makes products or provides services that you love and that your friends and/or family love. Ideally they will be at the leading edge of what you perceive is a trend. Ideally they will be distinctly better than specific competition. Ideally they will have corporate values that match your own values. Ideally they will be trendsetters operationally as well as in the products and services they offer. Ideally you will be very lucky.

Here's one example: I've been a Mac user since 1985. I saw the ups and downs, the company almost going bankrupt, etc. I saw OS X come out and start to get legs. I started seeing articles about the high percentage of Power Books among audience members at leading edge conferences. That seemed like a good sign. Plus Macs were so clearly better than Windows machines, my friends and family all used Macs, and the market opportunity was huge. Macs had like 2% market share, so they could easily double, quadruple, or increase their sales by an order of magnitude even. Plus, the stock was cheap.

So I bought a few shares for something like $7 each and it turned out well.

So is that a model to follow? Maybe. But maybe not. Because I wasn't right in my reasoning at all. The Mac didn't take over the world, sales of Macs haven't increased by an order of magnitude, and Macs don't contribute much at all to the company's stock price. It's all iPhone and iPad plus odds and ends. I was right that Apple was a good tech company, but I was mostly really lucky.

The thing is, even if Apple had gone bankrupt I wouldn't have minded too much because (a) I didn't invest more than I could afford to lose, and (b) I believed in the company so it would have been an okay company to lose money for.

I'm not sure if that's what you were looking for, op, but that's how I invest speculatively. Bottom line: just make sure you're having fun with it, and don't invest more than you can lose.
posted by alms at 11:46 AM on December 3, 2013


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