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Comment by viraptor | Hacker News Reader

> The 42-year-old says he first invested $40,000 in Bitcoin in 2017, and quickly made his money back as the value of the coins rose on the open market. He cashed out and got his initial money back, but then watched excitedly over the years as the 10 coins grew to be worth nearly 500,000 euros.

Fortunately this sounds like he didn't lose anything, just never realised extra gains. I know it's slightly nitpicking, but losing your actual $500k and losing $500k unrealised gains from a gamble is a massive difference. Especially if you already withdrew the original investment.

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No. This is a common way to think about it, but it's wrong imho. Because that money is real and it buys you real stuff. If you have that money one day and it is gone the next, you effectively lost that money. It doesn't matter where it came from.

Think about it: You inherit $500k. You lose it through a scam or a bet or gambling. Do you think it doesn't matter? I mean, you didn't earn that money yourself, right?

There are no paper losses and no "unrealized gains". It's your money and if it's gone, it's gone. Doesn't matter how you earned it.

I agree with you, he lost real money. But I also agree with the other poster: it's hard to feel bad for him gambling away money that he got by gambling to begin with.

But it's not real money, it's an asset! I think you have a wrong understanding of what unrealized gains are. It's not about whether you earned it yourself - it's about whether it's liquid cash or just an asset. Only once you sell your asset do you realize your gains.

As I asked in the other part of this thread: Would you feel differently if he sold the bitcoins and then immediately bought them again before participating in the scam? Of course not. Even though that would make them "realized", that has no impact on the situation

Easy come, easy go. I was never planning on a $500k inheritance, it was just a good bonus.

For tax purposes, in the U.S., what he had at the time was an unrealized gain. So if he later went to convert that Bitcoin into U.S. dollars, he would have a taxable event (i.e., if he cashed out the whole thing, he would owe taxes on the difference between his basis and the value at the time).

I don't know how it works in Germany though.

This would be a good way to launder Bitcoin to yourself without paying taxes on it. Could that be what this is?

Germany ditched the holding period a while back for stocks. You pay 25% plus a little bit (26.375% in reality) on every gain, no matter if you hold it for 10 years or for two seconds.

Bitcoin is tax-free after a holding period of 1 year afaik.

If you lose $500k, you don't owe taxes, congratulations. But you still lost money (even if you maybe only lost $300k, because the rest would've been taxes).

Right. This guy was happy when the unregulated Wild West made him a fortune for doing no work, but started crying for regulation when he was on the bad side of a trade.

"Fortunately this sounds like he didn't lose anything, just never realised extra gains."

Sounds like if someones house caught fire the owner did not loose anything because he did not sell it?

That were His bitcoins he was the owner of the bicoins and he was scammed.

I think this is a bad comparison. His situation would be closer to buying a house for $40k, making $40k renting it out. Then someone tells you you could probably sell the house now for $500k, but you don't and instead you gamble it away. You never had the $500k to begin with. You had a house people say could be possibly worth that much.

There is no question he really could have exchanged the coins for $500k of value though.

If he had sold the bitcoins for cash and then used the cash to buy bitcoins again immediately after so that he could send them to the scammer, then would they be "realized" as opposed to "unrealized", even though there's no practical difference between the two situations?

It's the same situation. You don't have $500k - you have an opportunity to get $500k if you do things right. If it's kept as BTC, there's a number of things that could bring the value to $0 without the scam.

I think this is a pointless distinction. A 500k bank balance is just an "opportunity" to withdraw 500k of cash. There are a number of things that could bring your bank balance to $0 without the scam. 500k of cash is just an "opportunity" to extract 500k of value. etc.

A bank balance is different. The value of $500k in $ doesn't change. There's regulation which dictates what banks can do with that money. There's industry enforced insurance which means even if the bank goes under, you can still recover a decent chunk of that money. Putting money into a basic bank account is by law not gambling, speculation, or investment.

You don't have opportunity to withdraw it - you've got the right to do it.

OK, sure. Those things are all true, but it doesn't change my point: He could have "realized" the gains any time he wanted and it wouldn't have affected the outcome of this scam. For all we know he actually did "realize" them at some point and just bought the coins again to send them to the scammer. It makes no difference in this situation.

> For all we know he actually did "realize" them at some point and just bought the coins again to send them to the scammer. It makes no difference in this situation.

I think it makes a big difference. "I'll gamble my 10 BTC" and "I'll exchange my actual $500k to gamble as BTC" would have a very different threshold for action. I suspect he wouldn't do that with real money.

Same reason F2P games get you to exchange money into tokens (some even twice) to make you lose connection to the real value.

F2P game tokens are a much different situation because they are not a liquid asset (you can only buy them)

> "I'll gamble my 10 BTC" and "I'll exchange my actual $500k to gamble as BTC" would have a very different threshold for action

For a rational investor, they shouldn't.

Nobody denies that he was scammed.

But he didn't lose anything but opportunity costs and because he cashed out his initial gambling money, he is not worse off than if he didn't gamble with Bitcoin to begin with.

Coming out of the crypto game with a big fat zero is better than many others who tried it.

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