Where to categorize crypto-currencies
"Forex. I will employ my skill for ""suspension of disbelief"" and answer with no visceral reaction to Bitcoin itself. The Euro is not an 'investment.' It's a currency. People trade currencies in order to capture relative movements between pairs of currencies. Unlike stocks, that have an underlying business and potential for growth (or failure, of course) a currency trade is a zero sum game, two people on opposite sides of a bet.  Bitcoin has no underlying asset either, no stock, no commodity. It trades, de facto, like a currency, and for purposes of objective classification, it would be considered a currency, and held similar to any Forex position."
"Overall, since gold has value in any currency (and is sort of the ultimate reserve currency), why would anyone want to currency hedge it? Because gold is (mostly) priced in USD. You currency hedge it to avoid currency risk and be exposed to only the price risk of Gold in USD.  Hedging it doesn't mean ""less speculative"". It just means you won't take currency risk. EDIT: Responding to OP's questions in comment what happens if the USD drops in value versus other major currencies? Do you think that the gold price in USD would not be affected by this drop in dollar value? Use the ETF $GLD as a proxy of gold price in USD, the correlation between weekly returns of $GLD and US dollar index (measured by major world currencies) since the ETF's inception is around -47%. What this says is that gold may or may not be affected by USD movement. It's certainly not a one-way movement. There are times where both USD and gold rise and fall simultaneously. Isn't a drop in dollar value fundamentally currency risk? Per Investopedia, currency risk arises from the change in price of one currency in relation to another. In this context, it's referring to the EUR/USD movement. The bottom line is that, if gold price in dollar goes up 2%, this ETF gives the European investor a way to bring home that 2% (or as close to that as possible)." "I researched 3 of the major corrections, the 1929 one, the tech bubble, and the housing bubble.  The three things they all have in common was people were too complacent in their life, The world was doing pretty well at the time during at least 2 of those.  I believe there will be another great war before a recession though. The world isn't fine right now and people aren't complacent. Now perhaps this only means right now"" and not the past 8 years before now though. But any major events happening in the world is taking a slow and steady pace, and the market is making tiny corrections as it goes along. People are accepting the fact the way the world works is rocky so past events wont affect future events if something major does happen.   Another thing 2 out of the 3 I researched is they existed when people were taking advantage of something. Buying and reselling houses, creating websites and putting them on the stock market without any value. There are 2 things similar to that right now, phone apps/social networks, and crypto currencies(bitcoin etc).  People are taking super advantage of those 2 things right now millionaires are popping out too easily.  But if bitcoin and other crypto currencies crash I don't think it'll affect the rest of the market since they aren't a regulated currency. The phone apps and social networks aren't really being super over valued using the stock market in recent times either, with exception to snapchat.  All in all, I'll I don't believe there will be another great market crash/recession for at least another 5-10 years." There are two ways to measure the value of money in the past. 1) As Victor mentioned there are inflation statistics covering the last 100 or so years that value the currency against an ever-changing basket of goods. This is sufficient when measuring general inflation over the period of the hundred years where there is data. This is how it was measured in your example. 2) For older time periods or where a value comparison is required between specific items (particularly where these were not in the basket of goods used for the inflation calculation) Historical records of the price of comparable goods can be used. This is in effect the same as mark to market valuations for illiquid financial instruments and requires poring through records to find the price of either a comparable basket of goods to one that would be used for inflation calculations today or a comparable set of items. An example of this is finding the value of a particular type of house (say a terraced house in London) in the 19th Century compared to the same house today by finding records of how much comparable houses would sell for, on average, then and now. This second measure is also used where the country in question didn't or doesn't keep reliable inflation statistics which may well be true of Colombia in the 90s. This means that there is a chance that this way of estimating Escobar's wealth in today's terms may have also been used. Another notable reason to use this methodology is that (unless you are using exchange rates in purchasing power parity terms) the value of money held in different currencies is different. This is even true today as the value of $1 in INR in India is likely to be higher than the value of a dollar in the US in terms of what you can buy. Using this methodology allows for a more accurate comparison in values where different countries and currencies are involved. It depends on if it is a non-refundable deposit, retainer, etc. The remaining $1,500 is not included in that quarter's sales, because you have not yet received it and it is not guaranteed. The question is really if you should count the $500 toward the quarter where it is received, or during the quarter where you invoice. This deposit might be categorized as a liability until you invoice, and there is no sales tax to be calculated until the invoice for the total. I say 'might' because this can vary by state and the type of transaction or business. For example, if someone makes a cash down payment on a lease for a car, some states will require that sales tax be charged on this. "Then can you elaborate on what you meant by ""at the end of the day, fiat currencies are based on trust and accountability of the government""?  I would normally *agree* with that statement, but your use of it as a point of concern in your previous post appears to contradict what you just said." "Alright, so this is all out of the way.  As a further note, I have a degree in computer science so I'm not oblivious to the technical aspects of bitcoin.  I reject the idea that banning bitcoin is akin to banning the internet - in fact, I reject the notion that bitcoin is anywhere as revolutionary as ""the internet"" was (which itself, as a construct, is far older than most people let on).    I've always acknowledged that there are many innovative technical aspects to bitcoin which are likely to find their way into our current system of money and transactions.    The reality, however, goes back to my original contentions - that bitcoin is difficult (if not nearly impossible) to track, and thus serves as a black-market vehicle for those who wish to transact outside the power of the government.  Whether or not you see this as ""good"" or ""bad"" doesn't matter; ""the government"" within any defined national border is the plenary power - period - and thus (for lack of a better phrase) ""resistance is mostly futile.""" "First of all, setting some basics: What is a sound way to measure the risk of each investment in order to compare them with each other ? There is no single way that can be used across all asset classes / risks. Generally speaking, you want to perform both a quantitative and qualitative assessment of risks that you identify.  Quantitative risk assessment may involve historical data and/or parametric or non-parametric models. Using historical data is often simple but may be hard in cases where the amount of data you have on a given event is low (e.g. risk of bust by investing in a cryptocurrency). Parametric and non-parametric risk quantification models exist (e.g. Value at Risk (VaR), Expected Shortfall (ES), etc) and abound but a lot of them are more complicated than necessary for an individual's requirements. Qualitative risk assessment is ""simply"" assessing the likelihood and severity of risks by using intuition, expert judgment (where that applies), etc. One may consult with outside parties (e.g. lawyers, accountants, bankers, etc) where their advisory may help highlighting some risks or understanding them better. To ease comparing investment opportunities, you may want to perform a risk assessment on categories of risks (e.g. investing in the stock market vs bond market). To compare between those categories, one should look at the whole picture (quantitative and qualitative) with their risk appetite in mind. Of course, after taking those macro decisions, you would need to further assess risks on more micro decisions (e.g. Microsoft or Google ?). You would then most likely end up with better comparatives as you would be comparing items similar in nature. Should I always consider the worst case scenario ? Because when I do that, I always can lose everything. Generally speaking, you want to consider everything so that you can perform a risk assessment and decide on your risk mitigating strategy (see Q4). By assessing the likelihood and severity of risks you may find that even in cases where you are comparatively as worse-off (e.g. in case of complete bust), the likelihood may differ. For example, keeping gold in a personal stash at home vs your employer going bankrupt if you are working for a large firm. Do note that you want to compare risks (both likelihood and severity) after any risk mitigation strategy you may want to put in place (e.g. maybe putting your gold in a safety box in a secure bank would make the likelihood of losing your gold essentially null). Is there a way to estimate the probability of such events, better than intuition ? Estimating probability or likelihood is largely dependent on data on hand and your capacity to model events. For most practical purposes of an individual, modelling would be way off in terms of reward-benefits. You may therefore want to simply research on past events and assign them a 1-5 (1 being very low, 5 being very high) risk rating based on your assessment of the likelihood. For example, you may assign a 1 on your employer going bankrupt and a 2 or 3 on being burglarized. This is only slightly better than intuition but has the merit of being based on data (e.g. frequency of burglary in your neighborhood). Should I only consider more probable outcomes and have a plan for them if they occur? This depends largely on your risk appetite. The more risk averse you are, the more thorough you will want to be in identifying, tracking and mitigating risks. For the risks that you have identified as relevant, or of concern, you may opt to establish a risk mitigating strategy, which is conventionally one of accepting, sharing (by taking insurance, for example), avoiding and reducing. It may not be possible to share or reduce some risks, especially for individuals, and so often the response will be either to accept or avoid the given risks by opting in or out on an opportunity." "I think you just don't understand what ""intrinsic"" means. It's not an opinion. It's a fact that currencies like the USD and EUR have no intrinsic value. That doesn't mean they're worthless, they just have no intrinsic value. Technically dollar COINS have intrinsic value, because they're a piece of metal that can be used for something else. Dollars itself however don't have intrinsic value."