Crypto Currency IRA-Bitcoin

[OldShooter]

... if you believed in Amazon even a little bit when it all started you'd be better off now that if you dismissed it.

Sure. And if you believed in any of the thousands of other potential internet stars that are now dead and buried, you wouldn't be better off.

Your claimed Bitcoin ownership at only 2.2% of your portfolio states clearly that you do not believe in all the rosy predictions. That is a hobbyist number, not an investor number. There's nothing wrong with having a hobby, of course. Many are more expensive than a tiny Bitcoin position is likely to be.

 

[tenant13]

Sure. And if you believed in any of the thousands of other potential internet stars that are now dead and buried, you wouldn't be better off.

Your claimed Bitcoin ownership at only 2.2% of your portfolio states clearly that you do not believe in all the rosy predictions. That is a hobbyist number, not an investor number. There's nothing wrong with having a hobby, of course. Many are more expensive than a tiny Bitcoin position is likely to be.

It's a 6 figures number - not that tiny More than my positions in Wells Fargo or Citibank.

 

[BrianB]

It looks like Fidelity is getting into the Bitcoin world with a new fund:

https://www.forbes.com/sites/michaeldelcastillo/2020/08/26/fidelity-president-files-for-new-bitcoin-fund/#3b474fb045c9

(There may be a paywall on this site).

Briefly: Fidelity has filed paperwork to create a new fund for digital currency. Initially it will be for institutional and accredited investors only, with a $100K minimum investment.

Maybe they will open it to retail customers later?

BrianB

 

[OldShooter]

It's a 6 figures number - not that tiny More than my positions in Wells Fargo or Citibank.

Well 2.2% is 2.2%. A relatively negligible portion of a portfolio. I generally run my investment experiments in $100K chunks, also a relatively negligible portion of our portfolio. These numbers do not represent commitment.

I'm not sure what your bank investments have to do with it. $100K is more than our positions in Wells and Citi, too. It's more than our positions in about 8,700 other stocks as well.

 

[1-31-18]

Your claimed Bitcoin ownership at only 2.2% of your portfolio states clearly that you do not believe in all the rosy predictions. That is a hobbyist number, not an investor number.QUOTE]



Or maybe it is an insurance policy of sorts.

I no longer post here on digital assets. I found that it’s too painful. But I will point out that a mere 1% position in BTC will hedge one’s entire portfolio against monetary policy disaster if one believes that BTC is a hard-capped scarce asset. The right tail of the BTC bell curve pays out at about 100X current market prices. The left tail is a loss of 1X. Options traders call that “extremely positive skewness.” Actuaries, too, like those odds.

I didn’t do the math. Mark Yusko did. And Chamath Palihapitiya. And others. Chamath says he hopes his BTC position (currently worth several billion USD) will go to zero. Why? Because BTC is insurance against the escalating negative consequences of nearly a century of irresponsible fiat money creation, accelerating even as we speak, and we should all hope that catastrophe will be avoided.

The reason it would be catastrophic if the insurance policy that is BTC does pay out is that very few people are hedged in BTC, but the unhedged will experience economic devastation if that hedge is needed. 1930s Germany. 2020s Venezuela. #fiatfiasco

Like Chamath, I hope that my BTC position will go to zero. I also hope that all the money that I will spend, during a 40-year career, on accidental death and dismemberment insurance premiums, will return zero dollars to me and my estate. And I hope that the puts that I recently bought on my equity portfolio for November through January will expire worthless.

Probably this is all I will say about BTC at this website for another year or two. But it’s good to see some informed discussion of the topic here.

 

[tenant13]

Your claimed Bitcoin ownership at only 2.2% of your portfolio states clearly that you do not believe in all the rosy predictions. That is a hobbyist number, not an investor number.QUOTE]



Or maybe it is an insurance policy of sorts.

(...) I hope that my BTC position will go to zero. I also hope that all the money that I will spend, during a 40-year career, on accidental death and dismemberment insurance premiums, will return zero dollars to me and my estate. And I hope that the puts that I recently bought on my equity portfolio for November through January will expire worthless.

Probably this is all I will say about BTC at this website for another year or two. But it’s good to see some informed discussion of the topic here.

Yet another good analogy.

 

[bmcgonig]

Really? You're an expert on the mathematics here? From a career in high tech I can tell you that pronouncements using words like "always," "never," and "can't" often die a quick death.
Complete nonsense. No one could possibly know the intent of all Bitcoin holders even without considering the anonymity factor. So you are really not at all confident in your beliefs.

Taleb's position is "Don't tell me what you think. Show me your portfolio." I am increasingly seeing the wisdom in that.

And you know of course that Taleb is very much a proponent of Bitcoin...

 

[NYEXPAT]

With Bitcoin crossing over the 15k level today I have sold all my holdings! I will of course buy the pullback.

 

[tenant13]

With Bitcoin crossing over the 15k level today I have sold all my holdings! I will of course buy the pullback.

I def like that my BTC is way up but I see it as a long term holding so I won't be selling. If there's a pullback however I will be buying more.

 

[ownyourfuture]

Saw this commercial earlier today. Don't understand cryptocurrency myself, but you can't miss how they reference the printing of US bills.
Maybe someone here could explain what, if any effect widespread cryptocurrency use would have on the government/treasury ?
BTW: Shouldn't they have included tulips in the video as well

 

[VFK57]

Prior to 1971, when President Nixon untied Gold back up of paper money, the Government simply could not print the fiat money as they need to increase the money supply at the times of recessions, war or simply weaponry racing with USSR. Cryptocurrency is a threat to this very much needed tool of the Government(s). How they will react on another paper dollar challenge when more and more payments will shift to the cryptocarrency?

 

[tenant13]

Prior to 1971, when President Nixon untied Gold back up of paper money, the Government simply could not print the fiat money as they need to increase the money supply at the times of recessions, war or simply weaponry racing with USSR. Cryptocurrency is a threat to this very much needed tool of the Government(s). How they will react on another paper dollar challenge when more and more payments will shift to the cryptocarrency?

According to Ray Dalio governments will 'outlaw' bitcoin. While that's certainly possible - Roosevelt famously tried to outlaw privately held gold - outlawing and making it disappear are two different things.

 

[Onward]

Saw this commercial earlier today.

With that soundtrack, I don't think they're targeting retirees.

 

[MichaelB]

Maybe someone here could explain what, if any effect widespread cryptocurrency use would have on the government/treasury ?

It’s hard to imagine cryptocurrency having widespread use in its current form. Our government has a carefully developed regulatory system that has multiple objectives. Critical among these are making sure intermediaries and custodians meet certain solvency standards, and transactions are identified and subject to scrutiny and taxation. Cryptocurrency transactions are anonymous, this places them outside the regulatory system, and that is something not clearly in the public interest.

 

[OldShooter]

According to Ray Dalio governments will 'outlaw' bitcoin. While that's certainly possible - Roosevelt famously tried to outlaw privately held gold - outlawing and making it disappear are two different things.

Treasury departments in many major countries are working on their own digital currencies. China, in particular, hopes that leadership in this area will help them undermine the dollar as the world's reserve currency.

As far as "outlaw" goes, all a government has to do is something like enact a 100% transaction tax on all unapproved digital currencies, with draconian penalties for evasion. That will drive them underground and make it extremely difficult to convert them into useful money. Harder than money laundering currently is.

I think John Templeton's famous comment pertains: “The four most expensive words in the English language are 'This time it’s different.' ”

 

[tenant13]

It’s hard to imagine cryptocurrency having widespread use in its current form. Our government has a carefully developed regularity system that has multiple objectives. Critical among these are making sure intermediaries and custodians meet certain standards, and transactions are identified and subject to scrutiny and taxation. Cryptocurrency transactions are anonymous, this places them outside the regulatory system, and that is something not clearly in the public interest.

We totally differ on what is and is not in the public interest. I firmly believe in the right of individuals to transact in private : and just to remind you - that's what cash is for, the truly anonymous money Your view however on the need of the government and third parties to scrutinize every transaction is probably welcomed at central banks plotting to release their CBDCs. I think that they will not pass the opportunity to snoop on every coffee purchase we make however intrusive it may be.

 

[tenant13]

Treasury departments in many major countries are working on their own digital currencies. China, in particular, hopes that leadership in this area will help them undermine the dollar as the world's reserve currency.

As far as "outlaw" goes, all a government has to do is something like enact a 100% transaction tax on all unapproved digital currencies, with draconian penalties for evasion. That will drive them underground and make it extremely difficult to convert them into useful money. Harder than money laundering currently is.

I think John Templeton's famous comment pertains: “The four most expensive words in the English language are 'This time it’s different.' ”

They can certainly make it hard but when it comes to protecting wealth, no laws will stop people from finding ways of doing just that. So if bitcoin retains its value (that remains to be seen) there will be individuals willing to risk breaking the law.

I kind of speak from experience. I grew up in an Eastern European country where the state controlled currency exchange rate was tightly regulated and had nothing to do with the real value of the currency. Owning and trading USD was outlawed. Yet, that did not prevent anyone from doing just that and black market was booming. And why wouldn't it if $10K would buy you a two bedroom apartment and a pair of blue jeans cost as much as an average monthly salary when converted at an official rate. The whole thing eventually collapsed and ended with hyperinflation followed by wiping off everyone's savings. Except for those who illegally hoarded USD.

I sincerely doubt we're looking at the hyperinflation hitting US shores any time soon. But I'm not ignoring Fed's monetary policy which moved from 1) manipulating interest rates all the way down to zero through 2) printing money and purchasing debt via QA to 3) printing even more money and giving it to targeted groups of consumers.

As someone invested in equities I'm benefiting from this policy - no complains there - but I think we have to see it for what it is: debasing USD.

 

[ownyourfuture]

They can certainly make it hard but when it comes to protecting wealth, no laws will stop people from finding ways of doing just that. So if bitcoin retains its value (that remains to be seen) there will be individuals willing to risk breaking the law.

I sincerely doubt we're looking at the hyperinflation hitting US shores any time soon. But I'm not ignoring Fed's monetary policy which moved from 1) manipulating interest rates all the way down to zero through 2) printing money and purchasing debt via QA to 3) printing even more money and giving it to targeted groups of consumers.

Well stated. I was cleaning out my file cabinet recently & saw that in 2000, my fidelity money market fund was paying 5.00%..... today its paying 0.01 or 1/500 of that. I certainly don't have a degree in economics, but I have a sick feeling that this is going to end badly.

Isn't the zero interest rate game one that Japan tried to play ?
The Nikkei average was approximately 38k in 1990, 30 years later it's at 23k

I believe a big part of the reason the Fed has lowered interest rates so sharply is to coddle the stock market. In the early 80s, approximately 60.00% of private sector workers received a defined benefit pension. Today it's down to approximately 4.00%.

Their 401(k) is their pension, & if the market isn't doing well, they'll do things like cut household spending, put off buying that new car, that new house, new washer and dryer, etc.

It's my understanding that the US reached 1 trillion in debt for the first time in 1980. It's approximately 28 trillion today. 204 years to reach 1 trillion, but only 40 more years to increase that by 2,800.00% & that's not including the unfunded liabilities from you know where.

What could possibly go wrong ?

 

[Montecfo]

I am a bitcoin skeptic, but also an open minded investor who likes to do research. This article I found very interesting.

Whatever else you might think, there is evidence that cryptocurrencies may have legs.

Cites"greater conviction" on the part of institutional investors, corporate sponsorship by Square, Microstrategy and PayPal, and, importantly, fund flows.

More like a speculative investment than a Treasury/USD alternative in my opinion. But the currency type features may be a kicker for folks who hold the crypto directly. I would not see reason to do that presently for law-abiding people, but there may be added appeal for some folks. If I invested it would probably be in a taxable account.

Worth a read.

https://www.fnlondon.com/amp/articles/hedge-funds-not-hipsters-may-be-powering-bitcoins-second-big-rally-20201120

 

[OneMarcilV]

I thought I saw recently that you could now hold crypto ETFs in an IRA without doing any special gymnastics to make it happen. Maybe that would work for you and let you get started faster.

Google says you could look into Grayscale:

Grayscale Bitcoin Trust (symbol: GBTC),
Grayscale Bitcoin Cash Trust (symbol: BCHG),
Grayscale Ethereum Trust (symbol: ETHE),
Grayscale Ethereum Classic Trust (symbol: ETCG),
Grayscale Litecoin Trust (symbol: LTCN)​

If you didn't want to hold actual currency, you could look at Blockchain ETFs, which should have a lot of overlap with regular tech sector funds:

Reality Shares Nasdaq NexGen Economy ETF (BLCN)
Amplify Transformational Data Sharing ETF (BLOK)
First Trust Indxx Innovative Transaction & Process ETF (LEGR)​

I purchased 1.5 LiteCoin recently. These are quick movers. By this I mean the value jumps up and down every few seconds.

I purchased this because I read this coin could be a very good investment thus year.

I remember hearing about Bitcoin many years ago. Then the value was as affordable as my LiteCoin is today. If I knew more about what this type of monies is I would have purchased that.

 

[Teacher Terry]

My son who is the brains of our 8 year voyage into crypto currency said we will be cashing out this year. We have slowly taken profits throughout that time.

 

[OneMarcilV]

Did you make enough profit to make you want to sell out?

I have a question on that. When you sell your investment does the money go back into your bank account?

 

[charais]

My son who is the brains of our 8 year voyage into crypto currency said we will be cashing out this year. We have slowly taken profits throughout that time.

We're thinking of cashing out as well as the year goes on. Mining and investing since 2013. Where to put those proceeds have us doing some research, possibly some to stake stable USDC coins. The taxes are really going to hurt as we have not sold any since beginning this journey in true HODL fashion. Our crypto portfolio percentage of net has become breathtaking. Time to rebalance.

 

[OneMarcilV]

Well as of not my poor little LiteCoin lost 3.32%. The bestest today was just ones +2%

 

[Dash man]

Well as of not my poor little LiteCoin lost 3.32%. The bestest today was just ones +2%

I dipped my toe into Bitcoin and Ethereum a few days ago. The prices do bounce all over the place. I’m considering dollar cost averaging a little each month. BlockFi actually has accounts that pay interest on crypto, with Bitcoin paying 6%.