The Cryptocurrency Thread

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How do NFTs get monetized, they appreciate and you trade them?

Or is there a way to have people pay to view them and the payments go to the owner?

But why would anyone pay to view an NFT of famous paintings exactly?
 
NFT is non-fungible token. That is, there is only one instance of an NFT and it is not swappable for an equal NFT in the way that a USD or BTC is. So the basic concept of an NFT is that it is a digitally signed one-of-a-kind item.

We need to differentiate from an NFT in general and the junk that is currently being sold for excessive amounts.

The NFT's that are just a JPG file are sold by the initial creator who makes a series of pictures that are randomly generated by combining features that are issued in different amounts or percentages. A person "mints" and NFT by paying the initial price and is given a randomly generated picture that is either common or rare depending on which features were used to make it up. I think this is probably similar to baseball cards or beanie babies. The original owner then tries to sell the NFT on the secondary market using the greater fool theory.

I saw a discussion that suggested that someone could mint an NFT, sell it to themselves for $2,00,00 using two user accounts, thereby establishing a prior sale history. Once done, they could sell it to someone at a huge discount, say $200,000 and come out ahead by $200,000.

That said, there is a legitimate future use of the NFT. That would be if it were somehow attached to something of legitimate value and used to track the provenance of the item, or if NFT's were sold by some sports team or musical artist and were used as a sort of fan-reward system to get special favors or a special song.

Another use case, that I am not sure is actually using NFT, would be fractional ownership. In this case, ownership a rare painting or high rent property would be recorded on the block chain and people could own a fraction of it like they would do with an ETF or REIT. The part of this that I don't quite understand is that it seems there would still be some sort of custodial counterparty risk or property management function involved.

A lot of the JPG NFTs are bought by famous rich people to use as their avatar on social media. I also think that NFT's could be used to track the items that people use in video games like a tenth-level magic sword that could be sold to other players.

Vitalik Buterin, the guy who created Etherum is said to have gotten started because he lost all of his stuff when some video game went out of business and was looking to develop a way of owning game stuff that was independent of any particular game or gaming company.
 
Well, according to this source (veracity unknown) there have been over 13000 synthetic tokens (aka crypto currencies) introduced so far.
According to this source, more than 2000 have already failed. No idea how much money has been lost, but it must be considerable.

Just as in nature, when plants or animals evolve, there are millions of "failures". Over time, the "winners" continue and gain momentum and become dominant as their development has become stable. Same with crypto. The winners are a direct outcome of the many (potentially infinite) number of failures. What we, as investors, need to do, is identify the winners. Bitcoin is clearly one of these most dominant and stable "species". With the many alts that come and go one needs to be very careful and realistic - most will fail.
 
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I don't understand the idea that Bitcoin has some special attribute because the supply is limited. As others have mentioned, wouldn't a rival digital currency effectively create another source of supply?

-ERD50

As others have mentioned, try creating a "new Bitcoin", and see how that works out for you. (There have been thousands and thousands of attempts - all have failed...)
 
I think you need a history lesson. Currency inflation is a feature, not a bug, of the world's economy. When currencies were based on the value of precious metals like gold, the world went through financial panics every couple decades -- 1873, 1893, 1907, 1929. That's when bank failures would cost depositors their life savings, during periods of DEflation.

The major concern among economists during the Great Recession circa 2008 was that the economy would fall into a deflationary spiral, as it did in the early 1930s. That's why the government inflated the currency -- credit had dried up, reducing what is known as the credit multiplier in the money supply. Did the policy extend too long, do too much? I'll skip that debate to avoid Porky and a lock on this thread.

Is inflation up this year? Sure. I lived through the '70s, and I can tell you from experience that this is nothing compared to that decade. That's the benefit of being 67 and cranky vs. 37 and happy -- you gain some perspective.

Its a matter of semantics whether you call inflation a "feature" or a "bug". Either way, this feature/bug steals value and purchasing power from you. Bitcoin is used as defense against that. Ask yourself what a dollar could buy you back in 67, as opposed to what it gets you now.
 
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I don't understand the idea that Bitcoin has some special attribute because the supply is limited. As others have mentioned, wouldn't a rival digital currency effectively create another source of supply?

Why not create a currency based on the works of Picasso, there won't be anymore of those either?

-ERD50

As others have mentioned, try creating a "new Bitcoin", and see how that works out for you. (There have been thousands and thousands of attempts - all have failed...)
ERD asks an important question which reflects one of the biggest concerns expressed in this thread, and your response doesn’t address it. There are other synthetic tokens that have not failed, and there appears to be no barrier to entry, other than an application of creative technology. What prevents an unlimited supply of new tokens?
 
Its a matter of semantics whether you call inflation a "feature" or a "bug". Either way, this feature/bug steals value and purchasing power from you. Bitcoin is used as defense against that. Ask yourself what a dollar could buy you back in 67, as opposed to what it gets you now.
Repeated endlessly, this is a red herring.

If you had $100 back in the 60’s you could bury it in the back yard, take it out today, and see that it indeed has lost considerable purchasing power. Or, you could have invested it in Berkshire Hathaway stock (as an example) and your investment today would be worth close to $3M.

The purpose of the US$ isn’t to hold forever, it’s to use. If you stick it under your mattress for years, silly you. Folks here at ER Forum don't, though, and instead, save and invest.

A more useful discussion would be what makes bitcoin a better - as in preferable - portfolio allocation then equities today, going forward?
 
As others have mentioned, try creating a "new Bitcoin", and see how that works out for you. (There have been thousands and thousands of attempts - all have failed...)



I’ve been listening to the Sailer Series on Robert Breedlove’s “What is Money?” podcast. Sailer has a gift for analogies and I find him a compelling teacher. He described Bitcoin as the anti-fragile, single-celled plankton in an alt coin sea of specialized, more vulnerable vertebrates, ladened with various features, most of which will not survive natural selection. He would seem to be a credible source, given the long time success of Micro Strategies, Inc., and his own enormous stake of Bitcoin.
 
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A more useful discussion would be what makes bitcoin a better - as in preferable - portfolio allocation then equities today, going forward?


I don’t have any yet but I’m studying taking a 1% position in Bitcoin as an inflation hedge. Apparently, Paul Tudor Jones did the same, is now up to 5% or more, and he’s no slouch. https://news.bitcoin.com/paul-tudor...l-in-on-inflation-trades-fed-things-are-good/

I’m new to this field and in no position to pontificate, but the reasons to own some Bitcoin include the same reasons rich people* would hold a bit gold. But gold is not ideal, because it difficult to hold and to transport around the world when times get tough. Bitcoin can be sent anywhere in a flash. Also, the supply of gold is not limited, and its value grows long term at about the rate of the economy, because like any commodity, more is mined when the price goes up, then the price eventually crashes with overproduction. There will only ever be 21 million Bitcoin, so it has unlimited upside. Actually, far less, given that the keys to a large % have been lost already.

It does ultimately take conviction and a leap of faith, though, which is exactly like any investment, including equities.

*Other coins might prove better at every day transactions. The greatest appeal and highest value for Bitcoin seems likely to be as a buy and hold, long term asset.
 
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I watched Rubenstein interviewed Alan Greenspan in the weekend.
Greenspan said nobody expected 2008 financial crisis; not the Fed, not IMF, not World Bank, not Wall Street. Only a few economist and people in Wall Street raised concern.
We all knew back then about housing bubble years before the crisis. How come they didn't foresee the crisis?
Quantitative easing or money printing since 2008.
What are they missing now? What will be the crisis to come?

To me, by having a little bit bitcoin may save some of my little savings in the future.
 
Its a matter of semantics whether you call inflation a "feature" or a "bug". Either way, this feature/bug steals value and purchasing power from you. Bitcoin is used as defense against that. Ask yourself what a dollar could buy you back in 67, as opposed to what it gets you now.

In 1967, my single-earner dad was bringing in about $6K/yr. DW and I have done much better financially than my parents despite the decline in the dollar's purchasing power. What a dollar could buy 55 years ago is irrelevant to my life today.
 
Everyone agrees that fiat currency devalues over time (normally). That is why we all invest. No need to discuss that.

What to invest in is a fair question. Is Bitcoin crypto a candidate for your portfolio?

If you are 100% no on crypto investing then you would have no interest in this thread.

I think most people in this thread are at least curious about the possibility of crypto being successful.

So have more than zero. What is the harm?
 
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Web3, DAOs, and the Metaverse

I follow David Stein's podcasts (Money for the Rest of Us) and his most recent release (#368) discusses his foray into cryptos and beyond, mostly as a learning exercise. This made me realize that I know very, very, little about what is going on in this new world. A bit of an eye opener for me. The episode is titled "How to Invest in Web3, DAOs, and the Metaverse", and can be found at http://https://moneyfortherestofus.com/episodes/

Well worth the investment of 25 minutes of my time.
 
Repeated endlessly, this is a red herring.

If you had $100 back in the 60’s you could bury it in the back yard, take it out today, and see that it indeed has lost considerable purchasing power. Or, you could have invested it in Berkshire Hathaway stock (as an example) and your investment today would be worth close to $3M.

The purpose of the US$ isn’t to hold forever, it’s to use. If you stick it under your mattress for years, silly you. Folks here at ER Forum don't, though, and instead, save and invest.

A more useful discussion would be what makes bitcoin a better - as in preferable - portfolio allocation then equities today, going forward?

I think that is a very useful way to think about the $USD, and fits in well with the following:

In 1967, my single-earner dad was bringing in about $6K/yr. DW and I have done much better financially than my parents despite the decline in the dollar's purchasing power. What a dollar could buy 55 years ago is irrelevant to my life today.

If we are using the $USD to facilitate trading one thing (an hour of labor for instance) for another thing (a week's worth of groceries), than it doesn't really seem to matter much what the $USD is at relative to the past. As MichaelB says, we use it (in place of inconvenient bartering), we don't 'save' it.

It's a little like two passive S&P500 mutual funds - one might be priced at $30/share, and another at $120/share. It's just a number that reflects the value of the holdings, and one share represents 4x the holdings of the other. But they will perform the same.

-ERD50
 
... I think most people in this thread are at least curious about the possibility of crypto being successful.

So have more than zero. What is the harm?

I've never looked at investing that way. What's the harm? I want to know, what's the benefit (of course, taking risk into account).

We have a lot of history and have some idea of the 'harm' (and reward) of an equity/fixed portfolio. Nothing is for certain of course.

We have very little history of an investment in digital currency. What's the harm? Like any other non-diversified/speculative investment - it could go to zero.

"Why not?" isn't a very convincing point in favor of Bitcoin, IMO.

-ERD50
 
Why has Etherium and Bitcoin fallen ~16 percent over the past few days?

Why is there such a strong correlation between Etherium and Bitcoin? (The slope is NOT 1.0 but they are mostly dancing to the same tune.)

I bought in around $44 (ETHE) on the upslope and it has been a volatile downslide mostly since then.

The Etherium volatility reminds me of a "Wall Street Bets" play like SOFI, Gamestop.

If the price of any other individual stock that I own moves UP or DOWN 15% there is a clear reason. I am clueless about why Crypto moves one way or another. F.M.?

I have <0.5% invested in Ethe so am not gonna be hurt if it goes bust.
 
I follow David Stein's podcasts (Money for the Rest of Us) and his most recent release (#368) discusses his foray into cryptos and beyond, mostly as a learning exercise. This made me realize that I know very, very, little about what is going on in this new world. A bit of an eye opener for me. The episode is titled "How to Invest in Web3, DAOs, and the Metaverse", and can be found at http://https://moneyfortherestofus.com/episodes/



Well worth the investment of 25 minutes of my time.



Thanks. Downloaded. I have a skeptical but curious mindset going in, as Bitcoin is the lone token I have some degree of comfort in so far.
 
More reasons not to throw your money down the drain buying bitcoin.

The market is manipulated. Even the proponents on you tube explain most of the drops as "whale games" and say that the big money is pushing the price down so they can buy more since they are late to the party. They seldom say that the at $68K the smart money might be unloading to the dumb money. Their rationale is that they are smart and nimble enough to front run the whale games.

If you leave your BTC up on an exchange, you run the risk of the exchange stealing it or being hacked.

If you download your BTC to a private wallet, you are likely to lose it by forgetting your keys or being careless and getting hacked.

If you use a hardware wallet, what is to prevent the small hardware wallet company in the Czech Republic or Switzerland from sending you a firmware update that uploads your private keys so they can steal all your BTC and then hide on Mars.

If you get a lot of BTC, what is to prevent the government from taxing it to death? To be fair, this same worry has been raised with regard to gold. And some stuff I have read lately said that if the divide between the haves and the have-nots keeps expanding and gets to large and the have-nots gain control of the government they would do the same thing to equity or bond holdings.

Many of the youtube videos are blatant shilling, with the creators being paid to push certain coins. There is no guarantee that even the supposedly credible creators or BTC proponents will not dump their holdings at the top. Raoul Pal clearly states that he is in it to make money and will flip on a dime if he needs to.

I think most of the people who are arguing against BTC here are probably older and most likely have nice seven or eight figure portfolios. They are probably correct that in a short enough time frame the increasing debasement will not affect their lifestyle much in the next 10 or 15 years. I think, though, that someone with a 30 year timeframe might look at things differently.
 
Why has Etherium and Bitcoin fallen ~16 percent over the past few days?

Why is there such a strong correlation between Etherium and Bitcoin? (The slope is NOT 1.0 but they are mostly dancing to the same tune.)
When I plug GBTC and ETHE into "asset correlation" over at Portfolio Visualizer, the result comes back 0.51 over the past 2.5 years. I don't think your analysis of their correlation is correct.

India proposed a law that was widely read as banning crypto currencies there, which holds far more Bitcoin than the U.S. (4x population, 4x Bitcoin). Events like that can move all crypto currencies, as fearful holders in India sell and drive down prices.
 
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I’ve been listening to the Sailer Series on Robert Breedlove’s “What is Money?” podcast. Sailer has a gift for analogies and I find him a compelling teacher. He described Bitcoin as the anti-fragile, single-celled plankton in an alt coin sea of specialized, more vulnerable vertebrates, ladened with various features, most of which will not survive natural selection. He would seem to be a credible source, given the long time success of Micro Strategies, Inc., and his own enormous stake of Bitcoin.

Why is one crypto inherently more valuable than another?

Better encryption?

More trades or holders of a given coin? So it's purely supply and demand, nothing to do with some intrinsic value or being associated with a revenue stream like an equity?

Seems hard to compare other than the most valuable ones are the ones which have been around the longest?

Another obstacle to comparing different crypto currencies is that there is no easy answer for why a given coin has the valuation that it does.
 
I watched Rubenstein interviewed Alan Greenspan in the weekend.
Greenspan said nobody expected 2008 financial crisis; not the Fed, not IMF, not World Bank, not Wall Street. Only a few economist and people in Wall Street raised concern.
We all knew back then about housing bubble years before the crisis. How come they didn't foresee the crisis?
Quantitative easing or money printing since 2008.
What are they missing now? What will be the crisis to come?

To me, by having a little bit bitcoin may save some of my little savings in the future.

But we don't know how crypto would have fared during the financial crisis do we?

Or a deep recession or high periods of inflation?

Which crypto currency has had the longest life span? Has any of them been around more than 10 years?
 
When I plug GBTC and ETHE into "asset correlation" over at Portfolio Visualizer, the result comes back 0.51 over the past 2.5 years. I don't think your analysis of their correlation is correct.

India proposed a law that was widely read as banning crypto currencies there, which holds far more Bitcoin than the U.S. (4x population, 4x Bitcoin). Events like that can move all crypto currencies, as fearful holders in India sell and drive down prices.

Agree on correlation comment - I was looking at a 6 month trend and just eyeballing the 2 data sets. Correlation is around 0.8 or so using the Portfolio Visualizer "Asset Correlations tool" for a 6 month window. A correlation of 0.8 is pretty good.

Maybe 2 1/2 years ago these "variables" were too new to get any meaningful correlation, but they appear to move together over the past 6 months.

But what I was looking for was the common cause for the latest pullback - which you identified as India.

My nephew bought into ETHE around $25/share. He sold 75% of his shares when the share price crossed $44. Today he bought back the same number of shares he sold at $32.

I'm thinking that is the secret to make money with crypto. Flip it.
 
Repeated endlessly, this is a red herring.

If you had $100 back in the 60’s you could bury it in the back yard, take it out today, and see that it indeed has lost considerable purchasing power. Or, you could have invested it in Berkshire Hathaway stock (as an example) and your investment today would be worth close to $3M.

The purpose of the US$ isn’t to hold forever, it’s to use. If you stick it under your mattress for years, silly you. Folks here at ER Forum don't, though, and instead, save and invest.

A more useful discussion would be what makes bitcoin a better - as in preferable - portfolio allocation then equities today, going forward?
If you had $100 back in the 60's in silver coins that would be worth $2000 today.

Bitcoin has value over any other Crypto Currency becuase it's safety and ability to continue has been proven over 13 years. The smartest people in the world have a ton of white papers and uses for bitcoin. The only reason people want to know the positive is because individuals are for the most part too damn lazy to learn anything on their own.

Over the last 10 years , a great many people have posted here about how investing in Bitcoin is not proven and desire to be told on a bulletin board why to invest in it and that they have never been given a solid reason to own. If you have not taken time to research what is happening in the cryptocurrency world why should some poster be obligated to convince you? Never buy what you are not interested in learning about.

In listening to doubting Thomas's here posters here I missed the single best investment in the history of the world. To read the old threads about bitcoin and get posts similar to this today is interesting.

At present today Bitcoin has a real effect on the economy and a source of inflation that the Federal Reserve is not controlling. There is no doubt that the one trillion of value that Bitcoin holds is not controllable by the Federal Reserve and is reducing the young work force while increasing the supply of money.

Bitcoin deserves a 5% place in a portfolio in my opinion based on the potential need should all of the economic engine be switched to DeFi, which is most certainly not certain but very possible. A solid review of bitcoin 10 years ago would have led to the same conclusion, not a certainty but a possibility. Totally missed opportunity that Imolderu instictively grasped and I should have reviewed but didn't.

If you don't have enough money in your portfolio after what has happened since 1981 you are a terrible investor, anything would have worked. Burying 1,000 gold coins in your backyard in 1965 would have cost $35,000 and be worth $1,800,000 today so almost anything would have worked.
 
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Other crypto like ETH do tend to follow Bitcoin. GBTC and ETHE are close end funds with large swings in premium that change that relationship.

A lot of the recent drop was a cascade of margin calls by leveraged crypto ‘investors’. Leverage builds on the way up and arguably gets wiped out when whales start a liquidation event.

That is one theory. But in crypto a 15% drop is a normal occurrence. You should plan for 85% drops in your portfolio diversification.
 
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