The Cryptocurrency Thread 2

[turbo89]

Quote:

Originally Posted by jim584672 You definitely want to get to cold storage as quickly as possible if you are playing in this game. crypto.com (Matt Damon) has just frozen all transactions due to customers reporting thefts in their accounts.

This was an interesting case, as it apparently impacted people who had 2-factor authentication activated.

I certainly understand why folks would want to use cold storage, but the transact fees and loss of staking yields make it less attractive in my eyes.

This is “part of” crypto… its kind of the Wild West. As investors we need to pick good exchange(s) with enhanced security measures and good insurance. Staking adds a layer of security, as it can be used to lock your money up for specific durations.

[Markola]

I read through the article in post #158 above and a few others. It seems almost all of these exchange hacks involved hot wallets and other internet-connected assets, and the Coinbase hack and some others involved 2fa authentication Sim swap scams. I haven’t seen one yet of hack of cold storage on a reputable exchange or a personal custody hardware wallet but please post if you see one.

My bank and other systems also use 2fa authentication, which was touted as the gold standard of online protection. From what I can tell, scammers have better success with texted codes rather than authentication apps.

[all4j]

Quote:

Originally Posted by joesxm3 There is a narrative floating around that younger people are buying crypto as an inflation hedge rather than buying gold. I have not attempted to verify the volume of gold transactions to see if it has changed lately. This narrative posits that the boomer generation who has bought gold as an inflation hedge is dying off and their heirs are dumping the inherited gold and buying crypto instead. Another narrative I have heard recently, which is probably older, is that the price of gold is being suppressed by activity in the futures market where "paper gold" can be sold much in excess to the actual supply. A couple things I have been wondering about is whether a drop in the stock market will trigger a flight to the safety of bitcoin as some pundits predict and also if a blow off top in crypto might trigger some diversification into stocks among the young crypto buyers. I saw another article saying that in 2020 and 2021 there was quite an increase in the number of younger people opening brokerage accounts. I wonder if this group will be more receptive to crypto and perhaps swing trade between stocks and crypto.

Interesting -- thanks for insight. A few thoughts...

Actually part of what I heard was along the lines of outflow from gold to crypto (at least in US/Europe, but opposite in Asia). To me though, that is perhaps more of a symptom than a driver. Implies investor did own gold, then switched. Folks buy gold for different reasons, especially in some cultures. I believe that some who try to create a simple, etf version of the permanent portfolio/golden butterfly/all weather generally substitute bitcoin for part of the commodity (not cash/dollar) portion. I wonder if this will become more prominent as crypto matures & has greater liquidity/efficiency. I still question why one would see a greater inflation hedge in crypto than other assets? It does move away from a currency being devalued, but does it secure greater assurance of retaining purchasing power in the future?

Demographics are an interesting dynamic for sure. I wouldn't read much into an increase of younger folks opening brokerage accounts. At least some of that was driven by the meme stock craze -- perhaps not long term investing. I have heard some have tired of renting or living at home. Coupled with more work at home opportunity, they are generating demand for real estate more than previously.

As central banks shift their intervention in upcoming months, there will undoubtedly be shifts in allocations. If, as you say, there is perceived "safety of bitcoin", perhaps it will get inflows at the expense of stocks & bonds. For a generation of investors who haven't seen risk in the marketplace, it may be uncharted waters

[explanade]

Quote:

Originally Posted by Markola I read through the article in post #158 above and a few others. It seems almost all of these exchange hacks involved hot wallets and other internet-connected assets, and the Coinbase hack and some others involved 2fa authentication Sim swap scams. I haven’t seen one yet of hack of cold storage on a reputable exchange or a personal custody hardware wallet but please post if you see one. My bank and other systems also use 2fa authentication, which was touted as the gold standard of online protection. From what I can tell, scammers have better success with texted codes rather than authentication apps.

Supposedly Google Voice numbers are better because scammers can't reach Google employees to fool like they can telephone company employees.

[joesxm3]

I saw some discussion that the crypto.com hack got past 2FA, including things like Google Authenticator. While looking for more info, I came across this article on how malware on the phone can get at the secret sauce used by the phone based authenticators.

I guess the main takeaway is if you are using Google Authenticator for something serious like your brokerage account, it would be worth the extra cost to have a dedicated phone to run it on that you never download apps to. I suppose that is hard with so many apps being force fed to phones these days.

If your brokerage or crypto exchange supports a hardware device like Yubikey, you are probably better off using that.

https://finance.yahoo.com/news/most-...130000637.html

[oldie]

Quote:

Originally Posted by Markola A better analogy for Bitcoin might be land on the island of Manhattan, as there is a finite number of parcels and developers are building aggressively on top of it.

There are thousands of islands out there which have also finite land but which nobody is buying.

The land of the island of Manhattan is valuable because people want to live there (for the reasons which have nothing to do with it being Manhattan), not because there is finite land.

The only value of crypto right now is speculative, and it is not backed by anything except the speculating interest of others.

[target2019]

Quote:

Originally Posted by aja8888 When I click on the link, a pop up asks me to subscribe, and if I clear that popup, it sends me to the home page where I don't see the article.

Here is a caption from the page. There is a video as described below.

Quote:

Play Video CoinOS CEO Kris Constable and NextWorldLeader Managing Partner Shannon Allen discuss how crypto holders can protect themselves from hackers and mitigate their cybersecurity risk. "Not your keys, not your crypto," Constable said, echoing the mantra of the digital asset space.

Without banking or legal protection you're screwed. For older investors who are already prey, this is a layer of complication. So the elderly guy is watched by spyware, or a close contact is tasting his secrets on paper.

[Markola]

While we’re fretting about risk and friction, hoping the Bitcoin ecosystem will evolve to be a safer and simpler space before we somehow lose our own stashes, it’s worth considering some of the risks and frictions of the traditional finance system. This Bitcoin Magazine article explores how Bitcoin developers are disrupting the half-century year-old global wire transfer regime, and why that antiquated system’s security flaws, fees, delays and exchange-rate problems needs disrupting to save corporations and individuals considerable time, hassle and dollars.

In my own career, I’ve been amazed at the volume of dollars that flow via wire transfer into every organization I’ve worked for that have no identifiers except the sending bank. We spent countless hours contacting our employees asking, “Is this your money?” The blockchain ledger of Bitcoin and related apps on the parallel Lightning network are starting to solve this massive inefficiency.

https://bitcoinmagazine.com/business...r-global-money

[Markola]

Quote:

Originally Posted by oldie There are thousands of islands out there which have also finite land but which nobody is buying. The land of the island of Manhattan is valuable because people want to live there (for the reasons which have nothing to do with it being Manhattan), not because there is finite land. The only value of crypto right now is speculative, and it is not backed by anything except the speculating interest of others.

Yes, I said it wasn’t a perfect analogy. This new asset class defies perfect analogy. It’s not my duty to try to persuade anyone else why growing numbers of people are buying lots on Bitcoin Island. Regardless of individual opinions, it is an eleven year global trend that isn’t slowing, resulting in 170% average annual appreciation and a spot price of $42,000 US at present. Most people who undertake an open-minded study of the space want to know more and more. The fact that the vast majority of people can’t, won’t or don’t yet “see it” means that the total addressable market remains enormous. These disruptive technologies are in the embryonic stage, and I am personally most curious to witness the next ten years.

You’re also right that there are thousands of Sh*tcoin Islands that may or may not ever be developed into anything meaningful or occupied for very long. For lots of important reasons that curious people can study for themselves, Bitcoin Island is distinct from all the rest and it is the place that I plan to HODL down.

[Gumby]

MODERATOR NOTE: This discussion is drifting into the Bitcoin good/bad argument, which is barred by the rules of this thread. If it continues, the thread may be closed. Please adhere to the rules.

[Markola]

I want to be respectful of the rules. If the mods directed this comment at me, I honestly don’t understand this “good/bad” rule and I, for one, could use some clarity; the ER Forum has endless posters making their cases for their risky investments in options, derivatives, preferred stocks, real estate of all kinds, day trading stocks, junk bonds and you name it. What is the forum’s commenting standard, please?

If the mods would please spell out where the above discussion went awry, it would provide an example to help us understand the lines not to cross, especially when someone shows up with an uninformed and critical comment. If it wasn’t directed at me, where was it directed, please?

I do understand that we don’t make comments about people’s ages, and that someone’s recent age-related comment above in #167 is still there.

[REWahoo]

^ Did you see the first post in this thread, where the mods set the rules for commenting?

[Markola]

Yes, and I try consistently to say “This is what I choose to do. YMMV.”

[braumeister]

Two points:

Post #1 in this thread lays out the standards for posting here. If that is still too opaque, it is probably best not to post in this thread.

Comments about moderation do not belong in the forum, but should be addressed by PM to a moderator. That has always been the rule here.

[jim584672]

Say I want to invest $100,000 in BTC today. I wire the funds to Coinbase (or any place that handles this stuff). How much does it cost to get my position on the Blockchain with my private key and how soon would that be done? Not interested in new and upcoming things, so today.

[joesxm3]

Quote:

Originally Posted by jim584672 Say I want to invest $100,000 in BTC today. I wire the funds to Coinbase (or any place that handles this stuff). How much does it cost to get my position on the Blockchain with my private key and how soon would that be done? Not interested in new and upcoming things, so today.

The main expense of doing that would be buying a hardware wallet device and paying the Coinbase trading fee. Moving the bitcoin from Coinbase to the blockchain would only cost a dollar or two.

The hardware wallets range from $50 to $200. If you were to buy the bitcoin using Coinbase Pro rather than Coinbase, the fee is something like 0.50%. So, say $600 to $700 or so. The main Coinbase charges 3% or so to the newbie customers.

I am not sure about the time to get onto the block chain. If you had the bitcoin on Coinbase the transfer would take 10 minutes for the first block to be made, then usually it is considered to wait for 6 more blocks to be sure everything is all settled. So, say an hour.

However, I think Coinbase will put a hold on your deposit for some number of days before they allow you to remove the bitcoin from your account. They should allow you to buy it as soon as your wire transfer arrives. Maybe with wire transfer they have less of a time limit than ACH, but I don't know about that.

Ordering a hardware wallet from the manufacturing company would take a week or so, depending on shipping and supply chain issues. If you were willing to risk a software wallet, setting it up would be same day.

You would also have to set up your account and do the know your customer stuff. I have heard that Coinbase is pretty quick, but have seen people complaining of some other exchanges taking weeks to approve due to staffing shortages.

Also, with that amount of money, it would be prudent to spend some time learning and practicing with your hardware wallet to make sure you don't have an issue doing the transfer.

[target2019]

I met up with a nephew (40) at a family wedding on Saturday. He brought up the topic and asked me how involved I was in Crypto, etc. I mentioned my minor mining involvement as an educational experience to keep me busier. He was surprised to hear that the subject of Crypto is a contentious one on the forums I visit. Let him know that my investing view is very long and conservative. This contrasted with his frequent trades of game NFTs. He's aware of the taxes, and pays, and knows that it is very risky. In his words, it's something to do as corporations take 6 months to process and review candidates for jobs. He spends a lot of time on Discord, researching the early releases and getting in for a quick strike and sell.

To make this somewhat broader, here is an article that discusses findings about differences in generational thinking on the subject.
https://markets.businessinsider.com/...esting-2021-11

Quote:

Nearly two-thirds — 59% — of Gen Z respondents to the survey believe they could become wealthy by investing in cryptocurrencies. "This generation has a greater acceptance and comfort with all things digital, so not surprising that would be more comfortable with crypto," Kathy Sheehan, SVP at Cassandra, a division of Engine, told Insider. "This generation has a lot of concerns about debt and finances."

That brings me to my wife's young cousin (25) and her school loans. She is a music graduate of local Uni, and now working in an inner city high school. We've had serious talks about her private and public loans. She has significant concerns about what happens when the loans get turned back on. The payback and duration are anchors around her neck. I did not get the complete details, but this sounds like the last sentence in the quote above.

So there's a wide gulf between generations, as if I needed to confirm that again. The opinions about investing and finance, and assoicated behaviors are something that is quite interesting to me. YMMV.

[captain3d]

Quote:

Originally Posted by jim584672 Say I want to invest $100,000 in BTC today. I wire the funds to Coinbase (or any place that handles this stuff). How much does it cost to get my position on the Blockchain with my private key and how soon would that be done? Not interested in new and upcoming things, so today.

It may take some time to verify a new account at Coinbase pro before you can transfer in the money

$100k trades are 0.2% or 0.15% depending if it is a market or limit order.

[joesxm3]

I just had a thought.

Investing only 1% in bitcoin is not likely to have a huge effect on you unless it really goes hyperinflation level exponential.

But everyone investing 1% in bitcoin will really help those with a lot of it . . .

[target2019]

Another interesting experiment would be to open a legacy wallet, and put $10,000 crypto in that. Leave it alone and bequeath to heirs. If it does well, they'll open envelope A and read that you always knew it was a fantastic idea. If it does poorly, they open envelope B and read that you always knew it was a loser's bet, but wanted them to see this valuable investing lesson.