Bitcoin - World's 30th largest Currency

[redduck]

... I'm not going to squander a life's savings on it, but when I here/see people say that "if you'd have bought Amazon" or whatever in the beginning, a $1,000 would be $1M today...

Beware of the law of unintended consequences. Anyhow, when I was a very young child, apparently my father put all his money into a South Sea scam. Lost our home. Lost everything. Luckily, his brother had a hovel in the Shetland Islands where we could stay. Now, here's where the law of unintended consequences comes in: My father's job was to take care of the sheep on my uncle's farm. My father was a rather dour man, but after a week tending sheep, he started coming back to the hovel at the end of the day with a smile on his face. He seemed happy for a man who had lost it all and he sure slept well. Now my mom, who basically was a calm, unflappable person also began to experience a personality change. She became irritable, short-tempered and weirdly kind of jealous--which seemed crazy to me. I mean, it was only him, her and some sheep--what was there to be jealous about?

 

[NW-Bound]

... I want to be on the lookout for the next Amazon. Some people had the foresight to see these new things. How did they do that? Dumb luck?

Wikipedia says:

Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralized digital currency, as the system works without a central bank or single administrator. The network is peer-to-peer and transactions take place between users directly through the use of cryptography, without an intermediary. These transactions are verified by network nodes and recorded in a public distributed ledger called a blockchain. Bitcoin was invented by an unknown person or group of people under the name Satoshi Nakamoto and released as open-source software in 2009.

Nakamoto created a website with the domain name bitcoin.org and continued to collaborate with other developers on the bitcoin software until mid-2010. Around this time, he handed over control of the source code repository and network alert key to Gavin Andresen, transferred several related domains to various prominent members of the bitcoin community, and stopped his involvement in the project. Until shortly before his absence and handover, Nakamoto made all modifications to the source code himself.

​

To this day, we do not know who Satoshi Nakamoto is. He never appeared in public, and has not been active since 2010, and also has not spent any of the million bitcoins he mined.

... Except for test transactions these remain unspent since mid January 2009. The public bitcoin transaction log shows that Nakamoto's known addresses contain roughly one million bitcoins. As of 17 December 2017, this is worth over 19 billion USD. This makes him the 44th richest person on earth.​

Bitcoins were not considered serious at first. I think programmers who participated early thought of it as a game. Hence, someone paid 10,000 bitcoins for a pizza. And a Web site said "Gavin Andresen, a coder in New England who bought 10,000 bitcoins for $50 created a website, ‘Bitcoin Faucet’ in 2010, and he gave away all those coins just because."

Bitcoin has some very novel concepts, and is said to be the first scheme that solved the double-spending problem in an environment without central oversight. However, as the 1st implement it has some drawbacks that newer proposed schemes are trying to improve on.

 

[NYEXPAT]

Now that trading on the CME is open, the spread on the front month contract is down from $400 to $40. So much for arbitrage for the little guy.
On the CME 1 contract = 5 bitcoins.

 

[dixonge]

I mean, it was only him, her and some sheep--what was there to be jealous about?

Reminds me of the old line "Where men are men and the sheep are nervous"

LOL

 

[tinlizzy]

Started in 1989 as a small Canadian mining company trading on the Toronto exchange (tell you anything). Go for it, but if I wanted cheap I would put my money in Ripple. If I wanted stock I would look at John McAfee's new company.

Really interesting to me is the proposed deal with Hernando de Soto and Overstock.com to use blockchain to create a worldwide property registry.

Besides being one of the worlds great economists, He is one of our great FIRE examples!

What is Ripple exactly? It's not exactly a currency but an exchange?

 

[Running_Man]

But if even one of their products become a standard to use, wouldn't it actually be a very cheap way of getting exposure?

I'm not talking about doing/buying something crazy, but if there really is "the next thing" happening, I want to try to get in on it. I'm not going to squander a life's savings on it, but when I here/see people say that "if you'd have bought Amazon" or whatever in the beginning, a $1,000 would be $1M today, I want to be on the lookout for the next Amazon. Some people had the foresight to see these new things. How did they do that? Dumb luck?

For the $1.55 per share you are paying you are getting $0.10 of crypto-currencies and paying $1.45 per share for technology they bought for $0.01. Whether they are successful or not is the gamble, you and management are sharing. However the differential in cost you are paying is 145X what the company paid in execution of their strategy. At 20-30 cents per share it is a gamble that may pay off, at current prices I think it is expensive, however one of the few ways to invest in this currently if you are of that mind.

 

[tinlizzy]

https://techcrunch.com/2017/12/15/u...ure-of-the-trillion-dollar-shipping-industry/

UPS has joined the blockchain in transport alliance and is looking at Etherium. I don't think any of this is a fad.

 

[NW-Bound]

They are looking at using the technology behind the blockchain concept to manage and to log transport data. Not sure about it having to do with them using any of the current cryptocurrency to manage payment, though it is possible.

About blockchain technology, some businesses including banks also said they were looking to apply it. And there can be many blockchains to track a myriad of things, and they may not have much to do with one another.

This technology may be like the Internet. No government or a business monopoly has total control of it. But that does not mean the end users like us can string wire and fiber optical cables between our homes and do without ISP's, cable, telcos, and wireless carriers.

 

[Teacher Terry]

We decided at this point a bird in the hand was better so cashed out 60k. We still have some that we are going to let ride.

 

[tinlizzy]

They are looking at using the technology behind the blockchain concept to manage and to log transport data. Not sure about it having to do with them using any of the current cryptocurrency to manage payment, though it is possible.

About blockchain technology, some businesses including banks also said they were looking to apply it. And there can be many blockchains to track a myriad of things, and they may not have much to do with one another.

This technology may be like the Internet. No government or a business monopoly has total control of it. But that does not mean the end users like us can string wire and fiber optical cables between our homes and do without ISP's, cable, telcos, and wireless carriers.

I'm trying to understand it but I'm not sure I get it.

Bitcoin is like a currency but it's more like a ledger with a credit for work performed for the blockchain?

Etherium is a blockchain with two componants, one to keep track of goods and the coin that provides the transaction data and allows a transaction of goods?

And Ripple is like a central bank that exchanges the cryptocurrencies?

 

[Fermion]

It is bitcoin vs biotech. I made about the same as Teacher Terry did in bitcoin by investing in individual biotech this year (well, more like $180k but I had more invested).

Hmm.

Bitcoin...Biotech.

Perhaps it is a B thing?

Any other good speculations starting with B?

 

[redduck]

Well, I wouldn't say it's a good speculation, but BITcf is up 28% as I type. If you look closely you will see that it does start with a "B."

 

[aja8888]

We decided at this point a bird in the hand was better so cashed out 60k. We still have some that we are going to let ride.

Just curious, but is the gain subject to capital gains tax?

 

[sengsational]

From what I understand, yes, the IRS wants their cut.

 

[NYEXPAT]

From what I understand, yes, the IRS wants their cut.

In 2015 only 802 people reported their gains to the IRS. Recently the IRS went after Coinbase to release their transactions of customers who traded more than $20k in Bitcoin a year between 2013-2015. Incidently, they won the court case but it is unclear if Coinbase has complied. Also, the Guvmint has partnered with Chainanalysis to try and learn the identities of traders.

 

[NYEXPAT]

What is Ripple exactly? It's not exactly a currency but an exchange?

Ripple is a company that developed a protocol for payments and exchange. Their "crypto" is called/traded as XRP.

 

[FUEGO]

About blockchain technology, some businesses including banks also said they were looking to apply it. And there can be many blockchains to track a myriad of things, and they may not have much to do with one another.

What's to stop banking execs from the world's top banks getting together and hashing out a plan for their own proprietary blockchain currency where they each own a small part of it. They can scale it up quickly, promote it to their current book of business (in retail banking AND in their wealth management arms) and create their own megabillion dollar cryptocurrency almost overnight.

Banks are deeply in bed with regulators and lobbyists, so they might be able to kill competing cryptocurrencies legislatively or through regulatory means. Like white knights riding into the crypto market to save us from ourselves! Now, how do we get a piece of the next big cryptocurrency?

Or should I continue to hold low cost passive index funds and profit?

 

[Teacher Terry]

Yes we pay taxes on the profits.

 

[NYEXPAT]

What's to stop banking execs from the world's top banks getting together and hashing out a plan for their own proprietary blockchain currency where they each own a small part of it. They can scale it up quickly, promote it to their current book of business (in retail banking AND in their wealth management arms) and create their own megabillion dollar cryptocurrency almost overnight.

Banks are deeply in bed with regulators and lobbyists, so they might be able to kill competing cryptocurrencies legislatively or through regulatory means. Like white knights riding into the crypto market to save us from ourselves! Now, how do we get a piece of the next big cryptocurrency?

Or should I continue to hold low cost passive index funds and profit?

Nothing. But it would still be on a centralized vs distributed ledger, controlled by central banks who could artificially increase/decrease supply. The original idea was to create a peer to peer payment system to eliminate the need for middlemen in the transaction.

 

[FUEGO]

Nothing. But it would still be on a centralized vs distributed ledger, controlled by central banks who could artificially increase/decrease supply. The original idea was to create a peer to peer payment system to eliminate the need for middlemen in the transaction.

I still envision a distributed ledger system. A dozen banks, maybe a hundred sign on as sponsors to get this thing going (of course with the benefit of each of them getting a big fat initial dose of the cryptocurrency). Then open it up for anyone to mine and anyone to transact on.

 

[FUEGO]

I also have to add this datapoint. My brother in law called me very excited this morning, like he had won the lottery. He wanted to make sure I knew about this thing called "bitcoin" because all his buddies at the factory where he works are getting super rich on it (amounts "earned" varied from $2,000 to $14,000 since they started "investing" in the past 2-3 weeks). He wants to win big too and mentioned throwing a few hundred dollars into bitcoin ("hey, uh, how exactly do you uh... buy this stuff?").

I suggested he treat it like gambling and have fun with it, but don't play with any more money than you can afford to lose. And I further suggested that I wouldn't be putting any money into it personally

I'm calling a top based on this phone call. This is the equivalent of the shoeshine boy/paper boy giving hot stock tips.

At the end of the phone call he asked if I could go over his 401k asset allocation and expense ratios to make sure he's still on the right track with that. Thank goodness for the 401k - at least he won't be broke when he's 60 or 70 if he keeps contributing regularly. I think he's noticed that I'm getting pretty wealthy and doing very little whereas his fellow factory workers are still cutting boxes, running machines, etc. He knows I'm a big fan of 401ks and the like, so maybe he likes them for the same reason.

 

[exnavynuke]

I treat my cryptocurrency as gambling/speculating money as well. I've bought $1,149.92 worth of currency since July. I've cashed in $1,119.22 so far. The remainder is currently valued at ~$3,440 across 4 cryptocurrencies.

There's nothing wrong with gambling money you don't mind losing/can afford to lose imo.

 

[NYEXPAT]

Because I do not have banking in the USA, I have not been able to participate in the bitcoin frenzy. Additionally, there was to much risk for me. Finally, I convinced my friend to act as my proxy and together we are now long Jan 2018 bitcoin futures /short GBTC.

 

[NYEXPAT]

A nice peace for those that believe "money is more real" than crypto currency.

https://medium.com/@mariabustillos/you-dont-understand-bitcoin-because-you-think-money-is-real-5aef45b8e952

The article starts like this:

Bitcoin is an illusion, a mass hallucination, so one hears. It’s just numbers in cyberspace, a mirage, insubstantial as a soap bubble. Bitcoin is not backed by anything other than the faith of the fools who buy it and of the greater fools who buy it from these lesser fools. And you know? Fair enough. All this is true.

What may be less easy to grasp is that U.S. dollars are likewise an illusion. They too consist mainly of numbers out there in cyberspace. Sometimes they’re stored in paper or coins, but while the paper and coins are material, the dollars they represent are not. U.S. dollars are not backed by anything other than the faith of the fools who accept it as payment and of other fools who agree in turn to accept it as payment from them. The main difference is that, for the moment at least, the illusion, in the case of dollars, is more widely and more fiercely believed.

 

[easysurfer]

Paying for things by smartphone still seems like an illusion to me.