The Cryptocurrency Thread

[freedom2022]

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?

Thank you for responding to my post.
To answer your question, bitcoin has been around for more than 10 years.
My goal is to preserve my capital.
We all know high inflation will be a new normal for several years to come.
Stocks are good investment. But, what is up will go down.
Or more likely it will go flat.
Bonds don't give us good return anymore.
Gold used to be a good hedge against inflation. However, people seem to think differently about gold now.
Real estate has its own bubble and I am not a handy guy to maintain properties.
So, I am searching alternate investments to hedge against inflation.
I used to think bitcoin was a Ponzi scheme.
After spending more time learning about it, I came to realize bitcoin can be a good hedge against inflation for several reasons:
1. Supply is limited.
2. Young people inherit trillion dollars from their parents.
3. Young people like bitcoin.

 

[Markola]

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.

This is approximately my mindset. Of course, I wish I owned 100 Bitcoin but the truth is, I have never been an early adopter of any technology. I invest for decades and believe that I can still be part of the early bell curve.

I appreciate 37and Happy and others hanging in there, because their insights kindled my own interest to finally go study this new asset class.

Bitcoin alone in the crypto world has achieved enough critical mass to convince me. It has a limited supply, is attracting credible mainstream investors, and its particular ecosystem seems to have a moat forming around it, reflected in its high price and overwhelming market share. Leaders tend to lead and if there is a blue chip cryptocurrency, it is Bitcoin.

I have convinced myself. That’s me. In this space, YM, most definitely, MV. Good luck!

 

[ERD50]

... If you have not taken time to research what is happening in the cryptocurrency world why should some poster be obligated to convince you? ....

Because some posters have come to this forum, which covers a broad range of topics of interest to retirees or wanna be retirees, and have posted (almost?) solely on the one topic of Bitcoin, praising it to the heavens.

They seem to be motivated (not obligated) to convince us, so why not challenge them?

BTW, since I always 'sign' my posts with "-ERD50" (it's just habit), your current sig makes your posts look like I signed them. Please change that.

-ERD50

 

[thepalmersinking]

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.

As I retire in March, I have wondered what the marketplace is for a legit crypto advisory firm. I have met with 3 different small independent investment companies and have asked them 3 questions. 1. What are your thoughts on Crypto? Answer- All do not believe in it. 2. Have your clients asked about it? Answer - yes and we steer them away from it. 3. If you had a reputable firm where you could refer them while retaining your AUM fees, would you? Answer - we would consider that.

Most people have no clue about the underlying Web 3.0 projects, role of DAO’s, coins vs. tokens. Lot of pumping and little real data.
It is very much lot the Dot.com period. We need to flush the suckers out and this will be as legit as any pseudo commodity.

On the other hand, people buy stocks and never read prospectus or buy corporate bonds thinking they are worry free too. So….

 

[captain3d]

I think crypto is correlated to stocks at this point as they are both expected to perform well in good times. Risk On assets. We have seen stock drops being reflected in crypto drops with magnified effect.

My guess if stocks drop 50% crypto will drop 85%. I also think crypto can drop 50%+ all by itself

Thoughts on that?

As crypto is considered property and currently has no wash sale rule it is a great candidate for tax loss harvesting with immediate buy back for long term holding.

 

[OverThinkMuch]

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?

Technically Bitcoin has existed for a decade, but it was not known to the mainstream for years after it's creation.

Bitcoin lost much more of it's value than stocks in Mar 2020. If stocks lose half their value, it's safe to guess Bitcoin would lose -70% to -90%.

 

[Chuckanut]

Bitcoin and other Crypto currencies are a speculation today.

Since 11/11/21 Bitcoing is down about 24%. That is not a good way to fight inflation. Just because fiat currencies like the dollar are hurt by inflation does not mean the Crypto currencies are effective inflation fighters.

Crypto currencies have to stand or fall on their own merits.

Right now, IMO, Crypto merits being considered a speculation. Nothing more. In the long run, it may end up being a big winner, or a big loser, or maybe it goes nowhere. Nobody knows for sure.

 

[Mr._Graybeard]

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.

Very true. We've seen people get hurt by investments du jour that turned into disasters. Some of us have been hurt ourselves, me included.

I like the observation that good investments should be boring. Wall Street rocketships have a way of crashing to earth. A lot of even conservative investors on this forum like S&P index mutual funds and ETFs; I prefer funds with a value tilt because the components have a track record. I would suggest at least that younger investors consider a similar investment core, especially as the high flyers fly high. You'll get the benefit when times aren't so good.

 

[joesxm3]

Bitcoin and other Crpto currencies are a speculation today.

Since 11/11/21 Bitcoing is down about 24%. That is not a good way to fight inflation. Just because fiat currencies like the dollar are hurt by inflation does not mean the Crypto currencies are effective inflation fighters.

SP500 just made an all time high.

BTC is in the toilet.

SP500 year to date
3765 to 4712, roughly 25%

BTC year to date
29084 to 48496, roughly 66%

SP500 9/30 to date
4364 to 4712, roughly 8%

BTC 9/30 to date
43381 to 48496, roughly 11%

Pardon if my numbers are a bit rough, I just got them off of Trading View charts.

 

[Markola]

Gold is a better comparison to Bitcoin than the S&P 500, since it is not a company. However, Ark Invest’s Cathie Wood said on CNBC this week that her firm’s study found that real estate is the most closely correlated asset class to Bitcoin: https://markets.businessinsider.com...itutional-allocations-cathie-wood-ark-2021-12

 

[RobbieB]

Because some posters have come to this forum, which covers a broad range of topics of interest to retirees or wanna be retirees, and have posted (almost?) solely on the one topic of Bitcoin, praising it to the heavens.

They seem to be motivated (not obligated) to convince us, so why not challenge them?

BTW, since I always 'sign' my posts with "-ERD50" (it's just habit), your current sig makes your posts look like I signed them. Please change that.

-ERD50

Yeah, you always know when someone is selling eh?

I don't bother with challenge, not worth the time.

 

[jim584672]

Who cares how volatile it is, it is still intrinsically worthless. There is no conceptual difference between Shiba Inu @ $0.00003420 and Bitcoin @ $49,045, they both are greater fool investments.

 

[freedom2022]

Hi 37 and happy,

I appreciate your posts. I learned more about bitcoin from it.
I agree with your writing in the most recent post. However, your statement below make it sound like preparing for doomsday scenario.

"And by the way, have exposure to BTC via a listed ETF or index fund will not provide the gains or protection that owning BTC directly will provide should some types of scenarios come to fruition"

This is the quote from your post.

 

[MichaelB]

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.

Thanks for taking the time to respond. I value your opinions even when I don’t always agree with them.

There’s nothing wrong with some healthy skepticism, be it about bitcoin, Tesla, pop artwork, or many other things that have become unexpectedly valuable over time. An opportunity missed is not the same as a portfolio error. This is especially true if we judge ourselves on what we have achieved, not what others are achieving (or say they are).

If you choose to make a portfolio allocation to bitcoin, that’s your choice and I hope it works for you. In my humble opinion, there still is no compelling need for someone, especially when retired, to allocate portfolio to crypto assets. The risk reward ration is not at all clear.

I still don’t see the relationship between crypto and inflation, current or future.

 

[Markola]

"And by the way, have exposure to BTC via a listed ETF or index fund will not provide the gains or protection that owning BTC directly will provide should some types of scenarios come to fruition".

I sense that Bitcoin, at least, is moving past its initial libertarian, gold-bug-oriented fan base, though many of the loudest YouTube and podcast broadcasters hold some alarmist doomsday assumptions that can sound like they are from the Prepper fringe. Some of these folks are so committed that they own 100% Bitcoin.

Investors like Paul Tudor Jones, who has recently built a 5% position, do not wish to burn down the Federal Reserve nor do they have a monomaniacal hatred of the dollar. Nor do I and I don’t think 37andHappy is in this camp, given his 3-5% or so stake. Mainstream investors are getting on board, because they see critical mass forming toward a much more secure internet, a new one trillion asset class that is not correlated well with existing asset classes, and other potential diversification benefits. Capitalism absorbs everything in its wake, no matter where it starts.

And such mainstream investors want to be early movers. Once all the basic questions are answered to the collective satisfaction and more pension funds, hedge funds, university endowments and insurance companies, etc. decide to take a small stake, we might well wake up to $500,000 spot Bitcoin.

 

[captain3d]

For people who do not want any crypto in their portfolio today.

What changes would it take for you to want crypto?

 

[joesxm3]

Are the join dates listed accurate?

I see that although he has been accused of being a newcomer, 37andhappy has a join date of June 2008. Does that mean he is actually 50 now?

When I started the "Help me understand crypto" thread that was rolled into this one, I was sincerely interested in finding out what crypto was, how it worked, and trying to figure out if it was important. I had no intention of trying to convert anyone, even myself to the crypto religion.

Since then, I have come to the conclusion that a non-zero portfolio allocation to crypto is appropriate. But I do see crypto as a very volatile proposition and as a way to get some quick good returns. However, I am starting to think that you need to trade in and out to lock your profits. On the other hand, I worry if I had some BTC and sold it at a top like $69K, I might be kicking myself when it is $200K.

I was there for the 1987 crash and was doing very well during the dot com bubble, until I wasn't. One friend of mine had $3M of stock that he bought from the stock options he got from his employer. His option price was $9 and the shares were trading at $60 before the the lockup ended. Long story short, there was some administrative mix up that allowed the senior holders to sell but not the employees until it was $30. He had been foolish enough to exercise his options as they became vested. At $25, I told him to sell all he had and keep the yet to vest options. He wanted to wait for $30 to sell. End result, he finished the trade owing $40,000 in taxes and having stock selling for 60 cents a share.

I bought JDSU for $10 a share and watched it go to $120. I gave 10% to my charitable gift fund. Next I knew it was $12 a share and I was wondering what happened.

Maybe BTC works the same way?

 

[joesxm3]

I listened to a few interviews lately and one explanation seemed to make sense to me.

The Internet is made up of protocol layers that build upon each other. At the base is TCP/IP. On top are various utility layers like DNS, Email, VOIP, etc. What is missing is a financial transaction protocol layer.

Bitcoin and some of the other crypto protocols are this missing financial transaction layer.

What the interviewee argued was that unlike the beginning of the Internet were we were not able to invest in the actual protocols, like TCP/IP, we now have an opportunity to invest in the financial protocols.

Whether that means BTC or some of the more complex protocols like Ethereum or Solana remains to be seen. But that explanation seemed to help establish some sort of intrinsic value for some of these crypto protocols.

 

[joesxm3]

Another interesting thought from some reading and interviews is the effect of exponential growth on human perception and company performance or stock valuation.

With exponential growth, it seems to be going very flat until it hits the "hockey stick curve" and takes of vertically. This is hard for the human mind to perceive.

There is a tendency to identify companies or investments with potential, but to be much too early on the exponential curve. That is basically what happened with the dot com bubble. Take Amazon for example. It got a huge rush, but then was plodding along on the flat portion of the exponential curve. The stock price got crushed, but then years later it hit the hockey stick point.

One interviewee made the point that Cathy Wood with ARK Invest is good at picking disruptive companies, but is too early on the timeline.

Another interesting point is that James, the guy from Invest Answers, while agreeing that BTC is the greatest asymetric bet of our lifetime, feels that the real money is to be made trading stock options and that rental real estate should be a third to half of one's portfolio to provide a stable source of continuous income.

 

[Aerides]

Are the join dates listed accurate?

I see that although he has been accused of being a newcomer, 37andhappy has a join date of June 2008. Does that mean he is actually 50 now?

Join dates are accurate. And yes, in his intro thread, he claimed to be 37 in 2008. So, today at least 50 if that's true.

And of course, age should not be pertinent to the discussion. Hopefully no one is swayed by or dismissive of arguments, based on the age of the person making them.

 

[Mr._Graybeard]

Are the join dates listed accurate?

I see that although he has been accused of being a newcomer, 37andhappy has a join date of June 2008. Does that mean he is actually 50 now?

When I started the "Help me understand crypto" thread that was rolled into this one, I was sincerely interested in finding out what crypto was, how it worked, and trying to figure out if it was important. I had no intention of trying to convert anyone, even myself to the crypto religion.

Since then, I have come to the conclusion that a non-zero portfolio allocation to crypto is appropriate. But I do see crypto as a very volatile proposition and as a way to get some quick good returns. However, I am starting to think that you need to trade in and out to lock your profits. On the other hand, I worry if I had some BTC and sold it at a top like $69K, I might be kicking myself when it is $200K.

I was there for the 1987 crash and was doing very well during the dot com bubble, until I wasn't. One friend of mine had $3M of stock that he bought from the stock options he got from his employer. His option price was $9 and the shares were trading at $60 before the the lockup ended. Long story short, there was some administrative mix up that allowed the senior holders to sell but not the employees until it was $30. He had been foolish enough to exercise his options as they became vested. At $25, I told him to sell all he had and keep the yet to vest options. He wanted to wait for $30 to sell. End result, he finished the trade owing $40,000 in taxes and having stock selling for 60 cents a share.

DW and I had an experience somewhat similar to your friend, although we managed to hang on until we were able to mitigate the loss somewhat.

Part of the scenario was that we had a "financial advisor" who was feeding into our greedy emotions and encouraging us to wait until our options boosted our profits even more instead of getting out while the getting was good. To this day I wonder whether he was shorting the stock on the side.

 

[explanade]

For people who do not want any crypto in their portfolio today.

What changes would it take for you to want crypto?

If equities became volatile, for whatever, reasons like hyperinflation or stagflation and crypto seemed more stable.

IOW, the opposite of today.


Most of the people in ER have plenty of money left for retirement. Some will likely have substantial money to leave to heirs.

So asset preservation is a higher priority than say a cohort of 30-somethings.

As it is, growth in equity valuations have probably resulted in many ER members having more money than they imagined.

Some may take the opportunity to do a small crypto allocation.

Some may just stay with the devil they know, especially since the indexes keep going up. Maybe not as fast as crypto but fast enough. Even if equities stagnated for the next 10 or 20 years, people who've been in the market the last 10 or 20 years have big wins.

 

[Running_Man]

Thanks for taking the time to respond. I value your opinions even when I don’t always agree with them.

There’s nothing wrong with some healthy skepticism, be it about bitcoin, Tesla, pop artwork, or many other things that have become unexpectedly valuable over time. An opportunity missed is not the same as a portfolio error. This is especially true if we judge ourselves on what we have achieved, not what others are achieving (or say they are).

If you choose to make a portfolio allocation to bitcoin, that’s your choice and I hope it works for you. In my humble opinion, there still is no compelling need for someone, especially when retired, to allocate portfolio to crypto assets. The risk reward ration is not at all clear.

I still don’t see the relationship between crypto and inflation, current or future.

If you look at the value of M2 that is 20 trillion dollars in USD, if Bitcoin only manages to replace 1/2 of that level the value of Bitcoin will need to be 10 times greater than it is today, if that occurs it is much more likely to supplant many other currencies as well. More than likely it will be at least 20 trillion in value so Bitcoin will become by necessity to work as replacement between 1 and 2 million dollars each.

Gold has a value of 8 trillion dollars, but since the world is not on a gold standard the price as a reserve currency has been depressed but replacing only gold as it stands today would be a 6-8X move. This to me does not seem to be a logical stopping point as if Bitcoin were to achieve this level of acceptance the digital applications are too valuable to stop there so I myself am looking for 1-2 million ultimately.

Now this is not new this has been the possibility since I first heard of bitcoin when it was $8 but didn't look at really till it hit $100. As the value grows the likelihood of hitting a million dollars ultimately becomes far more likely not less, a 5% allocation means it would protect your entire portfolio value if this were to occur. There is a definite possiblity it could go to zero, but based on everything I am following the path to 1-2million per bitcoin is occurring.

Now I wish I had come to this conclusion when I first heard of bitcoin and could easily have purchased 3,000 bitcoins without batting an eye and having 150 million right now. But I have to settle with my purchases between $7,000 and $30,000.

I first tried seriously to hold a thread on Bitcoin in 2017 with the price in a one way ticket to 18K from the 8K during the 5 weeks from where I started the thread, in the thread I did note that an 80% drop would be NORMAL for this type of investment, and that did equal the bottom of a drop in bitcoin. But Bitcoin itself has grown far more accepted since 2017. However 95% of the posts were derisive of the idea of bitcoin, though I could tell from the tenor of posts that bitcoin ignorance, denial and mischarecterization were the source of most of the conversation posted on the thread. It was a very civil thread though.


I stand by my comment where I stated USD being increased in value in society from 4 trillion to 12 trillion in 12 years is considered prudence but a 5X jump in bitcoin is seen as a bubble is not logical.

https://www.early-retirement.org/forums/f44/bitcoin-worlds-30th-largest-currency-89521.html#post1971036

 

[captain3d]

If equities became volatile, for whatever, reasons like hyperinflation or stagflation and crypto seemed more stable.

IOW, the opposite of today.

That seems fair. And I think for now crypto will be an amplified version of stocks volatility. I do not see it NON-correlated yet and if anything more like an extreme tech stock. Bitcoin itself is slightly different as it is half gold half tech by that analogy.

I only hold crypto using funds that are above and beyond what I think I need for a successful retirement. It is still 20% approx and of course I greedily hope it will balloon over the next five years, but also it is non essential money...I think.

Having said that I would not be without crypto in the portfolio either as I look at the risks to the other traditional assets.

 

[captain3d]

However, I am starting to think that you need to trade in and out to lock your profits. On the other hand, I worry if I had some BTC and sold it at a top like $69K, I might be kicking myself when it is $200K.

This is easily handled by rebalancing to your preferred allocation just like any other asset.