The Cryptocurrency Thread

[jasonfreedom]

The crypto market lost some of that inflation handling criteria last Monday when "Squid coin" went to $0.00000 as the creators ran off with the $$$$.

You bring up a great point.

Crypto right now is the Wild West.

No regulation, extreme pump and dump schemes, and scam messages on every messaging platform (try posting "Hey I have $50k to invest, what coin should I buy??" on Discord, and see how many private messages you get with get-poor-quick invitations).

Which is why basic due diligence is mandatory. Squid coin showed many early signs, that many were able to recognize:

- Anonymous founders - none posted LinkedIn profiles, or even pictures
- No partnerships - no blockbuster names in the community were vouching for these guys
- No formal association with the TV show - the show studio denied any relation
- Warnings from MANY sources that this looked like a scam
- An extreme, even by crypto standards, hockey stick moment

I personally think Doge, Shibu Inu, Squid, and other memes are toxic like Chernobyl.

It's the same as if in the late 1800s, I offered to sell you property deeds to plots of land in the Arizona Territory. Some people bought these worthless pieces of paper, without due diligence.

Moral of story: Stay away from pink sheet crypto.

 

[BMP2CPM]

I would like to share my thoughts on this thread.

I was a big skeptic of bitcoin. I remember hearing about Bitcoin way back when it was at $60 a coin.

I’ve read every edition of every investment book by Benjamin Graham and was convinced Bitcoin was a fad that would disappear. Cryptocurrency was pure speculation, nothing more.

However, the US Dollar is completely unable to hold it’s own against Bitcoin. It’s not that I think Bitcoin is worth the price it sells for, it is that US dollar keeps losing its value to Bitcoin and other Cryptocurrencies.

This makes me realize I need to start slowly moving money into cryptocurrency as a hedge against the US dollar continually losing its value.

I now see cryptocurrency is insurance against the collapse of the US dollar. I’m not selling my conventional investments, but I am moving a small amount of money each month into crypto.

 

[aja8888]

I would like to share my thoughts on this thread.

I was a big skeptic of bitcoin. I remember hearing about Bitcoin way back when it was at $60 a coin.

I’ve read every edition of every investment book by Benjamin Graham and was convinced Bitcoin was a fad that would disappear. Cryptocurrency was pure speculation, nothing more.

However, the US Dollar is completely unable to hold it’s own against Bitcoin. It’s not that I think Bitcoin is worth the price it sells for, it is that US dollar keeps losing its value to Bitcoin and other Cryptocurrencies.

This makes me realize I need to start slowly moving money into cryptocurrency as a hedge against the US dollar continually losing its value.


I now see cryptocurrency is insurance against the collapse of the US dollar. I’m not selling my conventional investments, but I am moving a small amount of money each month into crypto.

But isn't Bitcoin valued in dollars? If dollars lost their value, so will Bitcoin. Imagine dollars going to zero....what will Bitcoin be worth?

 

[captain3d]

But isn't Bitcoin valued in dollars? If dollars lost their value, so will Bitcoin. Imagine dollars going to zero....what will Bitcoin be worth?

Well the opposite is clearly true. You can measure Bitcoin in $ or € if you like. Or you can measure $€ in Bitcoin.

I wonder when my keyboard will have a Bitcoin symbol

 

[Markola]

I keep returning to the frame that, in the messy, confusing world of cryptocurrencies and block chain tech, there is Bitcoin, which has legs, and then there is everything else. Nothing is guaranteed for Bitcoin any more than any other investment, but it is dominant and, if a comparison with stock investing fits, “leaders tend to lead.”

That vast, promising second bucket of primordial ooze will require time for the necessary, unpredictable creative destruction before market leader currencies with clear utility and tech companies with tremendous earnings can emerge from the goo. Is that a fair assessment at this early stage?

 

[Aerides]

I might have missed it, but one of my primary concerns is the environmental impact. The sheer power component of all the mining. And it's interesting to me particularly, since Crypto is so much part of the Millennial/Gen-Z investing approach, seemingly also the same groups who rank climate issues higher than older ones.

While the exact impacts are debated, no one can deny that a whole bunch of machines and energy are being burned in the pursuit of mining. Probably this demand has also contributed to the chip shortage, and the spillover effects that has caused are known to most here.

https://www.investopedia.com/tech/whats-environmental-impact-cryptocurrency/

The Bottom Line
Whether you're in favor of cryptocurrencies or against them, there's little doubt that bitcoin and other proof-of-work blockchains use enormous amounts of energy. Much of this energy usage comes from burning coal and other fossil fuels, although cryptocurrency advocates have argued that renewable sources are also a major component. While the exact figures are disputed, even the best case scenarios indicate that mining is a major factor in carbon dioxide emissions.

 

[captain3d]

I keep returning to the frame that, in the messy, confusing world of cryptocurrencies and block chain tech, there is Bitcoin, which has legs, and then there is everything else. Nothing is guaranteed for Bitcoin any more than any other investment, but it is dominant and, if a comparison with stock investing fits, “leaders tend to lead.”

That vast, promising second bucket of primordial ooze will require time for the necessary, unpredictable creative destruction before market leader currencies with clear utility and tech companies with tremendous earnings can emerge from the goo. Is that a fair assessment at this early stage?

I think that is pretty fair. A portfolio of 60% Bitcoin 30% Ethereum 10% other is reasonable at this time.

 

[Exchme]

The other topic I feel worth mentioning now is cryptocurrency use cases.

To be fair, this is the beginning.

From a technologist's perspective, Bitcoin is the most exciting thing to happen in tech since the coming of Internet in the 1990s.

At the time, people were saying "so you have a website, that takes 15 seconds to load... how will that change things?" and indeed use cases were slow to rise up - the only real viable uses were selling things (ebaY and Amazon), email (which at one time cost up to $5 per message to send), or information portals (Yahoo).

Today, there are two real use cases in crypto:
- Decentralized Finance - trading one currency for another
- Gaming

And a case can be made for DeFi being only speculation. But, as more countries and companies decide to accept Crypto as payment.. these DeFi protocols will become more relevant.

Consider Chainlink, an "Oracle" which brokers payments between parties. This company / entity could become VERY relevant as crypto becomes adopted on a more mass scale.

And Gaming, well...the League of Legends world championships had over 200 Million LIVE viewers in 2019. That is a significant percentage of the world population. Children in South Korea are setting up their own grandfathers on Axie Infinity, so grandpa can play games and earn money while at it.

In the future, I do think NFTs as ownership deeds will increase, although it hasn't quite caught fire yet.

And then I think corporate use cases are probably 5-10 years down the line. I always thought Supply Chain was a prime target for disruption via blockchain. But there isn't enough interest in that (according to my networking) to invest real dollars.

I was going to post almost exactly the same thing, except your post is more informed than what I would have written. All of these seem to be an invention or three away from the transformative things being promised. But there are so many smart people working on the technology and so much money flowing that it seems likely that someday, offshoots of the technology will transform our lives. I just don't know what, when, how or who and the eventual big money makers may not even exist yet.

In any event, just like the tech boom, bust and eventual victory, I will watch from the sidelines and be happy with my VTI.

 

[Markola]

I think that is pretty fair. A portfolio of 60% Bitcoin 30% Ethereum 10% other is reasonable at this time.

I know that Ether has the most utility of the coins but its potential supply and, therefore, dilution, is unlimited, vs. Bitcoin’s mining cap. Doesn’t that give you pause buying it?

 

[SecondAttempt]

But bitcoin also has a real value independent of the prospect of price appreciation -- you can use it to hold and transfer wealth free from the prying eyes of any government.

Not legally. At least in the US.

so may the allure of bitcoin fade (and quickly) when governments find a way to track it.

It is interesting that the US goverment was able to claw back about half the ransom paid in the recent pipeline operator attack. This is something our experts here say is impossible. Yet it happened. There is much about bitcoin that no one understands fully.

 

[indiajust]

Everyone (except 37) who has mentioned on this and other recent threads that they have bought bitcoin suggest that they bought for speculative reasons. I see nothing wrong with that. It turns out to have been a good speculation. You should all pat yourselves on the back. I mean that sincerely. I've made some speculative buys in my life, some have paid extremely well and some turned into total losses.

But I still do not see the long term value in a cryptocurrency that has no economic value that anyone seems to be able to explain. A USD, CAD, AUD, euro, yuan, peso, etc. has value as a convenient medium of exchange. Bitcoin is far from convenient. I can't go to the grocery store and buy a bag of apples or a six pack with it, at least not yet. Maybe it will get there, maybe it will not.

I do see a lot of value in its use by criminals and tax cheats and I think that is what has driven its growth. But that evaporates once transacions are traceable to individuals which I think is both imminent and inevitable.

And designed into the protocol at inception. Reagan bought guns/drugs/ammo via CIA for Sandinistas in cash. Nixon had refrigerators full of untraceable cash. Bush delivered a shipping container of cash to Iraq. Black markets are cash markets. Crypto is the only pressure relief valve for currency devaluation. That is a speculative outcome, which is why the returns have are high and volatile. It's the only way to make it worthwhile.

In a previous thread it was mentioned that all currencies decline in value over time. Yes they do and we call that inflation. But there is a broader economic system in play. In general governments, banks, and other borrowers must pay a little bit over inflation to attract capital. Government bonds, at least the 10-year US Treasuries, are generally considered risk free (because the government can always print money to pay them). Those have typically yielded at roughly the inflation rate for a long time. Other bonds typically are priced to yield slightly more or less based on their relative risk. Equities have historically paid a 6% risk premium. It is hard to do the research but peopel who do this kind of work think they have evidence that the same relative relationships existed hundreds of years ago and possibly in ancient Rome.

So the way to store value is to accept a little risk. And the flip side is that your return generally reflects the risk you are taking. The returns of bitcoin are screaming high risk.

And designed into the protocol at inception. Reagan bought guns/drugs/ammo via CIA for Sandinistas in cash. Nixon had refrigerators full of untraceable cash. Bush delivered a shipping container of cash to Iraq. Black markets are cash markets. Crypto is the only pressure relief valve for currency devaluation. That is a speculative outcome, which is why the returns have are high and volatile. It's the only way to make it worthwhile.

 

[MichaelB]

<mod note> Let’s please stick to the thread topic and drop the references to politicians and their deeds.

 

[captain3d]

I know that Ether has the most utility of the coins but its potential supply and, therefore, dilution, is unlimited, vs. Bitcoin’s mining cap. Doesn’t that give you pause buying it?

I use $ to buy it [emoji3]. Also it is heading more deflationary recently with ‘burning’

 

[captain3d]

Not legally. At least in the US.





It is interesting that the US goverment was able to claw back about half the ransom paid in the recent pipeline operator attack. This is something our experts here say is impossible. Yet it happened. There is much about bitcoin that no one understands fully.

How though? You can not undo a transaction. But you can send it back with a new transaction if you have the keys.


https://www.npr.org/2021/06/08/1004...ackers-and-got-colonial-pipelines-bitcoin-bac

 

[Markola]

I use $ to buy it [emoji3]. Also it is heading more deflationary recently with ‘burning’

I don’t understand your comment, so would you please clarify? I can understand 60% Bitcoin and 10% Other (perhaps that fund of many currencies shown earlier). But I don’t understand the reason for your suggested 30% allocation to Ethereum/Ether, or maybe I don’t agree. I know it has more utility than others and that it has done well this year in speculation but I have a problem long term with it, because the potential supply is unlimited. Am I wrong?

 

[captain3d]

Obviously I was making a joke about the $ supply being unlimited. Ethereum has been deflationary recently I believe through token burning. Also moving to proof of stake will lock out more from active circulation.

But yes it is all about the utility it provides to other services running on top that will be the true measure of value. It is the current leader in that area.

Over simplified but I view Bitcoin more like gold and ETH more like the Internet.

All personal choice of course

 

[MichaelB]

<mod note>

Multiple posts have been removed. ER Forum is known for respectful members, polite exchange and fact based discussions. There’s no place in this thread, topic or forum for age based divisiveness or intergenerational conflict. Make your point without belittling other members because of their age.

External links serve to support fact based opinion posts, not replace them. A constant, endless stream of YouTube links is no substitute for thoughtful exchange between members. When excessive, as in this thread, instead of helping they get in the way.

This discussion is open to all views, and further efforts to limit the participation of any members will be lead to post removal.

 

[captain3d]

And just a little congrats for BTC and ETH hitting a All time highs today. I wonder how tied to stock gains crypto are right now.

 

[zekeboz]

I might have missed it, but one of my primary concerns is the environmental impact. The sheer power component of all the mining. And it's interesting to me particularly, since Crypto is so much part of the Millennial/Gen-Z investing approach, seemingly also the same groups who rank climate issues higher than older ones.

One would think that at first (as I did) but when you look at the traditional financial systems (FIAT currency) and what it takes to not just run but the associated capital expenses the scales start to look at little different.

See the following study on the "costs" of these two areas.
https://www.ledger.com/energy-consumption-crypto-vs-fiat

..and this recent article:

https://www.forbes.com/sites/lawrencewintermeyer/2021/03/10/bitcoins-energy-consumption-is-a-highly-charged-debate--whos-right/?sh=2e4d30d57e78

 

[Luvtoride]

And just a little congrats for BTC and ETH hitting a All time highs today. I wonder how tied to stock gains crypto are right now.

Good question but not necessarily correlated.

I have made a huge profit on BTC without owning it directly. As BTC hit its high today, a stock I’ve owned since earlier this year, Marathon Digital Holdings (MARA) which mines and holds BTC was up $11/ share to $75! I have a 350% profit on this stock, but it reacts to the price of BTC not the market overall.

 

[turbo89]

Good question but not necessarily correlated.

I have made a huge profit on BTC without owning it directly. As BTC hit its high today, a stock I’ve owned since earlier this year, Marathon Digital Holdings (MARA) which mines and holds BTC was up $11/ share to $75! I have a 350% profit on this stock, but it reacts to the price of BTC not the market overall.

Congrats on your big gains!

I owned GBTC, but it never seemed to “perform” relative to BTC… wish I had gone with one of the miners instead…. For now I’ll just speculate with the actual currency (and collect dividends through staking).

 

[SecondAttempt]

How though? You can not undo a transaction. But you can send it back with a new transaction if you have the keys.


https://www.npr.org/2021/06/08/1004...ackers-and-got-colonial-pipelines-bitcoin-bac

I have no idea. But there was another story today about a ransomware attack where the ransom was recovered.

Remember a few years ago the FBI tried to get courts to order Apple to get them access to an iphone and Apple refused. Then a few months later the FBI kind of said "neveer mind." I suspect the NSA is much better at hacking encryption than anyone gives them credit for. Maybe they did not "reverse" the transaction but instead just hacked the criminals' wallets and sent it back. In every case these were foreign nationals. I think there would be legal issues with doing it to US citizens but foreign persons have no real protections.

 

[captain3d]

Yes I think getting their keys and creating a new return transaction is what happened.

 

[Markola]

Good question but not necessarily correlated.

I have made a huge profit on BTC without owning it directly. As BTC hit its high today, a stock I’ve owned since earlier this year, Marathon Digital Holdings (MARA) which mines and holds BTC was up $11/ share to $75! I have a 350% profit on this stock, but it reacts to the price of BTC not the market overall.

This is the obvious future. Public companies form around the new and improved block chain-based internet and their growth and failures will be reflected at appropriate levels in the stock indices. Same as it ever was.

 

[37andhappy]

Actually you can go to any store that accepts a Visa or Mastercard which has Bitcoin enabled on the backend. On the front-end, the transaction can be seamless and in fiat currency for those who want it, but for a person who want to deal in Sats (either as the buyer or the seller) this is entirely doable.

You need not worry about being compelled to use Bitcoin in transactions when you go shopping (at least not yet!). But the option is certainly there for you to do so, and this becoming more visible and viable every day. In the US, I think its far more likely we will first see BTC used primarily as a store of value and defence against a declining currency, but then over time see it integrated to fiat currency conversions for micropayments. For Visa and Mastercard, they really have no choice but to adopt. PayPal, Square, Stripe, Crypto.com, etc are all already well on their way, so the big players now are rapidly following.

As a follow up to this earlier discussion of "how to practically use BTC in commerce", an announcement in Asia overnight with Mastercard now joining Visa in announcing Bitcoin linked cards, first to be launched in Thailand, Singapore, Hong Kong and Australia.

Consumers (and also private businesses) in Asia region will be able to apply for Bitcoin connected Mastercard credit, debit or prepaid cards. These cards will then enable them to instantly convert their crypto into a traditional fiat currency in any country where Mastercard operates (basically globally). So interestingly, whilst for now the cards can only be obtained in Australia, Singapore, Hong Kong and Thailand (which have crypto friendly regulations), the cards themselves will be usable globally (as the Bitcoin is held domestically and then spent on the front end in fiat).

If we look at how much the USD (or indeed any fiat currency) has fallen against BTC over the last decade, we can see instantly why people would want a solution where their wealth is stored in BTC but yet their day to day spend is fiat is seamlessly converted into local currency (only to the extent as exactly is needed for a fiat transaction). Those of us who already have crypto Visa card still get a bit of "novelty factor attention" when we whip our "crypto-cards" out to perform credit card transactions, but I think just like the novelty of a new i-phone, crypto cards will soon become far more mainstream as more people get access to them.

Such cards are of course also a Trojan horse for Bitcoin to achieve adoption and regulatory acceptable in countries globally, as eventually, merchants will also be seeking to have the option of being paid in BTC (as opposed to BTC converted into fiat). This option is already provided in some countries (and indeed even mandated in the case of El Salvador).

The other cool thing is that the card pay "rewards" in Bitcoin, as opposed to gifts or ""travel miles". To some, (including myself), having BTC cashback on every credit card spend is something which is highly appealing.

https://www.forbes.com/sites/zinnia...launch-bitcoin-payment-cards/?sh=725c85d2431d

https://www.mastercard.com/news/ap/...e-region-s-first-crypto-linked-payment-cards/

https://www.straitstimes.com/busine...ed-carbon-insights-4-highlights-from-day-1-of