OT: Crypto Currencies

This is the greatest wealth creator in history. Where else could $100 make you a billionaire in 8 years? There are 4 components of value and Btc has them; demand(PayPal is buying every btc created per day 900), utility( portable , fungible, durable, deflationary), scarce(limited to 21 million tokens), Market purchasing power( institutional investors pouring in billions). 
If you’re attentive to inflation and monetary policy, btc makes perfect sense. If I’d gotten in when I learned of it 7 years ago, I’d have 9 figures now. Among other uses, btc will provide financial services to a billion unbanked people globally and it allows the sending of money for virtually nothing as western union and the swift banking system have been gouging people for years.

Btc represents the dematerialization of money just as Uber is worlds largest taxi co. Without owning a car , FB is largest media co. Without any writers or content And Airbnb is largest accommodations provider without owning real estate. There are other crypto’s such as Tron which connects content creators with the end user (Eliminates middleman) which could do to Netflix what Netflix did to Blockbuster. Virtually everything is going digital.

TL:DR  this is a new revolutionary asset class that is only beginning. It’s worth your while to learn and understand it soon.  I’m still kicking myself since it was $13 and now it’s near $30k.

I’ve told everybody here countless times to buy bitcoin in all the investing threads. Someone asked me if it’s still safe to get in at <10k levels and I insisted these are great times to buy. It’s still a great time to buy. 

Can you cash in your profits for US dollars, or any normal currency, so you can live the good life?  What good is millions in your Bitcoin account if you can only deal with a limited number of vendors/bankers/etc that currently deal in Bitcoin?  As far as Mr. Okung, I would rather have $6.5M in US dollars than the same in Bitcoin.  I guess I wouldn't be as worried if I was 20-something and had all those years ahead of me to absorb a crash and recover.

On the other hand, my betting website bovada.lv offers zero fees for deposits and payouts through Bitcoin.  So that would be one good use for a few thousand Bitcoin bucks.  Anyone want to toss me 5k Bitcoin to deposit in my account?  Maybe I'll double it for you.  But maybe I won't.

I'm a little wary of it, TBH.  But if you tell me that $100 of my money will make me 10X that in a year then I'd probably jump in so long as I can cash out.

I scanned this thread. It seems the discussion is centered around Bitcoin (which is fine) but I also recommend exploring Ethereum.

While some try to needlessly build an antagonistic relationship between the two crypto market leaders, I think it's more symbiotic.

Also, DeFi (short for Decentralized Finance) took off this summer. It didn't garner much attention (other than the occasional headline about Yearn Finance on Bloomberg) but it's quietly doing A LOT of work.

Famed investor Marc Andreessen once made a famous statement: "software is eating the world." He correctly indicated that more and more services were becoming available online or were being automated.

Likewise, DeFi is doing the same thing to finance. Most individuals are simply blissfully unaware of how much of the financial world is still manually run because of gatekeepers or intermediaries. DeFi is dramatically changing that by removing middlemen.

Caveat: I'm invested in both Bitcoin and Ethereum because I've believed in the promise of both for a long time.

If anyone is truly interested in learning more, then I strongly recommend reading something like https://cryptotesters.com/ which breaks down what's happening into the essentials.

"Inflation associated with the pandemic's stimulus plans have further pushed the value"

Inflation is low.

STONKS! HODL!

11 years ago, It might have been fun fining portions of block chains. It was much easier to find a few portions of  64-digit hexadecimal that were close to so many of the early target hashes. In 2009 if you were able to complete a block chain you got 50 bit coins or you got several coins for just completing a portion of a block.  Now with over 88 percent of the known 64-digit hexadecimal found you would need the large computing power.

Cryptic

If I know one about NFL players, it’s that they make wise financial decisions

Bitcoin is how you diversify with the investments in strip clubs 

Eh, whatever he wants to do I suppose.  But investing half your income into asset speculation is something I don't have the risk toleration for.

Good luck to him, and I get wanting to diversify your portfolio, but nothing I've seen about crypto strikes me as anything other than speculation, propped up by a manufactured scarcity, and one that relies on a lot of marketing and wishing to portray it as anything more than that.  It's absolutely in a bubble now and while I doubt it'll completely deflate, I also wouldn't be surprised if it severely depreciated before starting up another bubble.

I try to stay away from these conversations because I find them to just be the same 4 or 5 talking points I've been hearing for half a decade repeated ad nauseum, but I also don't begrudge a guy who has made $100M in his career taking some chances at the end, especially since he may not need the money right now.

I bought a half of a BTC when it was trading at $8K during the last run and have held it through the round trip -- $20K-$4K-$28K. Conceptually I like the idea of an international currency that can't be debased by reckless government spending and there is a boatload of that in the current environment.

One thing that concerns me, though, is that the growth rate in transaction volume has really tailed off and that, to me, is indicative of demand and future price appreciation.

The problem with cryptocurrency is that it's really bad as a currency. It doesn't hold its value stably or predictably and no goods/assets are represented by their price in Bitcoin, it's always converted into the local currency to transact. It lost 85% of its purchasing power in one year (2018).  While I'm sympathetic to the arguments against holding all of your assets in one fiat currency, I see a stable coin like Libra (a digital currency representing a basket of fiat currencies) rather than Bitcoin being the solution here, as you could actually count on its value remaining steady/predictable.

If it's not really a currency, then is it an investment? Not really.

Crypto has no intrinsic value and produces nothing. Stocks represent an ownership share of a company with assets and profits. Bonds represent debt that must be repaid (if not, debtholders have recourse through bankruptcy). Real estate can be rented out while held and will retain some value to be sold (which isn't to say it can't lose value). Even gold and precious metals can be melted down and sold as a commodity to create jewelry or electronic components.

It is a greater fool gamble rather than a currency or an investment (hoping someone else is foolish enough to pay more for something than you did). It may work out and make some people very rich, it may also lose 85% of its value again like happened in 2018. The key to building and preserving wealth isn't speculation, but rather preservation of capital and long-term compound returns.  Holding a portfolio of 60% US stock index, 20% International stock index, and 20% bond index may not see the same surges in value as Bitcoin has seen recently, but it also won't see the same kind of drop as Bitcoin saw in 2018 (also- I can feel more confident holding this portfolio in a drop than I could something with no intrinsic/productive value). Plus there's the tax efficiency of being able to hold index funds forever without having to sell and realize capital gains (although dividends in a taxable account will be taxed, it's also a way to have income without realizing gains on your principle investment).

I'd rather be moderately successful making the right risk-adjusted long term decisions than try to win the lottery.



 

The arguments in favor of bitcoin sound an awful lot like gold bug arguments. There are differences, but I wonder how significant they are. Gold does have at least some intrinsic value and I suppose its supply is less fixed (extra-terrestrial supply?). It's currently much less "fashionable".

At the end of the day, power is what matters. People seem to think that can change by changing currency. It will only change who has the power and it still won't be you. Technology will only make it easier for power to be maintained. In the old days, you had to keep your henchmen happy or they might turn on you. Robots are much easier to keep happier....until AI spirals out of control. 

Happy thoughts.

The reason for 90+% of price action in both the crypto and traditional markets pertain to futures - which is to say, options or derivative contracts between two (typically) large whales that are both using leverage. In the Covid era, you also a decent number of Robinhood people buying and selling crap, but the order book for Robinhood trades was largely bought up by HFT guys, so again, whales. And then tying this all together, are the huge proliferation of index funds, along with the the stuff thats been around forever - 401K and pension funds (more whales). In this era = everything is good news, we live in a golden age of securities fraud. Tesla is a great example of this.

At any given moment, the whales are getting into/out of their contracts because they are maintaining risk/leverage of their book, and any price movement is then rebalanced against their risk model. Rinse, repeat.

The reason you see that much movement in Bitcoin (and not altcoins in the runup) is because Bitcoin is the only real crypto with a futures market. The futures market is where the Wall Street money comes pouring into/out of. They don't actually physically hold private keys to any of the bitcoin they're trading, and the total nominal amount of what the contracts they hold are in excess of the value of the underlying crypto, due to leverage. And that's for a single security with a $425 billion dollar market cap. Now take that understanding and apply that to a $50 trillion securities market. Remember that CDO clip from The Big Short? It's true, only worse now.

But even crypto (along with all asset classes) will fall in the hyperinflation big bang followed by a new currency deflation black hole that will follow. You saw that in the March equities market collapse - BTC collapsed too, because of the whales needed to get out of their futures contracts to raise cash to pay the margin clerk. But BTC then outperformed equities markets the rest of the year.

But the golden question question is - what will have a more abbreviated fall/recover quicker/actually still exist when this all goes down? That's the asset class you want to own.

I own Monero - if you're going to own crypto, at least own crypto that has the technical capability to circumvent KYC laws.

If things go to shit in this country (which is only a matter of time with the present rate of moral decay) - what's easier to jump the border with - sacks of gold or a crypto private key?

BTC $100k within 4 years.

I don't understand anything about currency, but I bought about a paycheck's worth in Bitcoin (plus a little less in other cryptos) at $8500, tell me if I should buy, sell, or hodl

As an amateur, this feels very bubble-ish with what’s going on over the past week or two.