Thoughts on Cryptocurrencies?

[Stronghold]

Bitcoin continues to surge and is up to over $6k each.  This is a $1.7k increase in the last month alone and over $5.3k from this time last year.  Anyone invested in this or other currencies such as Ethereum, Litecoin, Ripple, etc.?  Ripple is the most intriguing to me at the moment because of its possible applications in banking and it is only valued at $0.20 per XRP right now. 

[mu03eng]

Bitcoin continues to surge and is up to over $6k each.  This is a $1.7k increase in the last month alone and over $5.3k from this time last year.  Anyone invested in this or other currencies such as Ethereum, Litecoin, Ripple, etc.?  Ripple is the most intriguing to me at the moment because of its possible applications in banking and it is only valued at $0.20 per XRP right now.

If you are investing in Cryptocurrencies make sure it's a short term one. These types of currencies are a direct threat to governments and/or large financial institutions and are going to be subject to significant regulation threat limiting their usefulness  and stability.

If you are going to invest in anything from that space, do it in Blockchain, that is the revolution that will change the market right up to the point that quantum computing becomes a thing.

[Tortuga94]

I own a little bit of bitcoin and a little bit of ethereum. I am willing to take a small portion of my investment portfolio and take a gamble on the blockchain technology. I have a half of a percent of my total portfolio in them. The downside is very limited, but the potential upside is huge, I figure the odds are slightly better than winning the lottery. I don't think you can take a short-term view as they are way too volatile for that. I'm invested for he long-haul fully aware that it can go to zero.

I bought them through coinbase.

[Juan Anderson's Mixtape]

My thoughts:

1.  There are so many, which one will win out?  The rest might go to zero.  It's basically VCR vs Beta or Blu Ray vs HD-DVD.  Who knows who will win.

2.  The developed world is already drifting away from cash.  Is there really a need for cryptocurrency?  Think of how many transactions are already done via electronic banking.  Cryptocurrency is duplicating what can already be done with dollars, euros, yen, or any other currency. 

So you have a bunch of cryptocurrencies competing not only with each other but every established currency in the world.  I don't view them as an investment, I view them as lottery tickets.  And they all might go to zero.

[Stronghold]

My thoughts:

1.  There are so many, which one will win out?  The rest might go to zero.  It's basically VCR vs Beta or Blu Ray vs HD-DVD.  Who knows who will win.

2.  The developed world is already drifting away from cash.  Is there really a need for cryptocurrency?  Think of how many transactions are already done via electronic banking.  Cryptocurrency is duplicating what can already be done with dollars, euros, yen, or any other currency. 

So you have a bunch of cryptocurrencies competing not only with each other but every established currency in the world.  I don't view them as an investment, I view them as lottery tickets.  And they all might go to zero.

I agree with #1, but as for #2 the difference is that they are decentralized rather than issued from a government/institution.  They also cannot be duplicated/counterfeit and every transaction is registered in an un-manipulable (if that is even a word) blockchain.  I think they will have their place in the global economy but to what extent I'm not sure.

[mu03eng]

My thoughts:

1.  There are so many, which one will win out?  The rest might go to zero.  It's basically VCR vs Beta or Blu Ray vs HD-DVD.  Who knows who will win.

2.  The developed world is already drifting away from cash.  Is there really a need for cryptocurrency?  Think of how many transactions are already done via electronic banking.  Cryptocurrency is duplicating what can already be done with dollars, euros, yen, or any other currency. 

So you have a bunch of cryptocurrencies competing not only with each other but every established currency in the world.  I don't view them as an investment, I view them as lottery tickets.  And they all might go to zero.

To echo Stronghold, the need is as a means of reducing the reliance on goverments/financial institutions to complete transactions. Basically those institutions represent a middleman that drives up costs of transactions that a cryptocurrency can eliminate while simultaneously providing a more secure transaction via blockchain.

How governments react will be telling, cryptocurrency represents the best "attack" on their last lever of true power, fiscal empowerment.

[Tugg Speedman]

I agree with #1, but as for #2 the difference is that they are decentralized rather than issued from a government/institution.  They also cannot be duplicated/counterfeit and every transaction is registered in an un-manipulable (if that is even a word) blockchain.  I think they will have their place in the global economy but to what extent I'm not sure.

To echo Stronghold, the need is as a means of reducing the reliance on goverments/financial institutions to complete transactions. Basically those institutions represent a middleman that drives up costs of transactions that a cryptocurrency can eliminate while simultaneously providing a more secure transaction via blockchain.

How governments react will be telling, cryptocurrency represents the best "attack" on their last lever of true power, fiscal empowerment.

I agree with this ... the government cannot do anything about it, anymore than they can ban porn or audio streaming on the internet.  They could ban US institutions from dealing in it but that risks US institutions missing out and watching it take off without them putting that way behind foreign institutions.

The rumor that pops up from time to time is Amazon is going to accept payment in bitcoin.  Thought is if that ever happened, the price would triple overnight.  Overstock, Expedia and Dish network currently accept payment in bitcoin.

(Amazon would accept bitcoin payment and when the payment is being made immediately swap it into dollars/Yen/Euros. 

[Juan Anderson's Mixtape]

Their decentralized nature is very risky.  Those "middlemen" known as banks and the government also offer some protection and financial security that cryptocurrencies don't.  Malware, data loss, the physical loss of the media holding the info, etc. can lead to permanent loss of the cryptocurrency.

I think eventually government develops their own virtual currency system(s), i.e. "Federation Credits" from Star Trek.  Whether this happens in my lifetime or hundreds of years from now remains to be seen.  But "investing" in cryptocurrencies?  Not for me.

[Tugg Speedman]

My thoughts:

1.  There are so many, which one will win out?  The rest might go to zero.  It's basically VCR vs Beta or Blu Ray vs HD-DVD.  Who knows who will win.

Better example is Napster.  It created pier-to-pier file streaming that allowed audio files to be transferred.  The music industry screamed that they were illegal and drive them out of business.  Mission accomplished, right?

Not quite, once the file sharing protocols were known and understood it led to iTunes, Spotify,  Pandora, etc and everything that the music industry feared happened anyway.

Even if all the governments pooled their collective might to get rid of bitcoin, the Block-chain will allow people to transfer money, assets, titles without their knowledge and everything they are trying to prevent will happen anyway.

They cannot stop it.

[Tugg Speedman]

Their decentralized nature is very risky.  Those "middlemen" known as banks and the government also offer some protection and financial security that cryptocurrencies don't.  Malware, data loss, the physical loss of the media holding the info, etc. can lead to permanent loss of the cryptocurrency.

I think eventually government develops their own virtual currency system(s), i.e. "Federation Credits" from Star Trek.  Whether this happens in my lifetime or hundreds of years from now remains to be seen.  But "investing" in cryptocurrencies?  Not for me.

More money is lost every hour because of crappy procedures we have with credit cards than all of the losses in cryptocurrencies combined.  Many argue the risk is the current system.

Also a similar argument was made about Taxi regulation.  It is very risky to have unregulated people in their personal cars randomly pick up people. Fact is the simple idea of double rating (driver rates passenger and passenger rates driver) was found to be more effective than all the taxi rules.

Likewise, many people see the financial middle-men as little more than a friction and expense and will trust the block-chain over JP Morgan.  The block-chain is the tech answer that makes middle-men and all their costs obsolete.

Think of credit and debit cards having no fee.  You send a dollar to a vendor and they get a dollar.  Not 97 cents or 98 cents.  That is what the block-chain means and that allure will make people want it to work.

5 to 10 years, not a hundred years.

[jesmu84]

Better example is Napster.  It created pier-to-pier file streaming that allowed audio files to be transferred.  The music industry screamed that they were illegal and drive them out of business.  Mission accomplished, right?

Not quite, once the file sharing protocols were known and understood it led to iTunes, Spotify,  Pandora, etc and everything that the music industry feared happened anyway.

Even if all the governments pooled their collective might to get rid of bitcoin, the Block-chain will allow people to transfer money, assets, titles without their knowledge and everything they are trying to prevent will happen anyway.

They cannot stop it.

What? No.

Music industry hated it and said it was illegal because it was. It was pirated music. Distributed with a license and without and money/royalties going to the studios/artists. All the companies you mention charge consumers or in otherwise pay for access to the music so those who own the music are getting paid.

I know you like you yell about how industries are "already dead," but your analogy is terrible

[Tugg Speedman]

What? No.

Music industry hated it and said it was illegal because it was. It was pirated music. Distributed with a license and without and money/royalties going to the studios/artists. All the companies you mention charge consumers or in otherwise pay for access to the music so those who own the music are getting paid.

I know you like you yell about how industries are "already dead," but your analogy is terrible

Ok ... judge comments by the name and not the comments ... so try this (where I got my example) ...

https://www.cnbc.com/2017/08/11/blockchain-technology-will-change-the-world-fidelity-labs-svp.html

imagining the future of blockchain technology is like trying to imagine Google and Facebook on the day the first web browser came out, said Hadley Stern, senior vice president at Fidelity Labs.

Stern is responsible for running Fidelity's bitcoin, blockchain and digital currency incubator. His research team has been experimenting with bitcoin because he said it is like "digital gold" and that "blockchain technology will change the world."

The corporation announced Wednesday that it started allowing clients to view bitcoin and other cryptocurrencies on its website, making it one of the few established institutions that have warmed up to cryptocurrencies.

"The big story is you can transfer value through software and software alone. This is a huge societal breakthrough," Stern said on CNBC's "Closing Bell."

And regardless of whether bitcoin will survive, it could be like the Napster of blockchain technology, Stern said, where it is the first of its kind but the next products, in this case Spotify and Apple Music, get better and better.

"I do think [cryptocurrencies] will make things, whether it's bitcoin or something else, faster and cheaper and create new products and services that we can't even imagine," Stern said.

[mu03eng]

Ok ... judge comments by the name and not the comments ... so try this (where I got my example) ...

https://www.cnbc.com/2017/08/11/blockchain-technology-will-change-the-world-fidelity-labs-svp.html

imagining the future of blockchain technology is like trying to imagine Google and Facebook on the day the first web browser came out, said Hadley Stern, senior vice president at Fidelity Labs.

Stern is responsible for running Fidelity's bitcoin, blockchain and digital currency incubator. His research team has been experimenting with bitcoin because he said it is like "digital gold" and that "blockchain technology will change the world."

The corporation announced Wednesday that it started allowing clients to view bitcoin and other cryptocurrencies on its website, making it one of the few established institutions that have warmed up to cryptocurrencies.

"The big story is you can transfer value through software and software alone. This is a huge societal breakthrough," Stern said on CNBC's "Closing Bell."

And regardless of whether bitcoin will survive, it could be like the Napster of blockchain technology, Stern said, where it is the first of its kind but the next products, in this case Spotify and Apple Music, get better and better.

"I do think [cryptocurrencies] will make things, whether it's bitcoin or something else, faster and cheaper and create new products and services that we can't even imagine," Stern said.

In today's episode of tortured metaphors.....Napster is the same as Spotify in the way that apples are the same as coconuts (they both hang in trees and Napster/Spotify both involved music).

Much better analogy for bitcoin is Rhapsody (which is what you are trying to say by calling it Napster, yes I know it's the current name but most people don't know that so it's confusing and stupid) which was the first music streaming service that Spotify and Pandora have now co-opted and improved on. In that regard, Stern is correct that bitcoin may not win but something will.

[KaKawwImAnEagle]

A few tips/opinions:

- Read up on bitcoin, understand the blockchain and potential risks before buying.
- Buy on gdax. Bitcoin prices are usually higher on coinbase and they charge a processing fee (no fees on gdax).
- DO NOT store your bitcoin in an exchange (coinbase, etc.) Depending on how much you're invested, you should look at cold-storage options for your bitcoin wallet.

[Tugg Speedman]

In today's episode of tortured metaphors.....Napster is the same as Spotify in the way that apples are the same as coconuts (they both hang in trees and Napster/Spotify both involved music).

Much better analogy for bitcoin is Rhapsody (which is what you are trying to say by calling it Napster, yes I know it's the current name but most people don't know that so it's confusing and stupid) which was the first music streaming service that Spotify and Pandora have now co-opted and improved on. In that regard, Stern is correct that bitcoin may not win but something will.

That maybe.

But the bigger issue is the government can’t just Ban them and then wash their hands of it and say that episode is over forever.

We have crypto currencies, they’re going to exist forever, and some will be back by governments and iothers will not.  Those that are not are going to be a threat to their sovereignty.

That is the new world we live in.

[Tugg Speedman]

I think eventually government develops their own virtual currency system(s), i.e. "Federation Credits" from Star Trek.  Whether this happens in my lifetime or hundreds of years from now remains to be seen.  But "investing" in cryptocurrencies?  Not for me.

If the US government put together a crypto dollar, they could destroy the banking system as we know it.

If you had an electronic wallet with US treasury and you can transfer your crypto dollars for no fee, all debit, and the majority of credit cards, would cease to exist.  The majority of bank accounts would cease to exist (keep your money in your electronic wallet at the US treasury). The financial intermediary that banks provide would no longer be necessary.

Knowing this if they develop the crypto dollar and slapped a fee on money transfers, it’s only to keep the banking system afloat, and it would fail.     It can only work if it gets rid of the friction of the banking system, which gets rid of the banking system itself

[mu03eng]

If the US government put together a crypto dollar, they could destroy the banking system as we know it.

If you had an electronic wallet with US treasury and you can transfer your crypto dollars for no fee, all debit, and the majority of credit cards, would cease to exist.  The majority of bank accounts would cease to exist (keep your money in your electronic wallet at the US treasury). The financial intermediary that banks provide would no longer be necessary.

Knowing this if they develop the crypto dollar and slapped a fee on money transfers, it’s only to keep the banking system afloat, and it would fail.     It can only work if it gets rid of the friction of the banking system, which gets rid of the banking system itself

The irony of this statement is that cryptocurrencies were invented to avoid government intervention and conduct financial transactions without friction. Having the government involved by definition introduces friction.

[Stronghold]

A few tips/opinions:

- Read up on bitcoin, understand the blockchain and potential risks before buying.
- Buy on gdax. Bitcoin prices are usually higher on coinbase and they charge a processing fee (no fees on gdax).
- DO NOT store your bitcoin in an exchange (coinbase, etc.) Depending on how much you're invested, you should look at cold-storage options for your bitcoin wallet.

What kind of cold storage do you recommend?

[KaKawwImAnEagle]

What kind of cold storage do you recommend?

You basically just want to have control of your private keys without having them exposed to the internet. I'd recommend either a paper wallet (basically writing down the public and private keys and keeping it in a safe place) or an offline hardware wallet. I use a Trezor hardware wallet.

[ZiggysFryBoy]

What kind of cold storage do you recommend?

My bitcoin is next to Ted Williams' head.

[Benny B]

Every mainstream investment has some sort of inherent value to it other than simple speculation, i.e. buying low and selling high.  Sometimes it's a tangible benefit, e.g. stock dividend, bond coupon, etc., and sometimes, it's simply as a hedge against another investment.  Like any fiat currency, the inherent value of cryptos is as hedge against other currencies; however, unlike forex which allows you to hedge against a currency (or partial bag of currencies), cryptos are a hedge against the entire bag of currencies.  In other words, if you believed the central bank of a country was about to fail, you'd put your money into a different country's currency, but because cryptos are not regulated by a central bank, they will always be seen as riskier propositions than any of the central banks of developed countries (and even some central banks of developing countries).  Therefore, the hedge that cryptos are making are against a systemic disruption in the central banks, or some sort of global turmoil. 

Ignoring for a moment the value that cryptos have in black market/illegal transfers of wealth, the trendiness of cryptos seem to be nothing more than a play on trend of prepping and survivalists.  "If governments around the world fail, my crypto will still be around."  Well, that may be true, but if all of the crypto speculators exited the market tomorrow, the value of your crypto would essentially depend on some sort of global crisis, in which case, ask yourself what would be more valuable: 100 bitcoin or 100 lbs. of grain?

In short, cryptos are a pump-and-dump turned long-con.  There's absolutely no reason that anyone should invest in cryptos unless they are either a) speculating or b) chasing some sort of absolute diversification strategy.  Otherwise, if you're looking for a hedge against the U.S. dollar, you're better off investing in a bag of Euro and Asian currencies.  If you're looking for some sort of safe-haven in case the world goes Mad Max, then invest in a bunch of 5 gallon buckets from Menards and fill them with shelf-stable foodstuffs.


EDIT: I should clarify that the above is a static observation.  It may not be a valid observation 50 years from now.

[Tugg Speedman]

Ignoring for a moment the value that cryptos have in black market/illegal transfers of wealth

Fact is we have erected zillions of money transfer rules and they have done almost nothing to stop the illegal drug and terrorist trade.  What these rules do is protect the franchises BlackRock and JP Morgan buy forcing people to stay in their organizations because moving money out is hard.  Also, JP Morgan has probably paid more in fines over the last 10 years than any organization on the planet (and maybe more than the entire size of bitcoin) so he is in no position to argue against bitcoin from a moral point of view.

Those that bitch the loudest about bitcoin stand the most to lose if it goes mainstream.

[Tugg Speedman]

The rumor that pops up from time to time is Amazon is going to accept payment in bitcoin.  Thought is if that ever happened, the price would triple overnight.  Overstock, Expedia and Dish network currently accept payment in bitcoin.

(Amazon would accept bitcoin payment and when the payment is being made immediately swap it into dollars/Yen/Euros.

Bitcoin is up $1500 in the last week ($6800 as of this writing).  These stories are sparking hope bitcoin is going mainstream in a big way...

Amazon just bought three domain names related to cryptocurrency
https://www.cnbc.com/2017/11/01/amazon-buys-crypto-domains-bitcoin-ethereum.html

CME says it plans to launch bitcoin futures by the end of the year, pending regulatory review.
https://www.cnbc.com/2017/10/31/cme-plans-to-launch-bitcoin-futures-by-year-end.html?__source=facebook%7Ccrypto

[B. McBannerson]

Better example is Napster.  It created pier-to-pier file streaming that allowed audio files to be transferred.  The music industry screamed that they were illegal and drive them out of business.  Mission accomplished, right?

Not quite, once the file sharing protocols were known and understood it led to iTunes, Spotify,  Pandora, etc and everything that the music industry feared happened anyway.

You may not be aware, but Pandora is in deep trouble and likely bankruptcy in the next 6 months if they don't get bought. iHeart is in massive trouble with massive debt that comes due next year and banks not willing to renegotiate.  Spotify, also strongly rumored to be a bankruptcy candidate.  AppleMusic has underwhelmed, but because it is Apple they are able to mask it. 

Don't confuse the technology of sharing 1's and 0's and equate that to a successful business model.  It's the same reason that all but one of the over the top television providers is under water and not making any profits.  The one that is, barely makes a profit.  There's no margins in these things and eventually the consolidation by just a few behemoths will mean huge price increases so they can be monetized.  Enjoy it while you can, won't last to many years further in terms of business models.

[reinko]

Bitcoin down 30% from its high just from a week ago.  Seems super stable.