Author Topic: Is it too late [bitcoin]?  (Read 85030 times)

phil22

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Re: Is it too late [bitcoin]?
« Reply #550 on: January 02, 2018, 09:55:23 PM »
http://www.mrmoneymustache.com/2018/01/02/why-bitcoin-is-stupid/

perhaps the price bubble formed from speculators is "stupid", but bitcoin itself is not stupid.  that title is just meant as clickbait.  on the other hand this article is substandard for MMM, is shallow and close-minded, and is silly.  (his fingernails are not $70k per bag because no one has paid that.)

i fully agree with MMM and all the posters here saying speculators should NOT "invest" in bitcoin or any other cryptocurrency chasing profits.  i'm surprised MMM didn't directly mention the energy usage of bitcoin mining, since he's environmentally-focused and i think that may kill bitcoin if nothing else does.

that said, this article and all discussion i've seen here says "blockchain not bitcoin" is a good invention.  this may be true, but without a valuable token paid out to honest participants in securing a blockchain, that blockchain will be insecure and useless.  it's a positive feedback loop of incentives.  without a valuable token incentivizing participation you'd have to keep it private, trusted, and centralized, and at that point you may as well use a regular database like we've been using all along.

in 20 years when a cryptocurrency, whichever one, is still around, this article will look pretty silly.

phil22

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Re: Is it too late [bitcoin]?
« Reply #551 on: January 02, 2018, 10:03:15 PM »
Just for the record, I'd like to state that our site founder agrees with me and not with 90% of the people in this thread. 

Sol, by my count there are at most five active accounts potentially arguing that it makes sense to invest in some kind of cryptocurrency* sometimes (shadow, phil22, lifeanon269, thenextguy, and Tonyahu), and at least fifteen accounts (myself included) who have posted that it does not make sense to purchase cryptocurrencies as investments in the two most recent pages of posts alone.

*And I think at least several of them also have agreed that the current price of bitcoin represents a bubble.

put me on the list for never advocating "investing" in any cryptocurrencies.  if you want to blow your beer money on a fraction of a coin one week then fine but you better learn how to manage your private keys yourself first because of forks and blah blah blah.

BattlaP

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Re: Is it too late [bitcoin]?
« Reply #552 on: January 02, 2018, 10:36:04 PM »
http://www.mrmoneymustache.com/2018/01/02/why-bitcoin-is-stupid/

Really glad he weighed in.

This nonsense has no place in the mustachian philosophy. It's greed, scams and idiocy all the way through.

FiveSigmas

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Re: Is it too late [bitcoin]?
« Reply #553 on: January 02, 2018, 10:59:10 PM »
i'm surprised MMM didn't directly mention the energy usage of bitcoin mining, since he's environmentally-focused and i think that may kill bitcoin if nothing else does.

I believe Pete's post does specifically mention the environmental concerns (or maybe he added this later?):

Quote
This Vice article explains yet another ridiculous aspect of Cryptocurrency: running the transaction network (called “Mining”) involves a deliberate computer-intensive crypto challenge syetem called “proof of work”. This inefficient design is now wasting more electricity than many entire countries. Doing one transaction burns 215 kilowatt-hours of electricity, enough to run the entire MMM household for more than a full month, or to power an electric car for more than 800 miles of driving.


perhaps the price bubble formed from speculators is "stupid", but bitcoin itself is not stupid.  that title is just meant as clickbait.

I agree that the title is slightly clickbait-ish. On the other hand, I don't see any value in "investing" in Bitcoin right now, because it doesn't serve me any purpose. In that sense, buying Bitcoin does seem stupid to me.

If and when a cryptocurrency becomes a practical medium of exchange and a store of value, though, I'll be happy to use it as appropriate.

KTG

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Re: Is it too late [bitcoin]?
« Reply #554 on: January 03, 2018, 07:18:28 AM »
From all the way back in August. I agree, it's ridiculous:

https://www.cnbc.com/video/2017/08/16/heres-how-to-build-your-cryptocurrency-portfolio.html

Wow. So I did the math on what a $1k investment would return and his portfolio would be worth $5k at yesterday's prices. I just do not see the justification for this. I cannot spend the vast majority of these currencies ANYWHERE. I would literally be purchasing 1s and 0s here. I just can't do it no matter what the returns are.

These cryptos are literally like their own market, with peeps buying and selling on speculation. I guess the cheap entry price is easy for some, but once you get out of 10s of dollars range, I just can't believe people are doing this. There is no doubt this is going to end very, very badly.


talltexan

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Re: Is it too late [bitcoin]?
« Reply #555 on: January 03, 2018, 07:40:46 AM »
My cousin and I were talking (before the blog post came out), and he said that he thinks about a country called Bitcoinia. When he wants to go to Iceland, he knows that travel there will involve buying goods and services in Iceland. But right now, there aren't goods/services available in Bitcoinia that he wants to buy (he did want to buy a book from Iceland recently).

phil22

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Re: Is it too late [bitcoin]?
« Reply #556 on: January 03, 2018, 09:02:33 AM »
i'm surprised MMM didn't directly mention the energy usage of bitcoin mining, since he's environmentally-focused and i think that may kill bitcoin if nothing else does.

I believe Pete's post does specifically mention the environmental concerns (or maybe he added this later?):

Quote
This Vice article explains yet another ridiculous aspect of Cryptocurrency: running the transaction network (called “Mining”) involves a deliberate computer-intensive crypto challenge syetem called “proof of work”. This inefficient design is now wasting more electricity than many entire countries. Doing one transaction burns 215 kilowatt-hours of electricity, enough to run the entire MMM household for more than a full month, or to power an electric car for more than 800 miles of driving.

thanks, i may have missed that.

as i said above, the energy consumption is a big problem and it may kill bitcoin.  but Pete is repeating the same ignorant inaccurately reported crap about "electricity use per transaction" we've seen mentioned time and again.  it's all about the cumulative proof of work from 9 years ago today that keeps all past transactions secure.

perhaps the price bubble formed from speculators is "stupid", but bitcoin itself is not stupid.  that title is just meant as clickbait.

I agree that the title is slightly clickbait-ish. On the other hand, I don't see any value in "investing" in Bitcoin right now, because it doesn't serve me any purpose. In that sense, buying Bitcoin does seem stupid to me.

agreed

maizeman

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Re: Is it too late [bitcoin]?
« Reply #557 on: January 03, 2018, 09:08:12 AM »
Just for the record, I'd like to state that our site founder agrees with me and not with 90% of the people in this thread. 

Sol, by my count there are at most five active accounts potentially arguing that it makes sense to invest in some kind of cryptocurrency* sometimes (shadow, phil22, lifeanon269, thenextguy, and Tonyahu), and at least fifteen accounts (myself included) who have posted that it does not make sense to purchase cryptocurrencies as investments in the two most recent pages of posts alone.

*And I think at least several of them also have agreed that the current price of bitcoin represents a bubble.

put me on the list for never advocating "investing" in any cryptocurrencies.  if you want to blow your beer money on a fraction of a coin one week then fine but you better learn how to manage your private keys yourself first because of forks and blah blah blah.

Please accept my apologies for the mischaracterization of your views, Phill22.

jeff2017

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Re: Is it too late [bitcoin]?
« Reply #558 on: January 03, 2018, 09:55:01 AM »
Long time reader of Bitcoin, but never bought any or any other Cryptos... Below is from the WSO forum and best reflects my thoughts on Bitcoin.

As a former currency trader who now invests in technology businesses, I feel compelled to comment--this shit is nuts. The vast majority of these ICOs are going to 0. The vast majority of so-called 'blockchain' businesses are going to 0. I'm old enough to remember the dot.com bubble.

In 1997, any internet company was well bid precisely because the people investing in it did not understand what they were buying. I got asked by a waitress at a cocktail bar recently about whether she should invest in bitcoin. She has NO other investments and knows nothing about finance or the underlying technology. And while that anecdote doesn't implicitly scale to the larger market, I think it's an indication of it.

I had a friend in high school who went to jail for dealing drugs that killed one of our other friends. He's out of jail now, can barely spell, and has $1M worth of cryptocurrencies. While there are a few respectable TRADERS who are into this at the moment, there are few respectable INVESTORS who have jumped into the deep end of the pool as of yet.

Traders can make a lot of money in a bubble so long as they get out before the collapse, but as a former trader, I warn those of you who aren't professionals that it's exceedingly difficult to pick tops and bottoms. That's not how any trader makes money. And for those of you who don't understand A LOT of the underlying technology and the corresponding policy drivers that will invariably poke a hole in the sidewall of this over-inflated nonsense, I have another anecdote: I have never known a successful tech investor who doesn't understand the tech in which they invest.

Now, there is a chance that I'm simply too old, too dumb or too myopic to understand this newfangled technology, but I think not. One or two of these will work out. For ICOs that are ostensibly replacements for shares, I think they're almost all going to 0. For 'crypto' companies that change their name to 'reflect the new reality of what their companies do', they're almost surely going to 0. For people who think they're buying a currency with their investments in the space, they're likely to be disappointed. Most of these 'assets' will never become currencies. They will mostly become valueless commodities. For those of you who think you have the chops to pick the handful of winners out of hundreds of options, I say to you, "Good luck." For those of you who just want to make some money trading, keep it light and take profits when you can. For every person who made a fortune in the dot.com bubble, there were dozens of people who lost their shirts, their shoes and most importantly, their chance to take risk in their careers.

If you're not risking much, knock yourself out. But view this as a gamble, not an investment. And if you get lucky, and happen to pick the winner in this chariot race, congratulations. But try not to pretend ex post that you were some sort of genius, and saw the whole thing playing out precisely as it did. I know far too many dicks in the VC world who got lucky or were in the right place at the only moment someone like them could ever have made any real money. They concoct some narrative after-the-fact that paints themselves as some sort of sagacious prognosticator. Don't be that guy.

FiveSigmas

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Re: Is it too late [bitcoin]?
« Reply #559 on: January 03, 2018, 10:04:40 AM »
IF it is so great, then why haven't other more useful use-cases been implemented by now?  When a great new technological innovation hits, all of the large competitors usually race to implement it.  With block chain, no one can figure out what to do with it.

In 20 years, blockchain will be in the dustbin of unadopted worthless technology.

I don't know about blockchain in particular, but there are certainly very successful technologies that have had long gestation times. RSA public-key cryptography, for instance, was first published in 1976. It took until 1994 before HTTPS (arguably its break-out usage) was even invented.

shadow

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Re: Is it too late [bitcoin]?
« Reply #560 on: January 03, 2018, 10:26:03 AM »
Just for the record, I'd like to state that our site founder agrees with me and not with 90% of the people in this thread. 

Sol, by my count there are at most five active accounts potentially arguing that it makes sense to invest in some kind of cryptocurrency* sometimes (shadow, phil22, lifeanon269, thenextguy, and Tonyahu), and at least fifteen accounts (myself included) who have posted that it does not make sense to purchase cryptocurrencies as investments in the two most recent pages of posts alone.

*And I think at least several of them also have agreed that the current price of bitcoin represents a bubble.

put me on the list for never advocating "investing" in any cryptocurrencies.  if you want to blow your beer money on a fraction of a coin one week then fine but you better learn how to manage your private keys yourself first because of forks and blah blah blah.

Me too. In fact, my stance is the opposite: https://forum.mrmoneymustache.com/investor-alley/is-it-too-late-(cryptocurrency)/?PHPSESSID=b0vm70p5b9kt0erchpgm1dsu25. I even urged people who are interested in crypto and have some confidence in it, to limit to a small amount if they wanted to speculate. I replied to the op of this thread with advice because he asked about speculating on 3k. I never indicated to anyone who didn't ask or wasn't interested in crypto to put some funds into crypto; though, I've seen other people with crypto replies in other threads that didn't specifically ask about crypto. I'm not part of that group.

maizeman

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Re: Is it too late [bitcoin]?
« Reply #561 on: January 03, 2018, 10:29:53 AM »
So noted, and apologies to you as well shadow for misrepresenting your position.

This has been part of what has been so frustrating for me about reading crypto threads in recent weeks. People keep coming in and making dramatic arguments against the position that people should invest their life savings in cryptocurrencies like they are saying something amazingly controversial, when almost no one (on this board) is actually advocating that position.

sol

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Re: Is it too late [bitcoin]?
« Reply #562 on: January 03, 2018, 10:30:23 AM »
Is anyone willing to come forward and publicly recommend an investment in bitcoin at today's prices?

This thread is about to get a whole lot less interesting if we're 100% in agreement that holding bitcoin now is stupid.
« Last Edit: January 03, 2018, 11:59:30 AM by sol »

shadow

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Re: Is it too late [bitcoin]?
« Reply #563 on: January 03, 2018, 10:33:09 AM »
http://www.mrmoneymustache.com/2018/01/02/why-bitcoin-is-stupid/

Just for the record, I'd like to state that our site founder agrees with me and not with 90% of the people in this thread. 

But hey, he and I could both be wrong!

I genuinely want you all to get rich.  I think bitcoin is a bad way to do that, but if you can make it work for you I won't hold it against you.  Good luck, bitcoiners.

For a long time, it was the opposite: it was crypto enthusiast vs the world. Years ago, there was a thread in the off-topic section, with something like "bitcoin: a classic case of a bubble" and 90% of comments then were contempt and scorn for blockchain tech. And there is still alot of people that disagree about crypto.     

The future will be the verdict.

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #564 on: January 03, 2018, 11:53:01 AM »
Is anyone willing to come forward and publicly recommend an investment in bitcoin at today's prices?

This thread is about to get a whole lot less interesting of we're 100% in agreement that holding bitcoin now is stupid.

I see no problem with someone who wants to allocate something like 1% of their portfolio in Bitcoin. After all, just about everything out there is overpriced at the moment by most measures. The price of a bitcoin is just a proxy for the market size. So suggesting that the price of a bitcoin today is over or under valued means that one is suggesting that the market size is either to big or too small. I believe in Bitcoin from a technological perspective and personally spend time programming with it and believe there are a lot of use cases that will drive future outside money into Bitcoin. So it is my opinion that the market size will continue to grow into the foreseeable future.

I've said this numerous times before though. Don't mistake my opinions of Bitcoin or any other crypto-currency as investment advice for the individual. To give investment advice to an individual, you need to understand that individuals financial situation and risk tolerance. Because I don't know anyone's personal financial situation or risk tolerance, I cannot, with good intention, give any sort of investment advice. So while I stand by my position on the above about Bitcoin, that is not me giving an endorsement for any given individual to invest in bitcoin. Hopefully that distinction makes sense.

FiveSigmas

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Re: Is it too late [bitcoin]?
« Reply #565 on: January 03, 2018, 12:15:05 PM »
Is anyone willing to come forward and publicly recommend an investment in bitcoin at today's prices?

This thread is about to get a whole lot less interesting if we're 100% in agreement that holding bitcoin now is stupid.

I'm happy to play John Cleese to your Michael Palin, if you think it would help.

talltexan

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Re: Is it too late [bitcoin]?
« Reply #566 on: January 03, 2018, 03:01:45 PM »
Is anyone willing to come forward and publicly recommend an investment in bitcoin at today's prices?

This thread is about to get a whole lot less interesting if we're 100% in agreement that holding bitcoin now is stupid.

Rating Bitcoin as a "hold" is different than rating it as a "buy". If someone admitted to me that she had it today, I'd encourage her to liquidate 4% of it, i.e. mark the current price and begin withdrawing it on some type of schedule resembline the 4% rule.

The goal when you've gotten lucky is to cash out some gains, and I think there'd be little psychological hangup for anyone cashing out 4% at today's appreciation.

Optimiser

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Re: Is it too late [bitcoin]?
« Reply #567 on: January 03, 2018, 03:07:25 PM »
Is anyone willing to come forward and publicly recommend an investment in bitcoin at today's prices?

This thread is about to get a whole lot less interesting if we're 100% in agreement that holding bitcoin now is stupid.

Rating Bitcoin as a "hold" is different than rating it as a "buy". If someone admitted to me that she had it today, I'd encourage her to liquidate 4% of it, i.e. mark the current price and begin withdrawing it on some type of schedule resembline the 4% rule.

The goal when you've gotten lucky is to cash out some gains, and I think there'd be little psychological hangup for anyone cashing out 4% at today's appreciation.


Quote from: Mr. Money Mustache
If You Wouldn't Buy it, You Should Probably Sell it

Does this not apply to "investments?"

sol

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Re: Is it too late [bitcoin]?
« Reply #568 on: January 03, 2018, 03:20:52 PM »
Quote from: Mr. Money Mustache
If You Wouldn't Buy it, You Should Probably Sell it

Does this not apply to "investments?"

Of course it does.  When it comes to evaluating investments, the only relevant decision is between "should own" and "should not own" and in this context hold and buy are identical decisions.  I thought that was obvious in the original post.

When evaluating relative allocation between assets that you have already decided to own, and which have changed in relative value, you can differentiate some.  But only after you've decided to own, rather than not own.  In my mind, bitcoin is definitely a "should not own" in any proportion. 

I wouldn't buy one for a 90% discount against current prices if I had to own it for ten years.  If I was holding any bitcoin today, I'd be cashing out tomorrow regardless of what I paid for it.

thenextguy

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Re: Is it too late [bitcoin]?
« Reply #569 on: January 03, 2018, 03:41:00 PM »
Just for the record, I'd like to state that our site founder agrees with me and not with 90% of the people in this thread. 

Sol, by my count there are at most five active accounts potentially arguing that it makes sense to invest in some kind of cryptocurrency* sometimes (shadow, phil22, lifeanon269, thenextguy, and Tonyahu), and at least fifteen accounts (myself included) who have posted that it does not make sense to purchase cryptocurrencies as investments in the two most recent pages of posts alone.

*And I think at least several of them also have agreed that the current price of bitcoin represents a bubble.

Just to make my position known since my name was mentioned. I'm not a fan of Bitcoin; it's the AOL of cryptocurrencies.

As for the idea that blockchain tech is useless because it's been around for 9 whole years, the internet began development in the 1960s.
« Last Edit: January 03, 2018, 03:43:34 PM by thenextguy »

maizeman

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Re: Is it too late [bitcoin]?
« Reply #570 on: January 03, 2018, 03:50:25 PM »
Just for the record, I'd like to state that our site founder agrees with me and not with 90% of the people in this thread. 

Sol, by my count there are at most five active accounts potentially arguing that it makes sense to invest in some kind of cryptocurrency* sometimes (shadow, phil22, lifeanon269, thenextguy, and Tonyahu), and at least fifteen accounts (myself included) who have posted that it does not make sense to purchase cryptocurrencies as investments in the two most recent pages of posts alone.

*And I think at least several of them also have agreed that the current price of bitcoin represents a bubble.

Just to make my position known since my name was mentioned. I'm not a fan of Bitcoin; it's the AOL of cryptocurrencies.

As for the idea that blockchain tech is useless because it's been around for 9 whole years, the internet began development in the 1960s.

I understand. And apologies to you (like with shadow and phil) for misrepresenting your position.

thenextguy

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Re: Is it too late [bitcoin]?
« Reply #571 on: January 03, 2018, 03:55:28 PM »
Just for the record, I'd like to state that our site founder agrees with me and not with 90% of the people in this thread. 

Sol, by my count there are at most five active accounts potentially arguing that it makes sense to invest in some kind of cryptocurrency* sometimes (shadow, phil22, lifeanon269, thenextguy, and Tonyahu), and at least fifteen accounts (myself included) who have posted that it does not make sense to purchase cryptocurrencies as investments in the two most recent pages of posts alone.

*And I think at least several of them also have agreed that the current price of bitcoin represents a bubble.

Just to make my position known since my name was mentioned. I'm not a fan of Bitcoin; it's the AOL of cryptocurrencies.

As for the idea that blockchain tech is useless because it's been around for 9 whole years, the internet began development in the 1960s.

I understand. And apologies to you (like with shadow and phil) for misrepresenting your position.

Oh no, not at all. I didn't mean to imply you did anything wrong. Just going on record :) I am invested in cryptocurrencies, just not Bitcoin.

I believe that within 5 years, cryptocurrencies will be a big part of our lives. If I'm wrong, I'll gladly admit it.

Earlier someone implied that big companies aren't developing the tech and that is just not true. See: https://entethalliance.org/members/

talltexan

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Re: Is it too late [bitcoin]?
« Reply #572 on: January 04, 2018, 08:22:36 AM »
I rightly deserved Sol's criticism for my position. When I make recommendations to other people, I try to consider the highest degree to which I can persuade them to make a move that will be beneficial. If I think owning no Bitcoin is the best, then I think owning less bitcoin is better than the current state. the sell 4% immediately suggestion seems like it should be a no-brainer even for someone who is quite bullish.

ChpBstrd

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Re: Is it too late [bitcoin]?
« Reply #573 on: January 04, 2018, 09:14:48 AM »
I find it interesting how some people are offering advice to put 1% or whatever of one's portfolio in cryptocurrencies. Does this reflect 1% of uncertainty about whether cryptocurrencies are a bubble or is it just an attempt to sound (or be) reasonable, like the people proposing we put X% of our portfolio in commodities to diversify?

I ask this because if cryptocurrencies have no value and are a bubble destined to burst, then only a zero allocation makes sense.

It would be like saying one should allocate 1% of one's portfolio to companies that look a lot like pyramid schemes, another 1% to gold coins advertized on fox news, another 1% to penny stocks that faxes received at work says are going to soar, another 1% to companies working on cold fusion, etc... As you can see, eventually this incremental "what if" mindset allocates a decent chunk of change to ideas with a " what-if" chance of paying off and a very high chance of going to zero. It also feeds well-known scams that feed upon FOMO (fear of missing out).

Diversification makes sense within a certain set of investments, but we must be careful not to extend this thinking into the various quasi-legit and somewhat suspicious-looking financial products sold around the periphery of real markets. Beyond some line of legitimacy, one has to switch from diversification thinking to binary "nope, that's bullshit" kind of thinking.

sol

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Re: Is it too late [bitcoin]?
« Reply #574 on: January 04, 2018, 10:50:56 AM »
ML bans bitcoin:  https://www.ccn.com/bank-americas-merrill-lynch-bans-clients-bitcoin-fund/

Don't worry, I'm sure it's totally fine!  What could possibly go wrong?

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #575 on: January 04, 2018, 11:03:44 AM »
I find it interesting how some people are offering advice to put 1% or whatever of one's portfolio in cryptocurrencies. Does this reflect 1% of uncertainty about whether cryptocurrencies are a bubble or is it just an attempt to sound (or be) reasonable, like the people proposing we put X% of our portfolio in commodities to diversify?

I ask this because if cryptocurrencies have no value and are a bubble destined to burst, then only a zero allocation makes sense.

It would be like saying one should allocate 1% of one's portfolio to companies that look a lot like pyramid schemes, another 1% to gold coins advertized on fox news, another 1% to penny stocks that faxes received at work says are going to soar, another 1% to companies working on cold fusion, etc... As you can see, eventually this incremental "what if" mindset allocates a decent chunk of change to ideas with a " what-if" chance of paying off and a very high chance of going to zero. It also feeds well-known scams that feed upon FOMO (fear of missing out).

Diversification makes sense within a certain set of investments, but we must be careful not to extend this thinking into the various quasi-legit and somewhat suspicious-looking financial products sold around the periphery of real markets. Beyond some line of legitimacy, one has to switch from diversification thinking to binary "nope, that's bullshit" kind of thinking.

Obviously if your mindset is that Bitcoin will cease to exist in 2 years then that is a perfectly fine standpoint to have and makes sense. However, for those that feel that Bitcoin does have future use-cases as a legitimate technology, then the idea of holding 1% of your portfolio into a non-correlative asset would actually be worthwhile, especially given the fact that most other investment classes themselves are significantly overpriced.

But going down the rabbit hole of 1% here and 1% there isn't what was implied, so extrapolating that out in the way that you did is misrepresentative of the advice at hand.

I do agree about the diversification though which is why in my post I didn't say "crypto-currencies", but bitcoin specifically. So far there has been no sign that the correlation in price movements between bitcoin and the rest of the crypto field will ever diverge. So diversifying beyond bitcoin doesn't really make sense. I'm firmly of the belief that a vast majority of the crypto-currencies today will not be around for the long term.

shadow

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Re: Is it too late [bitcoin]?
« Reply #576 on: January 04, 2018, 11:22:38 AM »
I find it interesting how some people are offering advice to put 1% or whatever of one's portfolio in cryptocurrencies. Does this reflect 1% of uncertainty about whether cryptocurrencies are a bubble or is it just an attempt to sound (or be) reasonable, like the people proposing we put X% of our portfolio in commodities to diversify?

I ask this because if cryptocurrencies have no value and are a bubble destined to burst, then only a zero allocation makes sense.

It would be like saying one should allocate 1% of one's portfolio to companies that look a lot like pyramid schemes, another 1% to gold coins advertized on fox news, another 1% to penny stocks that faxes received at work says are going to soar, another 1% to companies working on cold fusion, etc... As you can see, eventually this incremental "what if" mindset allocates a decent chunk of change to ideas with a " what-if" chance of paying off and a very high chance of going to zero. It also feeds well-known scams that feed upon FOMO (fear of missing out).

Diversification makes sense within a certain set of investments, but we must be careful not to extend this thinking into the various quasi-legit and somewhat suspicious-looking financial products sold around the periphery of real markets. Beyond some line of legitimacy, one has to switch from diversification thinking to binary "nope, that's bullshit" kind of thinking.

The people that have some confidence in crypto are going to be in it, no matter what, despite the risk. The "no more than 10-15%" is to discourage from taking on too much risk, and yet enough to warrant capturing a huge upside. Even 3-5% or lower can suffice, if they pick the right crypto for 50-300x returns (or higher) and have an exit strategy. This recommended percentage is an arbitrary evaluation. This is not a reflection of % to uncertainty, and I'm not even sure how you would quantify that. Some crypto may go to zero, but the crypto enthusiast believes the overall market will persist.

Aside, I think >90% of crypto right now are shit. So the odds of most crypto enthusiasts losing are very high, especially when there is a crash.

Lastly, I can't recommend anyone to put any amount into bitcoin.   

Telecaster

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Re: Is it too late [bitcoin]?
« Reply #577 on: January 04, 2018, 11:24:51 AM »
I find it interesting how some people are offering advice to put 1% or whatever of one's portfolio in cryptocurrencies. Does this reflect 1% of uncertainty about whether cryptocurrencies are a bubble or is it just an attempt to sound (or be) reasonable, like the people proposing we put X% of our portfolio in commodities to diversify?

I ask this because if cryptocurrencies have no value and are a bubble destined to burst, then only a zero allocation makes sense.

Those are good questions.  For sake of argument, let's say Bitcoin is NOT a bubble.  Let's say it is a real currency. 

Are those same people advising to put 1% or whatever of their portfolios in other currencies?  Like say, the Euro or Norwegian Kroner?  If not, why not?  Why is Bitcoin a better hedge against the USD than any other currency? 

The answer is they don't really expect it to behave like a currency . 

maizeman

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Re: Is it too late [bitcoin]?
« Reply #578 on: January 04, 2018, 11:27:07 AM »
...the idea of holding 1% of your portfolio into a non-correlative asset would actually be worthwhile...

This is an interesting point. However, I would argue that until we've been through at least once major recession, we don't yet have enough data to say whether either bitcoin specifically or cryptocurrencies generally are going to be correlated with other asset classes or not.

One of these days we should have another major stock market pullback, and I'm fascinated to see what that does to cryptocurrencies.

shadow

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Re: Is it too late [bitcoin]?
« Reply #579 on: January 04, 2018, 11:39:38 AM »
So far there has been no sign that the correlation in price movements between bitcoin and the rest of the crypto field will ever diverge. So diversifying beyond bitcoin doesn't really make sense.

This is misinformation. Anyone can look at cmc, cryptocompare, cryptowat, worldcoindex, etc and see the charts that empirically show otherwise.

In the same timeframe, from last month, that btc moved 30%, some coins moved 30,000 - 110,000%.
« Last Edit: January 04, 2018, 11:44:25 AM by shadow »

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Re: Is it too late [bitcoin]?
« Reply #580 on: January 04, 2018, 11:57:20 AM »
So far there has been no sign that the correlation in price movements between bitcoin and the rest of the crypto field will ever diverge. So diversifying beyond bitcoin doesn't really make sense.

This is misinformation. Anyone can look at cmc, cryptocompare, cryptowat, worldcoindex, etc and see the charts that empirically show otherwise.

In the same timeframe, from last month, that btc moved 30%, some coins moved 30,000 - 110,000%.

Most of us have at least 30 year investment horizons--and probably much more.   Is one month of data meaningful over those time frames? 

shadow

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Re: Is it too late [bitcoin]?
« Reply #581 on: January 04, 2018, 12:04:27 PM »
Most of us have at least 30 year investment horizons--and probably much more.   Is one month of data meaningful over those time frames?

Can you elaborate on this? I'm not clear on what you're trying to say.

lifeanon269 said

Quote
So far there has been no sign that the correlation in price movements between bitcoin and the rest of the crypto field will ever diverge

My response indicated that at times, price moves differently for other crypto despite bitcoin's movement. What is the relation to your statements?

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Re: Is it too late [bitcoin]?
« Reply #582 on: January 04, 2018, 12:30:11 PM »
Quote from: maizeman
This is an interesting point. However, I would argue that until we've been through at least once major recession, we don't yet have enough data to say whether either bitcoin specifically or cryptocurrencies generally are going to be correlated with other asset classes or not.

True, so far we've only really had snippets of how the markets would react such as when North Korean threats escalated a while back. We won't know for until an actual recession hits the economy and the availability of money dries up.

This is misinformation. Anyone can look at cmc, cryptocompare, cryptowat, worldcoindex, etc and see the charts that empirically show otherwise.

In the same timeframe, from last month, that btc moved 30%, some coins moved 30,000 - 110,000%.

It isn't misinformation. The key point in your rebuttal to my point is that some coins have diverged from Bitcoin. So what you're saying is that diversifying outside of bitcoin is essentially taking a gamble that you're going to pick the winners and losers correctly. The truth of the matter is that almost all of these alt-coins only have trade pairs in Bitcoin or possibly Ethereum. As has been shown time and time again, whenever Bitcoin goes down by a significant amount, all the other alt-coins do as well because panic ensues that if Bitcoin vanished, then your exit from your alt-coin position would vanish as well. So if your main concern is that Bitcoin won't be around in 5 years, then how would diversifying from Bitcoin into other alt-coins help hedge that? Until this situation changes, diversifying in other crypto-currencies makes no sense.

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Re: Is it too late [bitcoin]?
« Reply #583 on: January 04, 2018, 12:53:06 PM »
It isn't misinformation. The key point in your rebuttal to my point is that some coins have diverged from Bitcoin. So what you're saying is that diversifying outside of bitcoin is essentially taking a gamble that you're going to pick the winners and losers correctly. The truth of the matter is that almost all of these alt-coins only have trade pairs in Bitcoin or possibly Ethereum. As has been shown time and time again, whenever Bitcoin goes down by a significant amount, all the other alt-coins do as well because panic ensues that if Bitcoin vanished, then your exit from your alt-coin position would vanish as well. So if your main concern is that Bitcoin won't be around in 5 years, then how would diversifying from Bitcoin into other alt-coins help hedge that? Until this situation changes, diversifying in other crypto-currencies makes no sense.

All coins are in the same crypto market, so most will similiarly mimic movements of up and down. However, this does not mean they will move in tandem percentage-wise with btc. Let's expand 'some' to many 'many'. We've seen this with many newer crypto. It will become increasingly harder and harder for larger marketcaps to make increases, but the newer, promising crypto should have larger returns in the same timesets.

Also, other trading-pairs have emerged and are on the rise. Btc's position and reliance as a trading pair is decreasing, especially when coinbase/gdax starts offering more crypto and more exchanges start offering different trading-pairs.

As for what coin to speculate on, do your due diligence. This is where risk analysis comes into play, and crypto enthusiasts need to understand what they are buying, what has fundamentals, what has strongest chance to survive crashes, how to decrease risk, etc.

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Re: Is it too late [bitcoin]?
« Reply #584 on: January 04, 2018, 01:00:09 PM »
The truth of the matter is that almost all of these alt-coins only have trade pairs in Bitcoin or possibly Ethereum. As has been shown time and time again, whenever Bitcoin goes down by a significant amount, all the other alt-coins do as well because panic ensues that if Bitcoin vanished, then your exit from your alt-coin position would vanish as well. So if your main concern is that Bitcoin won't be around in 5 years, then how would diversifying from Bitcoin into other alt-coins help hedge that? Until this situation changes, diversifying in other crypto-currencies makes no sense.

Well it really depends on why a particular person is thinking bitcoin may have reduced value or disappear entirely in five years.

If they take the position that cryptocurrencies are a solution in search of a problem, and one day people will wake up and realize the ones and zeros they bought aren't actually worth anything, then yes, if bitcoin vanishes, the ability to convert most altcoins to dollars vanishes at the same time. <-- the "bitcoin is a ponzi scheme" argument

If they take the position that cryptocurrencies address real needs and are going to be with us for the foreseeable future, but that bitcoin's present position as the most highly valued/widely traded currency is a result of first mover advantage and network effects which can be overcome by other currencies with different (potentially better designs), then if bitcoin vanishes, it will be because its role has been replaced by some other cryptocurrency, and to the ability to convert between altcoins and dollars wouldn't be effected. <-- the "bitcoin is myspace" argument.

The people who argue bitcoin-is-a-ponzi scheme probably aren't any more excited about any other cryptocurrencies, so most of the people who think bitcoin might not be a going concern in 5 years but are interested in buying other cryptocurrencies probably fall into bitcoin-is-myspace camp.

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #585 on: January 04, 2018, 01:06:40 PM »
It will become increasingly harder and harder for larger marketcaps to make increases, but the newer, promising crypto should have larger returns in the same timesets.

Also, other trading-pairs have emerged and are on the rise. Btc's position and reliance as a trading pair is decreasing, especially when coinbase/gdax starts offering more crypto and more exchanges start offering different trading-pairs.

I mentioned in the other crypto thread how market cap doesn't mean anything and I'll state it again here. Market cap means nothing in the crypto space. That is especially true with crypto-currencies that are pre-mined. I can create a cryptocurrency with 1 trillion tokens and sell one for $1 and suddenly the market cap for my cryptocurrency is $1 trillion. Pre-mined currencies are essentially printed money.

The reason why they're going up in price so quickly has nothing to do with market cap size and everything to do with the fact that there is absolutely no liquidity in these markets. It only takes a few thousand/million dollars to move the prices of these currencies massive percentages in price. If you look at the 30 day volume trend for any of these alt-coins over the last 30 days, you'll see that 30 days ago they likely had non-existent trading volume.

I agree there are a few instances where trading pairs are opening up in USD for other alt-coins, but again, liquidity matters. These trading pairs are still low volume and not common. If you expect those few trading pairs to pick up the slack in the event of a bitcoin crash, you're being naive.

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Re: Is it too late [bitcoin]?
« Reply #586 on: January 04, 2018, 01:12:54 PM »
I rightly deserved Sol's criticism for my position. When I make recommendations to other people, I try to consider the highest degree to which I can persuade them to make a move that will be beneficial. If I think owning no Bitcoin is the best, then I think owning less bitcoin is better than the current state. the sell 4% immediately suggestion seems like it should be a no-brainer even for someone who is quite bullish.

One other factor to consider is transaction costs/friction. The "if you wouldn't buy it sell it" logic works best when transactions are easy and low cost, for example with stock positions one purchased before deciding to switch over to index investing. As we've seen, people who have cryptocurrency for some reason other than recently purchasing it on an exchange (for example seattlecyclone's experience trying to sell their ripple) often don't have a straightforward way to convert it to US dollars,** and the costs of setting up a way to cash out their positions* may exceed the value of their current cryptocurrency holdings.

I still have a bit of bitcoin although I wouldn't buy bitcoin, and the primary reason I haven't sold it is that for exactly the reasoning above.

*Time spent learning how to use exchanges, time spent finding and filling paperwork to get properly authorized accounts at exchanges which is generally more onerous for people pulling USD out than people putting USD in, the risk that now an awful lot of their personal information is held at an exchange and they are at risk of being swept up in things like the recent attempt by the IRS to subpoena the identities and financial information of everyone with a coinbase account as potential tax cheats.

**People who wish to do a celebratory dance about how the preceding phrase proves cryptocurrencies are not really currencies can feel free to do so at this point. I disagree, but here's a nice GIF you can use.

sol

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Re: Is it too late [bitcoin]?
« Reply #587 on: January 04, 2018, 01:20:07 PM »
This is where risk analysis comes into play, and crypto enthusiasts need to understand what they are buying, what has fundamentals, what has strongest chance to survive crashes, how to decrease risk, etc.

I'm pretty sure all of this techno-speak about cryptocurrencies is going to sound pretty ridiculous in a year or two.  Imagine making these same arguments about tulip bulbs and you'll get some idea of why I think so.  Fundamentals?  Risk mitigation of diversification?  Underlying technologies?  Um, none of that actually exists in any relevant way.

We're taking about a runaway market bubble in theoretical abstractions.  Price is totally decoupled from anything you might call a fundamental.  The only way to make money here is for someone else to lose money.  We're speculating on future demand, for something with no known use, so the only demand out there is driven by the growing demand.  It's the classic definition of a bubble, only made more obvious by the lack of any underlying value stream.  At least tulip bulbs could be used to make your garden prettier.

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Re: Is it too late [bitcoin]?
« Reply #588 on: January 04, 2018, 02:05:18 PM »
the "bitcoin is myspace" argument.

I just wanted to clarify my position a little deeper on why diversifying with alt-coins doesn't make much sense at the moment.

The entire point of diversifying is to reduce risk. But, if you take the market position where your funds are diversified equally across a variety of crypto-currencies, then you've increased your risk in the short-term because of the fact that the liquidity in the diversified portion is either negligible or is directly dependent upon another currency that you're supposedly diversifying from (Bitcoin).

What I wasn't saying was that that will always be the case. Maybe 10 years from now another currency overtakes Bitcoin and has massive liquidity in every trading pair imaginable. Even knowing that in the long term doesn't reduce the risk of the marketplace reality in the short term.

Anyone is free to put money into any alt-coin they please, but don't do it because you feel you're diversifying and reducing risk. What you're really doing is taking on short-term risk in hopes of long term fortune...another name for that is gambling.

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Re: Is it too late [bitcoin]?
« Reply #589 on: January 04, 2018, 03:18:55 PM »

I'm pretty sure all of this techno-speak about cryptocurrencies is going to sound pretty ridiculous in a year or two.  Imagine making these same arguments about tulip bulbs and you'll get some idea of why I think so.  Fundamentals?  Risk mitigation of diversification?  Underlying technologies?  Um, none of that actually exists in any relevant way.

We're taking about a runaway market bubble in theoretical abstractions.  Price is totally decoupled from anything you might call a fundamental.  The only way to make money here is for someone else to lose money.  We're speculating on future demand, for something with no known use, so the only demand out there is driven by the growing demand.  It's the classic definition of a bubble, only made more obvious by the lack of any underlying value stream.  At least tulip bulbs could be used to make your garden prettier.

I never made any arguments against why we're not in a bubble. My statements have referenced the entire market crashing.

Right now, there are over a thousand crypto. Most will probably fail. However, some of the crypto that people are speculating on have the premise of solving problems like financial coordination, remittance, providing financial services to those without banking access or credit system, reducing cost of financial transactions, etc; and all this done on an underlying decentralized tech. All these transactions will have fees, which are rewarded to stakers. These types of crypto, created to address social problems, have a strong probability of being around one or two years from now. The current working model of decentralization is that it needs costs and incentives for distributed entities to agree on a valid transaction; the speculation is on the number of transactions and fees paid to crypto stakers. Regardless of market cap valuation, the fees will be paid dependent on network traffic. The expectation is that people will use blockchain because, for various reasons, it improves some aspect of their lives.





     

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Re: Is it too late [bitcoin]?
« Reply #590 on: January 04, 2018, 03:23:47 PM »
the "bitcoin is myspace" argument.

I just wanted to clarify my position a little deeper on why diversifying with alt-coins doesn't make much sense at the moment.

The entire point of diversifying is to reduce risk. But, if you take the market position where your funds are diversified equally across a variety of crypto-currencies, then you've increased your risk in the short-term because of the fact that the liquidity in the diversified portion is either negligible or is directly dependent upon another currency that you're supposedly diversifying from (Bitcoin).

What I wasn't saying was that that will always be the case. Maybe 10 years from now another currency overtakes Bitcoin and has massive liquidity in every trading pair imaginable. Even knowing that in the long term doesn't reduce the risk of the marketplace reality in the short term.

Anyone is free to put money into any alt-coin they please, but don't do it because you feel you're diversifying and reducing risk. What you're really doing is taking on short-term risk in hopes of long term fortune...another name for that is gambling.

I'm aware of how volume, liquidity, and marketcap works. You're taking my generalization and narrowing it into a specific narrative about market liquidity.

Also, the assumption you're making is that btc is responsible for how the entire crypto will perform, when it could very well be these crypto outperform btc or eats into its market share.

sol

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Re: Is it too late [bitcoin]?
« Reply #591 on: January 04, 2018, 03:31:54 PM »
some of the crypto that people are speculating on have the premise of solving problems like financial coordination, remittance, providing financial services to those without banking access or credit system, reducing cost of financial transactions, etc; and all this done on an underlying decentralized tech. All these transactions will have fees, which are rewarded to stakers. These types of crypto, created to address social problems, have a strong probability of being around one or two years from now.

These hypothetical applications of blockchain will never work until the associated currency is stable.  Like if the US government were to issue a coin worth one dollar, and offer to always buy one or sell one for one dollar, then it could be used for money transfers.  But when the price fluctuates 25% in a matter of hours, the currency is pretty useless for this purpose.

And just to put a finer point on it, it is the speculators who are driving the price fluctuations, and thus preventing the widespread adoption of a coin.  Cryptocurencies are doomed as long as everyone continues to speculate in cryptocurrencies.

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Re: Is it too late [bitcoin]?
« Reply #592 on: January 04, 2018, 03:55:13 PM »

These hypothetical applications of blockchain will never work until the associated currency is stable.  Like if the US government were to issue a coin worth one dollar, and offer to always buy one or sell one for one dollar, then it could be used for money transfers.  But when the price fluctuates 25% in a matter of hours, the currency is pretty useless for this purpose.

And just to put a finer point on it, it is the speculators who are driving the price fluctuations, and thus preventing the widespread adoption of a coin.  Cryptocurencies are doomed as long as everyone continues to speculate in cryptocurrencies.

What if the crypto is not used as a medium-of-exchange? What if the blockchain allows anyone to transact in their token or currency of choice? What if banks or governments start to issue a crypto version of their currency on top of these blockchains? What if the crypto is not merely a currency, but represents a unit of accounting particular to a service?

Most of the questions have already been redressed, and banks like mitsubishi are conducting blockchain experiments:

https://news.bitcoin.com/mitsubishi-testing-cryptocurrency/


sol

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Re: Is it too late [bitcoin]?
« Reply #593 on: January 04, 2018, 05:26:39 PM »
What if banks or governments start to issue a crypto version of their currency on top of these blockchains?

This one is the only valid use case I can possibly see.  Basically, the blockchain becomes the serial number of a specific dollar bill.  It just has to be worth exactly one dollar, at all times, for this to work.

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #594 on: January 04, 2018, 05:48:09 PM »
I'm aware of how volume, liquidity, and marketcap works. You're taking my generalization and narrowing it into a specific narrative about market liquidity.

Also, the assumption you're making is that btc is responsible for how the entire crypto will perform, when it could very well be these crypto outperform btc or eats into its market share.

Apologies, my intention wasn't to imply that you didn't know how markets worked, but merely to explain my personal opinion and take on the current state of the markets and why diversifying into other alts doesn't reduce your short term risk.

I also am not implying that there aren't some amazing crypto-currencies out there beyond bitcoin that have viable use-cases. Decentralized storage solutions are of particular interest to me as I think there is a great need for something like that to compete against their centralized alternatives (especially considering the recent CPU vulnerabilities).

So my opinion against diversifying isn't an argument against alt-coins or their legitimacy in particular, but more an argument with regards to the current state of the markets and their immaturity that makes reducing risk via diversification rather pointless until that changes.


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maizeman

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Re: Is it too late [bitcoin]?
« Reply #596 on: January 05, 2018, 03:17:45 PM »
https://www.cnbc.com/2018/01/05/visa-bans-cryptocurrency-backed-cards.html

Doh!

Indeed, that is not good news. I will be interested to hear their reasoning (if they ever release a public statement beyond "we're not doing this anymore"). Lifeanon, was the card you use impacted by this?

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Re: Is it too late [bitcoin]?
« Reply #597 on: January 05, 2018, 03:35:42 PM »
And yet Bitcoin spent the day going up. It's almost as though its price is unrelated to the real world...

sol

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Re: Is it too late [bitcoin]?
« Reply #598 on: January 05, 2018, 03:42:04 PM »
Or is related to the amount of media coverage it gets, positive or negative.

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #599 on: January 05, 2018, 06:02:48 PM »
Indeed, that is not good news. I will be interested to hear their reasoning (if they ever release a public statement beyond "we're not doing this anymore"). Lifeanon, was the card you use impacted by this?

No, the headline is extremely click-baity. VISA is not banning crypto-backed credit cards. They shutdown one single issuer (Wavecrest) that a lot of crypto-currency payment providers happened to use in Europe for not being compliant and violating license agreements. It does not impact any US residents and the bitcoin debit card I use (Shift card) is still completely functional as are many others. That's pretty crappy of VISA to at least not give customers a 30 day notice though as I'm sure it left a lot of people high and dry. Or perhaps the blame is on Wavecrest if VISA gave them plenty of time to become complaint (which could certainly be true).

Either way, if anything this goes to show why a permission-less payment network is desperately needed.