Author Topic: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion  (Read 246054 times)

Travis

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1200 on: February 05, 2019, 12:25:04 PM »
How many billions of dollars worth of crypto have gone "missing" from exchanges, one way or another?  Is anyone keeping count?

Because to a casual observer, this looks like the riskiest, most insecure, most fraud-prone "asset class" ever invented.

Keeping crypto at an exchange has a very different (and worse) set of risks associated with it compared to having crypto that you control yourself.

Just like the types and degree of risks are different if you have cash stashed under your mattress or deposited at a bank.
Or buy a bunch of shares of VTI vs start a small business.
Or own a gold ETF vs have gold coins buried in the backyard.

Does it make sense why these two things are not the same as each other? If not, and you are interested, I'm happy to discuss what the different risks are and why they exist.

Maize, I'll bite. I'm not seeing the comparison.  If your bank or Vanguard HQ get hit by a meteor tomorrow, your funds are still secure.  Your bank is FDIC insured and Vanguard's assets are secured/handled by a third party.  Both examples have layers of regulation and closely monitored security.  If the same meteor lands on your house and obliterates your cash or gold coins you're screwed.  If Vanguard or your bank are subject to a theft, then the same insurance/backups/guarantees kick in.  I don't know what the ratio of hacking losses are for exchanges vs privately-owned wallets, but it seems that in either case there is no recourse.

maizeman

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1201 on: February 05, 2019, 12:55:30 PM »
I don't know what the ratio of hacking losses are for exchanges vs privately-owned wallets, but it seems that in either case there is no recourse.

I agree that in both cases there is no recourse (just as there wouldn't be for gold in the backyard or cash under the mattress). That doesn't mean the types of risk and probability of risk is the same between the two.

There have been lots of exchanges that have been compromised because they either made their private keys not secure enough (so funds get stolen), too secure (they lose the ability to access those funds themselves), or the temptation to run off with other people's money was too great.

For a private individual both the first and second are straightforward to avoid if you are following best practices with your private key(s), and the third doesn't enter into the picture.

If you just have an account on some exchange, you're putting your trust in a whole bunch of other people to also follow best practices for key security and backup when the harm to you if they don't is dramatically greater than the harm to themselves, which is never a recipe for good outcomes.

In the case of an account on an exchange, you also have to trust that the large group of people with potential access to your funds doesn't include anyone willing to do anything unethical, which is particularly rich since one of the big original selling points of crypto before the price spiked and it made the news is that you could safely store and transmit funds without having to trust any 3rd parties.

I do want to repeat here that my thesis isn't cryptocurrencies are more or less safe than cash, bank deposits, stocks, or gold (either ETFs or buried in the back yard).

My thesis is that looking at the safety record of exchanges and what kinds of problems they run into is not going to provide useful information about the type about the safety record or types of risks for people who actually use cryptocurrencies will encounter.

sol

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1202 on: February 05, 2019, 12:56:25 PM »
Keeping crypto at an exchange has a very different (and worse) set of risks associated with it compared to having crypto that you control yourself.

I see that the risks are different.  I was merely commenting on what seems to be a continuous stream of bad outcomes for crypto holders, suggesting that the types of risk are less important than the literal losses that have resulted from those risks.  Like what percentage of crypto has gone "missing" in the past two years, compared to the equivalent percentage of stocks or gold?

I don't mean the day to day price fluctuations.  I mean the theft, loss, and destruction of assets.  Reuters reported 1.7 billion in thefts alone in 2018, mostly from a handful of high-profile heists of several hundred million dollars each.  And that doesn't include "losses" like this most recent password loss due to founder death at QuadrigaCX, which also seems to have destroyed hundreds of millions of dollars worth of crypto (though may be another heist disguised to look like destruction).

The entire global crypto market appears to be worth something less than $300 billion, suggesting that approximately half a percent of the global store of value was stolen in 2018 alone, not counting however much was "lost" for other reasons.  Does anyone have any idea how to find equivalent number for the amount of savings account that are stolen, or stocks, or gold?  Fraud and identity theft are approaching $20b per year, but that's out of something like 30 trillion dollars.  That rough math suggests that you are approximately ten times more likely to suffer losses due to crypto theft than you are to other kinds of financial theft. 

You can certainly fudge those numbers a little bit depending on how you measure stuff, but I think the general conclusion is sound.  Crypto looks insecure in practice, despite being an idea wholly built around security.

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1203 on: February 05, 2019, 12:59:10 PM »
How many billions of dollars worth of crypto have gone "missing" from exchanges, one way or another?  Is anyone keeping count?

Because to a casual observer, this looks like the riskiest, most insecure, most fraud-prone "asset class" ever invented.

even Dutch tulips didn't just 'disappear'... because say the guy warehousing them died knowing the only password.

Travis

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1204 on: February 05, 2019, 01:09:14 PM »
I don't know what the ratio of hacking losses are for exchanges vs privately-owned wallets, but it seems that in either case there is no recourse.

I do want to repeat here that my thesis isn't cryptocurrencies are more or less safe than cash, bank deposits, stocks, or gold (either ETFs or buried in the back yard).

My thesis is that looking at the safety record of exchanges and what kinds of problems they run into is not going to provide useful information about the type about the safety record or types of risks for people who actually use cryptocurrencies will encounter.

Why do people use crypto-exchanges in the first place? The word "exchange" makes me think of a stock exchange, but it sounds like in this particular case this hot/cold storage was being used more like a traditional bank.  If the latter, then why? Are the owners of those coins not confident in managing their own wallets that they put them in a third party's hands?

maizeman

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1205 on: February 05, 2019, 01:16:59 PM »
Why do people use crypto-exchanges in the first place? The word "exchange" makes me think of a stock exchange, but it sounds like in this particular case this hot/cold storage was being used more like a traditional bank.  If the latter, then why? Are the owners of those coins not confident in managing their own wallets that they put them in a third party's hands?

Exactly. They heard crypto was going up (or think they can make money trading the swings when it is going down), so they decided to buy some either happens in person or on exchanges, but then didn't bother to learn enough about the technology to actually set up a wallet of their own.

Cryptocurrencies are not stocks. If anything they are closer to some weird hybrid between a currency and a commodity. Anyone buying them to get rich, especially folks who don't take the time to understand the technology behind them enough to actually use them, is unlikely to have a good time.

An analogy: You here there is a run on bananas. You go to the grocery store to buy some bananas before the price goes up. You're not sure how to store for bananas, so you ask the cashier to hold on to your bananas but you'll come back for them someday. You come back a week later and there are no bananas. People write right stories about how bananas are stupid because you cannot safely leave them at a grocery store for weeks on end after you buy them and trust that no one will take them.
« Last Edit: February 05, 2019, 06:03:19 PM by maizeman »

Syonyk

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1206 on: February 05, 2019, 02:23:19 PM »
How many billions of dollars worth of crypto have gone "missing" from exchanges, one way or another?  Is anyone keeping count?

I'm sure someone is, though the details of accounting would be tricky - do you count the value deposited, value when it's actually missing, or value when it's discovered widely that it's missing (with a large gap, often, between #2 and #3, depending on how many shenanigans the place losing coins goes through to hide the loss)?

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Because to a casual observer, this looks like the riskiest, most insecure, most fraud-prone "asset class" ever invented.

With great risk comes great opportunity...

I'll certainly grant that the risks involve with cryptocurrencies are different than many other classes of asset, but "The riskiest, most insecure, most fraud-prone..." - eh.  I'm not sure I'd go there.  That's an awful lot of absolute statements.

However, quite a bit of the risk is from people who take assets designed for direct person-to-person exchange, and then put them in third party run exchanges, and leave them there.  Without any clue what those exchanges are really doing, or how well secured they are.  Cryptocurrencies aren't designed for that use case, and it turns out, they break badly when you do that.  There's nothing wrong with putting the assets in an exchange to exchange them/trade them/etc, but leaving them there for the long term, empirically, is certainly risky.  So don't do that.

Why do people use crypto-exchanges in the first place? The word "exchange" makes me think of a stock exchange, but it sounds like in this particular case this hot/cold storage was being used more like a traditional bank.  If the latter, then why? Are the owners of those coins not confident in managing their own wallets that they put them in a third party's hands?

In general, the exchanges should be used for trading between various asset classes (cash, various cryptocurrencies, etc), with the results pulled out, but people tend to get lazy and leave them there - and, empirically, an awful lot of people do that.  I think it's stupid, personally, but... well, I'm not exposed to risk from third party exchanges running God knows what software stack at some poorly secured cloud provider.

Even mining pools tended to use a hot/cold storage system, though.  It's simple risk management - for the same reason most people don't carry all their cash on them at any given point in time, a pool or exchange will likely have a reasonably large amount present, and the hot wallet value is at risk.  You need some liquid funds on hand for paying out when people transfer back to their private wallets, but not all of it, and having all of it online is more likely to result in losses than having some of it offline.

And then, for your cold storage, well, you still need to balance the risks.  Password protecting a personal wallet is one such risk - what are the risks of having your wallet stolen by malware or something, versus the risks of you forgetting the password?  I can't answer that for other people, but I'll suggest it largely depends on what your overall "cyber" risks are.  If you're a gamer who mines on your gaming rig and pirates lots of video games, maybe keeping the hot wallet on that system isn't such a good idea.

In terms of losing the wallet, there are quite a few options to make very durable wallets (printing them, punching out metal cards, etc), and you can store it many places - again, look at the risk factors for your specific use case.

Exactly. They heard crypto was going up (or think they can make money trading the swings when it is going down), so they decided to buy some either happens in person or on exchanges, but then didn't bother to learn enough about the technology to actually set up a wallet of their own.

If someone tells me to "Short Tesla" and I'll make a gazillion, and I do it without understanding, it's still my fault for losing money there...

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Cryptocurrencies are not stocks. If anything they are closer to some weird hybrid between a currency and a commodity. Anyone buying them to get rich, especially folks who don't take the time to understand the technology behind them enough to actually use them, is unlikely to have a good time.

I've come to describe them as "Synthetic digital commodities."  It's the most accurate description I've yet found - they act more like a commodity than a currency, they're purely synthetic, and they exist only in a digital realm.  However, I'd also argue that during a pure gold standard era, you're not using a currency, but a commodity - just one conveniently broken up for exchange.

aspiringnomad

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1207 on: February 05, 2019, 10:00:59 PM »

In general, the exchanges should be used for trading between various asset classes (cash, various cryptocurrencies, etc), with the results pulled out, but people tend to get lazy and leave them there - and, empirically, an awful lot of people do that.  I think it's stupid, personally, but... well, I'm not exposed to risk from third party exchanges running God knows what software stack at some poorly secured cloud provider.


In my admittedly limited experience, moving crypto from an exchange to a cold wallet and back again costs you a chunk of your crypto. It's not necessarily cost prohibitive, but certainly more expensive than modern fiat exchanges which generally allow free transfers. More broadly, crypto still seems to be an expensive, volatile, and potentially insecure solution to a problem that doesn't really exist unless you're laundering money, spreading ransomware, or living in Venezuela.

maizeman

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1208 on: February 05, 2019, 10:20:01 PM »
More broadly, crypto still seems to be an expensive, volatile, and potentially insecure solution to a problem that doesn't really exist unless you're laundering money, spreading ransomware, or living in Venezuela.

I'm not necessarily disagreeing with any of these* beyond the fact that I don't think security problems at exchanges say anything about cryptocurrencies being insecure. If you trust anything of potential value to random strangers on the internet, bad stuff is going to happen fairly often.

The nice thing about cryptocurrencies is that you don't have to trust random strangers on the internet. Some people still chose to.

*Also, expensive is a matter of definition, but I agree that the transactions generally cost more than free.

sol

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1209 on: February 06, 2019, 10:36:44 AM »
If you trust anything of potential value to random strangers on the internet, bad stuff is going to happen fairly often.

Why does crypto appear to be so much more vulnerable to this than other types of investments?

I mean I trust random internet strangers like Vanguard and Fidelity with most of my life savings, and I never lose a minute's sleep over it.  I also have tens of thousands of dollars stored with the random internet strangers at various online banks.  We don't see losses from these types of online storage "fairly often" if at all. 

I think that the very security that crypto was designed to offer is exactly what makes it so vulnerable.  The fact that it's decentralized and irreversible is what makes it a lucrative target for thieves.  Strong encryption offloads all of the responsibility for safety to the user, and users are notoriously bad at that.  It's almost like cryptocurrenies were tailor-made to be the perfect target for theft. 

seattlecyclone

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1210 on: February 06, 2019, 11:05:36 AM »
I think that the very security that crypto was designed to offer is exactly what makes it so vulnerable.  The fact that it's decentralized and irreversible is what makes it a lucrative target for thieves.  Strong encryption offloads all of the responsibility for safety to the user, and users are notoriously bad at that.  It's almost like cryptocurrenies were tailor-made to be the perfect target for theft. 

I think you've got it exactly right. Vanguard and Fidelity can give tons of employees access to perform transactions with your money because if they go rogue and defraud you there are ways to undo it. With cryptocurrencies, anyone who has the key to the account holding your money can steal it with no recourse other than the possibility of jail time if caught. No power on earth can force them to reverse that transaction if they choose not to surrender their private keys. Hence the practice of this exchange of only having one person who knows the private key. The downsides with this are obvious in hindsight. A better system might be to break the key into a dozen pieces and make sure multiple people have each piece so there's no single point of failure.

maizeman

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1211 on: February 06, 2019, 11:12:19 AM »
Strong encryption offloads all of the responsibility for safety to the user, and users are notoriously bad at that.

Yup. Hence, those of us who put in the time to understand how to use it safely find it both appealing and secure (since how secure it is depends on our own actions or inactions rather than those of other people) at the same time that the news is full of stories of people who get a different outcome because they aren't going a good job of taking responsibility for their own safety but also aren't recognizing that, if they aren't willing to take that responsibility, they'll get a much safer outcome if they didn't touch crypto with a ten foot pole.

sol

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1212 on: February 06, 2019, 11:45:47 AM »
those of us who put in the time to understand how to use it safely find it both appealing and secure

I guess I just don't see the attraction, unless you're a criminal.  Why would I choose crypto, which apparently has a huge online theft problem, over some other form of digital value storage like a bank or mutual fund company, that appears to be much more secure?

I understand that some people don't trust banks, all evidence to the contrary, and prefer to bury gold coins in their back yard.  Storing your crypto privately feels to me just like burying gold.  It can still be stolen!  Physically hiding your stuff is literally the least secure way to protect it!  Anyone can break into your home and steal your crypto, or your jewelry or your gold or your art.  Keeping valuables in your home is far less secure than keeping them in a bank vault, or an online brokerage house.  A bank will store it safely for free, because they can lend against it.  That's how banking works.  The profits from that lending are used to insure against fraud and theft.  Everyone wins.

If I was a career criminal, however, and wanted to convince people to put vast sums of money into forms that I could steal in bulk without ever leaving the comfort of my home office, then crypto seems like a genius idea.  There are some slightly more subtle complications in the comparison between crypto and online banking, for example the "real" value vs the fractional reserve and the fluctuations in current exchange price vs the carrying costs.  Market cap is not the same as true value, just like M0 is not M3.  Even delving into these ideas, though, makes me think that crypto is a criminal's dream.  I haven't yet thought of any angles from which crypto is superior to the existing traditional financial system.  That doesn't mean they don't exist, just that I haven't found them yet.

From one perspective, this whole debate boils down to your philosophy of society.  Do you believe we succeed when we cooperate and trust one another, or when we retreat into private warring factions?  If you're a rugged individualist who hand pumps his own well water and poops in his back yard, then privately protecting your gold bars or crypto might make sense.  For everyone else, who has built a life based on civilization's social contract, you've already accepted that cooperation and trust are the key to our success as a species, and banks with checks and balances are a great idea.  Cryptography allows one person and one person alone to have 100% of the power in a specific narrow instance, but I'm not sure that's a good idea.  Ask those QuadrigaCX people how that worked out.

waltworks

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1213 on: February 06, 2019, 12:21:38 PM »
I don't claim to speak for Maizeman, but he and I have both talked about this here in the past, so let me explain what the appeal is (to me, keeping in mind that I currently don't own any crypto at all):

-Currently I need a third party in many cases to pay someone. I could be paying for a purchase to be shipped to me, or settling a debt, or buying something at the grocery store. I can of course pay with cash/checks, but those are a pain for a number of reasons. So I'll usually use a credit card, or paypal, or something like that to process the transaction.

-Those third parties (mostly credit card companies) charge a lot of money to 1) provide some fraud protection, and 2) make a profit. They get a BIG chunk (sometimes like 4%) of the transaction.

-If we had a way to transact between strangers that was inherently secure, we wouldn't need a third party, and both parties would save significantly.

To me, *that* is the appeal. I want to be able to securely pay anyone (or get paid) in the world, for free or close to free.

Currently that's not very practical. Maybe someday it will be. The fraud protection angle (no recourse if I never receive my purchase, except to personally go track down the seller) is a big issue for your average consumer too.

-W

maizeman

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1214 on: February 06, 2019, 01:07:39 PM »
Waltworks, you did a great job of summarizing the points I find appealing about the technology as well. It's, in principle, a technological solution to a problem that right now a bunch of very profitable businesses extra large "rents"* from society for solving. I'll be the first to admit that right now, in practice, cryptocurrencies aren't fasters/cheaper/more efficient than western union/mastercard/paypal. But their technology means that they do have the potential to be. And that's just cool from a tech perspective. It's also nice from an economic perspective, because rents tend to distort the economy and make it less productive over the long hall.**

@sol, you're clearly a smart guy, but it is frustrating that we cannot seem to ever disagree without you trying to demonize people for taking the other side of an argument from you. No, I am not a criminal. I am also not a goldbug.*** No I am not advocating a retreat from general society into groups of warring factions. Nor I am not a rugged individualist who is ungrateful for or unaware of the countless benefits and blessings being born into a functioning and affluent society has provided for myself over the years (and hopefully will continue to do so). As we established in a previous thread, I am also not a nazi.

I wish I could find a way to convince you people can look at the same data as you, come to a different conclusion from you, and that doesn't mean that they buy into every idea you disagree with. It makes it frustrating/depressing to have conversations with you. From my perspective, life is too short for that. From your perspective, surely there is some value to being able to continue to be exposed from ideas from people of differing perspectives rather than being left in a bubble of only people who agree with you on every topic and maybe a few people who really DO disagree with you on every topic?

* In the economic sense of the word.

** Even though there can be short term economic pain when a previously profitable sector goes under.

*** If nothing else surely my track record on this thread demonstrates that I am not a gold bug? https://forum.mrmoneymustache.com/investor-alley/precious-metals/50/

sol

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1215 on: February 06, 2019, 01:12:22 PM »
Currently I need a third party in many cases to pay someone.

That's a feature, not a bug!  That third party is what MAKES the system secure.  Operating without one is like buying on the black market with suitcases full of cash.  You're just asking to get robbed.

I agree that some third party fees are high, like credit cards, but that's purely a matter of you choosing to pay for convenience.  There is no cost at all to using a regular bank, because the bank makes money by lending against your account balance.  Banks will happily transfer money for you electronically, for free, it's just slow and inconvenient.  If you prefer to use a little plastic chip that you carry in your wallet that is accepted literally everywhere and offers you fraud protection and chargeback privileges, then you pay a little more for the convenience.  But you don't have to. 

Crypto also charges fees to transfer back and forth to other forms of currency, so it's not like this problem is unique to credit cards, and crypto is terribly inconvenient if you want to use it at your local gas station.

If you regularly need to conduct immediate transactions with unbanked individuals in foreign countries who don't have access to a third party, then I can see utility in a direct crypto transfer from your phone to his.  That person is setting himself up to be robbed, though, just like if he had met in person for a suitcase full of cash.  The bank's accounts are insured against theft, and are free to set up and use.  I'm not such a recluse that I think avoiding participating in the benefits of civilization is somehow a virtue.  What's next, smelting my own aluminum to make circuit boards in case someone hardware hacked the laptop I bought from Vietnam?  At some point, you have to learn to trust the system we have built, warts and all.

sol

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1216 on: February 06, 2019, 02:02:28 PM »
And that's just cool from a tech perspective.

I can definitely understand dabbling with something just because you think it's cool technology, like drones or solar panels or ham radios.  Those feel like someone's potential hobbies, to me.

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it is frustrating that we cannot seem to ever disagree without you trying to demonize people

I think you might be taking things a bit too personally.  You're one of my favorite posters here, and I always look forward to your contributions.  I don't feel any conflict, nor any demons.  I didn't mean to accuse you personally of anything.  I know you're not a gold bug, or a nazi. 

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I wish I could find a way to convince you people can look at the same data as you, come to a different conclusion from you

Of course!  And when that happens repeatedly with someone whose opinions I value and respect, I tend to push a little harder to figure out why.  Crypto is one of those prime examples were I just genuinely don't understand what all the hype is about, but lots and lots of smart people are totally hyped about it.

It's cool tech, I get that.  It's also popular with online communities, so I think there's a little bit of groupthink behind it.  But as a practical matter, it has some significant drawbacks that basically make it DOA in terms of serving as a useful currency, in my opinion.  The rampant theft issue is one of those, and seems particularly ironic because cryptocurrencies were specifically promoted as offering people added security, then turned out to be way less secure than traditional currency banking.  It's like when Norton Antivirus promises to speed up your computer by removing malware, but then bogs your system down with virus scans.  Or people who buy firearms because they don't feel safe at home, and then end up having an accidental firearm fatality at home because of it.  Like, whoops maybe this wasn't as great of an idea as we thought it was.

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It makes it frustrating/depressing to have conversations with you.

Well that's too bad, I kind of enjoy our conversations and I like your logical and quantitative approach to numerous forum discussion.  Maybe this a tone issue rather than a substance one?  Would it be easier if you pictured me with a big goofy smile whenever you read a post with my name next to it?
« Last Edit: February 06, 2019, 05:18:04 PM by sol »

Syonyk

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1217 on: February 06, 2019, 02:40:37 PM »
I agree that some third party fees are high, like credit cards, but that's purely a matter of you choosing to pay for convenience.

Ah, no.  Wrong.  You pay for the convenience, even if you use cash.

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There is no cost at all to using a regular bank, because the bank makes money by lending against your account balance.

They... really don't exactly lend against consumer balances, and the fees my bank attempts to regularly charge me for a checking account indicate that there's more than "no cost."

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Banks will happily transfer money for you electronically, for free, it's just slow and inconvenient.

The wire transfer fees I pay beg to differ.

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If you prefer to use a little plastic chip that you carry in your wallet that is accepted literally everywhere and offers you fraud protection and chargeback privileges, then you pay a little more for the convenience.  But you don't have to.

Literally everywhere, huh?  Try again, outside Seattle.

And I pay the same if I use it or not, per vendor's merchant agreements that prohibit them from offering cash discounts.

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Crypto also charges fees to transfer back and forth to other forms of currency, so it's not like this problem is unique to credit cards, and crypto is terribly inconvenient if you want to use it at your local gas station.

A credit card is terribly inconvenient if I want to use it at one of the local farmer's markets, because it's not accepted.  So... use the proper medium for the transaction?

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What's next, smelting my own aluminum to make circuit boards in case someone hardware hacked the laptop I bought from Vietnam?  At some point, you have to learn to trust the system we have built, warts and all.

Aluminum is awful for circuit boards.  And in general, the board layout isn't the problem - the firmware is a far, far easier place to put bonus functions.  You'd be better off investing in a secure SPI flasher to pull the firmware and compare it against the reference, or to just fully flash a new firmware onto the various non-volatile storage chips in the machine.

And, yes, laptops do come with bonus functionality on a regular basis.

sol

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1218 on: February 06, 2019, 03:24:29 PM »
the firmware is a far, far easier place to put bonus functions.  You'd be better off investing in a secure SPI flasher to pull the firmware and compare it against the reference, or to just fully flash a new firmware onto the various non-volatile storage chips in the machine.

I knew, as soon as I wrote what I thought was nonsensical paranoia, that someone would actually take it seriously. 

There is a community of tin foil hat wearing folks out there, and some of them think banks are evil and some of them think cryptocurrency is awesome, and there is some overlap between those groups.  Some of them are also way into "permaculture" or "prepping" and will hoard emergency rations or ammunition, but I'm not sure how much overlap there is between the folks paranoid about the government melting (like the preppers) and the folks paranoid about fiat currency melting (like the crypto bros).  I'm guessing, at least a little?

Most of the cast of Cryptonomicon, for example, were digital libertarians with hard-ons for crypto, free information sharing, guns, and stockpiles of gold.  That's kind of the stereotype I envision whenever this topic comes up, and it just seems silly to me.

Hey man, it's a free country.  If you're really worried about secret backdoors in your laptop, then by all means take whatever precautions you find necessary.  You're also free to stockpile guns and gold.  This just feels like a weird place to be having this conversation, in the middle of a forum that exists for the express purpose of helping people achieve financial freedom by actively participating in the system that seems so scary.  The main pathway to FI promoted here is investing in the stock market, which means buying into capitalism and globalism and fiat currency and central banking.  They're all tied up together, creating a world in which an average-earning 40 year old can retire and never work again.  It seems pretty great, to me.

Syonyk

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1219 on: February 06, 2019, 04:35:43 PM »
I knew, as soon as I wrote what I thought was nonsensical paranoia, that someone would actually take it seriously.

2018 happened.  The {Meltdown, Spectre, L1TF, etc} bugs would have been laughed at had they been described accurately in a Hollywood movie in 2016 because they were that comically bad, and couldn't possibly have been in Intel processors.  Except they were (L1TF being, by far, the worst of those, allowing a total bypass of the protections provided by SGX).

Nonsensical paranoia has a way of turning into reality alarmingly quickly. :/

Quote
There is a community of tin foil hat wearing folks out there, and some of them think banks are evil and some of them think cryptocurrency is awesome, and there is some overlap between those groups.  Some of them are also way into "permaculture" or "prepping" and will hoard emergency rations or ammunition, but I'm not sure how much overlap there is between the folks paranoid about the government melting (like the preppers) and the folks paranoid about fiat currency melting (like the crypto bros).  I'm guessing, at least a little?

I'd expect maybe a 20-30% cross-membership in those groups.  They're certainly related issues.  However, dismissively tossing "permaculture" and "preppers" together is a bit dishonest, if you're at all familiar with the groups (I assume you're not).

Quote
Hey man, it's a free country.  If you're really worried about secret backdoors in your laptop, then by all means take whatever precautions you find necessary.  You're also free to stockpile guns and gold.  This just feels like a weird place to be having this conversation, in the middle of a forum that exists for the express purpose of helping people achieve financial freedom by actively participating in the system that seems so scary.  The main pathway to FI promoted here is investing in the stock market, which means buying into capitalism and globalism and fiat currency and central banking.  They're all tied up together, creating a world in which an average-earning 40 year old can retire and never work again.  It seems pretty great, to me.

The main pathway, yes.  The only pathway, certainly not.  Quite a few of the MMM posts are entirely useful if you're going different paths - spending radically less than you make is useful if you're investing in markets as many are, or if you're investing heavily into productive property improvements along the solar/permaculture path.  IIRC, you've got solar, but zero grid-down running capability on that system.  I happen to think that's a bit silly, and am doing something quite a bit more robust.

A main difference I see between the core thinking here and the wings is that the core group basically assumes everything will continue, as it has, for at least most of the rest of their lives.  If you're older, sure, that's probably a good bet, but for those under 40, I'm far less optimistic - I think the various headwinds of debt, climate change, all our eggs in one computer basket, and diminishing returns on investment are likely to lead to a reduction in market returns sometime before the end of my life.  So I'm interested in alternative paths that offer returns, even if the markets don't.

Metals and crypto are useful hedges against various things that can (and, quite reliably, do) go wrong with fiat currencies.  Do you think the US Dollar will still be a major world reserve currency in 500 years?  How about 5?  Things don't last forever, and neither do nations or currencies.  So... there's remarkably little mitigation of that woven into the core thinking.  Gold, in particular, isn't so much an "investment" as a "long term value store."  It fluctuates in value over time, especially when compared to one particular currency, but it holds value throughout time.  The same cannot be said of fiat currencies - my $50T Zimbabwe dollar is an entertaining reminder of this.

I started a thread about 2 years ago that led to quite a few pages of discussion on this concept: https://forum.mrmoneymustache.com/welcome-to-the-forum/thoughts-on-fire-in-a-declining-nation/ - I don't recall if you were engaged in that particular thread.

waltworks

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1220 on: February 06, 2019, 05:07:25 PM »
Hey, we're back to gold and fiat currencies!

Which is what is wrong with crypto right now. Sigh.

-W

Syonyk

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1221 on: February 06, 2019, 05:08:43 PM »
Hey, we're back to gold!

Which is what is wrong with crypto right now. Sigh.

Sorry, gold is wrong with crypto?  ::confused::

Both of them are commodities that have been used as value stores, so the parallels are greater than the differences...

waltworks

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1222 on: February 06, 2019, 05:40:42 PM »
What's wrong is that people are using crypto as a value store/commodity, like gold. That's when they're not speculating with it.

That makes it basically useless for actually doing transactions. Which is what I care about.

I want cheap boring crypto. That nobody owns for more than a few seconds to do a transaction. That nobody in their right mind would hoard or "invest" in or even want to own. The ultimate valueless token that makes transactions faster and cheaper. That's not what has happened so far.

-W

Telecaster

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1223 on: February 07, 2019, 03:51:55 PM »
^ Exactly.  The features of crypto are also liabilities.   Because Bitcoin is designed to be self-limiting, it is by design deflationary.   If a currency is deflationary, you hold it.  But if everyone is holding it, it will never become a widely accepted means of payment.  Therefore it won't work as currency.   

runbikerun

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1224 on: February 08, 2019, 02:02:57 AM »
For advocates of a borderless currency, there's often a tendency to US-focused myopia among American crypto enthusiasts. Most of the flaws identified as being endemic to the existing banking system - the time and expense involved in wire transfers, for example - are endemic to the American banking system, and don't necessarily apply at all outside.

I live in Ireland. I hold a current account with a German bank. They charge me no fees of any kind, and when I transfer funds from an Irish account into my German one it takes about one day and coats me nothing. When I went to the States last year, I brought a current account card from Revolut, which allowed me to convert funds instantly from euro to US dollars at the current interbank exchange rate with no additional charges. The problems people describe as reasons to go crypto are actually reasons to go with a better banking system.

Travis

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1225 on: February 10, 2019, 09:49:59 PM »
This particular exchange issue getting more interesting...

Court-appointed accounting firm cannot find any evidence of accounting records or even a bank account in QuadrigaCX's name.

https://business.financialpost.com/technology/blockchain/deciphering-quadrigas-finances-extraordinary-challenge-with-no-apparent-accounting-records

How did the employees get paid if there are no records or bank accounts?  Did this Cotton fella run the company entirely in his own head and do all of the financial transactions himself?


QuadrigaCX may have never had a cold wallet for its operations after all.
https://www.ccn.com/wheres-the-missing-150-million-crypto-exchange-quadrigacxs-fiasco-gets-weirder-with-new-research

Telecaster

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1226 on: February 22, 2019, 10:16:16 AM »
I want cheap boring crypto. That nobody owns for more than a few seconds to do a transaction. That nobody in their right mind would hoard or "invest" in or even want to own. The ultimate valueless token that makes transactions faster and cheaper. That's not what has happened so far.

Transactions can be fast and cheap, and even free if the cost is passed on to developers vs users, however the native token that secures the network can't be valueless, and the token value itself must increase as more value is created through the network.

Isn't increasing value exactly what you don't want? A deflationary environment encourages hording.


Telecaster

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1227 on: March 07, 2019, 05:02:32 PM »
More on  QuadrigaCX:

Millions of dollars were missing when the CEO of a crypto exchange died without sharing the passwords to his accounts. Investigators, who have secured his laptop and other devices, have revealed the money is gone...

... Using public blockchain records, it determined the digital wallets thought to contain millions were emptied in April, eight months before Cotten's death, it said in a report last week.
"In April 2018, the remaining bitcoin in the Identified Bitcoin Cold Wallets was transferred out bringing the balances down to nil," the report said.

The investigators said they found other issues too, such as that Quadriga kept "limited books and records" and never reported its financials.
Ernst & Young also reported that 14 user accounts were internally created under various aliases, traded on Quadriga's exchange, and withdrew cryptocurrency to addresses not tied to Quadriga.


https://markets.businessinsider.com/currencies/news/crypto-ceo-died-with-passwords-to-137-million-but-the-money-is-gone-2019-3-1028009684

For some people, unregulated markets are a feature of crypto.   Not so much for others.   

sol

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1228 on: March 07, 2019, 05:04:51 PM »
... Using public blockchain records, it determined the digital wallets thought to contain millions were emptied in April, eight months before Cotten's death, it said in a report last week.
"In April 2018, the remaining bitcoin in the Identified Bitcoin Cold Wallets was transferred out bringing the balances down to nil," the report said.

So the biggest exchange in the entire country was an outright fraud?  They straight up stole everyone's money?

It's a libertarian utopia!

jmecklenborg

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1229 on: March 07, 2019, 05:21:57 PM »
So I was going through my safe last week for something and I found a random business card with a long series of letters and numbers written on the back.  It wasn't what I was looking for and I didn't throw it out but a day or two ago I thought to myself...that's my old crypto wallet password

I now remember people back in 2017 advising newbies to not label your crypto wallet password as such...in case somebody breaks into my house, yanks a safe bolted to a concrete basement floor, and goes through everything for something labeled "crypto"? 

How many people out there have thrown out their crypto wallet passwords by mistake?  I came relatively close to doing it last week.  I sold everything at the top of the insanity in early 2018, so I don't have anything to lose, but still. 

I just don't have much faith that most people who actually had a lot of crypto at the top of the market got organized and put their wallet passwords in a safety deposit box (or two), and labeled everything.  As the years tick by, most crypto is going to end up fizzling out, locked in wallets that nobody can open. 

Travis

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1230 on: March 07, 2019, 07:32:18 PM »
I don't know the significance of this tidbit, but the article makes it a point to state that they still haven't cracked the laptop. They figured out the latest through other records.

MustacheAndaHalf

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1231 on: March 07, 2019, 08:35:23 PM »
Portfolio update: My final and insignificant crypto speculation is almost 100% in loom network. 

***

I want cheap boring crypto. That nobody owns for more than a few seconds to do a transaction. That nobody in their right mind would hoard or "invest" in or even want to own. The ultimate valueless token that makes transactions faster and cheaper. That's not what has happened so far.
As blockchain uses expand beyond online services such as gambling, ...  The time will come when public blockchains are an integral part of civilization and myriad dapps created that many people will want to use.
Blockchain is a public database.  I don't want my private information exported, and I think EU countries feel that even more strongly.  Will health care records be lost if I forget my cryptographic key?  Someone having a heart attack will remember their key, so their drug allergies can be considered?  And if I don't have a cryptographic key, what's the point of a public database as far as I'm concerned, as a member of the public?

Bitcoin is accepted more widely offline than other currency, and it's still barely used compared to cash or credit.  People are speculating with it, not using it.  The only people using it as a store of value are in countries like Venezuela where the currency is even riskier than BTC.  When someone decides "this has less chance of crashing to zero", that's using it as a store of value.  When people claim BTC will become the world currency, and they got there first, they're speculating.

GuitarStv

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1232 on: March 08, 2019, 06:36:17 AM »
... Using public blockchain records, it determined the digital wallets thought to contain millions were emptied in April, eight months before Cotten's death, it said in a report last week.
"In April 2018, the remaining bitcoin in the Identified Bitcoin Cold Wallets was transferred out bringing the balances down to nil," the report said.

So the biggest exchange in the entire country was an outright fraud?  They straight up stole everyone's money?

It's a libertarian utopia!

There do seem to be a lot of parallels to Galt's Gulch.

waltworks

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1233 on: March 18, 2019, 08:45:38 AM »
There are already "non physical" tokens for basically all games, though, right? I'm not a gamer but is this actually a useful application? Does Minecraft actually mail you a physical card when you want to buy stuff in the game?

Hell, I use a ton of credit-card scheme gift cards and even those rarely get mailed in physical form anymore. You just download them to your phone and away you go.

-W

waltworks

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1234 on: March 18, 2019, 12:40:59 PM »
I think you're reaching on the gaming thing. All of the stuff you're talking about already happens without blockchain, AFAIK.

Again, not a gamer, though. Maybe WOW gold is a real pain in the neck/the Fortnite Illuminati are secretly screwing you over and blockchain gold would be better or something. The fact that we're even talking about this says to me that blockchain isn't going bigtime anytime soon.

I mean, seriously - with some very rare exceptions, players video game time and effort do not *have* any IRL value. It's recreation. Within the game, existing electronic money/gold/whatever already does what you want without any need for blockchains.

-W
« Last Edit: March 18, 2019, 12:50:23 PM by waltworks »

Telecaster

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1235 on: March 18, 2019, 01:06:08 PM »
Players' time and effort can be meaningfully captured and valued through blockchain.

Is this a current problem that needs to be fixed? 

talltexan

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1236 on: March 18, 2019, 02:54:54 PM »
Most gaming happens on a platform run by an administrator. Blockchain is sold to the masses via the idea that these transactions can be verified without a central administrator.

GuitarStv

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1237 on: March 19, 2019, 08:42:32 AM »
Players' time and effort can be meaningfully captured and valued through blockchain.

Is this a current problem that needs to be fixed?

I for one, only play video games for money.  I mean, that's why playing video games is called 'work' not 'recreation', right?

:P

sol

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1238 on: March 19, 2019, 09:23:57 AM »
I for one, only play video games for money.  I mean, that's why playing video games is called 'work' not 'recreation', right?

Lots of people spend money to play video games as recreation, instead of earning money in an office as work.

But any time there is a transfer of money, one party is spending and the other party is earning.  Video games absolutely count as work, for hundreds of thousands of people who make their full time living developing them.

The current economics of this system, though, would seem to support using centralized financial institutions (i.e. regular banks) to purchase hardware and software, and then using centralized databases to support in-game transactions.  Because that's the way for these companies to be most profitable, which is probably why they're all doing it that way instead of venturing out into cryptocurrencies.

The defining feature of crypto is that it's irreversible.  Lots of people seem to think that's an advantage, but reality has proven otherwise. The entire industry seems rife with fraud and abuse precisely because it's irreversible.  One of the most important reasons that we use centralized banking and "fiat currency" is so that government can support economic growth by controlling the medium of exchange, stabilizing prices, seizing the assets of rogue actors like terrorist groups, printing money when necessary, reversing illegal transactions, and insuring people's accounts so that they can safely use them as a store of value.  Crypto undermines all of that, on purpose, and then claims these are somehow helpful advancements.  Sure, helpful if you're a criminal or a hacker.  Not so helpful for anyone else.

Some folks here keep pointing to places like Venezuela, where the historical benefits of traditional currencies and centralized financial systems have been significantly undermined by corruption and mismanagement, but that doesn't mean you should replace a mismanaged successful model with a broken model that just trades one set of problems for another.  Crypto would not have solved or avoided Venezuela's problems.  All systems are subject to abuse if enough people are willing to break it for personal profit.  Just look at the ever-growing list of crypto thefts and scams.  It's hard to argue that crypto is any more secure then traditional fiat currency, when it is digitally and irreversibly stolen ~ten times as often.



sol

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1239 on: March 19, 2019, 09:45:01 AM »
Current games are developed in a very centralized process, are vulnerable to hacking which impacts online social play, and there here is a lack of true scarcity in gaming assets.
...
Putting digital assets on a blockchain negates these issues; and if blockchain advances enough in terms of scalability and reduced costs, you can put entire game states or the entire game or other complex applications on these blockchains.

I understand this technical argument, but I think it misses the point.  Video games are made by for-profit corporations.  They are developed and sold to make money for the developers.  Why would they want a block-chain protected user-mod to be freely available?  How would they make money off of that?  They don't really care about "lack of true gaming scarcity" because ultimately they are trying to sell in-game items and the more they sell the more they make.  Fraud and dupes aren't a concern for them until they start cutting into sales, and most of their revenue already comes from the initial up-front game purchase, not microtransactions or auction houses.

The changes you want are what gamers want, not what studios want.  Studios make all of the decisions here, because they are the ones doing the work in order to make money.  Customers (gamers) can demand any crazy-ass changes they want, but they're living in a (MMPORPG) fantasy world if they think the studios are going to forego profits on their behalf. 

It's like people who watch tv demanding that networks stop airing commercials.  Um, the commercials are the reason the shows exist.  If they got rid of commercials there would be no shows in between them for you to watch.  Customers (viewers) just have to accept that they are not going to get the experience they really want, because that's how the industry works.  We all want something better, for free.  Identifying the things you don't like about games/tv/movies/cars/groceries is easy, but the things you don't like generally exist for profit-motivated reasons.

waltworks

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1240 on: March 19, 2019, 10:20:59 AM »
Sorry, this is just 1) not a meaningful problem within currently existing games, to the best of my knowledge, and 2) so minor that even talking about it undercuts the whole "blockchain will revolutionize your life" theme.

If the best we can come up with is that it'll make World of Warcraft gold somewhat more fair (which is actually dubious in the first place), that's pathetic.

-W

waltworks

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1241 on: March 19, 2019, 10:47:14 AM »
Yes, blockchain will change my life by making my Magic the Gathering deck more awesome...

Jesus.

-W

GuitarStv

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1242 on: March 19, 2019, 11:29:44 AM »
Yes, blockchain will change my life by making my Magic the Gathering deck more awesome...

Jesus.

-W

I thought Magic the Gathering: Online Exchange stopped handling crypto?

waltworks

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1243 on: March 19, 2019, 12:12:30 PM »
I thought Magic the Gathering: Online Exchange stopped handling crypto?

The founder (who was the only one who knew the laptop password) faked his own death, stole all the rare crypo-super-Gandalf cards, and now roams anonymously, deploying his unbeatable deck against poor saps at middle schools around the world.

Will crypto-Pokemon be next? This thing is going to be BIG!

-W

Telecaster

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1244 on: March 19, 2019, 01:54:10 PM »
Sorry, this is just 1) not a meaningful problem within currently existing games, to the best of my knowledge, and 2) so minor that even talking about it undercuts the whole "blockchain will revolutionize your life" theme.

If the best we can come up with is that it'll make World of Warcraft gold somewhat more fair (which is actually dubious in the first place), that's pathetic.

-W

That's very subjective. When amazon introduced online book orders, critics at the time didn't really perceive it as solving any meaningful problem.

Here's some examples of "centralized" gaming issues:

https://www.youtube.com/watch?v=SPTC-gJT1eM&feature=youtu.be (store removes rare cards and reseals package)
https://magic.wizards.com/en/articles/archive/buyer-beware-2004-04-26
https://www.cracked.com/personal-experiences-2472-i-made-obscene-money-forging-magic-gathering-cards.html
https://motherboard.vice.com/en_us/article/59p7qd/this-man-has-survived-by-hacking-mmo-online-games

How would blockchain apply to physical card games?   What's next blockchain Blackjack?  (Blockjack?) 

sveltino

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1245 on: March 26, 2019, 04:46:38 PM »
Today [spam link removed] btc have 3946 as previous support become resistance (classic support and resistance ). This level also as Fibonacci 618 resistance.
If this level able to hold bullish , it will confirm bearish with a new lower target at 3807 (fibonacci 1.618)

This pattern still unconfirmed as bullish 3 drives, and it will complete as bullish 3 drives once we reach 3807 with target at 3982

*I already close my short at 3860, now i wait for new short around 3946 with target at 3807.
« Last Edit: April 03, 2019, 08:16:13 AM by arebelspy »

seattlecyclone

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1246 on: March 26, 2019, 05:02:09 PM »
Technical analysis and cryptocurrencies, all in one post? I feel like I win crackpot investing bingo.

tralfamadorian

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1247 on: March 26, 2019, 05:34:15 PM »
Technical analysis and cryptocurrencies, all in one post? I feel like I win crackpot investing bingo.

I know, right? What a bunch of shite.

Quote
Fibonacci 618 resistance
*snort

waltworks

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1248 on: March 26, 2019, 05:57:57 PM »
Looks like something I could make with some peyote and MSpaint...

-W

sol

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #1249 on: March 26, 2019, 06:28:59 PM »
Technical analysis and cryptocurrencies, all in one post? I feel like I win crackpot investing bingo.

Wait, you mean that post wasn't satire.