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Learning, Sharing, and Teaching => Investor Alley => Topic started by: whywork on September 06, 2021, 07:29:43 PM

Title: What do you think of adding a low% of crypto allocation
Post by: whywork on September 06, 2021, 07:29:43 PM
Running a few backtests on portfolio visualizer, here are the stats using SPY and GBTC from year 2016 to now

100% SPY has 17% yearly returns and 19.4% maximum drawdown
98% SPY and 2% GBTC has 23% yearly returns and 19.8% max drawdown (note: portfolio is rebalanced annually)
95% SPY and 5% GBTC has 30% returns and 20.4% max drawdown

Wow, just 5% of the GBTC and we can see wonders with our returns (75% higher) and only 1% more drawdown

Having a huge allocation to Crypto can be dicey but just adding a small percent and annually rebalancing seems a great strategy to enhance returns. What are your thoughts on this?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on September 06, 2021, 07:35:51 PM
What are your thoughts on this?

It's six years of data where bitcoin has increased in price ~88x (also as I write this it is back up above $50,000, nice!). If bitcoin continues to grow that that rate, we'd be fools not to be 100% invested in it. If it does not continue to grow that that rate, backtesting on those six years isn't a good predictor of future returns.

The trick, as usual, is knowing which.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 06, 2021, 07:37:40 PM
I'm currently 80% vtsax, 11% Ethereum, 9% Bitcoin.  I'll likely shift another 20% into crypto by the end of the year. 

So yeah, I'd endorcse a 95/5 split as not being too crazy:)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: whywork on September 06, 2021, 07:52:58 PM
I'm currently 80% vtsax, 11% Ethereum, 9% Bitcoin.  I'll likely shift another 20% into crypto by the end of the year. 

So yeah, I'd endorcse a 95/5 split as not being too crazy:)

I am also 20% Crypto. Just don't see downside adding in a small percent for anyone.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on September 06, 2021, 08:10:15 PM
Tulip bulb / greater fool posters in 3,2,1...
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FLBiker on September 07, 2021, 06:54:38 AM
A small percent seems perfectly reasonable.  I don't have any, but that's because one of the rules on my IPS is not to invest in things I don't understand.  I understand crypto from a technical POV, I just don't understand why it has any inherent value, so I don't invest in it (just like I don't invest in gold or collectibles).  I realize that gold has been a store of value for humans for a very long time, but I still don't get it, so it isn't for me.

At the same time, I'm pretty much at my FI number so simplicity is even more important to me now than it was when I was focused on accumulation, so that's part of it too.  I think 5-10% is fine (as a random internet opinion).  I did that for a while with peer to peer lending (for example) years ago and did quite well.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on September 07, 2021, 07:04:28 AM
Tulip bulb / greater fool posters in 3,2,1...

Actually, most people here are fine with a small allocation going towards stock picking/speculation.

If OP was switching to 50% crypto, that would be a different story.

However, my question for OP is if they mean that they're putting 5% of their current 'stache into crypto, or if they plan to maintain a 5% allocation with regular rebalancing?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on September 08, 2021, 06:30:15 AM
Tulip bulb / greater fool posters in 3,2,1...

Actually, most people here are fine with a small allocation going towards stock picking/speculation.

If OP was switching to 50% crypto, that would be a different story.

However, my question for OP is if they mean that they're putting 5% of their current 'stache into crypto, or if they plan to maintain a 5% allocation with regular rebalancing?

OP is already 20% crypto so they are just trying to justify it by starting this thread

Oops, another case of me barely skimming a post before replying. I just saw the 5% part and focused more on the replies.

My point though was just to the pp that I quoted that although the vast majority of us here are suspicious of crypto, that doesn't mean that we're dogmatically against people allocating a small portion of their assets to it, or any other higher risk/volatile venture.

The poster I quoted has been quite active in some crypto threads, so I understand why they think that someone wanting to get into crypto at all would be criticized, but that's simply not true.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on September 08, 2021, 07:04:28 AM
OP posts wacky/risky investing ideas regularly, this (while also almost certainly a bad idea) is actually not one of the weirder ones.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ender on September 08, 2021, 07:22:05 AM
I don't really understand this thread.

You have 20% crypto yourself, this reads like crypto shilling.

I sometimes wonder what % of the growth in crypto is the investors ponzi scheme where you get in then have to shill it so others buy in so that it continues to go up.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: whywork on September 08, 2021, 07:54:20 AM
Yes I have 20%. @Malcat  I plan to rebalance my portfolio annually to keep it at 20% crypto.

My question on this thread though is to understand what's the downside of adding a low% and rebalancing. Crypto has better risk vs reward than leveraged ETFs and a 2-5% seem to do wonders to the returns.

@waltworks Thank you for the recognition :)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on September 08, 2021, 08:26:03 AM
My question on this thread though is to understand what's the downside of adding a low% and rebalancing.

It's the same downside as adding any wildly volatile thing to your portfolio as a low percentage and rebalancing.  It could drop precipitously, or could go up higher than your safer investments.  It's not different in any way than putting a small portion of your portfolio on black at the casino and then rebalancing after the ball stops.



Crypto has better risk vs reward than leveraged ETFs and a 2-5% seem to do wonders to the returns.

There are currently more than 4,000 cryptocurrencies and 186 leveraged ETFs being traded.  Not all meet your claim.  That makes this a completely meaningless (if not outright fraudulent) statement, doesn't it?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: bacchi on September 08, 2021, 08:30:04 AM
My question on this thread though is to understand what's the downside of adding a low% and rebalancing. Crypto has better risk vs reward than leveraged ETFs and a 2-5% seem to do wonders to the returns.

The risk is that your particular flavor gets put in the dustbin of history. If it's 5%, that loss is easy to recover. If it's 20%, that's a loss that will take years and years to recover.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FINate on September 08, 2021, 08:46:51 AM
I'm currently 80% vtsax, 11% Ethereum, 9% Bitcoin.  I'll likely shift another 20% into crypto by the end of the year. 

So yeah, I'd endorcse a 95/5 split as not being too crazy:)

I am also 20% Crypto. Just don't see downside adding in a small percent for anyone.

You do you. But the above is where I start to disagree with the crypto evangelists.

20% is not a "small percentage." Sure, for a portfolio less than $100k, 20% is relatively small to one's lifetime earning potential. As one gets closer to FIRE, however, that allocation becomes a rather large chunk of money in an extremely volatile asset with an uncertain regulatory and tax future. Speaking for myself here, I wouldn't want my FIRE plans to depend on Uncle Sam continuing to play nice with crypto.

Owning crypto requires a certain amount of user responsibility somewhat analogous to holding physical gold. If you hold it yourself, you better be tech savvy and have consistently good backup and security hygiene. The vast majority of people fail in this area and struggle with losing family photos and other important documents when something as simple as a HDD/SSD fails. This is a recipe for disaster. The alternative is to have someone else hold your crypto, but such sites have a pretty bad track record on security and outright theft because they don't have the same level of regulatory oversight as banks/brokerages and, by design, crypto has little recourse if something goes wrong. No one should ever invest in anything they don't fully understand and are prepared to manage properly.

On a philosophical note, I will likely never get into crypto because I disagree with the overall premise. I won't derail this thread with all my objections (and they are manifold). Let's just leave it at there are downsides for lots of people once they think through all the implications of crypto.

So, by all means, you invest in what is right for you. I genuinely wish you the best. But it's not for everyone. I would even argue that it's not appropriate for most people.

 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on September 08, 2021, 08:56:58 AM
Bitcoin and Ethereum seem most likely to stay around for years, while smaller coins could disappear at any time.  And yet we're talking about Bitcoin, that lost 99% of it's value when Mt Gox was hacked.  Looking at the past 7 crashes, the most common drops are 50% and 83%, losing half or 5/6th of it's value.
https://finance.yahoo.com/news/7-biggest-bitcoin-crashes-history-180038282.html

OP - have you recalculated returns if you rebalance whenever GBTC reaches 10% of your portfolio?  It might have lower returns if you limit the risk.  And also, GBTC charges a 2% expense ratio, so buying on a crypto exchange might be cheaper.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 09, 2021, 11:04:21 AM
I'm currently 80% vtsax, 11% Ethereum, 9% Bitcoin.  I'll likely shift another 20% into crypto by the end of the year. 

So yeah, I'd endorcse a 95/5 split as not being too crazy:)

I am also 20% Crypto. Just don't see downside adding in a small percent for anyone.

You do you. But the above is where I start to disagree with the crypto evangelists.

20% is not a "small percentage." Sure, for a portfolio less than $100k, 20% is relatively small to one's lifetime earning potential. As one gets closer to FIRE, however, that allocation becomes a rather large chunk of money in an extremely volatile asset with an uncertain regulatory and tax future. Speaking for myself here, I wouldn't want my FIRE plans to depend on Uncle Sam continuing to play nice with crypto.

Owning crypto requires a certain amount of user responsibility somewhat analogous to holding physical gold. If you hold it yourself, you better be tech savvy and have consistently good backup and security hygiene. The vast majority of people fail in this area and struggle with losing family photos and other important documents when something as simple as a HDD/SSD fails. This is a recipe for disaster. The alternative is to have someone else hold your crypto, but such sites have a pretty bad track record on security and outright theft because they don't have the same level of regulatory oversight as banks/brokerages and, by design, crypto has little recourse if something goes wrong. No one should ever invest in anything they don't fully understand and are prepared to manage properly.

On a philosophical note, I will likely never get into crypto because I disagree with the overall premise. I won't derail this thread with all my objections (and they are manifold). Let's just leave it at there are downsides for lots of people once they think through all the implications of crypto.

So, by all means, you invest in what is right for you. I genuinely wish you the best. But it's not for everyone. I would even argue that it's not appropriate for most people.

Lot's of solid stuff here that I agree with.  I definitely consider my 20% allocation a SIGNIFICANT amount. 

I also share your concerns about security.  As such, I guess I somewhat misspoke when I said I bought bitcoin and ether.  Technically, I invested into Grayscales Bitcoin and Ethereum trusts, because I don't trust myself yet to hold a large amount on either hot or cold storage, for all the reasons you mentioned. 

Also, I'm in a weird spot financially where I think taking a bigger investment risk doesn't have much of a downside.  I have about 750k in the stache, but my wife and I both will receive medium sized pensions in ten years, so we'll have a combined income of about 100k, along with a paid off house, at age 48 even without any stache.  My rationale is that if I lose the 150k or so I have in cyrpto, my retirement will essentially unchanged, both in terms of the date and the lifestyle.  However, if crypto really catches fire, which is completely possible, then it could have the upside of choosing to forego most of pension and retire in 5 years or so (we are 38/37 now).  And as an aside, my training is in math/stats, so I am able to understand the crypto stuff better than the general person saving for retirement. 

So, finally, I also agree that crypto is probably not for everyone.  Hopefully it works out for me, but if not, I'll still be retiring in June 2031 with an amazing wife and more than enough resources to live a full life after employment. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DaMa on September 09, 2021, 11:54:23 AM
Is there a way to have crypto in a Fidelity IRA?

(Yes, I could research this myself, but I want to follow this thread anyway.  TIA!)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: mntnmn117 on September 09, 2021, 12:54:06 PM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on September 09, 2021, 03:33:35 PM
I'm currently 80% vtsax, 11% Ethereum, 9% Bitcoin.  I'll likely shift another 20% into crypto by the end of the year. 

So yeah, I'd endorcse a 95/5 split as not being too crazy:)

I am also 20% Crypto. Just don't see downside adding in a small percent for anyone.

You do you. But the above is where I start to disagree with the crypto evangelists.

20% is not a "small percentage." Sure, for a portfolio less than $100k, 20% is relatively small to one's lifetime earning potential. As one gets closer to FIRE, however, that allocation becomes a rather large chunk of money in an extremely volatile asset with an uncertain regulatory and tax future. Speaking for myself here, I wouldn't want my FIRE plans to depend on Uncle Sam continuing to play nice with crypto.

Owning crypto requires a certain amount of user responsibility somewhat analogous to holding physical gold. If you hold it yourself, you better be tech savvy and have consistently good backup and security hygiene. The vast majority of people fail in this area and struggle with losing family photos and other important documents when something as simple as a HDD/SSD fails. This is a recipe for disaster. The alternative is to have someone else hold your crypto, but such sites have a pretty bad track record on security and outright theft because they don't have the same level of regulatory oversight as banks/brokerages and, by design, crypto has little recourse if something goes wrong. No one should ever invest in anything they don't fully understand and are prepared to manage properly.

On a philosophical note, I will likely never get into crypto because I disagree with the overall premise. I won't derail this thread with all my objections (and they are manifold). Let's just leave it at there are downsides for lots of people once they think through all the implications of crypto.

So, by all means, you invest in what is right for you. I genuinely wish you the best. But it's not for everyone. I would even argue that it's not appropriate for most people.

Lot's of solid stuff here that I agree with.  I definitely consider my 20% allocation a SIGNIFICANT amount. 

I also share your concerns about security.  As such, I guess I somewhat misspoke when I said I bought bitcoin and ether.  Technically, I invested into Grayscales Bitcoin and Ethereum trusts, because I don't trust myself yet to hold a large amount on either hot or cold storage, for all the reasons you mentioned. 

Also, I'm in a weird spot financially where I think taking a bigger investment risk doesn't have much of a downside.  I have about 750k in the stache, but my wife and I both will receive medium sized pensions in ten years, so we'll have a combined income of about 100k, along with a paid off house, at age 48 even without any stache.  My rationale is that if I lose the 150k or so I have in cyrpto, my retirement will essentially unchanged, both in terms of the date and the lifestyle.  However, if crypto really catches fire, which is completely possible, then it could have the upside of choosing to forego most of pension and retire in 5 years or so (we are 38/37 now).  And as an aside, my training is in math/stats, so I am able to understand the crypto stuff better than the general person saving for retirement. 

So, finally, I also agree that crypto is probably not for everyone.  Hopefully it works out for me, but if not, I'll still be retiring in June 2031 with an amazing wife and more than enough resources to live a full life after employment.

So the 20% of your stashed isn't anywhere near 20% of your retirement assets because of the pensions.

That's kind of important.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on September 09, 2021, 10:34:14 PM
Yeah, if you have $100k/year in pensions coming (roughly equivalent to $2.5 million in index funds in 10 years time, or maybe ~$1.25 million right now if you assume roughly historical returns) then you've really only got ~5-7% of your NW in crypto.

Really, if you wanted to roll the dice and didn't mind waiting 10 years to retire, why not go all in on speculative/high risk stuff? If your $750k has no value to you in this scenario as you've argued, it makes no sense to be even slightly conservative with it.

On the other hand if that $750k is enough to let you RE 5 years earlier with some amount of hit to your pension, then the risk/reward tradeoff gets more complex and the expected utility of a low probability/large reward investment drops considerably, since you're right back in the same boat as everyone else where a failed investment will lead to more work/later RE.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 11, 2021, 08:34:46 AM
Yeah, if you have $100k/year in pensions coming (roughly equivalent to $2.5 million in index funds in 10 years time, or maybe ~$1.25 million right now if you assume roughly historical returns) then you've really only got ~5-7% of your NW in crypto.

Really, if you wanted to roll the dice and didn't mind waiting 10 years to retire, why not go all in on speculative/high risk stuff? If your $750k has no value to you in this scenario as you've argued, it makes no sense to be even slightly conservative with it.

On the other hand if that $750k is enough to let you RE 5 years earlier with some amount of hit to your pension, then the risk/reward tradeoff gets more complex and the expected utility of a low probability/large reward investment drops considerably, since you're right back in the same boat as everyone else where a failed investment will lead to more work/later RE.

-W

To Waltworks and Malcat...

Ok, you are both bringing up really valid points, I suppose it isn't near 20% of our actual stache.  I've just chosen to frame it that way in my mind over the years, but that isn't really accurate is it. 

And to Waltworks, I actually am planning to make an even bigger play into crypto, but the rest of stache is locked up in employer IRA's with no access to crypto investments.  However, we have 180k that is locked up in my wife's retirement account through work, but because she just switched employers, we are in the process of moving it to an institution that can access the grayscale trusts to buy more Bitcoin and Ethereum.  That will put us at about 350k.  If it does a 10x or something stupid like that, we could be instantly done with work.  If it doesn't, we are totally fine. 

Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.

To mntnmn117, I thought this way for a while.  The more I learned about it, the less I take on that viewpoint.  The Crypto sphere in general is moving away from proof of work to proof of stake, and it takes so much less energy.  That process is accelerating.  With regards to illegal activity, that's already a very minor use of the blockchain, and if that was a reason for me boycotting it, then I'd be a hypocrite for not boycotting cash.  It's my understanding (but I'm not an expert) that 50 and 100 dollar bills are a much bigger cause of illegal activity, and no one has ever batted an eye at them. 

https://slate.com/business/2010/12/hundred-dollar-bills-are-for-criminals-and-sociopaths-why-do-we-still-print-them.html (https://slate.com/business/2010/12/hundred-dollar-bills-are-for-criminals-and-sociopaths-why-do-we-still-print-them.html)

Alright, time to enjoy the weekend and see if Novak Djokavic can complete the tennis grand slam.  Take care! 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on September 11, 2021, 09:06:08 AM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.
What if those environmental aspects could be offset?

"This equaled about 0.92 pounds of CO2 emissions per kWh."
https://www.eia.gov/tools/faqs/faq.php?id=74&t=11

"Single Bitcoin Transaction Footprints ... 1724.62 kWh"
https://digiconomist.net/bitcoin-energy-consumption

"The price of carbon offsets varies widely from <$1 per ton to >$50 per ton."
https://secondnature.org/climate-action-guidance/purchasing-carbon-offsets-faqs/#cost

So it takes 2000/.92 = 2173kwh to equal one ton of CO2, and each Bitcoin transaction uses 1724.62kwh / 2173kwh per ton = 0.7933 tons of CO2.  That means a cost of $1 to $40 in carbon offsets covers the cost of one BTC transaction.

That might be one way to invest in Bitcoin, while offsetting the damage involved in your purchase.  Although buying BTC directly from someplace like Coinbase probably doesn't even involve a transaction: they buy large quantities, and then sell from their inventory.

It would be really interesting to start a "carbon neutral Bitcoin ETF".  Every purchase would be paired with carbon offsets.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on September 11, 2021, 12:59:18 PM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.

Stop The Bitcoin FUD: Criminal Cryptocurrency Transactions Are Falling
https://www.nasdaq.com/articles/stop-the-bitcoin-fud%3A-criminal-cryptocurrency-transactions-are-falling-2021-01-20

From the Nasdaq article:
Cryptocurrency Is Leaving Criminals Behind
According to a summary of blockchain analysis firm Chainalysis’ “2021 Crypto Crime Report,” the proportion of cryptocurrency-related crime fell significantly last year.

“In 2019, criminal activity represented 2.1 percent of all cryptocurrency transaction volume, or roughly $21.4 billion worth of transfers,” the firm found. “In 2020, the criminal share of all cryptocurrency activity fell to just 0.34 percent, or $10.0 billion in transaction volume.”

Title: Re: What do you think of adding a low% of crypto allocation
Post by: mjr on September 11, 2021, 01:29:40 PM
Now provide the proportion of criminal BTC transactions after excluding transactions of one speculator selling to another.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on September 11, 2021, 05:49:24 PM
Stop The Bitcoin FUD: Criminal Cryptocurrency Transactions Are Falling
https://www.nasdaq.com/articles/stop-the-bitcoin-fud%3A-criminal-cryptocurrency-transactions-are-falling-2021-01-20

...

“In 2019, criminal activity represented 2.1 percent of all cryptocurrency transaction volume, or roughly $21.4 billion worth of transfers,” the firm found. “In 2020, the criminal share of all cryptocurrency activity fell to just 0.34 percent, or $10.0 billion in transaction volume.”
[/i]

The report that article refers to admits that they're almost certainly underestimating criminal activity in 2020. Their estimate for 2019 was off by nearly a factor of 2 (assuming it doesn't get revised up any further), a revision that would erase any alleged decrease (in dollar terms, not percent of transactions) from 2019 to 2020.

https://blog.chainalysis.com/reports/2021-crypto-crime-report-intro-ransomware-scams-darknet-markets

Quote
In 2019, criminal activity represented 2.1% of all cryptocurrency transaction volume, or roughly $21.4 billion worth of transfers ... We should note that at the time of writing last year’s report, we reported 2019’s criminal share of cryptocurrency activity to be 1.1%. The reason for the change is the identification of more addresses associated with criminal activity that were active in 2019. Most of those addresses were related to scams that had yet to be identified as such, primarily related to the PlusToken scam. Some are related to previously unreported ransomware attacks. For that reason, we should expect 2020’s reported criminal activity numbers to rise over time as well.

It seems that an expected 1% or 2% up or down is not surprising in any report that is continually readjusted to reflect true impact.
What I really objected to was the sweeping statement by mtnmn117 (without stats) that crypto is used 'primarily' for criminal activities because that is simply not true.

I don't consider 2% to be 'primary' criminal use, especially given the exponential growth that crypto has recently undergone.

Interesting points made in this link ...
https://blog.coinbase.com/fact-check-crypto-is-increasingly-being-used-for-criminal-activity-and-is-a-haven-for-illicit-856a71dfb399

I don't think that crypto will ever be free of scams no more than the banks will ever be free of illegal cash transactions, fraud and ID theft.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Civex on September 14, 2021, 08:31:36 PM
I try not to invest anything that doesn't have inherent value, though I have ~2% of our portfolio in derivatives.

Firmly agree with Bogleheads that crypto is a pump and dump scheme.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on September 14, 2021, 08:46:49 PM
I'm glad all the real crypto experts are here to let us know the facts.  I appreciate the insight.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on September 19, 2021, 07:37:19 PM
Tulip bulb / greater fool posters in 3,2,1...

If you want to buy crypto, buy crypto.  But please, please, please.  Basing your asset allocation on a four year backtest is just so silly it defies words.  Most of us have investing horizons of 30, 40, and 50 years.  Assuming the last four years of returns is representative of the next 40 is just barking madness.

Again, if you want to buy crypto, buy crypto.  But don't assume that we're so incredibly fucking stupid that we think the last four years is representative of any future time frame.  But crypto if you like, but don't come here and insult us. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on September 22, 2021, 10:59:21 AM
Bitcoin used to be a new frontier that law enforcement hadn't discovered.  But now the FBI tracks blockchain transactions.  Long term, I'd guess criminals won't like putting the exact amount and time of their illegal activity on the public blockchain.

I'm viewing Bitcoin as an experiment where people are trying to figure out it's use.  Being of the non-criminal type, I didn't find much to buy with BTC when I tried years ago.  Visa and Mastercard are more widely accepted with lower fees - yet earlier this year, the sum total of all BTC exceeded the market caps of both of those credit card companies.  But there's experimentation, like El Salvador adopting it as legal currency or an ETF tracking it's price (GBTC, Grayscale Bitcoin Trust... expense ratio 2%).

Today I discovered I can buy "GBTC" in my Vanguard account.  It's an OTC (over the counter) stock, not traded on Nasdaq or NYSE.  For me, that means I can buy and sell in my Roth account, and not deal with tax issues (I hope).
https://finance.yahoo.com/quote/GBTC/

Crypto is a fraction of 1% of my assets.  I'm not sure what I'll do if it rises to 2% or more of my assets... I'm very uncomfortable with a 5% allocation, so I'll rebalance somewhere between 2-5%, if that happens.

Yahoo shows 7 years of BTC-USD market prices, and investing.com goes back to 2012 prices.  Others might want to use that if they are only seeing 4 years of data elsewhere.
https://finance.yahoo.com/quote/BTC-USD/
https://www.statista.com/statistics/326707/bitcoin-price-index/
https://www.investing.com/crypto/bitcoin/btc-usd

Keep in mind there was another great experiment to figure out the internet, which resulted in the dot-com crash.  Many of those companies went to zero, taking all the money put into them and going bankrupt.  Keep that in mind when putting money into crypto currencies.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on September 24, 2021, 07:12:54 AM
For a while $GBTC was trading at a discount to Net Asset Value, it may be a nice vehicle. If you're committed to crypto for the long haul, dollar-value-averaging into it may be wise. With something as volatile as Bitcoin, I'd set a goal of rebalancing each month such that 1% at a time was going into it. So--on the 15th of the month--you rebalance such that 1% of account is in it. Then, the next month, rebalance to 2% (committing to repeating this process for ten months will get you to a 10% stake in Bitcoin). This means that a massive surge will result in you putting less in when prices are high, and more when it's down.

The key is committing to a program like this, and then not looking at it in between rebalance days.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: joe189man on September 24, 2021, 09:21:48 AM
I'm glad all the real crypto experts are here to let us know the facts.  I appreciate the insight.

Can you point us in the right direction to learn about crypto?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on September 24, 2021, 09:51:15 AM
I see a pretty good case for holding some crypto, especially if you're young and can afford to take bigger risks.

I'm not young but I've bought some BTC and a little ETH and I intend to hold for some years. I see greater prospects for significant price increases than for zero over the next 5-10 years. I've put in enough to make a nice difference if it goes very well but not enough to do meaningful damage if it all goes belly up.

I might be participating in the next great revolution or I might have stumbled into the biggest ever 'greater fool' scheme, or maybe something in between. The world of crypto is undeniably novel/groundbreaking and it will be interesting to see how things develop - and I'm happy to have a bit of skin in the game.

The only thing I'm very confident about is that the future is unknown, and it will probably surprise us all.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on September 25, 2021, 07:44:58 AM
Why is the previous 4 years the timeline of choice? Why not the last 6 months? Over the past 6 months, Bitcoin is down 17%.

I don't mind Bitcoin itself. However, the strong advocates for this type of "investment" has a tendency to bug the shit out of me. The very strong vocal advocates tend to have very little money to invest and want to get rich quick.

It is my belief that the MMM crowd probably has a small amount in their portfolio. However, the MMM crowd is smart enough not to be spewing Bitcoin FOMO all over the place. It looks and smells like barf.



Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on September 26, 2021, 06:31:47 AM
Why is the previous 4 years the timeline of choice? Why not the last 6 months? Over the past 6 months, Bitcoin is down 17%.
There's been multiple times where Bitcoin lost more than that in a day.

"Price lost one third of its value in 24 hours, dropping below $14,000."
"Price briefly dipped below $3,300, a 76% drop from the previous year and a 15-month low."
"... losing 25% in 24 hours early in the COVID-19 pandemic."
https://en.wikipedia.org/wiki/History_of_bitcoin#Prices_and_value_history

That list also mentions the price of Bitcoin in mid Dec 2017 and 2018, where Bitcoin sank from $17.9k to $3.3k over 12 months.  That's a loss of 81.6%, just a few years ago.

There should also be several more crashes before 2017 that were even worse than 81%.  Those buying it should do so knowing it is very, very risky.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: HamsterStache on September 26, 2021, 08:33:10 AM
I think a lot of people are going to lose a lot of money eventually by leaving assets tied up on crypto. I’ve been tempted to dabble, given the wild ride BTC has taken, but it’s just not worth it to me because I really don’t think any of it will last - especially now with China 100% outlawing it. It’s the type of investment that can evaporate overnight.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on September 26, 2021, 01:39:55 PM
Hamster Trades Cryptocurrencies, Outperforms Warren Buffett:
 https://futurism.com/hamster-trades-cryptocurrencies/amp (https://futurism.com/hamster-trades-cryptocurrencies/amp)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on September 27, 2021, 08:02:24 AM
Hamster Trades Cryptocurrencies, Outperforms Warren Buffett:
 https://futurism.com/hamster-trades-cryptocurrencies/amp (https://futurism.com/hamster-trades-cryptocurrencies/amp)

The hampster is clearly a shrewd investor.  If you can't see that, you probably aren't smart enough to understand crypto.  :P
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on September 27, 2021, 08:21:29 AM
I can't wait for someone to shout "Have fun staying poor, Warren!"
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FINate on September 27, 2021, 09:28:20 AM
Whoever created Mr Goxx certainly did their homework, I love it! The little trading desk with three monitors with city skyline view, Goxx Capital sign on the wall next to the quintessential office clock, the cold office swing-chair, Wheel of Intention, gratuitous stats like the speed of the wheel, and the animations for buy/sell events. Nailed it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Car Jack on September 27, 2021, 12:22:30 PM
If I wanted to add currency to my portfolio, I'd add either the Canadian dollar or British pound.  What's that got to do with crypto?  Well, they're all currency, right?  Less risk that say China outlaws the pound, where they just outlawed all crypto.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 27, 2021, 12:33:45 PM

I don't mind Bitcoin itself. However, the strong advocates for this type of "investment" has a tendency to bug the shit out of me. The very strong vocal advocates tend to have very little money to invest and want to get rich quick.

It is my belief that the MMM crowd probably has a small amount in their portfolio. However, the MMM crowd is smart enough not to be spewing Bitcoin FOMO all over the place. It looks and smells like barf.

I hope my assumptions are not barf, but I will soon be an example of a person with a medium portfolio (700k) who will be making a significant Crypto investment.  I'm at 20% now and will be moving to about 40% within the month.  I'll have about 320k in crypto (Ether and Bitcoin) and 400k in VTSAX at that point. 

I'm not doing it because I think the market is about to rise short term...I am not a short term investor and don't claim to know what any market will do short term.  I am doing this on the assumption that cyrpto is going to be the main financial instrument for the world by the middle of this century.  The only way I plan to exit this strategy is if it becomes crystal clear that this assumption has failed.    I have put spent about 200 hours studying crypto over the past few months trying to poke holes and look for reasons it will fail, but it just leaves me convinced that it will succeed.

I am not posting this to try to change your mind or disagree with you, but rather to add myself as a public data point so we can all see together whether I succeed or fail.   If correct, I plan to celebrate and hopefully even retire sooner than expected.  If false, then I plan to laugh at myself along with the rest of the forum! 

Cheers! 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FLBiker on September 27, 2021, 01:31:13 PM
I certainly do not claim to be an expert on crypto, but I've recently been struck by analogies between the development of blockchain technology and the development of the internet, in the sense that both had / have tremendous potential to transform business (and our lives) in ways that are hard to imagine in advance.  Even if I buy that argument for blockchain (which I think I do), that still doesn't give me any confidence that any of the current coins or platforms are necessarily the way forward.  Lots of people went broke in the dot com bubble, even though they were absolutely right in betting that the internet would change the world.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on September 27, 2021, 04:11:26 PM
Quote
I am doing this on the assumption that cyrpto is going to be the main financial instrument for the world by the middle of this century. The only way I plan to exit this strategy is if it becomes crystal clear that this assumption has failed. 

Quote
I've recently been struck by analogies between the development of blockchain technology and the development of the internet, in the sense that both had / have tremendous potential to transform business (and our lives) in ways that are hard to imagine in advance. Even if I buy that argument for blockchain (which I think I do), that still doesn't give me any confidence that any of the current coins or platforms are necessarily the way forward.  Lots of people went broke in the dot com bubble, even though they were absolutely right in betting that the internet would change the world.


I hear a lot of talk about how we don't yet know how or if we will use specific cryptocurrencies in the future, and there may be a fair argument that we should own a few wild speculations or hedges to cover us in the event of unexpected technological change. In the domain of cryptocurrencies, if they become "the main financial instrument for the world by the middle of this century" our portfolios would experience the following consequences:

*Much of the banking sector would be destroyed, and replaced by crypto finance startups that would be un-investable for years after they've wiped out the companies we were invested in.
*If the dominant cryptocurrency had deflationary characteristics, like bitcoin, the world would sink into an economic depression. Deflation is really bad for economic growth.
*If central banks could no longer control the money supply, severe recessions and inflationary/deflationary episodes would rock economies, as occurred in the late 1800s. 
*A huge transfer of wealth would have to occur from people using national currencies to people holding and not spending fiat cryptocurrencies. This would be the biggest transfer since the Russian or Chinese Revolutions and nobody would take it sitting down. First, established interests would try to ban crypto. If that failed, war would be the result. I.e. few people would accept lifelong serfdom by shrugging their shoulders and saying "wish I bought Bitcoin when it was only $100,000."
*Wars might also be fought over cryptocurrency specific issues, like forks or other changes in the rules. A deflationary crypto would eventually have to change its rules to be inflationary if the economy is to grow, but existing wealthy people would be against such changes (as they are generally against QE now).
*An energy crisis and chronic microprocessor shortages would crimp economic growth and drive inflation. Things like air conditioning and electronics not dedicated to payment processing would become much more expensive, if not luxuries.
*A worst-case climate scenario would occur, as a mad dash for fossil fuels occurs in an attempt to keep up with growth in the use of crypto. Coastal cities worldwide face the fate Jakarta is facing now, and desertification occurs worldwide. Places like Arizona and Pakistan become as uninhabitable as the Sahara Desert around mid-century.
*Hackers become a secret nobility, wiping out entire national reserves of cryptocurrency and millions of investors at a time, and influencing politicians and law enforcement to look the other way. Again, wars ensue.
*Authoritarian nations that are able to ban crypto (e.g. China) will outperform nations where domestic interest groups prevent legislative action. Big cryptocurrency holders in democracies will soon lobby to prevent any legislation from limiting use of crypto. Energy companies may help them. Thus, the influence of authoritarianism expands.

Overall, it's a bleak picture for those of us retiring on the proceeds of investments and expecting to live in free, wealthy societies like we did in the past. I have no idea how to hedge for such a future, much less exploit it.

Picking which cryptocurrency will attain dominance 20 years from now is at least as hard as picking stocks. Bitcoin, Ethereum, Litecoin, Dogecoin, etc. could ALL easily fade into obsolescence just like hundreds of once-massive technology brands such as DEC, IBM, GE, Atari, Netscape, MySpace, Blackberry, Nokia, etc. In a future where one or maybe two cryptocurrencies become dominant, and hundreds (thousands?) of others fail, a diversification strategy may not be helpful. You'd actually have to pick the winner and have so much invested in it that you wouldn't get to pick very many others. This is a decidedly narrower path for retirement success than the old indexing and diversification advice. Even worse, there's no particular difference or reason why one cryptocurrency is more likely to succeed than another. It's literally a wild guess among hundreds of current and future contenders, and there is no way to be good at it or apply reason to it. Perhaps the winning strategy would be to place some kind of long-term bet against cryptocurrencies in the hope that the eventually successful currency hasn't been invented yet. Still, that's crazy risky.

Quite frankly, if we even started going down the road described above, there would be considerable backlash and probably some kind of reversal before it got too far. It's entirely possible though, that this backlash is misdirected. E.g. people might attribute their economic decline to the usual suspects: minorities, other countries, conspiracy theories, religious causes, political opponents, etc. rather than blaming the new currency. If crypto investors emerge as a political force, they could reshape politics by cultivating a blame game while they consolidate wealth.

Good luck hedging all of that! I figure I might as well bet everything that the whole cryptocurrency thing collapses or is banished by governments. That's probably the only direction which could lead to a prosperous and happy retirement. Given that a lot of other people have this interest, it's likely this side will gain support in the coming years.   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on September 27, 2021, 04:48:41 PM
^ I don't think it will get to that point.  At least not very soon. 

Here are the main advantages of crypto:

1)  Does not require a trusted third-party to complete the transaction

2)  Cannot be inflated away by central government manipulation.

There are other advantages, but most are subsets of/related to those. 

But with Bitcoin in particular the transactions are so slow and so expensive that in order to use it as currency you actually do need a trusted third party application running on top of it.  So that advantage goes away.

And while Bitcoin can't be inflated away, it also can't be stabilized so you don't know what prices will be in the future.  That is a major liability, which essentially disqualifies it from having any real utility as a currency. 

So we're kind of left with Bitcoin as a store of value.  Which it might be.  As long as people in the future value it as much as people value it today. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: habanero on September 27, 2021, 04:59:46 PM
With the aid of 8(?) mainframes VISA can do 50.000 transactions per second.

Store of value? Maybe, as long as enough folks believe in it. As a general means of payment? No way for Bitcoin.

There is also no way the US or any other semi-functioning country is gonna accept some new "currency" as legal tender,

Crypto might collapse or go through the roof, but I still stick with the tried and tested slow and steady to build wealth.

If the US is ever gonna accept digital money it will be digital USD in some form, not some crypto.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on September 27, 2021, 11:00:28 PM

I don't mind Bitcoin itself. However, the strong advocates for this type of "investment" has a tendency to bug the shit out of me. The very strong vocal advocates tend to have very little money to invest and want to get rich quick.

It is my belief that the MMM crowd probably has a small amount in their portfolio. However, the MMM crowd is smart enough not to be spewing Bitcoin FOMO all over the place. It looks and smells like barf.

I hope my assumptions are not barf, but I will soon be an example of a person with a medium portfolio (700k) who will be making a significant Crypto investment.  I'm at 20% now and will be moving to about 40% within the month.  I'll have about 320k in crypto (Ether and Bitcoin) and 400k in VTSAX at that point. 

I'm not doing it because I think the market is about to rise short term...I am not a short term investor and don't claim to know what any market will do short term.  I am doing this on the assumption that cyrpto is going to be the main financial instrument for the world by the middle of this century.  The only way I plan to exit this strategy is if it becomes crystal clear that this assumption has failed.    I have put spent about 200 hours studying crypto over the past few months trying to poke holes and look for reasons it will fail, but it just leaves me convinced that it will succeed.

I am not posting this to try to change your mind or disagree with you, but rather to add myself as a public data point so we can all see together whether I succeed or fail.   If correct, I plan to celebrate and hopefully even retire sooner than expected.  If false, then I plan to laugh at myself along with the rest of the forum! 

Cheers!

It's possible to make money in anything. Some play and win the lottery. This discussion is more about what makes a good strategic investment. Not fear of missing out of potential future returns.

Good luck to you. You seem more reasonable than most. However, in order for this to work, your co-investors need to have the same level of confidence and determination. If trust weakens and people start to flee, it doesn't matter how well the technology performs.

If the technology performs well, it becomes a threat to the currency of the United States. It would be in the best interest of the United States to make it illegal or put restrictions on it. As others have said, due to special interest, we would have to engage in war for Bitcoin to become the dominant currency. It could happen. Anything is possible.

In a similar thread, (not too long ago), someone was advocating that rental real estate was just as risky as Bitcoin and cited the 2008-2012 housing recession. It's true that from Q1 2007 to Q1 2009, real estate decreased nationally about 19%.

https://fred.stlouisfed.org/series/MSPUS

Within the last 6 months, it looks like the biggest drop for Bitcoin was May 9 to 19. The drop was 36% over 11 days.

You said that if Bitcoin goes 10X, you will quit your job. You also said that you are in it for the long haul.

What is your withdrawal strategy for the next 30-40 years with Bitcoin?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FLBiker on September 28, 2021, 05:58:07 AM
Here are the main advantages of crypto:

1)  Does not require a trusted third-party to complete the transaction

2)  Cannot be inflated away by central government manipulation.

There are other advantages, but most are subsets of/related to those. 

But with Bitcoin in particular the transactions are so slow and so expensive that in order to use it as currency you actually do need a trusted third party application running on top of it.  So that advantage goes away.

And while Bitcoin can't be inflated away, it also can't be stabilized so you don't know what prices will be in the future.  That is a major liability, which essentially disqualifies it from having any real utility as a currency. 

So we're kind of left with Bitcoin as a store of value.  Which it might be.  As long as people in the future value it as much as people value it today.

Also, re: #1, even if the need for a third party app were eliminated, I feel like this "advantage" cuts both ways.  After all, it's due to this "advantage" that people have lost coins, or have coins they can't access, etc.  Personally (and maybe this makes me a sheep or whatever), I like the fact that third parties (ie banks, investment firms) are responsible for keeping track of my money and investments.  They are insured professionals, and I'm comfortable with the minimal fees I pay for that service.  I agree that in some sort of catastrophic future, these entities could fail and I could lose access to everything, but I don't believe that in this same catastrophic future folks would accept a digital currency for loaves of bread.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 28, 2021, 06:13:45 AM

Store of value? Maybe, as long as enough folks believe in it. As a general means of payment? No way for Bitcoin.

There is also no way the US or any other semi-functioning country is gonna accept some new "currency" as legal tender,

If the US is ever gonna accept digital money it will be digital USD in some form, not some crypto.


The governments of the US and other so-called semi-functioning countries may or may not choose to not accept bitcoin, but how often do you make a payment to a nation-state's governing body anyway? 

99.9% of the time, we make payments to corporations in the world, not the government institutions themselves.  And yes, those corporations will be accepting non government issued crypto. 

Twitter just announced that they will accept peer-to-peer bitcoin transfers as a general means of payment through a layer 2 solution called the lightning network.  Currently they have over 200 million daily users, most of whom are younger than 35 years old. 

https://www.theverge.com/2021/9/23/22689806/twitter-bitcoin-lightning-tipping-nft-authentication
 (https://www.theverge.com/2021/9/23/22689806/twitter-bitcoin-lightning-tipping-nft-authentication)

So now there exists whole countries (El Salvador currently, with Panama, Cuba, and Ukraine making strides) who accept bitcoin, and we have one of the biggest social networks in the world accepting it.  Keep in mind that bitcoin was created only 12 years ago.  To me, the take-away isn't "the US government doesn't even accept it yet".  The real take-away is "wow, in only 12 years, small countries and the some of the world's biggest corporations are already accepting it as legal tender.  This is pretty mind blowing!" 


Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 28, 2021, 06:40:09 AM

I don't mind Bitcoin itself. However, the strong advocates for this type of "investment" has a tendency to bug the shit out of me. The very strong vocal advocates tend to have very little money to invest and want to get rich quick.

It is my belief that the MMM crowd probably has a small amount in their portfolio. However, the MMM crowd is smart enough not to be spewing Bitcoin FOMO all over the place. It looks and smells like barf.

I hope my assumptions are not barf, but I will soon be an example of a person with a medium portfolio (700k) who will be making a significant Crypto investment.  I'm at 20% now and will be moving to about 40% within the month.  I'll have about 320k in crypto (Ether and Bitcoin) and 400k in VTSAX at that point. 

I'm not doing it because I think the market is about to rise short term...I am not a short term investor and don't claim to know what any market will do short term.  I am doing this on the assumption that cyrpto is going to be the main financial instrument for the world by the middle of this century.  The only way I plan to exit this strategy is if it becomes crystal clear that this assumption has failed.    I have put spent about 200 hours studying crypto over the past few months trying to poke holes and look for reasons it will fail, but it just leaves me convinced that it will succeed.

I am not posting this to try to change your mind or disagree with you, but rather to add myself as a public data point so we can all see together whether I succeed or fail.   If correct, I plan to celebrate and hopefully even retire sooner than expected.  If false, then I plan to laugh at myself along with the rest of the forum! 

Cheers!

It's possible to make money in anything. Some play and win the lottery. This discussion is more about what makes a good strategic investment. Not fear of missing out of potential future returns.

Good luck to you. You seem more reasonable than most. However, in order for this to work, your co-investors need to have the same level of confidence and determination. If trust weakens and people start to flee, it doesn't matter how well the technology performs.

If the technology performs well, it becomes a threat to the currency of the United States. It would be in the best interest of the United States to make it illegal or put restrictions on it. As others have said, due to special interest, we would have to engage in war for Bitcoin to become the dominant currency. It could happen. Anything is possible.

In a similar thread, (not too long ago), someone was advocating that rental real estate was just as risky as Bitcoin and cited the 2008-2012 housing recession. It's true that from Q1 2007 to Q1 2009, real estate decreased nationally about 19%.

https://fred.stlouisfed.org/series/MSPUS

Within the last 6 months, it looks like the biggest drop for Bitcoin was May 9 to 19. The drop was 36% over 11 days.

You said that if Bitcoin goes 10X, you will quit your job. You also said that you are in it for the long haul.

What is your withdrawal strategy for the next 30-40 years with Bitcoin?

Thanks for being willing to have an open discussion, despite having a different viewpoint. 

First, to be clear, I plan to be more invested in Ethereum than Bitcoin, but to hold both.  Bitcoin has like the most pure currency that coders could dream of, which entices me.  Ethereum has a MUCH more robust network of coders and corporations building on it's platform, which entices me. 

Here's my current withdrawal strategy:

If Ether and Bitcoin do establish themselves, then a withdrawal strategy for them is probably much more graceful and simple than in today's environment.  Ether and Bitcoin currently have a combined market cap of about 1.1 trillion dollars.  Enough money to already be legit entities, but very small compared to the ~95 trillion market cap of the corporations that make up VTSAX.  This is what creates the possibility for variance where the coin can drop 36% over 11 days as you mentioned.

However, if my assumptions are correct, then 20 years from now corporations and even several countries will be accepting these currencies as acceptable form of payment, and the market cap will be far higher than 1.1 trillion.  This is key.  If there is let's say 25 trillion held worldwide in Bitcoin/Ether (which I don't think is unreasonable, and possibly an underestimate), the variance of the currency will drop significantly.  This will have the downside of creating lower growth potential, but the huge upside of taking away much of the risk of waking up to 25% of your wealth evaporating. 

So, over time, I predict that Bitcoin/Ethereum will likely become worse from a standpoint of wealth creation, but will become much more stable as a way to store value.  My guess is that in 20 years, I won't be getting out of my Ether/Bitcoin positions to decrease volatility, rather I'll be doing it because volatility is low enough that VTSAX is once again a higher level of volatility, and therefore once again a better way to grow wealth. 

I'm not asking you to agree with my opinion, but did I explain my thoughts well enough that you are able to understand my opinion?  I've been working really hard to clarify all this in my own mind, and I know I'm not amazing at clarifying my thoughts to others yet:) 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: TheAnonOne on September 28, 2021, 07:23:06 AM
For what it's worth I am something like 20% crypto.

I don't include it on my NW sheets and I really didn't spend THAT much on it(maybe 1% NW or less). It just grew to that. I dumped most of that into some newer projects (alts) earlier this year and reset the growth curve.

If it does a 5X, I can FIRE. It's worth the gamble to me. It's somewhat like holding a perpetual lottery ticket.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on September 28, 2021, 08:09:11 AM
Today I discovered I can buy "GBTC" in my Vanguard account.  It's an OTC (over the counter) stock, not traded on Nasdaq or NYSE.  For me, that means I can buy and sell in my Roth account, and not deal with tax issues (I hope).
https://finance.yahoo.com/quote/GBTC/
And a week later, I realized there's a problem: GBTC and BTCUSD performance are far apart.  For a 2% expense ratio, they should do a better job of it.

YTD, BTC beat GBTC by 45% to 7%, which is a huge performance gap.
2 year, BTC beat GBTC by almost 2x, 409% vs 223%
5 year, BTC beats GBTC by 6774% to 3356%
(Admittedly, anyone who made 34x their money probably isn't so worried about missing another 2x)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 28, 2021, 08:46:56 AM

Store of value? Maybe, as long as enough folks believe in it. As a general means of payment? No way for Bitcoin.

There is also no way the US or any other semi-functioning country is gonna accept some new "currency" as legal tender,

If the US is ever gonna accept digital money it will be digital USD in some form, not some crypto.




The governments of the US and other so-called semi-functioning countries may or may not choose to not accept bitcoin, but how often do you make a payment to a nation-state's governing body anyway? 

99.9% of the time, we make payments to corporations in the world, not the government institutions themselves.  And yes, those corporations will be accepting non government issued crypto. 

Twitter just announced that they will accept peer-to-peer bitcoin transfers as a general means of payment through a layer 2 solution called the lightning network.  Currently they have over 200 million daily users, most of whom are younger than 35 years old. 

https://www.theverge.com/2021/9/23/22689806/twitter-bitcoin-lightning-tipping-nft-authentication
 (https://www.theverge.com/2021/9/23/22689806/twitter-bitcoin-lightning-tipping-nft-authentication)

So now there exists whole countries (El Salvador currently, with Panama, Cuba, and Ukraine making strides) who accept bitcoin, and we have one of the biggest social networks in the world accepting it.  Keep in mind that bitcoin was created only 12 years ago.  To me, the take-away isn't "the US government doesn't even accept it yet".  The real take-away is "wow, in only 12 years, small countries and the some of the world's biggest corporations are already accepting it as legal tender.  This is pretty mind blowing!"

so china has banned it if other global powers ban this the market for it basically goes away. Or it is now held and supported by these countries who had currency issues to begin with.  Currency in any form is only as good as the backing it receives from the trust of the general public.  I didn't put much trust in el Salvador's currency before bitcoin so its adoption along with the possible adoption of other 3rd world/corrupt economies does not interest me.  Maybe a combined 3rd world market currency with out fear of manipulation by the govt officials(they'll figure out a way) will help these economies do better in the long run it still doesn't solve the deflationary issues posed above.

Hey Boarder, I'm pumped you are chiming in.  I was actually thinking about PM'ing you recently because I know from your work in DFS that you are open to ways of making money that are considered outside the norm by most.  Your opinion holds a bit more weight to me on this topic than the average joe on the street, since I know you are generally open to pretty out of the box ideas. 

I can't deny that I am disappointed by China's banning of crypto as they roll out their cyrpto Yuan.  At first I was worried this could be an existential threat(I had an extra beer that night:), so I basically did nothing but look into the ramifications of this over the past few days.  I'm less concerned now.  It looks like democracies most of the rest of the world will have far less incentive to ban it, and far more pressure to allow it. 

For example, in the US:
- Companies like Fidelity are super close...like maybe within weeks of offering a crypto ETF.  When one institution offers this, they will all have to do it, and quickly, or they will lose clients.  Once most financial institutions offer this, then there will be more and more lobbyists in finance advocating for crypto.  Right now, the big banks are basically only being hurt by crypto, but I think in the coming year it will be more nuanced than that.  I see it as something that they wish was never created, but now that it does exist, they are going to have to quickly adapt and make the best of the new situation.  There are lots of examples of this already happening.

- Major corporations are adopting quickly.  I think in the tech industry the CEO's understand the value of blockchains, and they want to get cryto onboarded quickly for two reasons.  Unlike the finance industry, this is a help to most major tech firms, particularly in social media.  I think they don't want the government to ban it, so if they make it ubiquitous quickly, it gets really hard to do.  Last Thursday Jack Dorsey announced bitcoin as payment via tipping...that's 200 million people who  will shortly have the option.  I think we will see more of this by industries that stand to benefit from crypto adoption...they will want to make it ubiquitous quickly so the public sentiment would make it super hard for democracies to get in crypto's way too much. 

- Also, let's point out that the US may not make it a national currency, but that doesn't mean they will forbid people and corporations from using it.  At the most basic level, bitcoin is protected by the first amendment.  computer code is considered free speech, and it can't be outlawed.  Some applications of it can be banned.  So, for example, I could see stable coins be highly regulated, and maybe even banned (but hopefully not).  However, bitcoin, by definition, is literally computer code, and the constitution supersedes laws.  If bitcoin is banned in the US, then it means we have way bigger problems on our hands, and my implosion of my crypto portfolio will be the least of my concern.

Again, I am particularly interested in your opinion, so please let me know if and how your position on this solidifies or shifts over time.  I'd rather  change my position over time and be correct, then to hang on to the wrong ideas simply for pride or something stupid like that.  If I'm seeing this wrong, I want to understand why and act accordingly. 

Take care. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on September 28, 2021, 09:08:25 AM
Okay, here are very clueless and honest questions based on the opposing opinions I'm reading here.

Say I don't care about missing out on potential gains of investing in crypto, I'm just not a speculation person for whatever reason.
Let's also assume that crypto does take over at least large chunks of the currency system.

Would we not assume that if that happens, that there will be a reasonable system for transition?
Assuming I don't care about losing out on gains, what are the benefits of buying particular coins *at this time*?

Between the champing at the bit pro-crypto folks, and the frothing at the mouth anti-crypto folks, it's hard to get a decent sense of anything. But I simply cannot wrap my mind around the utility of buying crypto *now* other than speculation, despite the fact that the pro-crypto folks cite endless reasons beyond speculation for their positions.

Am I missing something?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 28, 2021, 09:22:53 AM
Okay, here are very clueless and honest questions based on the opposing opinions I'm reading here.

Say I don't care about missing out on potential gains of investing in crypto, I'm just not a speculation person for whatever reason.
Let's also assume that crypto does take over at least large chunks of the currency system.

Would we not assume that if that happens, that there will be a reasonable system for transition?
Assuming I don't care about losing out on gains, what are the benefits of buying particular coins *at this time*?

Between the champing at the bit pro-crypto folks, and the frothing at the mouth anti-crypto folks, it's hard to get a decent sense of anything. But I simply cannot wrap my mind around the utility of buying crypto *now* other than speculation, despite the fact that the pro-crypto folks cite endless reasons beyond speculation for their positions.

Am I missing something?

Yeah, that's a totally reasonable position/questions to be throwing out there.

I'll try to state a case for people not interested in using it as an investment. 

Suppose you have a person who is not comfortable with investing in stocks.  That's weird for us since we are all MMMer's, but many people in first world countries are not comfortable with stock investing.  These people are in a tough position right now, because the US, the EU, and most all first world countries are debasing their currency by printing money.  So, many people need a way to at least maintain the value they've accumulated.  US dollars and the EU are getting eaten by inflation, whereas Bitcoin has a forever hard cap of 21 million coins, and over 18 million of them have already been minted.  By the way the code was written, bitcoin can't debase their currency.  So, even if the world continues to trust the dollar, it will still be worth less and less each year.  But if the world continues to trust crypto, it has the feature of maintaining it's value. 

Now, an even stronger case for cyrpto is people who live in the developing world.  In those countries you usually CAN'T invest in stocks, buy gold on an exchange, etc.  The ONLY thing they can hold is their countries currency, which gets debases way faster than the US dollar...they lose so much to inflation.  And even if they have access to the dollar bill, that's getting debased super fast as well.  For the third world, cyrpto is the only solid way to maintain wealth.  They can get paid, and with an internet connection they can convert their nation's currency to bitcoin.

You may see bitcoin as unstable, but that's from the point of view of a first world rich person.  To a third world person with few to no options monetarily, this is the most stable and legit way to store wealth that they've ever had access too.

So, given your personal position towards crypto and the options to invest in stocks, gold, bonds, etc, I might advocate that you don't invest in crypto.  But there are many who right now SHOULD be buying it even if they don't care about the speculative gains. 

Hope that helps a bit.  Cheers! 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on September 28, 2021, 09:24:48 AM
There is no real reason to own crypto if you don't have fear of missing out on potential future gains.  There don't appear to be many (any?) valid current use cases for a person living in a country without a failed currency or for people who aren't currently unbanked.  Just about anything that crypto can do for legal uses, your regular bank/credit card can do better at the moment.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on September 28, 2021, 09:44:45 AM
There is no real reason to own crypto if you don't have fear of missing out on potential future gains.  There don't appear to be many (any?) valid current use cases for a person living in a country without a failed currency or for people who aren't currently unbanked.  Just about anything that crypto can do for legal uses, your regular bank/credit card can do better at the moment.

Yeah, but the sentiment seems to be that there are legitimate reasons to buy it *now* in the event that it becomes a standard form of currency.

I just don't see the mechanism for this argument.

I say this because I have seen countless debates online where pro-crypto folks insist that it's not just speculation.

But how? How is it not just speculation for a typical north american investor?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: simonsez on September 28, 2021, 09:48:37 AM
Okay, here are very clueless and honest questions based on the opposing opinions I'm reading here.

Say I don't care about missing out on potential gains of investing in crypto, I'm just not a speculation person for whatever reason.
Let's also assume that crypto does take over at least large chunks of the currency system.

Would we not assume that if that happens, that there will be a reasonable system for transition?
Assuming I don't care about losing out on gains, what are the benefits of buying particular coins *at this time*?

Between the champing at the bit pro-crypto folks, and the frothing at the mouth anti-crypto folks, it's hard to get a decent sense of anything. But I simply cannot wrap my mind around the utility of buying crypto *now* other than speculation, despite the fact that the pro-crypto folks cite endless reasons beyond speculation for their positions.

Am I missing something?
For someone not interested, I'd say just keep buying pieces of businesses (or instruments that represent buying pieces of businesses) assuming this is part of your portfolio.  If those businesses you purchase start to use crypto as a currency in the future, cool, you still own a piece of the business.  If they do not start to use crypto as a currency in the future, cool, you still own a piece of the business.  Owning pieces of a business is still a viable tool to help win the financial game of life but there are more and more options for doing so (and more pitfalls, perhaps).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 28, 2021, 10:22:39 AM

Store of value? Maybe, as long as enough folks believe in it. As a general means of payment? No way for Bitcoin.

There is also no way the US or any other semi-functioning country is gonna accept some new "currency" as legal tender,

If the US is ever gonna accept digital money it will be digital USD in some form, not some crypto.




The governments of the US and other so-called semi-functioning countries may or may not choose to not accept bitcoin, but how often do you make a payment to a nation-state's governing body anyway? 

99.9% of the time, we make payments to corporations in the world, not the government institutions themselves.  And yes, those corporations will be accepting non government issued crypto. 

Twitter just announced that they will accept peer-to-peer bitcoin transfers as a general means of payment through a layer 2 solution called the lightning network.  Currently they have over 200 million daily users, most of whom are younger than 35 years old. 

https://www.theverge.com/2021/9/23/22689806/twitter-bitcoin-lightning-tipping-nft-authentication
 (https://www.theverge.com/2021/9/23/22689806/twitter-bitcoin-lightning-tipping-nft-authentication)

So now there exists whole countries (El Salvador currently, with Panama, Cuba, and Ukraine making strides) who accept bitcoin, and we have one of the biggest social networks in the world accepting it.  Keep in mind that bitcoin was created only 12 years ago.  To me, the take-away isn't "the US government doesn't even accept it yet".  The real take-away is "wow, in only 12 years, small countries and the some of the world's biggest corporations are already accepting it as legal tender.  This is pretty mind blowing!"

so china has banned it if other global powers ban this the market for it basically goes away. Or it is now held and supported by these countries who had currency issues to begin with.  Currency in any form is only as good as the backing it receives from the trust of the general public.  I didn't put much trust in el Salvador's currency before bitcoin so its adoption along with the possible adoption of other 3rd world/corrupt economies does not interest me.  Maybe a combined 3rd world market currency with out fear of manipulation by the govt officials(they'll figure out a way) will help these economies do better in the long run it still doesn't solve the deflationary issues posed above.

Hey Boarder, I'm pumped you are chiming in.  I was actually thinking about PM'ing you recently because I know from your work in DFS that you are open to ways of making money that are considered outside the norm by most.  Your opinion holds a bit more weight to me on this topic than the average joe on the street, since I know you are generally open to pretty out of the box ideas. 

I can't deny that I am disappointed by China's banning of crypto as they roll out their cyrpto Yuan.  At first I was worried this could be an existential threat(I had an extra beer that night:), so I basically did nothing but look into the ramifications of this over the past few days.  I'm less concerned now.  It looks like democracies most of the rest of the world will have far less incentive to ban it, and far more pressure to allow it. 

For example, in the US:
- Companies like Fidelity are super close...like maybe within weeks of offering a crypto ETF.  When one institution offers this, they will all have to do it, and quickly, or they will lose clients.  Once most financial institutions offer this, then there will be more and more lobbyists in finance advocating for crypto.  Right now, the big banks are basically only being hurt by crypto, but I think in the coming year it will be more nuanced than that.  I see it as something that they wish was never created, but now that it does exist, they are going to have to quickly adapt and make the best of the new situation.  There are lots of examples of this already happening.

- Major corporations are adopting quickly.  I think in the tech industry the CEO's understand the value of blockchains, and they want to get cryto onboarded quickly for two reasons.  Unlike the finance industry, this is a help to most major tech firms, particularly in social media.  I think they don't want the government to ban it, so if they make it ubiquitous quickly, it gets really hard to do.  Last Thursday Jack Dorsey announced bitcoin as payment via tipping...that's 200 million people who  will shortly have the option.  I think we will see more of this by industries that stand to benefit from crypto adoption...they will want to make it ubiquitous quickly so the public sentiment would make it super hard for democracies to get in crypto's way too much. 

- Also, let's point out that the US may not make it a national currency, but that doesn't mean they will forbid people and corporations from using it.  At the most basic level, bitcoin is protected by the first amendment.  computer code is considered free speech, and it can't be outlawed.  Some applications of it can be banned.  So, for example, I could see stable coins be highly regulated, and maybe even banned (but hopefully not).  However, bitcoin, by definition, is literally computer code, and the constitution supersedes laws.  If bitcoin is banned in the US, then it means we have way bigger problems on our hands, and my implosion of my crypto portfolio will be the least of my concern.

Again, I am particularly interested in your opinion, so please let me know if and how your position on this solidifies or shifts over time.  I'd rather  change my position over time and be correct, then to hang on to the wrong ideas simply for pride or something stupid like that.  If I'm seeing this wrong, I want to understand why and act accordingly. 

Take care.

My opinion is there is far too much risk you're taking on to try to shave a few years off and FI timeline and possibly become mega rich.  having an allocation at no more than 5-10% maybe ok if this is something you believe in but its just a belief the history is far too short.  Investing in specific coins is even worse in my opinion as no one knows what will win or fail.  Just b/c something has a huge market cap doesnt mean its not a house of cards - see enron.  The govt may not be able to make this illegal per your statements but they can regulate it out of existance.  I just fundamentally see no value in this sector and mostly a bunch of talking heads trying to get rich quick.  I could not sleep at night or retire with an asset allocation that rich in a single short term trend that could completely fold on itself for no other reason than people lose interest in it being a thing. 

I'd also hope your research includes all of the counterpoints its very easy today to get confirmation bias on something when thats what you're seeking

Fair points.  I'll add that my wife and I each are ten years away from pensions.  Mine will probably be worth about 45k/year.  Hers will probably be worth 60k/year since she makes more than me.  We also own a house worth 400k currently that will be paid off in 9 years.  Additionally, we have 700k in the stach, 300k of which we are putting into crypto.  So even if that goes to zero, in 10 years we will have:

-100k+ pension per year (it would take a 2.5 million dollar stache to replicate this at a 4% withdrawal rate)
- paid off house
- whatever that 400k of VTSAX grows to in the next 10 years
- whatever additional VTSAX I buy in the next 10 years, plus the earnings on that additional money. 
- And we have a 500k life insurance policy on each other in the meantime for extra security. 

So in my particular position, I suppose it's not really 40% of my retirement.  It's 40% of my stache, but there's much outside of that.  If you include all that other stuff, I'm probably a bit over 10% allocated, but probably not much. 

Your last point is the one that is harder for me.  Searching for counterpoints to my assessment of crypto is harder than I'd like it to be.  I'm constantly looking, but many of the counterpoints are vague statements like "it's risky", "it's just used for crime", and things like that.  Things like "it's mainly used for crime" are just categorically false.  Statements like "it's risky" may be completely true, but there's seldom math to back it up. 

There is one REALLY VALID critique of crypto that I simply cannot deny, and you've pointed it out already.  Crypto has a super short lifespan, so the sample size is undeniably small.  This is a valid criticism and discounting it would be stupid.  Even though they seem like clear home runs to me, bitcoin has only been around for 12 years, and other coins are all younger than that.  This isn't a big deal, it's a really big deal:) 

My counter to that argument is this:  There was once a time when the US stock market was only 12 years old.  If we discount crypto because of it only being 12 years old, then we should similarly say that a person shouldn't have been buying stocks 12 years into the market's existence.  But a) that would have probably been a mistake for early adopters, and b) if they didn't invest in that, it wouldn't exist today, which would be sad. 

I believe that given all the layers of security I have listed above (pension/paid off house/400k in VTSAX, life insurance), I can easily absorb a 300k loss of wealth and still retire a happy and wealthy person in 10 years. 

Thanks again for your thoughtful response, hearing from an intelligent critic is far more valuable to me than someone who just drinks my cool-aide:)  It'll be fun to see how both of our views on this evolve in the coming months and years. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FLBiker on September 28, 2021, 10:31:18 AM
There is no real reason to own crypto if you don't have fear of missing out on potential future gains.  There don't appear to be many (any?) valid current use cases for a person living in a country without a failed currency or for people who aren't currently unbanked.  Just about anything that crypto can do for legal uses, your regular bank/credit card can do better at the moment.

Yeah, but the sentiment seems to be that there are legitimate reasons to buy it *now* in the event that it becomes a standard form of currency.

I just don't see the mechanism for this argument.

I say this because I have seen countless debates online where pro-crypto folks insist that it's not just speculation.

But how? How is it not just speculation for a typical north american investor?

If I'm understanding your question correctly, I agree that this position (you have to buy it now because it will be a viable currency) doesn't make any sense.  If a crypto currency becomes a viable form of currency, it would of course have to be obtainable via some sort of exchange process.  If it weren't, it wouldn't be a viable currency.  So, buying coins at this point in time is speculating on the particular coin(s) that will end up being viable.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on September 28, 2021, 10:45:59 AM
There is no real reason to own crypto if you don't have fear of missing out on potential future gains.  There don't appear to be many (any?) valid current use cases for a person living in a country without a failed currency or for people who aren't currently unbanked.  Just about anything that crypto can do for legal uses, your regular bank/credit card can do better at the moment.

Yeah, but the sentiment seems to be that there are legitimate reasons to buy it *now* in the event that it becomes a standard form of currency.

I just don't see the mechanism for this argument.

I say this because I have seen countless debates online where pro-crypto folks insist that it's not just speculation.

But how? How is it not just speculation for a typical north american investor?

If I'm understanding your question correctly, I agree that this position (you have to buy it now because it will be a viable currency) doesn't make any sense.  If a crypto currency becomes a viable form of currency, it would of course have to be obtainable via some sort of exchange process.  If it weren't, it wouldn't be a viable currency.  So, buying coins at this point in time is speculating on the particular coin(s) that will end up being viable.

Okay, so I'm not missing anything.

I keep positing this and keep being told I'm wrong and "don't understand" crypto.

Granted, the majority of crypto-folk in my real life are fucking morons who don't know anything about investing, so aren't able to engage in a real conversation.

But I wanted to really understand that I wasn't missing anything, because as much as I've read, I do NOT feel confident holding much of an opinion or position on crypto at this time.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 28, 2021, 11:55:00 AM
There is no real reason to own crypto if you don't have fear of missing out on potential future gains.  There don't appear to be many (any?) valid current use cases for a person living in a country without a failed currency or for people who aren't currently unbanked.  Just about anything that crypto can do for legal uses, your regular bank/credit card can do better at the moment.

Yeah, but the sentiment seems to be that there are legitimate reasons to buy it *now* in the event that it becomes a standard form of currency.

I just don't see the mechanism for this argument.

I say this because I have seen countless debates online where pro-crypto folks insist that it's not just speculation.

But how? How is it not just speculation for a typical north american investor?

If I'm understanding your question correctly, I agree that this position (you have to buy it now because it will be a viable currency) doesn't make any sense.  If a crypto currency becomes a viable form of currency, it would of course have to be obtainable via some sort of exchange process.  If it weren't, it wouldn't be a viable currency.  So, buying coins at this point in time is speculating on the particular coin(s) that will end up being viable.

Okay, so I'm not missing anything.

I keep positing this and keep being told I'm wrong and "don't understand" crypto.

Granted, the majority of crypto-folk in my real life are fucking morons who don't know anything about investing, so aren't able to engage in a real conversation.

But I wanted to really understand that I wasn't missing anything, because as much as I've read, I do NOT feel confident holding much of an opinion or position on crypto at this time.

+1  You are not missing anything.  If crypto takes off and becomes widespread currency you'll easily be able to convert your cash or stocks to it at any time.  Currently I am investing for the sake of speculation, and am assuming all the risk that goes with this, and not because it's my only shot to own it.  I strongly think it will rise in value faster than stocks.  But even if I'm right, the people who waited to buy it will be able to convert their currency to crypto at the click of the button in the future. 

No one living in a first world country currently needs to own any crypto at the moment.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on September 28, 2021, 11:59:19 AM

for the record if unicorn fartcoins ever come out i'm probably going to buy some just to say i own them

LOL. Unicorn fartcoins are the new Doge.

@aceyou, thanks for seeking and articulating reasonable arguments; ditto @Malcat.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on September 28, 2021, 12:13:44 PM
Yes I have 20%. @Malcat  I plan to rebalance my portfolio annually to keep it at 20% crypto.

My question on this thread though is to understand what's the downside of adding a low% and rebalancing. Crypto has better risk vs reward than leveraged ETFs and a 2-5% seem to do wonders to the returns.

@waltworks Thank you for the recognition :)

"My question on this thread though is to understand what's the downside of adding 20% Theranos and rebalancing.  Look at the backtesting!!1!1!"  -c2015

Good luck, OP.  It may well work out.  Or not.  I don't think there is any harm in gambling with a few % of your network or portfolio.  20%?  Seems exceedingly foolish to me but to the guy who wins $500,000,000 in the lottery,  I suppose buying a ticket wasn't a waste of money. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on September 28, 2021, 12:49:46 PM
1. I think the utility of crypto as a currency in 3rd world countries with unstable currencies is real. However, I don't see this value to be enough to allocate my money towards this "investment".

2. Similar to what others have said, my personal bias is that my family/friends that own bitcoin and crypto know very little about investing and have very little invested. They struggle to understand the basics of economics. They seem to take the "fairy dust" approach, which is difficult to debate.

3. Re-balancing at 20% and putting the profits into VTSAX seems like a better strategy than not re-balancing.

4. You are predicting less variance in Bitcoin in the future. Statistically speaking, that type of prediction is very difficult to pull off. To fully understand this prediction, I would encourage you to read up on "homogeneity of variance" 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 28, 2021, 02:46:27 PM

4. You are predicting less variance in Bitcoin in the future. Statistically speaking, that type of prediction is very difficult to pull off. To fully understand this prediction, I would encourage you to read up on "homogeneity of variance"

Ok, so it looks like the Levene Test will be my learning/reading for tonight.  Thanks clarkfan for the direction.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on September 29, 2021, 12:24:56 PM

4. You are predicting less variance in Bitcoin in the future. Statistically speaking, that type of prediction is very difficult to pull off. To fully understand this prediction, I would encourage you to read up on "homogeneity of variance"

Ok, so it looks like the Levene Test will be my learning/reading for tonight.  Thanks clarkfan for the direction.

Without going off of too much of a tangent, homogeneity of variance is a statistical assumption we make regarding normally distributed constructs/variables. Reasonable people making reasonable assumptions are going to assume normally distributed variables to have homogeneity of variance when making predictions about our world. 

Once you start violating this rule, you essentially go into an alternative universe (statistically speaking). In this alternative universe you are more likely to conclude that you found "something" (maybe a black hole?) when it doesn't actually exist. 



Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on September 29, 2021, 03:32:00 PM

4. You are predicting less variance in Bitcoin in the future. Statistically speaking, that type of prediction is very difficult to pull off. To fully understand this prediction, I would encourage you to read up on "homogeneity of variance"

Ok, so it looks like the Levene Test will be my learning/reading for tonight.  Thanks clarkfan for the direction.

Without going off of too much of a tangent, homogeneity of variance is a statistical assumption we make regarding normally distributed constructs/variables. Reasonable people making reasonable assumptions are going to assume normally distributed variables to have homogeneity of variance when making predictions about our world. 

Once you start violating this rule, you essentially go into an alternative universe (statistically speaking). In this alternative universe you are more likely to conclude that you found "something" (maybe a black hole?) when it doesn't actually exist.

Why should we assume that future prices of Bitcoin are normally distributed?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: habanero on September 29, 2021, 04:30:57 PM

Without going off of too much of a tangent, homogeneity of variance is a statistical assumption we make regarding normally distributed constructs/variables. Reasonable people making reasonable assumptions are going to assume normally distributed variables to have homogeneity of variance when making predictions about our world. 

Once you start violating this rule, you essentially go into an alternative universe (statistically speaking). In this alternative universe you are more likely to conclude that you found "something" (maybe a black hole?) when it doesn't actually exist.

On one day during the GFC Goldman Sachs published a note that the daily move in 2y US treasuries were 136 standard deviations (I might remeber the number incorrectly, but it was a botload of sigmas). They obv used it to make the point that stuff isn't really normally distributed in the real world.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 29, 2021, 05:01:57 PM

4. You are predicting less variance in Bitcoin in the future. Statistically speaking, that type of prediction is very difficult to pull off. To fully understand this prediction, I would encourage you to read up on "homogeneity of variance"

Ok, so it looks like the Levene Test will be my learning/reading for tonight.  Thanks clarkfan for the direction.

Without going off of too much of a tangent, homogeneity of variance is a statistical assumption we make regarding normally distributed constructs/variables. Reasonable people making reasonable assumptions are going to assume normally distributed variables to have homogeneity of variance when making predictions about our world. 

Once you start violating this rule, you essentially go into an alternative universe (statistically speaking). In this alternative universe you are more likely to conclude that you found "something" (maybe a black hole?) when it doesn't actually exist.

Why should we assume that future prices of Bitcoin are normally distributed?

Why should we assume anything about Bitcoin and it's future as anything of substance. I mean a coin made as a joke is insanely popular. What's stop edge investors from thinking doge is the best and my new unicorn farts are better.

Banks making vehicle to profit off transactions of something does not give value to something.

I'm mentally prepared to be totally wrong about Bitcoin and Ethereum, but if it's because Doge ends up supplanting them, well that's just not something I can emotionally prepare for:) 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: jojoguy on September 29, 2021, 07:10:45 PM
I have went from dabbling crypto to building a huge amount of excitement for it. I really like more of the Defi side of it. There are a bunch of ways to make money on it and hedge against a bearish market. Anchor Protocol basically has a 20% APY savings account and they also have a borrow/lending system that makes you interest in both directions, albeit there is a little risk involved. Staking is great too.

I bought a Helium(HNT) miner last week to make passive income on. So far it has been active for a couple of days. The wait was a headache. I had to wait two-three days for it to sync with the blockchain. The amount mined hasn`t been much so far because of there not being too many hotspots in a couple of miles radius of me. So, I ordered an outdoor antenna, that will soon arrive, to be able to pick up more hotspots a further away. Once I start building up more coins I will be able to stake those as well to get 8% APR.

I just really enjoy the vast ideas and projects within the crypto market. It is not just about buying and selling coins based on the price of the coin itself. You can put the coins to work to make you even more. I am taking a look at Pancake Swap and their daily auto-compounding as well as a newer one called Kogecoin. I don`t want to put too much into either, but both of those have such huge potential. Koge is newer than Pancake, but could possibly blow up in value.

I am not surprised that many from the FIRE movement are drawn to it. It seems good to mess around with if you want to risk a small amount for big rewards, and the amount of diversity it has.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Psychstache on September 29, 2021, 07:58:39 PM
Koge is newer than Pancake, but could possibly blow up in value.

To each their own, but I don't know how I could write a sentence like this and not feel ridiculous.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on September 30, 2021, 05:36:12 AM


I am not surprised that many from the FIRE movement are drawn to it. It seems good to mess around with if you want to risk a small amount for big rewards, and the amount of diversity it has.

i think this statement is categorically false - a few in the fire movement are drawn to it.  These threads are primarily composed of the same 3-5 people supporting it and a vast majority of people saying really wtf are you doing.

as to your comments on "interest" at 20% this is not even remotely the same as 20% interest on a dollar - the dollar is stable.  your coins fall as much as 80% in days.

I agree, the FIRE community is exceptionally risk averse on average compared to the rest of the population.

Perhaps there are other FIRE communities on the internet where crypto is big, but here the pro-crypto contingency is really just a small handful who post a lot about it.

That's not a criticism from me, I don't hold much of an opinion about crypto, it just doesn't really fit at this time with the demographic here, despite us having a huge proportion of techy folks.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on September 30, 2021, 07:02:26 AM
There are a bunch of ways to make money on it and hedge against a bearish market.

The last bear market that I can remember was in 2008.  Didn't bitcoin become a thing in 2009?  What 'bearish market' are you hedging against?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on September 30, 2021, 08:41:38 AM
I am not surprised that many from the FIRE movement are drawn to it. It seems good to mess around with if you want to risk a small amount for big rewards, and the amount of diversity it has.
Many are drawn to it?  I'm guessing your claim is based on a guess?
Most people I've seen base early retirement around equity investment, not crypto.


Why should we assume anything about Bitcoin and it's future as anything of substance. I mean a coin made as a joke is insanely popular. What's stop edge investors from thinking doge is the best and my new unicorn farts are better.
Market cap counts the price of something times how much is available.  Bitcoin's market cap is 30x that of Dogecoin, so it's like comparing Visa to AMC.  The existence of irrational meme stocks (like AMC) does not by itself mean that stock investing is a bad idea.


Last market crash was in March 2020.  Btc went from 9763 to a bottom of 5336 a loss of 4427 a loss of 45%
Another way to measure is from Feb peak to the low point in March.  By that measure, the S&P 500 dropped 35.6%... and Bitcoin dropped 60.7%.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 30, 2021, 10:10:18 AM


I am not surprised that many from the FIRE movement are drawn to it. It seems good to mess around with if you want to risk a small amount for big rewards, and the amount of diversity it has.

i think this statement is categorically false - a few in the fire movement are drawn to it.  These threads are primarily composed of the same 3-5 people supporting it and a vast majority of people saying really wtf are you doing.

as to your comments on "interest" at 20% this is not even remotely the same as 20% interest on a dollar - the dollar is stable.  your coins fall as much as 80% in days.

I agree, the FIRE community is exceptionally risk averse on average compared to the rest of the population.

Perhaps there are other FIRE communities on the internet where crypto is big, but here the pro-crypto contingency is really just a small handful who post a lot about it.

That's not a criticism from me, I don't hold much of an opinion about crypto, it just doesn't really fit at this time with the demographic here, despite us having a huge proportion of techy folks.

Yep, just looking at this forum as my data points, the pro-crypto cohort around here is real small...like myself and a few other posters is all I've seen.

Also, confirming what Boarder said, I'd advice against looking at crypto as a hedge for stocks.  I've put a lot of time into this and there's a lot of things I love about crypto, but that isn't one of them. 

If crypto was going to be a hedge for something, it would be against inflation of a fiat currency.  Nation states can and do print money, which debases and inflates that currency.  However...

Cryptocurrencies are considered superior by people who are pro-crypto because they have a cap on how many can be put into circulation, so those currencies are protected from inflation via debasement.  Bitcoin is perfectly protected, and it is often compared to gold.  The code for Bitcoin caps the number of coins that can be minted at 21 million.  There are a little over 18 of them minted already.  Gold is similar, there's a finite amount, and the only way to get more is to mine it.  But unlike gold, where we don't actually know how much is left to be mined, we know exactly how much more bitcoin can be mined...and it isn't that much. 

Ethereum has a slightly different code to limit debasement.  They allow the minting of 18 million new coins per year.  So, for the first few years, it will inflate rather quickly.  However, each year, 18 million coins will become a smaller and smaller percent of the total coins in circulation.  So, not as finite as bitcoin, but unlike the dollar, there's a prescribed rule to ensure that over time inflation rate goes down and down and down.  The dollar, on the other hand, is getting debased by a greater and greater amount each year.

This is the main reason that I am pro-crypto...it solves several problems that the world needs solved...
1.  It's a global currency in a world that is now global. 
2.  Even if picked a nation-state backed currency like the dollar, the Euro, or the yuan to be a universal currency, it would still  require us to trust that nation state to
      a) not debase it...which we know won't happen...all nation states are debasing their currency by printing money.
      b) not cease to exist.  History shows us that the rise and fall of empires is a given.  The people who live in the US may continue to thrive if the U.S. empire changed ownership, but it's currency would likely be replaced.  Crypto is not tied to a nation state, so as long as there's internet, bitcoin will still be there. 

The downside of crypto is clear as well...even if it IS on paper a better currency than fiat notes like the dollar, it will only win if people want it to win.  Inferior products sometimes defeat superior products in the marketplace of ideas, and it's possible that it doesn't get mass adopted.  My bet is that it has enough legs to eventually overtake fiat currency, and that it will come to fruition.  This is the only reason a person should buy bitcoin or ethereum IMO. You are speculating markets gradually replacing some of their gold, fiat, and equity reserves with crypto until we reach a new market equilibrium, and that you'll ride the gains of the cryptocurrency as it moves towards this new equilibrium.  

I invest in Bitcoin because it is the most secure cyrpto on the market from a code standpoint and because it has the most trust by the general public.  I view bitcoin as a digital replacement of gold.  It would be SUPER HARD for another crypto to knock off Bitcoin, because Bitcoin doesn't try to be everything to everyone.  From pure security standpoint, good luck writing a code that beats bitcoin. 

I invest in Ethereum, because it's security is nearly as secure as bitcoin from a code standpoint, but it has far more coders developing the platform than does bitcoin.  I view Ethereum as the place where people will actually be doing business, because applications can be build on it easier.  Ethereum has more competition than Bitcoin, because several other cryptos are trying to beat Ethereum as platforms where applications can be build on even better.  Ethereums two biggest competitors are Solana and Cardano.  Solana, for example, has coded itself to make transactions happen faster than Ethereum, but it by definition had to trade a bit on security to do it.  So many feel that this part of the crypto market won't be winner take all.  Instead, there will likely be a few different protocals that stand out depending on what you are looking to do.  I you are creating a business that need to make super fast and cheap transactions and security isn't that important, you might choose solana.  But for an application that requires more security that approaches bitcoin, but is far easier to use than bitcoin, you might choose Ethereum.  It's possible that a single corporation would put different parts of their businesses on different protocals, depending on what each part of their business requires.  This is why I'm not super concerned with Ethereum's competitors.  The things Ethereum does well, it does REALLY well, and I see them exploding in those domains. 

Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on September 30, 2021, 11:46:24 AM


I am not surprised that many from the FIRE movement are drawn to it. It seems good to mess around with if you want to risk a small amount for big rewards, and the amount of diversity it has.

i think this statement is categorically false - a few in the fire movement are drawn to it.  These threads are primarily composed of the same 3-5 people supporting it and a vast majority of people saying really wtf are you doing.

as to your comments on "interest" at 20% this is not even remotely the same as 20% interest on a dollar - the dollar is stable.  your coins fall as much as 80% in days.

I agree, the FIRE community is exceptionally risk averse on average compared to the rest of the population.

Perhaps there are other FIRE communities on the internet where crypto is big, but here the pro-crypto contingency is really just a small handful who post a lot about it.

That's not a criticism from me, I don't hold much of an opinion about crypto, it just doesn't really fit at this time with the demographic here, despite us having a huge proportion of techy folks.

Yep, just looking at this forum as my data points, the pro-crypto cohort around here is real small...like myself and a few other posters is all I've seen.

Also, confirming what Boarder said, I'd advice against looking at crypto as a hedge for stocks.  I've put a lot of time into this and there's a lot of things I love about crypto, but that isn't one of them. 

If crypto was going to be a hedge for something, it would be against inflation of a fiat currency.  Nation states can and do print money, which debases and inflates that currency.  However...

Cryptocurrencies are considered superior by people who are pro-crypto because they have a cap on how many can be put into circulation, so those currencies are protected from inflation via debasement.  Bitcoin is perfectly protected, and it is often compared to gold.  The code for Bitcoin caps the number of coins that can be minted at 21 million.  There are a little over 18 of them minted already.  Gold is similar, there's a finite amount, and the only way to get more is to mine it.  But unlike gold, where we don't actually know how much is left to be mined, we know exactly how much more bitcoin can be mined...and it isn't that much. 

Ethereum has a slightly different code to limit debasement.  They allow the minting of 18 million new coins per year.  So, for the first few years, it will inflate rather quickly.  However, each year, 18 million coins will become a smaller and smaller percent of the total coins in circulation.  So, not as finite as bitcoin, but unlike the dollar, there's a prescribed rule to ensure that over time inflation rate goes down and down and down.  The dollar, on the other hand, is getting debased by a greater and greater amount each year.

This is the main reason that I am pro-crypto...it solves several problems that the world needs solved...
1.  It's a global currency in a world that is now global. 
2.  Even if picked a nation-state backed currency like the dollar, the Euro, or the yuan to be a universal currency, it would still  require us to trust that nation state to
      a) not debase it...which we know won't happen...all nation states are debasing their currency by printing money.
      b) not cease to exist.  History shows us that the rise and fall of empires is a given.  The people who live in the US may continue to thrive if the U.S. empire changed ownership, but it's currency would likely be replaced.  Crypto is not tied to a nation state, so as long as there's internet, bitcoin will still be there. 

The downside of crypto is clear as well...even if it IS on paper a better currency than fiat notes like the dollar, it will only win if people want it to win.  Inferior products sometimes defeat superior products in the marketplace of ideas, and it's possible that it doesn't get mass adopted.  My bet is that it has enough legs to eventually overtake fiat currency, and that it will come to fruition.  This is the only reason a person should buy bitcoin or ethereum IMO. You are speculating markets gradually replacing some of their gold, fiat, and equity reserves with crypto until we reach a new market equilibrium, and that you'll ride the gains of the cryptocurrency as it moves towards this new equilibrium.  

I invest in Bitcoin because it is the most secure cyrpto on the market from a code standpoint and because it has the most trust by the general public.  I view bitcoin as a digital replacement of gold.  It would be SUPER HARD for another crypto to knock off Bitcoin, because Bitcoin doesn't try to be everything to everyone.  From pure security standpoint, good luck writing a code that beats bitcoin. 

I invest in Ethereum, because it's security is nearly as secure as bitcoin from a code standpoint, but it has far more coders developing the platform than does bitcoin.  I view Ethereum as the place where people will actually be doing business, because applications can be build on it easier.  Ethereum has more competition than Bitcoin, because several other cryptos are trying to beat Ethereum as platforms where applications can be build on even better.  Ethereums two biggest competitors are Solana and Cardano.  Solana, for example, has coded itself to make transactions happen faster than Ethereum, but it by definition had to trade a bit on security to do it.  So many feel that this part of the crypto market won't be winner take all.  Instead, there will likely be a few different protocals that stand out depending on what you are looking to do.  I you are creating a business that need to make super fast and cheap transactions and security isn't that important, you might choose solana.  But for an application that requires more security that approaches bitcoin, but is far easier to use than bitcoin, you might choose Ethereum.  It's possible that a single corporation would put different parts of their businesses on different protocals, depending on what each part of their business requires.  This is why I'm not super concerned with Ethereum's competitors.  The things Ethereum does well, it does REALLY well, and I see them exploding in those domains.

I'm highly unlikely to ever be a Bitcoin investor or holder, but I have a question about the bolded.  Isn't this actually a downside to Bitcoin?  Sure, it protects against inflation, as you explained.  But doesn't it also mean that Bitcoin will eventually become almost unusable?  It's not unlike if the US decided to stop making any more currency. Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?  Businesses and people would start seeking out and using Canadian dollars or Euro, or some other currency that would be more stable and more widely accepted, once the supply of USD started dwindling, no?  (That's assuming the US government didn't prevent that; they seem unlikely to interfere and try to force or even encourage the use of Bitcoin, so I doubt there would be any protection on that front.)   Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?

I absolutely could be thinking about this all wrong, and am truly asking from a place of ignorant curiousity--no snark or judgement.  Please explain to me why the hard limit on the number of Bitcoins isn't a bad thing in the longer term. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on September 30, 2021, 12:18:06 PM
I'm highly unlikely to ever be a Bitcoin investor or holder, but I have a question about the bolded.  Isn't this actually a downside to Bitcoin?  Sure, it protects against inflation, as you explained.  But doesn't it also mean that Bitcoin will eventually become almost unusable?  It's not unlike if the US decided to stop making any more currency. Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?  Businesses and people would start seeking out and using Canadian dollars or Euro, or some other currency that would be more stable and more widely accepted, once the supply of USD started dwindling, no?  (That's assuming the US government didn't prevent that; they seem unlikely to interfere and try to force or even encourage the use of Bitcoin, so I doubt there would be any protection on that front.)   Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?

I absolutely could be thinking about this all wrong, and am truly asking from a place of ignorant curiousity--no snark or judgement.  Please explain to me why the hard limit on the number of Bitcoins isn't a bad thing in the longer term.

Your comments are spot on.  Bitcoin is designed to be deflationary.  You don't want a deflating currency for the reasons you mention.  People will tend to horde money instead of spending it, which hurts the economy.   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on September 30, 2021, 12:56:17 PM
I'm highly unlikely to ever be a Bitcoin investor or holder, but I have a question about the bolded.  Isn't this actually a downside to Bitcoin?  Sure, it protects against inflation, as you explained.  But doesn't it also mean that Bitcoin will eventually become almost unusable?  It's not unlike if the US decided to stop making any more currency. Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?  Businesses and people would start seeking out and using Canadian dollars or Euro, or some other currency that would be more stable and more widely accepted, once the supply of USD started dwindling, no?  (That's assuming the US government didn't prevent that; they seem unlikely to interfere and try to force or even encourage the use of Bitcoin, so I doubt there would be any protection on that front.)   Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?

I absolutely could be thinking about this all wrong, and am truly asking from a place of ignorant curiousity--no snark or judgement.  Please explain to me why the hard limit on the number of Bitcoins isn't a bad thing in the longer term.

Your comments are spot on.  Bitcoin is designed to be deflationary.  You don't want a deflating currency for the reasons you mention.  People will tend to horde money instead of spending it, which hurts the economy.

i think we've seen a practical application of block chain thru the tracking of digital art and media that people are selling.  Does this benefit bitcoin - NO b/c bitcoin holds no patents on blockchain so its pretty worthless.  I think there are other practical applications yet to be discovered but again these dont benefit the first coin made.

Bitcoin isn't a functional currency.

The main reason to hold it is that maybe someone else will pay you more money for it at some point in the future.  At the very best it should be considered like a non-dividend paying stock.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on September 30, 2021, 01:00:42 PM
. . . Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?
. . .
Your comments are spot on.  Bitcoin is designed to be deflationary.  You don't want a deflating currency for the reasons you mention.  People will tend to horde money instead of spending it, which hurts the economy.

Villanelle: Won't Bitcoin become worthless due to scarcity ? (which is a bad thing)
Telecaster: Yes, Bitcoin will become very valuable due to scarcity. (which is also a bad thing)

Eh ??



edited for typo + expanded




Title: Re: What do you think of adding a low% of crypto allocation
Post by: maisymouser on September 30, 2021, 01:39:44 PM
but if it becomes the new dollar your company will just be measured in unicorn fartcoins

OK, I was not a crypto person but I'm sold. Selling all my VTSAX to invest in fartcoins, thank you boarder42.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: habanero on September 30, 2021, 02:30:57 PM
If you look at crypto as an asset class you should or shouldn't own you can repeat the excercise for others. Why not own commodities (has outperformed crypto lately even), why not real estate in addition to your own home if you own one? Why not a certain % in precious metals? Or unlisted equity? Bonds get very little love these days despite being one of the key asset classes.

There are a lot of asset classes most folks don't invest in directly, myself included. I have yet have someone explain to me why I should own crypto other than "I think it's gonna go higher 'cuase it has been going higher" It's a purely speculative play. If you bought something as dull as natural gas futures at the start of the year you would be up like 250%. Why is noone talking about natural gas futures? It's been a spectacular run.

You don't need crypto or any other specific asset class to get rich or stay rich. My sister bought some ETH some time ago. She "invested" like 2k USD. I told her that if you get lucky and make 2x or 5x or 10x the return it won't - after tax - really make any meaningful difference to you as you make 120k per year. Its a miniscule play that's not gonna move the needle on anything, but she just refused to listen. She heard it was hot and bought some. I tried explaining to here that it would most likely never make her rich even if returns turned out great %-wise. but that was like talking to a wall.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: joe189man on September 30, 2021, 03:36:05 PM
If you look at crypto as an asset class you should or shouldn't own you can repeat the excercise for others. Why not own commodities (has outperformed crypto lately even), why not real estate in addition to your own home if you own one? Why not a certain % in precious metals? Or unlisted equity? Bonds get very little love these days despite being one of the key asset classes.

There are a lot of asset classes most folks don't invest in directly, myself included. I have yet have someone explain to me why I should own crypto other than "I think it's gonna go higher 'cuase it has been going higher" It's a purely speculative play. If you bought something as dull as natural gas futures at the start of the year you would be up like 250%. Why is noone talking about natural gas futures? It's been a spectacular run.

You don't need crypto or any other specific asset class to get rich or stay rich. My sister bought some ETH some time ago. She "invested" like 2k USD. I told her that if you get lucky and make 2x or 5x or 10x the return it won't - after tax - really make any meaningful difference to you as you make 120k per year. Its a miniscule play that's not gonna move the needle on anything, but she just refused to listen. She heard it was hot and bought some. I tried explaining to here that it would most likely never make her rich even if returns turned out great %-wise. but that was like talking to a wall.

The bolded is what i keep coming back to, if i had bought (or even known about) cardono last fall it could have made ~20x right now, but i would have never put more than $1k into it, so hypothetically thats ~$20k profit,  many folks here get bonuses that large or larger all the time. Like @habanero says its not likely to move the needle much. Especially now that the cheap gains have been made and everyone is talking about crypto. I couldn't imagine bitcoin or ethereum going 20 x again, but i thought the internet was a fad in the late 90s so what do i know.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on September 30, 2021, 03:37:55 PM
If you look at crypto as an asset class you should or shouldn't own you can repeat the excercise for others. Why not own commodities (has outperformed crypto lately even), why not real estate in addition to your own home if you own one? Why not a certain % in precious metals? Or unlisted equity? Bonds get very little love these days despite being one of the key asset classes.
Why do you assume that anyone positive about crypto only looks at crypto ?

There are a lot of asset classes most folks don't invest in directly, myself included. I have yet have someone explain to me why I should own crypto other than "I think it's gonna go higher 'cuase it has been going higher" It's a purely speculative play. If you bought something as dull as natural gas futures at the start of the year you would be up like 250%. Why is noone talking about natural gas futures? It's been a spectacular run.
Who are you talking to ? Have you tried to find out for yourself ? For a more sophisticated case, try: https://www.lynalden.com/invest-in-bitcoin/ (https://www.lynalden.com/invest-in-bitcoin/) and the follow-up articles listed there. You might still disagree with it all but at least you'll have a better understanding of what some see as sound reasoning.

People probably would be talking about Natural Gas Futures if they subscribed to the theory of: "I think it's gonna go higher 'cuase it has been going higher". Maybe they don't. I don't.

You don't need crypto or any other specific asset class to get rich or stay rich. My sister bought some ETH some time ago. She "invested" like 2k USD. I told her that if you get lucky and make 2x or 5x or 10x the return it won't - after tax - really make any meaningful difference to you as you make 120k per year. Its a miniscule play that's not gonna move the needle on anything, but she just refused to listen. She heard it was hot and bought some. I tried explaining to here that it would most likely never make her rich even if returns turned out great %-wise. but that was like talking to a wall.
Yeah, I don't always understand my sister's actions . . . not sure what that tells me about crypto though.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: habanero on September 30, 2021, 04:06:13 PM
Quote

Who are you talking to ? Have you tried to find out for yourself ? For a more sophisticated case, try: https://www.lynalden.com/invest-in-bitcoin/ (https://www.lynalden.com/invest-in-bitcoin/) and the follow-up articles listed there. You might still disagree with it all but at least you'll have a better understanding of what some see as sound reasoning.


I (think) I have an at least fairly decent understanding of the main reasons why some / a lot think it will go to the moon and beyond. It might, or it might not. But given it's an asset class (like commodities) that pays no dividends or has no underlying income it boils down to the "will increase in value" argument otherwise there would be no point in owning it especially as it - at least seems like a - come hell or high water, I'm gonna stick to it thing. I have no idea what the price of bitcoin or any other crypto will be in 10 years, it might be very high and it might be very low. If it's the former there is no force of nature that dictatates it will stay that way, if it's the latter there is nothing that says it will rebound. You could kind of make the same argument for equities, but at least it's an asset class that pays semi-regular income and will scale with the general economy. I doubt many buy crypto hoping for 7% annual real returns. That would be like a slow Wednesday in crypto space.

Fwiw I find gold utterly useless - it barely has any uses other than being valued and scarce and that show has been going for like 5000 years or whatever so it's not like I think anything has to be useful to find widespread assumed value. If I bought X% of my NW in crypto today I might be vastly richer than if I didn't - I don't know. What I know for sure is that I don't need crypto or commodities or bonds or whatever to likely get and stay fairly rich. I could put some % of my NW in crypto but given the volatility it has my position would be small and unless I got very lucky it wouldn't matter that much in the end. If fairly confident in having say 1 million USD in global equities, in crypto  - not so much. Just like if I had some intel Moderna was probably gonna strike gold in 2020 I still wouldn't put 1 million into the bet on it.

Basically I have no need for the off-chance to get very rich very fast. Im fine with slow and steady the tried and tested way.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on September 30, 2021, 04:23:02 PM
. . . Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?
. . .
Your comments are spot on.  Bitcoin is designed to be deflationary.  You don't want a deflating currency for the reasons you mention.  People will tend to horde money instead of spending it, which hurts the economy.

Villanelle: Won't Bitcoin become worthless due to scarcity ? (which is a bad thing)
Telecaster: Yes, Bitcoin will become very valuable due to scarcity. (which is also a bad thing)

Eh ??



edited for typo + expanded

So what is your answer to my question? 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on September 30, 2021, 05:22:05 PM
. . . Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?
. . .
Your comments are spot on.  Bitcoin is designed to be deflationary.  You don't want a deflating currency for the reasons you mention.  People will tend to horde money instead of spending it, which hurts the economy.

Villanelle: Won't Bitcoin become worthless due to scarcity ? (which is a bad thing)
Telecaster: Yes, Bitcoin will become very valuable due to scarcity. (which is also a bad thing)

Eh ??



edited for typo + expanded

So what is your answer to my question?
Not sure I have a particularly good answer. I was just querying the logic of the response.

If pushed, I'd say my gut-feeling is that such ongoing losses should be fairly insignificant in the scheme of things / compared to many other risks.
There's plenty of tales about people throwing away laptops 10 years ago with 100 'worthless' Bitcoins on them. However, I doubt many would be so careless today. My assumption is that people are generally careful with, and seek to protect, their valuables.
The total value of Bitcoin is currently around $800 billion. You'd need to misplace a lot of value to undermine any usefulness it has as a medium of exchange even now.
If it gets to the extreme point that everybody has some Bitcoin and we all use it every day and get a bit casual with it and regularly lose some, the total value will be waaaay higher and the losses proportionally smaller.

My main interest in Bitcoin is as a store of value, and in that context any such losses would, presumably, increase the value. The 'coins' would still exist but they would be out of circulation, thus limiting supply.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on September 30, 2021, 06:49:07 PM
. . . Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?
. . .
Your comments are spot on.  Bitcoin is designed to be deflationary.  You don't want a deflating currency for the reasons you mention.  People will tend to horde money instead of spending it, which hurts the economy.

Villanelle: Won't Bitcoin become worthless due to scarcity ? (which is a bad thing)
Telecaster: Yes, Bitcoin will become very valuable due to scarcity. (which is also a bad thing)

Eh ??



edited for typo + expanded

So what is your answer to my question?
Not sure I have a particularly good answer. I was just querying the logic of the response.

If pushed, I'd say my gut-feeling is that such ongoing losses should be fairly insignificant in the scheme of things / compared to many other risks.
There's plenty of tales about people throwing away laptops 10 years ago with 100 'worthless' Bitcoins on them. However, I doubt many would be so careless today. My assumption is that people are generally careful with, and seek to protect, their valuables.
The total value of Bitcoin is currently around $800 billion. You'd need to misplace a lot of value to undermine any usefulness it has as a medium of exchange even now.
If it gets to the extreme point that everybody has some Bitcoin and we all use it every day and get a bit casual with it and regularly lose some, the total value will be waaaay higher and the losses proportionally smaller.

My main interest in Bitcoin is as a store of value, and in that context any such losses would, presumably, increase the value. The 'coins' would still exist but they would be out of circulation, thus limiting supply.

But if there are only 50,000 and then 25,000 and then 1,000 Bitcoin left in circulation, how usable really are they?  How many places are going to accept this tiny little currency?  I now bitcoins can be spent fractionally, and maybe that's part of the answer--it won't matter if there are only 1000 of them left in circulation because that will actually 1,000,000,000 .0001th bit coins, then it spend the same as 1,000,000,000 bitcoins, as long as the value inflates? 

But regarding the second bolded, it seems to miss the entire point of my question.  It won't increase the value if everyone stops taking bitcoin because it becomes some fringe currency (a bit like it was initially, but on the way down instead of the way up) that almost no one has.  If almost no one has it, stores will stop taking it, and it stores stop taking it, it has almost no value at all, and if it has almost no value, more stores ill stop taking it, and...

And I'm not sure I buy the "it's valuable so people are going to take good care of it" rationale.  Gold and diamond jewelry is valuable, but people lose it.  Paper US currency is valuable but it gets lot and burned in a house fire and left in a coat pocket of a coat that gets thrown away. 

Imagine there is only one bitcoin left.  How would that increase its value, instead of making its value basically $0?  At that point, it's just some random bit of code (or a number generated by). It only has value if people are willing to exchange it for goods or a different currency.  And why would they do that if it's just an obscure solution to an equation that was all the rage in 2020?  I guess maybe it would have some value as a NFT to someone with a nostalgia for the 2020's? 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on September 30, 2021, 07:21:23 PM
Hear that everyone?  If stores stop taking bitcoin, it's value will be worthless!  Except, stores never took it in the first place and it's value is $43500 per bitcoin.  Hrrmmmmm.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on September 30, 2021, 07:32:32 PM
Store of exactly what value. It consumes massive amounts of energy and has no utility as a currency or way to be utilized as a commodity. So it's a store of a perception that it has value to those who think it does?

Gold is a store of value but is used in jewelry and computing. What exactly is Bitcoin used for.
The price of gold is primarily driven by the same intangible perception of it as a store of value. What exactly is all the gold piled up in vaults used for ?

To be clear, I am a long way from being a Bitcoin-to-the-moon crypto fanatic or expert. I do think there is some potential value there but it's not immediately clear. It's very easy to conclude from a casual glance is that it's "just a bunch of worthless bytes" and that's where most people seem to stop.

I recommend the articles I quoted above written by someone way smarter and more knowledgeable than me for anyone that genuinely wants to understand why some think it might have value.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on September 30, 2021, 07:42:20 PM
Hear that everyone?  If stores stop taking bitcoin, it's value will be worthless!  Except, stores never took it in the first place and it's value is $43500 per bitcoin.  Hrrmmmmm.

But isn't that value based on the expectation that it *will* take over as a useful currency? It's not worth $43500 because of anything it actually does at the moment, it's worth $43500 because of faith in what it *will* become.

So if it does become a ubiquitous currency, then stops being useful as a currency due to loss of coins over time, then where will the value come from.

I know you like to give a lot of sarcastic responses in crypto threads because you think the naysayers just don't get it. But the conversation in this thread has been interesting and a lot of valid questions are being addressed.

Also, I'm not anti crypto, so I'm asking for you to legitimately answer and participate, because I think a lot of us here would like to better understand.

Or you can stick with the sarcasm because this is the internet and you don't owe anyone anything, if that's what you want.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on September 30, 2021, 08:00:55 PM
I'm happy to have serious discussions on crypto all day long.  Just not on this forum where the level of discussion seems to be 'shops won't take it, it'll never be a currency!' 'tulip bulbs!' 'Greater fool!' etc etc.  The starting point for discussion around crypto on this forum is just not worth the effort.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on September 30, 2021, 08:01:44 PM
. . . Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?
. . .
Your comments are spot on.  Bitcoin is designed to be deflationary.  You don't want a deflating currency for the reasons you mention.  People will tend to horde money instead of spending it, which hurts the economy.

Villanelle: Won't Bitcoin become worthless due to scarcity ? (which is a bad thing)
Telecaster: Yes, Bitcoin will become very valuable due to scarcity. (which is also a bad thing)

Eh ??



edited for typo + expanded

So what is your answer to my question?
Not sure I have a particularly good answer. I was just querying the logic of the response.

If pushed, I'd say my gut-feeling is that such ongoing losses should be fairly insignificant in the scheme of things / compared to many other risks.
There's plenty of tales about people throwing away laptops 10 years ago with 100 'worthless' Bitcoins on them. However, I doubt many would be so careless today. My assumption is that people are generally careful with, and seek to protect, their valuables.
The total value of Bitcoin is currently around $800 billion. You'd need to misplace a lot of value to undermine any usefulness it has as a medium of exchange even now.
If it gets to the extreme point that everybody has some Bitcoin and we all use it every day and get a bit casual with it and regularly lose some, the total value will be waaaay higher and the losses proportionally smaller.

My main interest in Bitcoin is as a store of value, and in that context any such losses would, presumably, increase the value. The 'coins' would still exist but they would be out of circulation, thus limiting supply.

But if there are only 50,000 and then 25,000 and then 1,000 Bitcoin left in circulation, how usable really are they?  How many places are going to accept this tiny little currency?  I now bitcoins can be spent fractionally, and maybe that's part of the answer--it won't matter if there are only 1000 of them left in circulation because that will actually 1,000,000,000 .0001th bit coins, then it spend the same as 1,000,000,000 bitcoins, as long as the value inflates? 

But regarding the second bolded, it seems to miss the entire point of my question.  It won't increase the value if everyone stops taking bitcoin because it becomes some fringe currency (a bit like it was initially, but on the way down instead of the way up) that almost no one has.  If almost no one has it, stores will stop taking it, and it stores stop taking it, it has almost no value at all, and if it has almost no value, more stores ill stop taking it, and...

And I'm not sure I buy the "it's valuable so people are going to take good care of it" rationale.  Gold and diamond jewelry is valuable, but people lose it.  Paper US currency is valuable but it gets lot and burned in a house fire and left in a coat pocket of a coat that gets thrown away. 

Imagine there is only one bitcoin left.  How would that increase its value, instead of making its value basically $0?  At that point, it's just some random bit of code (or a number generated by). It only has value if people are willing to exchange it for goods or a different currency.  And why would they do that if it's just an obscure solution to an equation that was all the rage in 2020?  I guess maybe it would have some value as a NFT to someone with a nostalgia for the 2020's?
How much are you imagining will be lost ? And at what point would it become 'fringe' ?
1% loss per year ? That would be $8 billion per year down the drain at today's prices - seems rather careless.
Even with that attrition rate, 60% of BTC would still be un-lost after 50 years. Is it 'fringe' yet ?

As I said, I'm not sure I have a good answer. It's not something I'd previously given any thought to.
On the face of it, I don't think I'll be giving much more thought to it in the future. It seems like a non-issue.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on September 30, 2021, 08:43:09 PM
I'm happy to have serious discussions on crypto all day long.  Just not on this forum where the level of discussion seems to be 'shops won't take it, it'll never be a currency!' 'tulip bulbs!' 'Greater fool!' etc etc.  The starting point for discussion around crypto on this forum is just not worth the effort.

So sticking to unhelpful sarcasm it is.

Cool. You do you.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on September 30, 2021, 08:45:52 PM
I'm happy to have serious discussions on crypto all day long.  Just not on this forum where the level of discussion seems to be 'shops won't take it, it'll never be a currency!' 'tulip bulbs!' 'Greater fool!' etc etc.  The starting point for discussion around crypto on this forum is just not worth the effort.

So sticking to unhelpful sarcasm it is.

Cool. You do you.

Yes that's the plan.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on September 30, 2021, 08:57:49 PM
To be fair, I think the question of whether bitcoin will be a currency is answered, and has been for about 5 years now. It won't. It can be digital gold maybe, though. I'm not interested in that, just like I'm not interested in regular gold, but people can do whatever they want, of course.

Nation states gonna nation state, so they'll just ban crypto/release their own. Controlling all the guns and infrastructure means you call the shots, so if/when anything gets mainstream enough that it's a threat to the dollar/euro/etc, that's the end of it. China already pulled the plug, I'd imagine others will follow in the next few years.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on September 30, 2021, 09:02:03 PM
Here is another opinion. It might not be worth much, but here it is.

1. People are making money on appreciating Bitcoin. However, they are not paying income taxes.

2. The US government wants to collect on the capital gains of Bitcoin.

3. The US government will start to put restrictions on buying/selling/trading bitcoin in an effort to collect capital gains.

4. The market of holders in bitcoin will interpret this as a threat to the growth and ceiling of Bitcoin.

5. Because Bitcoin is mostly based on speculation, trust and price will fall 50%-90% within 6 months of the first US government restriction. Yes, I understand the technology make sense. However, when people are scared, it really doesn't matter.

I don't really care either way.

I appreciate the few willing to allocate 40% to crypto when they have a near or above 1 million portfolio. It allows the opportunity for an apples to apples conversation. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on September 30, 2021, 09:28:09 PM
Store of exactly what value. It consumes massive amounts of energy and has no utility as a currency or way to be utilized as a commodity. So it's a store of a perception that it has value to those who think it does?

Gold is a store of value but is used in jewelry and computing. What exactly is Bitcoin used for.
The price of gold is primarily driven by the same intangible perception of it as a store of value. What exactly is all the gold piled up in vaults used for ?

To be clear, I am a long way from being a Bitcoin-to-the-moon crypto fanatic or expert. I do think there is some potential value there but it's not immediately clear. It's very easy to conclude from a casual glance is that it's "just a bunch of worthless bytes" and that's where most people seem to stop.

I recommend the articles I quoted above written by someone way smarter and more knowledgeable than me for anyone that genuinely wants to understand why some think it might have value.

Gold was used as currency accepted world wide for centuries. Wars were fought over it. It's useful in electronics today it's utilized to make jewelry.

Bitcoin has no utility no use as currency and is just being accepted as a store of value by a frenzy of people who mostly think their getting rich and assume they'll get richer
Yes, it was. Yes, they were. Yes, some of it is but you seem to have missed the 'thousands of tons piled up in vaults' part - that's not useful in electronics nor is it utilised in jewellery.
Gold has a tremendous history and it probably has a good future but it's price today has little to do with electronics and jewellery.

Oh, ok . . .
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 01, 2021, 06:36:00 AM

I'm highly unlikely to ever be a Bitcoin investor or holder, but I have a question about the bolded.  Isn't this actually a downside to Bitcoin?  Sure, it protects against inflation, as you explained.  But doesn't it also mean that Bitcoin will eventually become almost unusable?  It's not unlike if the US decided to stop making any more currency. Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?  Businesses and people would start seeking out and using Canadian dollars or Euro, or some other currency that would be more stable and more widely accepted, once the supply of USD started dwindling, no?  (That's assuming the US government didn't prevent that; they seem unlikely to interfere and try to force or even encourage the use of Bitcoin, so I doubt there would be any protection on that front.)   Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?

I absolutely could be thinking about this all wrong, and am truly asking from a place of ignorant curiousity--no snark or judgement.  Please explain to me why the hard limit on the number of Bitcoins isn't a bad thing in the longer term.

Hi Villanelle, fair question.  I am not concerned about lost coins affecting the utility of the supply, this was taken into account when the code was written.  In total, there will be 22 million coins made, but a bitcoin is not the smallest denomination of the coin.  Each coin is divided into 100 million base pieces, called Satoshi's (The founder of Bitcoin goes by the alias of Satoshi Yakamoto). So in total, there are about 2.2 quadrillion base units of bitcoin for potential circulation. 

Let's assume that an absurdly large amount of bitcoin gets lost, say 50% of the supply.  Well, there would still be 1.1 quadrillion Satoshi's in circulation.  Now let's keep with the toughest hypothetical scenarios possible, just to really pressure test bitcoins utility, and say that in 100 years we are a multiplanetary universe of 25 billion people, and we'll assume that 100% of them will be using bitcoin.  And for kicks we will assume that no one owns any other assets, no property, no gold, other cryptos or fiat currency, treasuries, stocks, etc...just bitcoin.  That would allow each of the 25 billion men, women, and babies in the universe to have 44,000 Satoshi's. 

Also, I think it's important that to understand that most of the coins that will ever be lost have likely already been lost.  People lost coins in the early days because a) they were worth almost nothing, and b) wallets and storage measures were in their infancy.  I don't have a way to track this, but I suspect that even 12 years in, the rate of coin loss is miniscule compared to what it was even 5 years ago. 

Bitcoin still has some tests to pass in order to gain permanent adoption on a large scale, but I personally wouldn't include coin loss as one of them. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 01, 2021, 08:38:06 AM
Hear that everyone?  If stores stop taking bitcoin, it's value will be worthless!  Except, stores never took it in the first place and it's value is $43500 per bitcoin.  Hrrmmmmm.

I'm happy to have serious discussions on crypto all day long.  Just not on this forum where the level of discussion seems to be 'shops won't take it, it'll never be a currency!' 'tulip bulbs!' 'Greater fool!' etc etc.  The starting point for discussion around crypto on this forum is just not worth the effort.

That is a strawman argument which you've repeated across two posts.  Nobody else claimed "stores stop taking bitcoin" before your first post, and nobody said "shops won't take it" until your second post.  You are creating arguments nobody else brought up, then arguing with yourself.  Why not respond to points people actually brought up?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 01, 2021, 09:00:45 AM
I'LL admit that I thought I'd missed the boat when Bitcoin declined so much in early 2018. Couldn't have imagined the kind of rebound we've had over the last year.

I spend entirely too much head space thinking about it. If long-term financial goals require leaving things alone, the volatility of crypto- seems to motivate kind of the opposite of that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 01, 2021, 09:17:21 AM
I'LL admit that I thought I'd missed the boat when Bitcoin declined so much in early 2018. Couldn't have imagined the kind of rebound we've had over the last year.

I spend entirely too much head space thinking about it. If long-term financial goals require leaving things alone, the volatility of crypto- seems to motivate kind of the opposite of that.

This is the root of the issue with discussions around this on a forum like this. We quickly shutdown discussions around individual stocks for basically the same reason. I don't see how one can retire relying on Bitcoin given it's history and feel secure in that retirement. As to the original point of this post. A small amount of crypto in a portfolio is unlikely to do much harm or much good for that matter.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 01, 2021, 09:50:54 AM
Hear that everyone?  If stores stop taking bitcoin, it's value will be worthless!  Except, stores never took it in the first place and it's value is $43500 per bitcoin.  Hrrmmmmm.

I'm happy to have serious discussions on crypto all day long.  Just not on this forum where the level of discussion seems to be 'shops won't take it, it'll never be a currency!' 'tulip bulbs!' 'Greater fool!' etc etc.  The starting point for discussion around crypto on this forum is just not worth the effort.


That is a strawman argument which you've repeated across two posts.  Nobody else claimed "stores stop taking bitcoin" before your first post, and nobody said "shops won't take it" until your second post.  You are creating arguments nobody else brought up, then arguing with yourself.  Why not respond to points people actually brought up?

I'd just let Juan's comments ride.  Juan already literally stated yesterday or the day before that his intention is to just complain on this thread, and not to add valuable contributions.  I don't understand using life energy this way, but Juan has certainly been true to his word:)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on October 01, 2021, 10:09:51 AM
I'LL admit that I thought I'd missed the boat when Bitcoin declined so much in early 2018. Couldn't have imagined the kind of rebound we've had over the last year.

I spend entirely too much head space thinking about it. If long-term financial goals require leaving things alone, the volatility of crypto- seems to motivate kind of the opposite of that.

This is the root of the issue with discussions around this on a forum like this. We quickly shutdown discussions around individual stocks for basically the same reason. I don't see how one can retire relying on Bitcoin given it's history and feel secure in that retirement. As to the original point of this post. A small amount of crypto in a portfolio is unlikely to do much harm or much good for that matter.

Agreed. It is a very similar argument to picking a single stock. However, you need to add in extreme volatility and speculation. For the average MMM investor, it's unnecessary.

Bitcoin is a great "investment" for people who have very little invested and need a home run. This needs to work because it's their only chance. They spend alot of time consuming information that supports their decision (confirmation bias). It becomes part of their identity. They consider themselves to be an "insider" of special information that other people simply just don't understand.

The above description of bitcoin owners does not apply to everyone. However, based on my personal experience, this is what I have witnessed.

 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on October 01, 2021, 12:44:59 PM
Hear that everyone?  If stores stop taking bitcoin, it's value will be worthless!  Except, stores never took it in the first place and it's value is $43500 per bitcoin.  Hrrmmmmm.

Huh.  I'm not sure where you live, but stores near me absolutely do take bitcoin.  Not all, but certainly some.  Yes, generally not directly, but they are still ultimately paid in bitcoin for a transaction.

I use "store" as a lazy stand-in for "any purchase transaction". I didn't think I needed to spell that out, but it seems I was wrong.  So... if stores, home sellers, coffee shops, restaurants, car sellers, online retailers, service providers, in-app purchases, travel companies, taxis, education providers,  etc., stop taking Bitcoin.... Is that better?

I notice you don't answer my actual question, either.  Doesn't the limited number of the 'currency' that will ever be available, and the obvious attrition that will happen to reduce that number, mean that eventually it will be so rare that no one will bother accepting it for any kind of payment, and it will then lose all value other than perhaps to digital antiques collectors? 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on October 01, 2021, 01:01:37 PM

I'm highly unlikely to ever be a Bitcoin investor or holder, but I have a question about the bolded.  Isn't this actually a downside to Bitcoin?  Sure, it protects against inflation, as you explained.  But doesn't it also mean that Bitcoin will eventually become almost unusable?  It's not unlike if the US decided to stop making any more currency. Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?  Businesses and people would start seeking out and using Canadian dollars or Euro, or some other currency that would be more stable and more widely accepted, once the supply of USD started dwindling, no?  (That's assuming the US government didn't prevent that; they seem unlikely to interfere and try to force or even encourage the use of Bitcoin, so I doubt there would be any protection on that front.)   Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?

I absolutely could be thinking about this all wrong, and am truly asking from a place of ignorant curiousity--no snark or judgement.  Please explain to me why the hard limit on the number of Bitcoins isn't a bad thing in the longer term.

Hi Villanelle, fair question.  I am not concerned about lost coins affecting the utility of the supply, this was taken into account when the code was written.  In total, there will be 22 million coins made, but a bitcoin is not the smallest denomination of the coin.  Each coin is divided into 100 million base pieces, called Satoshi's (The founder of Bitcoin goes by the alias of Satoshi Yakamoto). So in total, there are about 2.2 quadrillion base units of bitcoin for potential circulation. 

Let's assume that an absurdly large amount of bitcoin gets lost, say 50% of the supply.  Well, there would still be 1.1 quadrillion Satoshi's in circulation.  Now let's keep with the toughest hypothetical scenarios possible, just to really pressure test bitcoins utility, and say that in 100 years we are a multiplanetary universe of 25 billion people, and we'll assume that 100% of them will be using bitcoin.  And for kicks we will assume that no one owns any other assets, no property, no gold, other cryptos or fiat currency, treasuries, stocks, etc...just bitcoin.  That would allow each of the 25 billion men, women, and babies in the universe to have 44,000 Satoshi's. 

Also, I think it's important that to understand that most of the coins that will ever be lost have likely already been lost.  People lost coins in the early days because a) they were worth almost nothing, and b) wallets and storage measures were in their infancy.  I don't have a way to track this, but I suspect that even 12 years in, the rate of coin loss is miniscule compared to what it was even 5 years ago. 

Bitcoin still has some tests to pass in order to gain permanent adoption on a large scale, but I personally wouldn't include coin loss as one of them.


Thanks for answering.  I disagree that most of the coins that will be lost are already lost.  I suspect the overall rate of loss will be lower, but people lose diamond rings all the time.  They lose paper currency, and with it the inherent value, all the time.  And they get locked out of accounts because they forgot the password or someone dies and doesn't leave the password info anywhere.  (With more typical accounts, a lost password probably doesn't matter as one can provide proper documentation to a bank, investment firm, etc., and be granted access.  Maybe I'm wrong--tell me if I am--but I don't think that applies to most methods of storing Bitcoin.) 

So if people lose other things of significant value, I'm not sure what Bitcoin would be much different, though clearly it's not quite the same as coming home from a day at the beach and realizing your $20,000 ring is gone.  Bitcoin is certainly more difficult to lose, but I think there are still plenty of plausible ways for coins or parts of coins to be lost. 

I can't even predict the rate at which that will happen, but logic suggests to me that when there is the most bitcoin in circulation, it will be at its most accepted (as a payment) and thereofer the easiest to spend.  But in a non-linear way, as it starts to dwindle in amount-available, fewer places (again, using "place" very loosely to mean 'anyone accepting payment for anything') will bother accepting it and as fewer places accept it, fewer people will want to hold it because it is more difficult to spin, and the spiral will reenforce itself until it is essentially dead.

But maybe the number of coin-shares, along with a relatively low rate of loss, means that the spiral won't get any momentum for 200 years, or some other big number, and it won't really matter.  That certainly could be the answer to my question. 

Once again, I will say that I'm truly coming at this from a place of curiosity, not trying to 'own the Bitcoiners'.  All the defensive, sarcastic responses (yours excluded, as it was neither of those things, to be clear!) certainly don't help make it look legit and less, well, dare I say... Tulip Bulby.  It certainly looks like, 'I don't have an answer, or don't understand enough to have and articulate an answer, so I'm going to claim you aren't work my time and run off in a huff, before my ignorance becomes crustal clear.'
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 01, 2021, 04:02:16 PM
I'm happy to have serious discussions on crypto all day long.  Just not on this forum where the level of discussion seems to be 'shops won't take it, it'll never be a currency!' 'tulip bulbs!' 'Greater fool!' etc etc.  The starting point for discussion around crypto on this forum is just not worth the effort.

I realized this years ago.  That's why I don't get involved in these discussions.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on October 01, 2021, 05:31:33 PM
I'm happy to have serious discussions on crypto all day long.  Just not on this forum where the level of discussion seems to be 'shops won't take it, it'll never be a currency!' 'tulip bulbs!' 'Greater fool!' etc etc.  The starting point for discussion around crypto on this forum is just not worth the effort.

I realized this years ago.  That's why I don't get involved in these discussions.

I'm curious if part of the apparent consensus on cryptocurrency on this forum is driven by the same phenomenon. Social media tends to exaggerate the ratio in differences in opinion on many controversial subjects. Over time people who find themselves in even the modest minority view (say 40/60) tend to drop out of discussions. So a view held by say two out of three people in a group can end up looking like the view held by an overwhelming majority.

I know I used to be much more active in cryptocurrency threads. (Not that I thought they were something people should invest in, but I think they do solve very really problems with current means of payment. I used to actually buy things with bitcoin before the transaction fees got high.)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 01, 2021, 05:38:41 PM
I'm happy to have serious discussions on crypto all day long.  Just not on this forum where the level of discussion seems to be 'shops won't take it, it'll never be a currency!' 'tulip bulbs!' 'Greater fool!' etc etc.  The starting point for discussion around crypto on this forum is just not worth the effort.

I realized this years ago.  That's why I don't get involved in these discussions.

I'm curious if part of the apparent consensus on cryptocurrency on this forum is driven by the same phenomenon. Social media tends to exaggerate the ratio in differences in opinion on many controversial subjects. Over time people who find themselves in even the modest minority view (say 40/60) tend to drop out of discussions. So a view held by say two out of three people in a group can end up looking like the view held by an overwhelming majority.

I know I used to be much more active in cryptocurrency threads. (Not that I thought they were something people should invest in, but I think they do solve very really problems with current means of payment. I used to actually buy things with bitcoin before the transaction fees got high.)

As I've stated many times in this thread I believe Blockchain has uses but Bitcoin isn't one for the exact reason you just stated. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: jojoguy on October 02, 2021, 12:09:22 AM
Koge is newer than Pancake, but could possibly blow up in value.

To each their own, but I don't know how I could write a sentence like this and not feel ridiculous.

Mainly because in the last several months I have been spreading a little money broadly into some of these and they have been very profitable for me. I have no reason to feel ridiculous. I am not putting all my eggs into one basket.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 02, 2021, 08:44:39 AM

I'm highly unlikely to ever be a Bitcoin investor or holder, but I have a question about the bolded.  Isn't this actually a downside to Bitcoin?  Sure, it protects against inflation, as you explained.  But doesn't it also mean that Bitcoin will eventually become almost unusable?  It's not unlike if the US decided to stop making any more currency. Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?  Businesses and people would start seeking out and using Canadian dollars or Euro, or some other currency that would be more stable and more widely accepted, once the supply of USD started dwindling, no?  (That's assuming the US government didn't prevent that; they seem unlikely to interfere and try to force or even encourage the use of Bitcoin, so I doubt there would be any protection on that front.)   Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?

I absolutely could be thinking about this all wrong, and am truly asking from a place of ignorant curiousity--no snark or judgement.  Please explain to me why the hard limit on the number of Bitcoins isn't a bad thing in the longer term.

Hi Villanelle, fair question.  I am not concerned about lost coins affecting the utility of the supply, this was taken into account when the code was written.  In total, there will be 22 million coins made, but a bitcoin is not the smallest denomination of the coin.  Each coin is divided into 100 million base pieces, called Satoshi's (The founder of Bitcoin goes by the alias of Satoshi Yakamoto). So in total, there are about 2.2 quadrillion base units of bitcoin for potential circulation. 

Let's assume that an absurdly large amount of bitcoin gets lost, say 50% of the supply.  Well, there would still be 1.1 quadrillion Satoshi's in circulation.  Now let's keep with the toughest hypothetical scenarios possible, just to really pressure test bitcoins utility, and say that in 100 years we are a multiplanetary universe of 25 billion people, and we'll assume that 100% of them will be using bitcoin.  And for kicks we will assume that no one owns any other assets, no property, no gold, other cryptos or fiat currency, treasuries, stocks, etc...just bitcoin.  That would allow each of the 25 billion men, women, and babies in the universe to have 44,000 Satoshi's. 

Also, I think it's important that to understand that most of the coins that will ever be lost have likely already been lost.  People lost coins in the early days because a) they were worth almost nothing, and b) wallets and storage measures were in their infancy.  I don't have a way to track this, but I suspect that even 12 years in, the rate of coin loss is miniscule compared to what it was even 5 years ago. 

Bitcoin still has some tests to pass in order to gain permanent adoption on a large scale, but I personally wouldn't include coin loss as one of them.


Thanks for answering.  I disagree that most of the coins that will be lost are already lost.  I suspect the overall rate of loss will be lower, but people lose diamond rings all the time.  They lose paper currency, and with it the inherent value, all the time.  And they get locked out of accounts because they forgot the password or someone dies and doesn't leave the password info anywhere.  (With more typical accounts, a lost password probably doesn't matter as one can provide proper documentation to a bank, investment firm, etc., and be granted access.  Maybe I'm wrong--tell me if I am--but I don't think that applies to most methods of storing Bitcoin.) 

So if people lose other things of significant value, I'm not sure what Bitcoin would be much different, though clearly it's not quite the same as coming home from a day at the beach and realizing your $20,000 ring is gone.  Bitcoin is certainly more difficult to lose, but I think there are still plenty of plausible ways for coins or parts of coins to be lost. 

I can't even predict the rate at which that will happen, but logic suggests to me that when there is the most bitcoin in circulation, it will be at its most accepted (as a payment) and thereofer the easiest to spend.  But in a non-linear way, as it starts to dwindle in amount-available, fewer places (again, using "place" very loosely to mean 'anyone accepting payment for anything') will bother accepting it and as fewer places accept it, fewer people will want to hold it because it is more difficult to spin, and the spiral will reenforce itself until it is essentially dead.

But maybe the number of coin-shares, along with a relatively low rate of loss, means that the spiral won't get any momentum for 200 years, or some other big number, and it won't really matter.  That certainly could be the answer to my question. 

Once again, I will say that I'm truly coming at this from a place of curiosity, not trying to 'own the Bitcoiners'.  All the defensive, sarcastic responses (yours excluded, as it was neither of those things, to be clear!) certainly don't help make it look legit and less, well, dare I say... Tulip Bulby.  It certainly looks like, 'I don't have an answer, or don't understand enough to have and articulate an answer, so I'm going to claim you aren't work my time and run off in a huff, before my ignorance becomes crustal clear.'

If you found any of my responses sarcastic please just overlook it, that wasn't the intention and I stand by the actual content.
Full marks for the irony by the way - your complaint about sarcasm is extremely sarcastic :-)


A search for "bitcoin lost coins" brings up the following. This is just a random list of the first few relevant articles. I found nothing that echoed your concern.

The clearest statement comes from Investopedia:
Negligible Broader Impact
For users who misplace a wallet or key, the process can be overwhelmingly frustrating. However, the misplacement and potential loss of 20% of all BTC tokens should have little effect on the broader cryptocurrency industry. Bitcoin is easily split into very small denominations, unlike fiat currency. This allows for loss of a sizable quantity of BTC without an overall impact on the currency itself. Even given that miners are approaching the final BTC, the rate of loss of tokens can continue for years without there being any sort of impact on the functionality of the coin. Indeed, even if there were very few individual tokens, the protocol for how BTC can be divided could be adjusted to facilitate its continued functioning. Of course, this doesn't help those people who have lost their tokens.


https://www.investopedia.com/news/20-all-btc-lost-unrecoverable-study-shows/ (https://www.investopedia.com/news/20-all-btc-lost-unrecoverable-study-shows/)
https://beincrypto.com/bitcoin-worth-140-billion-lost-says-uk-council/
https://river.com/learn/what-happens-to-lost-bitcoin/ (https://river.com/learn/what-happens-to-lost-bitcoin/)
https://cointelegraph.com/news/up-to-four-million-bitcoins-gone-forever (https://cointelegraph.com/news/up-to-four-million-bitcoins-gone-forever)
https://www.nytimes.com/2021/01/13/business/tens-of-billions-worth-of-bitcoin-have-been-locked-by-people-who-forgot-their-key.html (https://www.nytimes.com/2021/01/13/business/tens-of-billions-worth-of-bitcoin-have-been-locked-by-people-who-forgot-their-key.html)
https://www.wired.com/story/wired-lost-bitcoin/ (https://www.wired.com/story/wired-lost-bitcoin/)

Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on October 02, 2021, 10:36:46 AM

I'm highly unlikely to ever be a Bitcoin investor or holder, but I have a question about the bolded.  Isn't this actually a downside to Bitcoin?  Sure, it protects against inflation, as you explained.  But doesn't it also mean that Bitcoin will eventually become almost unusable?  It's not unlike if the US decided to stop making any more currency. Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?  Businesses and people would start seeking out and using Canadian dollars or Euro, or some other currency that would be more stable and more widely accepted, once the supply of USD started dwindling, no?  (That's assuming the US government didn't prevent that; they seem unlikely to interfere and try to force or even encourage the use of Bitcoin, so I doubt there would be any protection on that front.)   Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?

I absolutely could be thinking about this all wrong, and am truly asking from a place of ignorant curiousity--no snark or judgement.  Please explain to me why the hard limit on the number of Bitcoins isn't a bad thing in the longer term.

Hi Villanelle, fair question.  I am not concerned about lost coins affecting the utility of the supply, this was taken into account when the code was written.  In total, there will be 22 million coins made, but a bitcoin is not the smallest denomination of the coin.  Each coin is divided into 100 million base pieces, called Satoshi's (The founder of Bitcoin goes by the alias of Satoshi Yakamoto). So in total, there are about 2.2 quadrillion base units of bitcoin for potential circulation. 

Let's assume that an absurdly large amount of bitcoin gets lost, say 50% of the supply.  Well, there would still be 1.1 quadrillion Satoshi's in circulation.  Now let's keep with the toughest hypothetical scenarios possible, just to really pressure test bitcoins utility, and say that in 100 years we are a multiplanetary universe of 25 billion people, and we'll assume that 100% of them will be using bitcoin.  And for kicks we will assume that no one owns any other assets, no property, no gold, other cryptos or fiat currency, treasuries, stocks, etc...just bitcoin.  That would allow each of the 25 billion men, women, and babies in the universe to have 44,000 Satoshi's. 

Also, I think it's important that to understand that most of the coins that will ever be lost have likely already been lost.  People lost coins in the early days because a) they were worth almost nothing, and b) wallets and storage measures were in their infancy.  I don't have a way to track this, but I suspect that even 12 years in, the rate of coin loss is miniscule compared to what it was even 5 years ago. 

Bitcoin still has some tests to pass in order to gain permanent adoption on a large scale, but I personally wouldn't include coin loss as one of them.


Thanks for answering.  I disagree that most of the coins that will be lost are already lost.  I suspect the overall rate of loss will be lower, but people lose diamond rings all the time.  They lose paper currency, and with it the inherent value, all the time.  And they get locked out of accounts because they forgot the password or someone dies and doesn't leave the password info anywhere.  (With more typical accounts, a lost password probably doesn't matter as one can provide proper documentation to a bank, investment firm, etc., and be granted access.  Maybe I'm wrong--tell me if I am--but I don't think that applies to most methods of storing Bitcoin.) 

So if people lose other things of significant value, I'm not sure what Bitcoin would be much different, though clearly it's not quite the same as coming home from a day at the beach and realizing your $20,000 ring is gone.  Bitcoin is certainly more difficult to lose, but I think there are still plenty of plausible ways for coins or parts of coins to be lost. 

I can't even predict the rate at which that will happen, but logic suggests to me that when there is the most bitcoin in circulation, it will be at its most accepted (as a payment) and thereofer the easiest to spend.  But in a non-linear way, as it starts to dwindle in amount-available, fewer places (again, using "place" very loosely to mean 'anyone accepting payment for anything') will bother accepting it and as fewer places accept it, fewer people will want to hold it because it is more difficult to spin, and the spiral will reenforce itself until it is essentially dead.

But maybe the number of coin-shares, along with a relatively low rate of loss, means that the spiral won't get any momentum for 200 years, or some other big number, and it won't really matter.  That certainly could be the answer to my question. 

Once again, I will say that I'm truly coming at this from a place of curiosity, not trying to 'own the Bitcoiners'.  All the defensive, sarcastic responses (yours excluded, as it was neither of those things, to be clear!) certainly don't help make it look legit and less, well, dare I say... Tulip Bulby.  It certainly looks like, 'I don't have an answer, or don't understand enough to have and articulate an answer, so I'm going to claim you aren't work my time and run off in a huff, before my ignorance becomes crustal clear.'

If you found any of my responses sarcastic please just overlook it, that wasn't the intention and I stand by the actual content.
Full marks for the irony by the way - your complaint about sarcasm is extremely sarcastic :-)


A search for "bitcoin lost coins" brings up the following. This is just a random list of the first few relevant articles. I found nothing that echoed your concern.

The clearest statement comes from Investopedia:
Negligible Broader Impact
For users who misplace a wallet or key, the process can be overwhelmingly frustrating. However, the misplacement and potential loss of 20% of all BTC tokens should have little effect on the broader cryptocurrency industry. Bitcoin is easily split into very small denominations, unlike fiat currency. This allows for loss of a sizable quantity of BTC without an overall impact on the currency itself. Even given that miners are approaching the final BTC, the rate of loss of tokens can continue for years without there being any sort of impact on the functionality of the coin. Indeed, even if there were very few individual tokens, the protocol for how BTC can be divided could be adjusted to facilitate its continued functioning. Of course, this doesn't help those people who have lost their tokens.


https://www.investopedia.com/news/20-all-btc-lost-unrecoverable-study-shows/ (https://www.investopedia.com/news/20-all-btc-lost-unrecoverable-study-shows/)
https://beincrypto.com/bitcoin-worth-140-billion-lost-says-uk-council/
https://river.com/learn/what-happens-to-lost-bitcoin/ (https://river.com/learn/what-happens-to-lost-bitcoin/)
https://cointelegraph.com/news/up-to-four-million-bitcoins-gone-forever (https://cointelegraph.com/news/up-to-four-million-bitcoins-gone-forever)
https://www.nytimes.com/2021/01/13/business/tens-of-billions-worth-of-bitcoin-have-been-locked-by-people-who-forgot-their-key.html (https://www.nytimes.com/2021/01/13/business/tens-of-billions-worth-of-bitcoin-have-been-locked-by-people-who-forgot-their-key.html)
https://www.wired.com/story/wired-lost-bitcoin/ (https://www.wired.com/story/wired-lost-bitcoin/)

My comment about sarcastic responses wasn't directed at you at all.  Sorry that wasn't clear, but I meant it when I said that yours was excluded from that.  I felt like you were truly trying to engage in a conversation and an exchange of information. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 02, 2021, 11:15:45 AM

I'm highly unlikely to ever be a Bitcoin investor or holder, but I have a question about the bolded.  Isn't this actually a downside to Bitcoin?  Sure, it protects against inflation, as you explained.  But doesn't it also mean that Bitcoin will eventually become almost unusable?  It's not unlike if the US decided to stop making any more currency. Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?  Businesses and people would start seeking out and using Canadian dollars or Euro, or some other currency that would be more stable and more widely accepted, once the supply of USD started dwindling, no?  (That's assuming the US government didn't prevent that; they seem unlikely to interfere and try to force or even encourage the use of Bitcoin, so I doubt there would be any protection on that front.)   Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?

I absolutely could be thinking about this all wrong, and am truly asking from a place of ignorant curiousity--no snark or judgement.  Please explain to me why the hard limit on the number of Bitcoins isn't a bad thing in the longer term.

Hi Villanelle, fair question.  I am not concerned about lost coins affecting the utility of the supply, this was taken into account when the code was written.  In total, there will be 22 million coins made, but a bitcoin is not the smallest denomination of the coin.  Each coin is divided into 100 million base pieces, called Satoshi's (The founder of Bitcoin goes by the alias of Satoshi Yakamoto). So in total, there are about 2.2 quadrillion base units of bitcoin for potential circulation. 

Let's assume that an absurdly large amount of bitcoin gets lost, say 50% of the supply.  Well, there would still be 1.1 quadrillion Satoshi's in circulation.  Now let's keep with the toughest hypothetical scenarios possible, just to really pressure test bitcoins utility, and say that in 100 years we are a multiplanetary universe of 25 billion people, and we'll assume that 100% of them will be using bitcoin.  And for kicks we will assume that no one owns any other assets, no property, no gold, other cryptos or fiat currency, treasuries, stocks, etc...just bitcoin.  That would allow each of the 25 billion men, women, and babies in the universe to have 44,000 Satoshi's. 

Also, I think it's important that to understand that most of the coins that will ever be lost have likely already been lost.  People lost coins in the early days because a) they were worth almost nothing, and b) wallets and storage measures were in their infancy.  I don't have a way to track this, but I suspect that even 12 years in, the rate of coin loss is miniscule compared to what it was even 5 years ago. 

Bitcoin still has some tests to pass in order to gain permanent adoption on a large scale, but I personally wouldn't include coin loss as one of them.


Thanks for answering.  I disagree that most of the coins that will be lost are already lost.  I suspect the overall rate of loss will be lower, but people lose diamond rings all the time.  They lose paper currency, and with it the inherent value, all the time.  And they get locked out of accounts because they forgot the password or someone dies and doesn't leave the password info anywhere.  (With more typical accounts, a lost password probably doesn't matter as one can provide proper documentation to a bank, investment firm, etc., and be granted access.  Maybe I'm wrong--tell me if I am--but I don't think that applies to most methods of storing Bitcoin.) 

So if people lose other things of significant value, I'm not sure what Bitcoin would be much different, though clearly it's not quite the same as coming home from a day at the beach and realizing your $20,000 ring is gone.  Bitcoin is certainly more difficult to lose, but I think there are still plenty of plausible ways for coins or parts of coins to be lost. 

I can't even predict the rate at which that will happen, but logic suggests to me that when there is the most bitcoin in circulation, it will be at its most accepted (as a payment) and thereofer the easiest to spend.  But in a non-linear way, as it starts to dwindle in amount-available, fewer places (again, using "place" very loosely to mean 'anyone accepting payment for anything') will bother accepting it and as fewer places accept it, fewer people will want to hold it because it is more difficult to spin, and the spiral will reenforce itself until it is essentially dead.

But maybe the number of coin-shares, along with a relatively low rate of loss, means that the spiral won't get any momentum for 200 years, or some other big number, and it won't really matter.  That certainly could be the answer to my question. 

Once again, I will say that I'm truly coming at this from a place of curiosity, not trying to 'own the Bitcoiners'.  All the defensive, sarcastic responses (yours excluded, as it was neither of those things, to be clear!) certainly don't help make it look legit and less, well, dare I say... Tulip Bulby.  It certainly looks like, 'I don't have an answer, or don't understand enough to have and articulate an answer, so I'm going to claim you aren't work my time and run off in a huff, before my ignorance becomes crustal clear.'

If you found any of my responses sarcastic please just overlook it, that wasn't the intention and I stand by the actual content.
Full marks for the irony by the way - your complaint about sarcasm is extremely sarcastic :-)


A search for "bitcoin lost coins" brings up the following. This is just a random list of the first few relevant articles. I found nothing that echoed your concern.

The clearest statement comes from Investopedia:
Negligible Broader Impact
For users who misplace a wallet or key, the process can be overwhelmingly frustrating. However, the misplacement and potential loss of 20% of all BTC tokens should have little effect on the broader cryptocurrency industry. Bitcoin is easily split into very small denominations, unlike fiat currency. This allows for loss of a sizable quantity of BTC without an overall impact on the currency itself. Even given that miners are approaching the final BTC, the rate of loss of tokens can continue for years without there being any sort of impact on the functionality of the coin. Indeed, even if there were very few individual tokens, the protocol for how BTC can be divided could be adjusted to facilitate its continued functioning. Of course, this doesn't help those people who have lost their tokens.


https://www.investopedia.com/news/20-all-btc-lost-unrecoverable-study-shows/ (https://www.investopedia.com/news/20-all-btc-lost-unrecoverable-study-shows/)
https://beincrypto.com/bitcoin-worth-140-billion-lost-says-uk-council/
https://river.com/learn/what-happens-to-lost-bitcoin/ (https://river.com/learn/what-happens-to-lost-bitcoin/)
https://cointelegraph.com/news/up-to-four-million-bitcoins-gone-forever (https://cointelegraph.com/news/up-to-four-million-bitcoins-gone-forever)
https://www.nytimes.com/2021/01/13/business/tens-of-billions-worth-of-bitcoin-have-been-locked-by-people-who-forgot-their-key.html (https://www.nytimes.com/2021/01/13/business/tens-of-billions-worth-of-bitcoin-have-been-locked-by-people-who-forgot-their-key.html)
https://www.wired.com/story/wired-lost-bitcoin/ (https://www.wired.com/story/wired-lost-bitcoin/)

My comment about sarcastic responses wasn't directed at you at all.  Sorry that wasn't clear, but I meant it when I said that yours was excluded from that.  I felt like you were truly trying to engage in a conversation and an exchange of information.
Note that I am not the original 'other party' in this discussion. You absolved aceyou, not me.

I'm genuinely interested to know if my previous post and the links above have changed your view in any way.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: thisisjeopardy on October 02, 2021, 11:29:24 AM
I've got a 401k, tIRA, and Roth. I'm going to xfer my six figure IRA into a self directed crypto IRA. Yep, fees, fees, and more fees. I firmly believe in BTC and SOL and I'm 20 years from retirement so I'm pushing half my retirement into these two.

I also put some of our joint holdings (5%) into crypto and my own cash flow / spending money goes into this. We still have the bulwark of our holdings into VTSAX and co (HSA, 529, joint brokerage).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on October 02, 2021, 01:27:26 PM

I'm highly unlikely to ever be a Bitcoin investor or holder, but I have a question about the bolded.  Isn't this actually a downside to Bitcoin?  Sure, it protects against inflation, as you explained.  But doesn't it also mean that Bitcoin will eventually become almost unusable?  It's not unlike if the US decided to stop making any more currency. Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?  Businesses and people would start seeking out and using Canadian dollars or Euro, or some other currency that would be more stable and more widely accepted, once the supply of USD started dwindling, no?  (That's assuming the US government didn't prevent that; they seem unlikely to interfere and try to force or even encourage the use of Bitcoin, so I doubt there would be any protection on that front.)   Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?

I absolutely could be thinking about this all wrong, and am truly asking from a place of ignorant curiousity--no snark or judgement.  Please explain to me why the hard limit on the number of Bitcoins isn't a bad thing in the longer term.

Hi Villanelle, fair question.  I am not concerned about lost coins affecting the utility of the supply, this was taken into account when the code was written.  In total, there will be 22 million coins made, but a bitcoin is not the smallest denomination of the coin.  Each coin is divided into 100 million base pieces, called Satoshi's (The founder of Bitcoin goes by the alias of Satoshi Yakamoto). So in total, there are about 2.2 quadrillion base units of bitcoin for potential circulation. 

Let's assume that an absurdly large amount of bitcoin gets lost, say 50% of the supply.  Well, there would still be 1.1 quadrillion Satoshi's in circulation.  Now let's keep with the toughest hypothetical scenarios possible, just to really pressure test bitcoins utility, and say that in 100 years we are a multiplanetary universe of 25 billion people, and we'll assume that 100% of them will be using bitcoin.  And for kicks we will assume that no one owns any other assets, no property, no gold, other cryptos or fiat currency, treasuries, stocks, etc...just bitcoin.  That would allow each of the 25 billion men, women, and babies in the universe to have 44,000 Satoshi's. 

Also, I think it's important that to understand that most of the coins that will ever be lost have likely already been lost.  People lost coins in the early days because a) they were worth almost nothing, and b) wallets and storage measures were in their infancy.  I don't have a way to track this, but I suspect that even 12 years in, the rate of coin loss is miniscule compared to what it was even 5 years ago. 

Bitcoin still has some tests to pass in order to gain permanent adoption on a large scale, but I personally wouldn't include coin loss as one of them.


Thanks for answering.  I disagree that most of the coins that will be lost are already lost.  I suspect the overall rate of loss will be lower, but people lose diamond rings all the time.  They lose paper currency, and with it the inherent value, all the time.  And they get locked out of accounts because they forgot the password or someone dies and doesn't leave the password info anywhere.  (With more typical accounts, a lost password probably doesn't matter as one can provide proper documentation to a bank, investment firm, etc., and be granted access.  Maybe I'm wrong--tell me if I am--but I don't think that applies to most methods of storing Bitcoin.) 

So if people lose other things of significant value, I'm not sure what Bitcoin would be much different, though clearly it's not quite the same as coming home from a day at the beach and realizing your $20,000 ring is gone.  Bitcoin is certainly more difficult to lose, but I think there are still plenty of plausible ways for coins or parts of coins to be lost. 

I can't even predict the rate at which that will happen, but logic suggests to me that when there is the most bitcoin in circulation, it will be at its most accepted (as a payment) and thereofer the easiest to spend.  But in a non-linear way, as it starts to dwindle in amount-available, fewer places (again, using "place" very loosely to mean 'anyone accepting payment for anything') will bother accepting it and as fewer places accept it, fewer people will want to hold it because it is more difficult to spin, and the spiral will reenforce itself until it is essentially dead.

But maybe the number of coin-shares, along with a relatively low rate of loss, means that the spiral won't get any momentum for 200 years, or some other big number, and it won't really matter.  That certainly could be the answer to my question. 

Once again, I will say that I'm truly coming at this from a place of curiosity, not trying to 'own the Bitcoiners'.  All the defensive, sarcastic responses (yours excluded, as it was neither of those things, to be clear!) certainly don't help make it look legit and less, well, dare I say... Tulip Bulby.  It certainly looks like, 'I don't have an answer, or don't understand enough to have and articulate an answer, so I'm going to claim you aren't work my time and run off in a huff, before my ignorance becomes crustal clear.'

If you found any of my responses sarcastic please just overlook it, that wasn't the intention and I stand by the actual content.
Full marks for the irony by the way - your complaint about sarcasm is extremely sarcastic :-)


A search for "bitcoin lost coins" brings up the following. This is just a random list of the first few relevant articles. I found nothing that echoed your concern.

The clearest statement comes from Investopedia:
Negligible Broader Impact
For users who misplace a wallet or key, the process can be overwhelmingly frustrating. However, the misplacement and potential loss of 20% of all BTC tokens should have little effect on the broader cryptocurrency industry. Bitcoin is easily split into very small denominations, unlike fiat currency. This allows for loss of a sizable quantity of BTC without an overall impact on the currency itself. Even given that miners are approaching the final BTC, the rate of loss of tokens can continue for years without there being any sort of impact on the functionality of the coin. Indeed, even if there were very few individual tokens, the protocol for how BTC can be divided could be adjusted to facilitate its continued functioning. Of course, this doesn't help those people who have lost their tokens.


https://www.investopedia.com/news/20-all-btc-lost-unrecoverable-study-shows/ (https://www.investopedia.com/news/20-all-btc-lost-unrecoverable-study-shows/)
https://beincrypto.com/bitcoin-worth-140-billion-lost-says-uk-council/
https://river.com/learn/what-happens-to-lost-bitcoin/ (https://river.com/learn/what-happens-to-lost-bitcoin/)
https://cointelegraph.com/news/up-to-four-million-bitcoins-gone-forever (https://cointelegraph.com/news/up-to-four-million-bitcoins-gone-forever)
https://www.nytimes.com/2021/01/13/business/tens-of-billions-worth-of-bitcoin-have-been-locked-by-people-who-forgot-their-key.html (https://www.nytimes.com/2021/01/13/business/tens-of-billions-worth-of-bitcoin-have-been-locked-by-people-who-forgot-their-key.html)
https://www.wired.com/story/wired-lost-bitcoin/ (https://www.wired.com/story/wired-lost-bitcoin/)

My comment about sarcastic responses wasn't directed at you at all.  Sorry that wasn't clear, but I meant it when I said that yours was excluded from that.  I felt like you were truly trying to engage in a conversation and an exchange of information.
Note that I am not the original 'other party' in this discussion. You absolved aceyou, not me.

I'm genuinely interested to know if my previous post and the links above have changed your view in any way.

Ah yes, sorry about the identify confusion.

And yes, it actually did change my view, at least somewhat.  I plan to do more research and reading.  To be clear, there is still a pretty much zero% chance that I will invest in Bitcoin or any crypto, if only because I don't stock pick.  (And even if I was buying actual crypto currency, I consider that to be much the same as owning a specific stock, as far as risk/reward goes).   But your links actually did address my question and give a good explanation of why it may lost coins and a resulting diminished supply may not be an issue. 

And that's sort of how these conversations should go.  So thank you.  (<<---Not at all '/s')
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 02, 2021, 03:05:37 PM
Agreed  @Villanelle picking a single crypto then siting why crypto adds value is akin to picking a single stock and siting why all stocks add value. Stocks are companies and have a long history of known regulation and trackable long-term performance. So while I agree with most sentiments here that Blockchain has value I don't see a way to invest in it that I think produces realistically predicable performance.

There is alot of recency bias here and around the investing forum today. From some one thinking owning the top of the qqq today would be a good investment which was quickly debunked by showing the top of the qqq 10 years ago underperformed the top today.

Saying this has a market cap of xyz today doesn't actual give credence to it's long term value as an investment vehicle. And more so a predictable investment vehicle. So if you invest in a coin today and make alot what makes you know it will be around tomorrow or how do you know when it's run its course and time to get out. It's the same question asked with an individual stock.

Further people who "win" at this technology advance if it pans out for them are likely inclined to think they can repeat this. When decentralized housing in the matrix comes out.(or whatever the next thing is).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 02, 2021, 05:37:39 PM
Agreed  @Villanelle picking a single crypto then siting why crypto adds value is akin to picking a single stock and siting why all stocks add value.
Who is "picking a single crypto then siting why crypto adds value" ?
If you're responding to the posts directly above . . . Villanelle's original question was specifically about Bitcoin. Hence, my response and others were specifically about Bitcoin. The conflation with general crypto seems to be all yours.

Saying this has a market cap of xyz today doesn't actual give credence to it's long term value as an investment vehicle. And more so a predictable investment vehicle. So if you invest in a coin today and make alot what makes you know it will be around tomorrow or how do you know when it's run its course and time to get out. It's the same question asked with an individual stock.
I agree, but a high market cap and a large number of participants give it some credence as a serious project. Bitcoin is quite a different animal to the latest fad meme coin.

I think the single-stock comparison is quite limited. As many are keen to repeatedly emphasise, it's not a stock.
Again, I recommend reading https://www.lynalden.com/invest-in-bitcoin/ (https://www.lynalden.com/invest-in-bitcoin/). I'm not a Lyn Alden fanboy, don't know much about her, but I think this is a comprehensive, broad and objective piece that covers a lot that is relevant to this topic. At worst it will give you a ton more things to disagree with :-)

Further people who "win" at this technology advance if it pans out for them are likely inclined to think they can repeat this. When decentralized housing in the matrix comes out.(or whatever the next thing is).
And that's also a negative against crypto ?? You're clutching at straws here. I get it that you don't like crypto but I am puzzled by your enthusiasm for attacking it from every conceivable angle. It doesn't seem very objective.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 02, 2021, 06:02:02 PM
I'll be back to say I told you so I'm 10 years. Nothing but rampant speculation in this market. Admitted by those here.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on October 02, 2021, 07:00:06 PM
I'll be back to say I told you so I'm 10 years. Nothing but rampant speculation in this market. Admitted by those here.

These posts are most likely going to come back to haunt you LMAO.  Why people want to put absolutes like this on the internet is beyond me, if you don't like crypto just move on to other interests.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 03, 2021, 03:19:56 PM
Just wanted to say thanks to the posters who I've interacted with in this thread.  A few posters helped me think about the topic in a new way, and that's been great.  And even to the people who just categorically reject it as a viable long term sector, it's valuable to know the full range of thoughts and attitudes on the emerging cyrpto space. 

This forum isn't perfect, but I've found it to be much better than most.  Cheers. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on October 04, 2021, 09:26:58 PM
I'll be back to say I told you so I'm 10 years. Nothing but rampant speculation in this market. Admitted by those here.

These posts are most likely going to come back to haunt you LMAO.  Why people want to put absolutes like this on the internet is beyond me, if you don't like crypto just move on to other interests.

Boarder42 is trying to provide value to the readers. He was requested by others to chime in. This is evidence that he has built some credibility over the past 7 years and 8,000+ posts. People like to hear his position and logic to support his position.

Boarder42 feels confident enough to make a specific prediction and is willing to accept a win or loss in 10 years. I don't see how that could be seen as a bad thing. It's very possible that he could be wrong. However, at this point in time he has more wins than losses and that is why people want to hear from him.

If I understand your logic correctly, you are firmly against making any type of specific prediction in the future because it might come back to haunt you (because you might be incorrect). How am I supposed to believe in your position on crypto when you don't believe in your position yourself.   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on October 04, 2021, 09:41:25 PM
Just wanted to say thanks to the posters who I've interacted with in this thread.  A few posters helped me think about the topic in a new way, and that's been great.  And even to the people who just categorically reject it as a viable long term sector, it's valuable to know the full range of thoughts and attitudes on the emerging cyrpto space. 

This forum isn't perfect, but I've found it to be much better than most.  Cheers.

In order to beat the market you have to go against the consensus and be correct (Ray Dalio). In order to figure out the position of the consensus, you need to ask the question. 

You asked the question and the forum answered the question. Now you should have a better idea of the position of the consensus. It's now your choice to go with the consensus or against it.

It is my personal belief that the position of the consensus on real estate on this forum is that cash flow is more important than appreciation. I disagree and don't really follow that investing advice. However, I still appreciate and value the opinion of others. Even the one's in which I disagree.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 05, 2021, 10:01:54 AM
I'll be back to say I told you so I'm 10 years. Nothing but rampant speculation in this market. Admitted by those here.
It sounds like you are predicting BTC will underperform the S&P 500 over the next 10 years?  It's like Buffet's bet, but with Bitcoin.

I have a softer prediction.  Over time, Bitcoin's crashes have gotten smaller.  I think Bitcoin's volatility is decreasing, and it's performance.  Yahoo Finance shows BTC-USD price 5 years ago was $745.69, and is currently $49767.02 (per BTC).  That's 66.74x in 5 years.  I predict it's performance will be much worse over the next 5 years: under 20x.

I predict on Oct 5th 2026, 1 BTC will be priced at under $1 million USD.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: bacchi on October 05, 2021, 10:31:06 AM
I'll be back to say I told you so I'm 10 years. Nothing but rampant speculation in this market. Admitted by those here.
It sounds like you are predicting BTC will underperform the S&P 500 over the next 10 years?  It's like Buffet's bet, but with Bitcoin.

I have a softer prediction.  Over time, Bitcoin's crashes have gotten smaller.  I think Bitcoin's volatility is decreasing, and it's performance.  Yahoo Finance shows BTC-USD price 5 years ago was $745.69, and is currently $49767.02 (per BTC).  That's 66.74x in 5 years.  I predict it's performance will be much worse over the next 5 years: under 20x.

I predict on Oct 5th 2026, 1 BTC will be priced at under $1 million USD.

I predict that the next market crash, which will happen before 2026, will shake out a lot of the Bitcoin/Ether/Doge/Binance/Etc. speculators. People will need money to pay their bills. Equities will go on sale and some currencies will fade into history, just like forgotten motorcycle and dotbomb companies.

$100k by 2026

Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 05, 2021, 11:31:38 AM
https://www.pymnts.com/news/payment-methods/2021/in-brazil-bitcoin-acceptance-comes-with-more-regulation/
 (https://www.pymnts.com/news/payment-methods/2021/in-brazil-bitcoin-acceptance-comes-with-more-regulation/)

Brazil is moving forward legislation to make bitcoin legal tender, just as El Salvador has.  Panama is getting there too.

When I brought up El Salvador, it was kind of denigrated by some as a bit of a backwater that doesn't really matter.  While I get that sentiment, I thought it was important because it was showing an overall trend towards legitimizing Bitcoin.

The total amount of Real's in circulation is worth a little over 1 trillion US dollars.  If this happens, a percentage of that trillion USD worth of WILL be converted to bitcoin. 

Brazil has a population of 213 million.  El Salvador has a population of 6 million.  Panama has 4 million.   I think it's likely that within the year, at least 223 million people in the world will live in countries where Bitcoin is a legal and legitimate currency. 

I don't think I'm speculating too wildly to say that in the coming months, many more millions of people are likely going to be trading their nation's current currencies for Bitcoin.  And since there's a hard limit of the number of bitcoins in circulation, this would serve to raise the value of each coin. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 05, 2021, 01:42:05 PM
I'll be back to say I told you so I'm 10 years. Nothing but rampant speculation in this market. Admitted by those here.
It sounds like you are predicting BTC will underperform the S&P 500 over the next 10 years?  It's like Buffet's bet, but with Bitcoin.

I have a softer prediction.  Over time, Bitcoin's crashes have gotten smaller.  I think Bitcoin's volatility is decreasing, and it's performance.  Yahoo Finance shows BTC-USD price 5 years ago was $745.69, and is currently $49767.02 (per BTC).  That's 66.74x in 5 years.  I predict it's performance will be much worse over the next 5 years: under 20x.

I predict on Oct 5th 2026, 1 BTC will be priced at under $1 million USD.

if i were to pick an asset class for it to underperform the next 10 years it would be SCV - we can use AVUV as the baseline for comparison from the date that i said that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: taekvideo on October 06, 2021, 11:58:09 AM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.

The economics of Bitcoin force miners to pursue the cheapest energy, ie stranded/waste energy & renewables. Bitcoin mining operations are portable... El Salvador just started mining it with Volcano energy. As the buyer of first & last resort, Bitcoin will drive renewable energy development and harvest wasted gas flaring/etc. It will help stabilize the grid since miners can turn off when demand peaks or supply dips, which will be increasingly important as the grid shifts towards renewables. It's far from "dirty".

The black market mostly operates in US Dollars, not crypto, and international banks launder 1000x more criminal money than crypto (you'd have to be a fool to put your money laundering transactions on an immutable public blockchain lol)

The true use cases are starting to be realized, like in El Salvador 1/4 of their GDP comes from remittances, which are now sent instantly over the Bitcoin Lightning Network bypassing the absurd Western Union fees.


But with Bitcoin in particular the transactions are so slow and so expensive that in order to use it as currency you actually do need a trusted third party application running on top of it.  So that advantage goes away.

The Lightning Network sends Bitcoin instantly and nearly free, in a trustless way. A lot of people will probably end up using custodians, but you don't have to, and the fact that you don't have to will help keep the custodians honest (kind of like having FU money gives you a lot of leverage, even if you don't quit your job).


Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?

Bitcoin is infinitely divisible. Right now the smallest unit is a satoshi, which is 1/100,000,000 of a Bitcoin, but it'd be trivial to add more zeroes after the decimal point with a soft fork to make it even more divisible. People losing Bitcoin just increases the value of other Bitcoins, it has no effect on utility for other participants.


Just b/c something has a huge market cap doesnt mean its not a house of cards - see enron.  I just fundamentally see no value in this sector and mostly a bunch of talking heads trying to get rich quick.

There's about $17 trillion that's currently invested in negative-yielding bonds, talk about a house of cards.
Betting long on a transformative technology like Bitcoin seems almost safe by comparison.

As a monetary technology Bitcoin is superior to gold/fiat across multiple dimensions:
-portability - transactions are instant & nearly free over Lightning (much cheaper than Visa), and final settlement occurs every 10 minutes on the blockchain (vs several business days for banks)
-verifiability - counterfeiting is impossible
-divisibility - each coin can be divided into as many fractional subunits as necessary
-durability - bitcoins never expire or degrade
-permissionless - there are no gatekeepers
-censorship resistant - transactions can be made peer-to-peer globally with no counterparty involvement
-fixed monetary policy - nobody can debase the currency. The founding fathers instituted the DEATH PENALTY for debasing the currency. They understood its importance. How the mighty have fallen. There's nothing modern about Modern Monetary Theory... history is full of empires debasing their currency and then collapsing.


I'll be back to say I told you so I'm 10 years. Nothing but rampant speculation in this market. Admitted by those here.

This is you right now:

Paul Krugman 1998, “The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law’ becomes apparent: most people have nothing to say to each other! By 2005, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s”
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 06, 2021, 12:53:45 PM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.

The economics of Bitcoin force miners to pursue the cheapest energy, ie stranded/waste energy & renewables. Bitcoin mining operations are portable... El Salvador just started mining it with Volcano energy. As the buyer of first & last resort, Bitcoin will drive renewable energy development and harvest wasted gas flaring/etc. It will help stabilize the grid since miners can turn off when demand peaks or supply dips, which will be increasingly important as the grid shifts towards renewables. It's far from "dirty".


100% of the energy that goes into "mining" bitcoin is wasted energy.  It serves no productive purpose for the human race.  You're arguing that energy is expensive, and "miners" are cheap, so they'll find more efficient ways to waste this energy . . . but missing the fundamental point.

Mining bitcoin is similar to leaving your car running in your driveway all day, 24/7.  It might be more efficient to leave a prius running rather than a humvee . . . but you're still creating tremendous waste.


Like so much related to bitcoin, the idea that bitcoin "mining" is somehow ushering in an era of clean power by wasting power also doesn't pass the smell test.  Profitable bitcoin "mining" facilities have been found in Alberta, sucking away at the teat of natural gas:  https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731 (https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dreadmoose on October 06, 2021, 01:03:26 PM
I'll be back to say I told you so I'm 10 years. Nothing but rampant speculation in this market. Admitted by those here.

This is you right now:

Paul Krugman 1998, “The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law’ becomes apparent: most people have nothing to say to each other! By 2005, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s”

This is sure disingenuous if you read the whole thread. B42 is not saying Blockchain has no use and will die out, he's saying Bitcoin (or any other altcoin) "investment" is speculation. To me it seems akin to what resulted in the dot-com crash, "investing" in those individual companies back then was picking a winner, not a bet on the internet itself. Maybe a straw man between "coin speculation is silly" and "blockchain technology won't exist in 10 years"?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dougules on October 06, 2021, 03:25:32 PM
Does anybody currently actually price products in bitcoin or another crypto over an established currency?  It's one thing to pay using bitcoin; it's another thing to set prices, rates, and debts in bitcoin.  If you think you can make quick money off of bitcoin going up or down relative to established currencies, you're also implicitly saying that you believe there will be no price stability. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on October 06, 2021, 03:39:17 PM
Does anybody currently actually price products in bitcoin or another crypto over an established currency?  It's one thing to pay using bitcoin; it's another thing to set prices, rates, and debts in bitcoin.  If you think you can make quick money off of bitcoin going up or down relative to established currencies, you're also implicitly saying that you believe there will be no price stability.

Look at the rate of US$ money printing over the last few years.  The prices of real estate, stocks and bitcoin may be speculative, but one thing you do know for sure is that they are scarcer assets than US$ and are going to appreciate vs US$ as the printing press rages on into the future.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dougules on October 06, 2021, 03:48:02 PM
Does anybody currently actually price products in bitcoin or another crypto over an established currency?  It's one thing to pay using bitcoin; it's another thing to set prices, rates, and debts in bitcoin.  If you think you can make quick money off of bitcoin going up or down relative to established currencies, you're also implicitly saying that you believe there will be no price stability.

Look at the rate of US$ money printing over the last few years.  The prices of real estate, stocks and bitcoin may be speculative, but one thing you do know for sure is that they are scarcer assets than US$ and are going to appreciate vs US$ as the printing press rages on into the future.

But appreciation isn't necessarily good for a currency.  You want price stability.  I wouldn't want to take out a mortgage for 5 BTC if I knew that was going to just appreciate. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 06, 2021, 09:12:18 PM
As the buyer of first & last resort, Bitcoin will drive renewable energy development and harvest wasted gas flaring/etc. It will help stabilize the grid since miners can turn off when demand peaks or supply dips, which will be increasingly important as the grid shifts towards renewables. It's far from "dirty".

Interesting argument! I had not absorbed the stabilizing argument before. That part seems plausible. (Harvesting gas flaring seems plausible too, but that doesn't stabilize a grid or provide other non-crypto value as far as I can see.)

Not sure it's enough to support "far from 'dirty' ", but am considering.

the idea that bitcoin "mining" is somehow ushering in an era of clean power by wasting power also doesn't pass the smell test.  Profitable bitcoin "mining" facilities have been found in Alberta, sucking away at the teat of natural gas:  https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731 (https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731)

I agree that Not All Bitcoin uses clean power, so it's false to claim BTC mining runs entirely clean.

But afaik stabilizing the grid for renewables by providing a non-essential buyer on demand is a legitimate benefit that can encourage construction of renewable facilities, because having such a buyer improves the breakeven economics of the renewable facilities. (Not an expert here, but it's what I have read in industry publications and heard from an individual whose job involves planning renewable facilities.)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: taekvideo on October 06, 2021, 10:53:01 PM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.

The economics of Bitcoin force miners to pursue the cheapest energy, ie stranded/waste energy & renewables. Bitcoin mining operations are portable... El Salvador just started mining it with Volcano energy. As the buyer of first & last resort, Bitcoin will drive renewable energy development and harvest wasted gas flaring/etc. It will help stabilize the grid since miners can turn off when demand peaks or supply dips, which will be increasingly important as the grid shifts towards renewables. It's far from "dirty".


100% of the energy that goes into "mining" bitcoin is wasted energy.  It serves no productive purpose for the human race.  You're arguing that energy is expensive, and "miners" are cheap, so they'll find more efficient ways to waste this energy . . . but missing the fundamental point.

Mining bitcoin is similar to leaving your car running in your driveway all day, 24/7.  It might be more efficient to leave a prius running rather than a humvee . . . but you're still creating tremendous waste.


Like so much related to bitcoin, the idea that bitcoin "mining" is somehow ushering in an era of clean power by wasting power also doesn't pass the smell test.  Profitable bitcoin "mining" facilities have been found in Alberta, sucking away at the teat of natural gas:  https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731 (https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731)

It's not wasted, the hash rate provides security for the network. Proof of work is necessary for a decentralized currency. That's what made gold work for thousands of years. Was all the energy expended in mining gold for coins & bars "wasted"? Far from it. The ability to store value and trade is what made civilization possible. Scaling beyond small groups requires a credible currency. Superior currencies (eg the Florin) have produced surges in human flourishing, whereas debasement of currencies has always led to ruin. The creation of a superior monetary system that can never be debased is perhaps the most valuable thing we could possibly expend the energy on.
And it's not like the Petrodollar system backed by oil, guns, and bombs is a very clean alternative.


This is sure disingenuous if you read the whole thread. B42 is not saying Blockchain has no use and will die out, he's saying Bitcoin (or any other altcoin) "investment" is speculation. To me it seems akin to what resulted in the dot-com crash, "investing" in those individual companies back then was picking a winner, not a bet on the internet itself. Maybe a straw man between "coin speculation is silly" and "blockchain technology won't exist in 10 years"?

He said "I just fundamentally see no value in this sector" and called it a "house of cards".

I think lumping all blockchain technology into the same "crypto" bucket is a mistake. There are different use cases that don't necessarily compete with each other. Separating those out makes things a lot more clear.

Bitcoin is already bigger than Facebook and commands orders of magnitude more hashrate than any other chain. Network effects will take it from here. You can call it speculation if you want but the way I see it the market has already chosen a winner: Bitcoin is digital gold.

The other use cases are less clear. Ethereum is probably the best bet for an application protocol and I have a lot of that too, but it's much more prone to disruption from a competitor like Solana, so yeah I would consider that speculation lol.



Does anybody currently actually price products in bitcoin or another crypto over an established currency?  It's one thing to pay using bitcoin; it's another thing to set prices, rates, and debts in bitcoin.  If you think you can make quick money off of bitcoin going up or down relative to established currencies, you're also implicitly saying that you believe there will be no price stability.

Store of value comes first, then medium of exchange, then unit of account. That's how it worked for gold thousands of years ago and Bitcoin is following the same progression. It's rapidly advancing as a medium of exchange now thanks to the Lightning Network, but it probably won't be commonly used as a unit of account until it's much closer to full saturation and the volatility is muted (maybe 10 years?).

Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 07, 2021, 07:12:03 AM
I'll be back to say I told you so I'm 10 years. Nothing but rampant speculation in this market. Admitted by those here.
It sounds like you are predicting BTC will underperform the S&P 500 over the next 10 years?  It's like Buffet's bet, but with Bitcoin.

I have a softer prediction.  Over time, Bitcoin's crashes have gotten smaller.  I think Bitcoin's volatility is decreasing, and it's performance.  Yahoo Finance shows BTC-USD price 5 years ago was $745.69, and is currently $49767.02 (per BTC).  That's 66.74x in 5 years.  I predict it's performance will be much worse over the next 5 years: under 20x.

I predict on Oct 5th 2026, 1 BTC will be priced at under $1 million USD.

I predict that the next market crash, which will happen before 2026, will shake out a lot of the Bitcoin/Ether/Doge/Binance/Etc. speculators. People will need money to pay their bills. Equities will go on sale and some currencies will fade into history, just like forgotten motorcycle and dotbomb companies.

$100k by 2026

If you truly believed there would be a moment within five years at which the price of Bitcoin would be 2X-20X of what it is today, why wouldn't you own some?

I think there will be a moment within the next five years at which Bitcoin's price will be 20% of what it is today. Both of these may well be true.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 07, 2021, 07:17:46 AM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.

The economics of Bitcoin force miners to pursue the cheapest energy, ie stranded/waste energy & renewables. Bitcoin mining operations are portable... El Salvador just started mining it with Volcano energy. As the buyer of first & last resort, Bitcoin will drive renewable energy development and harvest wasted gas flaring/etc. It will help stabilize the grid since miners can turn off when demand peaks or supply dips, which will be increasingly important as the grid shifts towards renewables. It's far from "dirty".


100% of the energy that goes into "mining" bitcoin is wasted energy.  It serves no productive purpose for the human race.  You're arguing that energy is expensive, and "miners" are cheap, so they'll find more efficient ways to waste this energy . . . but missing the fundamental point.

Mining bitcoin is similar to leaving your car running in your driveway all day, 24/7.  It might be more efficient to leave a prius running rather than a humvee . . . but you're still creating tremendous waste.


Like so much related to bitcoin, the idea that bitcoin "mining" is somehow ushering in an era of clean power by wasting power also doesn't pass the smell test.  Profitable bitcoin "mining" facilities have been found in Alberta, sucking away at the teat of natural gas:  https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731 (https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731)

It's not wasted, the hash rate provides security for the network. Proof of work is necessary for a decentralized currency. That's what made gold work for thousands of years. Was all the energy expended in mining gold for coins & bars "wasted"? Far from it. The ability to store value and trade is what made civilization possible. Scaling beyond small groups requires a credible currency. Superior currencies (eg the Florin) have produced surges in human flourishing, whereas debasement of currencies has always led to ruin. The creation of a superior monetary system that can never be debased is perhaps the most valuable thing we could possibly expend the energy on.

Proof of work is necessary for a decentralized crypto-currency.  I haven't seen any compelling necessity for a decentralized crypto-currency though.  You're still running the car in the driveway in park.

As you mentioned, the ability to store value and trade existed before crypto-currency.  It will exist after crypto-currency.  Concerns about debasement seem particularly silly.  How is it possible to debase something with no value beyond speculation?



And it's not like the Petrodollar system backed by oil, guns, and bombs is a very clean alternative.

You seem to be implying with this comment that cryptocurrency won't ever be used to fund oil, guns, and bombs - or by any country involved in the trade or use of those.  At the moment, this seems to be true . . . as cryptocurrency isn't widely used to fund anything but speculation, terrorism, human trafficking, and drug purchases.  I'd expect someone with faith in the future of this alleged 'currency' to some day expect it to be used as any other currency is today.  In which case, all that 'oil/guns/bombs backing' would seem to apply to crypto as well.

So I'm not sure I understand what you're getting at here.  Can you elaborate?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: taekvideo on October 07, 2021, 12:26:01 PM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.

The economics of Bitcoin force miners to pursue the cheapest energy, ie stranded/waste energy & renewables. Bitcoin mining operations are portable... El Salvador just started mining it with Volcano energy. As the buyer of first & last resort, Bitcoin will drive renewable energy development and harvest wasted gas flaring/etc. It will help stabilize the grid since miners can turn off when demand peaks or supply dips, which will be increasingly important as the grid shifts towards renewables. It's far from "dirty".


100% of the energy that goes into "mining" bitcoin is wasted energy.  It serves no productive purpose for the human race.  You're arguing that energy is expensive, and "miners" are cheap, so they'll find more efficient ways to waste this energy . . . but missing the fundamental point.

Mining bitcoin is similar to leaving your car running in your driveway all day, 24/7.  It might be more efficient to leave a prius running rather than a humvee . . . but you're still creating tremendous waste.


Like so much related to bitcoin, the idea that bitcoin "mining" is somehow ushering in an era of clean power by wasting power also doesn't pass the smell test.  Profitable bitcoin "mining" facilities have been found in Alberta, sucking away at the teat of natural gas:  https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731 (https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731)

It's not wasted, the hash rate provides security for the network. Proof of work is necessary for a decentralized currency. That's what made gold work for thousands of years. Was all the energy expended in mining gold for coins & bars "wasted"? Far from it. The ability to store value and trade is what made civilization possible. Scaling beyond small groups requires a credible currency. Superior currencies (eg the Florin) have produced surges in human flourishing, whereas debasement of currencies has always led to ruin. The creation of a superior monetary system that can never be debased is perhaps the most valuable thing we could possibly expend the energy on.

Proof of work is necessary for a decentralized crypto-currency.  I haven't seen any compelling necessity for a decentralized crypto-currency though.  You're still running the car in the driveway in park.

As you mentioned, the ability to store value and trade existed before crypto-currency.  It will exist after crypto-currency.  Concerns about debasement seem particularly silly.  How is it possible to debase something with no value beyond speculation?



And it's not like the Petrodollar system backed by oil, guns, and bombs is a very clean alternative.

You seem to be implying with this comment that cryptocurrency won't ever be used to fund oil, guns, and bombs - or by any country involved in the trade or use of those.  At the moment, this seems to be true . . . as cryptocurrency isn't widely used to fund anything but speculation, terrorism, human trafficking, and drug purchases.  I'd expect someone with faith in the future of this alleged 'currency' to some day expect it to be used as any other currency is today.  In which case, all that 'oil/guns/bombs backing' would seem to apply to crypto as well.

So I'm not sure I understand what you're getting at here.  Can you elaborate?

Following WW2 & the Bretton Woods agreement the US Dollar was backed by gold (which other nation states could redeem) and all other world currencies were pegged to the Dollar. But it was a scam. The US kept printing more dollars than they had gold to back it up. In 1971 Nixon defaulted on the debt and stopped allowing redemption of the dollar for gold. From that point on we operated under the Petrodollar. The US struck a deal with Saudi Arabia & other oil producing nations to only sell oil for dollars (in exchange for protection from the empire). So instead of being backed by gold it's backed by oil. And when a nation like Iraq or Libya tries to sell oil for something other than dollars the US swiftly invades and puts a stop to that. The currency must be backed by guns and bombs to force everyone to keep using it.
A decentralized currency backed by math & hashpower is a lot cleaner and more peaceful than empire notes backed by fossil fuel cartels and war. Bitcoin will be a lot better for the people as well, both within the empire and outside. Abandoning the gold standard has been a disaster for the average US citizen, since 1971 real wages flatlined and the divide between rich and poor skyrocketed.
The gold standard wasn't perfect as it still allowed the banks to commit legalized fraud in the form of fractional reserve banking, but it at least limited the damage they could do and kept real interest rates from going negative. A Bitcoin standard eliminates the need for trusted counterparties (who always, inevitably betray that trust) so it doesn't suffer the same drawbacks. A sound monetary system which nobody can cheat or manipulate has incredible potential to transform the human condition. Can the car idling in your driveway do that?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 07, 2021, 01:47:15 PM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.

The economics of Bitcoin force miners to pursue the cheapest energy, ie stranded/waste energy & renewables. Bitcoin mining operations are portable... El Salvador just started mining it with Volcano energy. As the buyer of first & last resort, Bitcoin will drive renewable energy development and harvest wasted gas flaring/etc. It will help stabilize the grid since miners can turn off when demand peaks or supply dips, which will be increasingly important as the grid shifts towards renewables. It's far from "dirty".


100% of the energy that goes into "mining" bitcoin is wasted energy.  It serves no productive purpose for the human race.  You're arguing that energy is expensive, and "miners" are cheap, so they'll find more efficient ways to waste this energy . . . but missing the fundamental point.

Mining bitcoin is similar to leaving your car running in your driveway all day, 24/7.  It might be more efficient to leave a prius running rather than a humvee . . . but you're still creating tremendous waste.


Like so much related to bitcoin, the idea that bitcoin "mining" is somehow ushering in an era of clean power by wasting power also doesn't pass the smell test.  Profitable bitcoin "mining" facilities have been found in Alberta, sucking away at the teat of natural gas:  https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731 (https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731)

It's not wasted, the hash rate provides security for the network. Proof of work is necessary for a decentralized currency. That's what made gold work for thousands of years. Was all the energy expended in mining gold for coins & bars "wasted"? Far from it. The ability to store value and trade is what made civilization possible. Scaling beyond small groups requires a credible currency. Superior currencies (eg the Florin) have produced surges in human flourishing, whereas debasement of currencies has always led to ruin. The creation of a superior monetary system that can never be debased is perhaps the most valuable thing we could possibly expend the energy on.

Proof of work is necessary for a decentralized crypto-currency.  I haven't seen any compelling necessity for a decentralized crypto-currency though.  You're still running the car in the driveway in park.

As you mentioned, the ability to store value and trade existed before crypto-currency.  It will exist after crypto-currency.  Concerns about debasement seem particularly silly.  How is it possible to debase something with no value beyond speculation?



And it's not like the Petrodollar system backed by oil, guns, and bombs is a very clean alternative.

You seem to be implying with this comment that cryptocurrency won't ever be used to fund oil, guns, and bombs - or by any country involved in the trade or use of those.  At the moment, this seems to be true . . . as cryptocurrency isn't widely used to fund anything but speculation, terrorism, human trafficking, and drug purchases.  I'd expect someone with faith in the future of this alleged 'currency' to some day expect it to be used as any other currency is today.  In which case, all that 'oil/guns/bombs backing' would seem to apply to crypto as well.

So I'm not sure I understand what you're getting at here.  Can you elaborate?

Following WW2 & the Bretton Woods agreement the US Dollar was backed by gold (which other nation states could redeem) and all other world currencies were pegged to the Dollar. But it was a scam. The US kept printing more dollars than they had gold to back it up. In 1971 Nixon defaulted on the debt and stopped allowing redemption of the dollar for gold. From that point on we operated under the Petrodollar. The US struck a deal with Saudi Arabia & other oil producing nations to only sell oil for dollars (in exchange for protection from the empire). So instead of being backed by gold it's backed by oil. And when a nation like Iraq or Libya tries to sell oil for something other than dollars the US swiftly invades and puts a stop to that. The currency must be backed by guns and bombs to force everyone to keep using it.

Some of what you've said above is true.  Some of it is pretty tinfoil hat conspiracy theorist though, and quite a bit of it is flat out wrong.

Argentina sells oil in currencies other than the US dollar, and I don't believe that the US has invaded or bombed them - so the theory about 'protection from the empire' falls flat at even the most cursory examination.  But if we look deeper . . . we also see that the US dollar isn't and has never been backed by oil.  If it was, the price of the US dollar and the price of oil would move in lockstep.  They don't.  Closest I can figure is that the US dollar is backed by the GDP of the US.

The US dollar is the world reserve currency because it has proven to be the most stable over time.  In finance, stability is very important in a functional currency (not good news for cryptocurrencies, I know!).  That's why it's the most commonly used currency to trade oil.  If bitcoin becomes the world reserve currency, I'd expect that it would be the most commonly used currency to trade oil.


A decentralized currency backed by math & hashpower is a lot cleaner and more peaceful than empire notes backed by fossil fuel cartels and war.

Math isn't a backing.  'Hashpower' isn't even a real word.

I'm not sure you fully understand the other terms you're using either.  A 'backed currency' is a currency that comes with a guarantee that it can always be exchanged for a predetermined amount of another asset.  That's the dictionary definition.

Neither the US dollar, nor bitcoin are backed currencies.


Bitcoin will be a lot better for the people as well, both within the empire and outside. Abandoning the gold standard has been a disaster for the average US citizen, since 1971 real wages flatlined and the divide between rich and poor skyrocketed.  The gold standard wasn't perfect as it still allowed the banks to commit legalized fraud in the form of fractional reserve banking, but it at least limited the damage they could do and kept real interest rates from going negative.

The gold standard was abandoned in the US 1933 by FDR.  It was abandoned by Britian in 1931 and then the rest of the UK and most of it's allies as part of the Bretton Woods agreement in '44.  Not sure I understand what you're talking about here.  Since abandoning the gold standard in 1933, I'd argue that the lives of most Americans have significantly improved.

Nixon scrapped the Bretton Woods agreement.

Fractional reserve banking started in the 17th century.  It was a significant economic contributor as it allowed greater access to capital to people trying to start and build businesses.  Not exactly sure what your issue is with this, could you explain?


A Bitcoin standard eliminates the need for trusted counterparties (who always, inevitably betray that trust) so it doesn't suffer the same drawbacks.  A sound monetary system which nobody can cheat or manipulate has incredible potential to transform the human condition. Can the car idling in your driveway do that?

You're right.  Not the same drawbacks - it introduces completely different ones.  Bitcoin is not a currency, not a monetary system, and trying to use it as either today just doesn't work very well.  Right now it's a car idling in the driveway.  Will someone some day drive the car around so that there's some value to the waste?  Maybe.  But that's not happening right now.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 07, 2021, 02:13:31 PM
I'd encourage more reading on the Bretton Woods agreement.

It did establish the financial system from 1944-1973 on a foundation of the US Dollar, which was backed by Gold until the Nixon decision. Other aspects of trade that it established (such as the GATT) continued for another generation, until they were replaced by the WTO.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 07, 2021, 05:45:06 PM
@GuitarStv - Perhaps you are not familiar with crypto terminology because hashpower and hash rate are interchangeable terms. 
Quote
What Is Hash Power/Hash Rate?
Hash power, or hash rate, are interchangeable terms used to describe the combined computational power of a specific cryptocurrency network or the power of an individual mining rig on that network.

Quote
Hash Rate
The hash rate is the measuring unit of the processing power of the Bitcoin network. The Bitcoin network must make intensive mathematical operations for security purposes. When the network reached a hash rate of 10 Th/s, it meant it could make 10 trillion calculations per second.

If Brazil as they have indicated declares BTC their legal tender in the near future then it is a currency and traded as such with the rest of the world.
That is the real reason why the IMF hated the idea of El Salvador choosing bitcoin as their legal tender. It means everyone incl the IMF has to accept it as currency.
Brazil has the sixth-largest population in the world. 212 Million people - roughly 150 Million of which would become active users of bitcoin.

Their cities have a bigger population than the entire country of El Salvador.
If Brazil happens then the dominoes will fall in Latin America.

I see bitcoin as a store of value - digital gold. But that narrative could change as crypto and bitcoin morph over time to answer different demands.
For now, it will work well as currency for countries like Brazil and Venezuela, no corruption and no shenanigans, no runaway inflation.
Regardless, I do think it is within the realm of possibility that bitcoin might become the world currency in a couple of decades or not:).

BTW I'm old enough to remember when President Nixon decided he wanted to end the prior agreement. He ended the gold standard. It was supposed to be temporary...
I thought that happened in 1972 but maybe it didn't go into effect until 1973 based on talltexan's comments.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 07, 2021, 07:54:16 PM
@GuitarStv - Perhaps you are not familiar with crypto terminology because hashpower and hash rate are interchangeable terms. 
Quote
What Is Hash Power/Hash Rate?
Hash power, or hash rate, are interchangeable terms used to describe the combined computational power of a specific cryptocurrency network or the power of an individual mining rig on that network.

Quote
Hash Rate
The hash rate is the measuring unit of the processing power of the Bitcoin network. The Bitcoin network must make intensive mathematical operations for security purposes. When the network reached a hash rate of 10 Th/s, it meant it could make 10 trillion calculations per second.

If Brazil as they have indicated declares BTC their legal tender in the near future then it is a currency and traded as such with the rest of the world.
That is the real reason why the IMF hated the idea of El Salvador choosing bitcoin as their legal tender. It means everyone incl the IMF has to accept it as currency.
Brazil has the sixth-largest population in the world. 212 Million people - roughly 150 Million of which would become active users of bitcoin.

Their cities have a bigger population than the entire country of El Salvador.
If Brazil happens then the dominoes will fall in Latin America.

I see bitcoin as a store of value - digital gold. But that narrative could change as crypto and bitcoin morph over time to answer different demands.
For now, it will work well as currency for countries like Brazil and Venezuela, no corruption and no shenanigans, no runaway inflation.
Regardless, I do think it is within the realm of possibility that bitcoin might become the world currency in a couple of decades or not:).

BTW I'm old enough to remember when President Nixon decided he wanted to end the prior agreement. He ended the gold standard. It was supposed to be temporary...
I thought that happened in 1972 but maybe it didn't go into effect until 1973 based on talltexan's comments.

I've been listening to people hate on Bitcoin since it was $1,200.  I hated on Bitcoin long before it got to $1,000.  Back then, I knew my arguments were weak, I understood what Bitcoin was doing, but I was stubborn and felt jealous of the folks that made a lot money in it.  I missed out on it for the longest time because of my stubbornness and that is on me.  I understand where GuitarStv is coming from.  He is a smart guy.  He won't admit it but he will come around sooner or later. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 07, 2021, 08:04:58 PM
Just wanted to say thanks to the posters who I've interacted with in this thread.  A few posters helped me think about the topic in a new way, and that's been great.  And even to the people who just categorically reject it as a viable long term sector, it's valuable to know the full range of thoughts and attitudes on the emerging cyrpto space. 

This forum isn't perfect, but I've found it to be much better than most.  Cheers.

In order to beat the market you have to go against the consensus and be correct (Ray Dalio). In order to figure out the position of the consensus, you need to ask the question. 

You asked the question and the forum answered the question. Now you should have a better idea of the position of the consensus. It's now your choice to go with the consensus or against it.

It is my personal belief that the position of the consensus on real estate on this forum is that cash flow is more important than appreciation. I disagree and don't really follow that investing advice. However, I still appreciate and value the opinion of others. Even the one's in which I disagree.

I just hopped on the site directly after listening to Ray Dalio being interviewed by Lex Fridman:)  This is the first post I read.  You summed his philosophy up well.  Love the analogy to your own ventures in real estate. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 07, 2021, 09:20:36 PM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.

The economics of Bitcoin force miners to pursue the cheapest energy, ie stranded/waste energy & renewables. Bitcoin mining operations are portable... El Salvador just started mining it with Volcano energy. As the buyer of first & last resort, Bitcoin will drive renewable energy development and harvest wasted gas flaring/etc. It will help stabilize the grid since miners can turn off when demand peaks or supply dips, which will be increasingly important as the grid shifts towards renewables. It's far from "dirty".


100% of the energy that goes into "mining" bitcoin is wasted energy.  It serves no productive purpose for the human race.  You're arguing that energy is expensive, and "miners" are cheap, so they'll find more efficient ways to waste this energy . . . but missing the fundamental point.

Mining bitcoin is similar to leaving your car running in your driveway all day, 24/7.  It might be more efficient to leave a prius running rather than a humvee . . . but you're still creating tremendous waste.


Like so much related to bitcoin, the idea that bitcoin "mining" is somehow ushering in an era of clean power by wasting power also doesn't pass the smell test.  Profitable bitcoin "mining" facilities have been found in Alberta, sucking away at the teat of natural gas:  https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731 (https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731)

It's not wasted, the hash rate provides security for the network. Proof of work is necessary for a decentralized currency. That's what made gold work for thousands of years. Was all the energy expended in mining gold for coins & bars "wasted"? Far from it. The ability to store value and trade is what made civilization possible. Scaling beyond small groups requires a credible currency. Superior currencies (eg the Florin) have produced surges in human flourishing, whereas debasement of currencies has always led to ruin. The creation of a superior monetary system that can never be debased is perhaps the most valuable thing we could possibly expend the energy on.

Proof of work is necessary for a decentralized crypto-currency.  I haven't seen any compelling necessity for a decentralized crypto-currency though.  You're still running the car in the driveway in park.

As you mentioned, the ability to store value and trade existed before crypto-currency.  It will exist after crypto-currency.  Concerns about debasement seem particularly silly.  How is it possible to debase something with no value beyond speculation?



And it's not like the Petrodollar system backed by oil, guns, and bombs is a very clean alternative.

You seem to be implying with this comment that cryptocurrency won't ever be used to fund oil, guns, and bombs - or by any country involved in the trade or use of those.  At the moment, this seems to be true . . . as cryptocurrency isn't widely used to fund anything but speculation, terrorism, human trafficking, and drug purchases.  I'd expect someone with faith in the future of this alleged 'currency' to some day expect it to be used as any other currency is today.  In which case, all that 'oil/guns/bombs backing' would seem to apply to crypto as well.

So I'm not sure I understand what you're getting at here.  Can you elaborate?

Following WW2 & the Bretton Woods agreement the US Dollar was backed by gold (which other nation states could redeem) and all other world currencies were pegged to the Dollar. But it was a scam. The US kept printing more dollars than they had gold to back it up. In 1971 Nixon defaulted on the debt and stopped allowing redemption of the dollar for gold. From that point on we operated under the Petrodollar. The US struck a deal with Saudi Arabia & other oil producing nations to only sell oil for dollars (in exchange for protection from the empire). So instead of being backed by gold it's backed by oil. And when a nation like Iraq or Libya tries to sell oil for something other than dollars the US swiftly invades and puts a stop to that. The currency must be backed by guns and bombs to force everyone to keep using it.
A decentralized currency backed by math & hashpower is a lot cleaner and more peaceful than empire notes backed by fossil fuel cartels and war. Bitcoin will be a lot better for the people as well, both within the empire and outside. Abandoning the gold standard has been a disaster for the average US citizen, since 1971 real wages flatlined and the divide between rich and poor skyrocketed.
The gold standard wasn't perfect as it still allowed the banks to commit legalized fraud in the form of fractional reserve banking, but it at least limited the damage they could do and kept real interest rates from going negative. A Bitcoin standard eliminates the need for trusted counterparties (who always, inevitably betray that trust) so it doesn't suffer the same drawbacks. A sound monetary system which nobody can cheat or manipulate has incredible potential to transform the human condition. Can the car idling in your driveway do that?

Wow the stretches and amount of idealism in this post.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: blue_green_sparks on October 08, 2021, 06:54:02 AM
I feel like I missed out on Bitcoin. I am age 60, with NW = 80x my comfortable yearly spend...so no big deal. I did look at some tweets pumping up dozens of other coins, each with an animal or cartoon mascot all promising a rocket ship to the moon. The due diligence is usually a sub-penny price chart and a few sentence about why this coin is the best. Elon seems to be a common mascot of sorts. Then I saw some posts from people who said that their wallets got corrupted or they lost their secret number and I could really sense their misery.

So I continue to 'miss out' even though I do see great value in the technology, especially involving intellectual property. I am sorta waiting for that aspect to evolve and develop a bit more. However back in my 'risk-on' days I would have been all in on Bitcoin.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 08, 2021, 07:19:05 AM
I feel like I missed out on Bitcoin. I am age 60, with NW = 80x my comfortable yearly spend...so no big deal.

At some point, we must accept that we didn’t miss out on anything. Disabled Haitian orphans may have a strong case, but not those of us retiring rich after multi-decade lives. No we didn’t go all-in on every best-performing stock of each year for the past decade either, but to perceive that as an error would be to set the bar a little high.

Crypto FOMO is a source of misery and anxiety, not an urge to succeed in life and certainly not a path to satisfaction. Upon realizing this, the next realization is that these speculations are entirely based on FOMO, and while FOMO can be explosive it also can evaporate as fast as ether.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 08, 2021, 08:04:41 AM
A decentralized currency backed by math & hashpower is a lot cleaner and more peaceful than empire notes backed by fossil fuel cartels and war.
Math isn't a backing.  'Hashpower' isn't even a real word.

I'm not sure you fully understand the other terms you're using either.
You might be right about the other poster's use of terms, but for those who don't recognize "hash power" I can try an help.  Bitcoin miners are specialized machines that guess at answers to cryptographic problems.  Their guess is put through a hashing algorithm ("hash") until they get an answer with a certain number of leading zeros (trailing? it's been awhile).  The "power" of miners is measured in how many hash guesses they can make per second.  But that's for others who might wonder what "hash power" means.


... And when a nation like Iraq or Libya tries to sell oil for something other than dollars the US swiftly invades and puts a stop to that.
Funny ... but are you sure that's true?  Do Russia and Iran only sell in U.S. dollars?  They haven't been invaded.  When you say "the US swiftly invades", are you ignoring partnerships of many countries?  How do you explain coalition lead invasions, if it's only about oil for America's benefit?  Seems like a lot of holes in this theory.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 08, 2021, 08:14:00 AM
Yeah, I don't get the "missing out" angle.

I missed out on a zillion rocket to the moon investments in my life, because, you know, I'm not omniscient. But just plugging extra money into boring investments and not buying stuff I didn't need cut my (not particularly well paid, even) working career to something like 10 years. It's hard to say I "missed out" on anything there.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on October 08, 2021, 08:58:19 AM
Yeah, I don't get the "missing out" angle.

I missed out on a zillion rocket to the moon investments in my life, because, you know, I'm not omniscient. But just plugging extra money into boring investments and not buying stuff I didn't need cut my (not particularly well paid, even) working career to something like 10 years. It's hard to say I "missed out" on anything there.

-W


100% agree. For people who already have enough or are on a simple path of having enough, the crypto game is unnecessary, so there's no FOMO. For people with much less, the FOMO is unbearable. They have to buy because it's their only chance. That might not represent the average crypto buyer on MMM, but it is my personal belief that it represents the average crypto buyer in the marketplace.

Institutional investors are buying Bitcoin. However, they spend 100 million/year on research. When the fundamentals change, they will be the first to know and will get out first. Because of the large volatility, the average Joe will continue to hold on, even after seeing 90% declines. The loss will be too damaging to accept, so they never sell. There is always a chance that it will come back. It will be akin to baseball cards sitting in their attic or a stock worth pennies in their brokerage account.

Yes, it is possible for Bitcoin to go 10X over the next 5 years. However, even if it does 10X in 5 years, how do you model a withdrawal strategy with the extreme volatility? How do you avoid having a legitimate heart attack? Someone suggested that the volatility will decrease in the future. Those FIRE calculators assume homogeneity of variance because they use parametric statistics. As a result, even if the volatility does decrease, those numbers that the FIRE calculators spit out are worthless. 

I would be more likely to agree with someone who picks individual stocks with less volatility.

Cathy Wood was considered by many the best stock picker of 2020. Her ARKK Innovation Fund went up 150%. She recently predicted (September 14, 2021) that Bitcoin will go 10X in 5 years. She is advocating for a 5% position in crypto and a 60/40 split between Bitcoin and Ethereum.

https://www.youtube.com/watch?v=A3mA_7T3xO8

Unfortunately, her ARKK fund isn't performing as well as 2020. In 2021, it's down 3.5%. Based on the charts it looks like -9%. However, the analytics say -3.5%, so I will defer to the experts.




Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on October 08, 2021, 09:05:28 AM
Yeah, I don't get the "missing out" angle.

I missed out on a zillion rocket to the moon investments in my life, because, you know, I'm not omniscient. But just plugging extra money into boring investments and not buying stuff I didn't need cut my (not particularly well paid, even) working career to something like 10 years. It's hard to say I "missed out" on anything there.

-W

Agreed.

You can drive yourself crazy looking backwards at your life with the benefit of perfect hindsight. You make the best decisions you can, with the information you have at the time. If things have worked out so you have a life that you're happy with, don't worry about it. If you're unhappy with your life, focus on things you can do today and in the future to change it rather than the different decisions you could have made in the past.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: index on October 08, 2021, 10:34:57 AM
... And when a nation like Iraq or Libya tries to sell oil for something other than dollars the US swiftly invades and puts a stop to that.

There are a couple big reasons I haven't invested in crypto-

1. The US and EU could follow China and outlay crypto mining and transactions tomorrow. Crypto getting too big takes the power away from central governments and governments tend not to give away power. You are making the argument the US uses its military to go in and prevent destruction of the petrodollar, then ignoring the possibility the government will use its pen to outlaw crypto to prevent destruction of the petrodollar? China did it last month.

2. The credit market is 10-12x the size of the money supply. Borrowing for an asset today and using more efficient future work (productivity gains) to later pay on that credit is a  fundamental way economics has worked since Roman times. How does lending work with BTC? Can I borrow 8 BTC to buy a home today and promise to pay back those 8 BTC with interest over 30 years? The fundamentals you are using to say BTC is a good investment make it a bad currency. If BTC is increasing in value faster than productivity then I am paying back BTC with more hours worked in the future then hours worked today. On a fundamental level, credit breaks down.

 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 08, 2021, 12:49:56 PM
I have a question about bitcoin that has always bugged me, and hasn't really been satisfactorily answered.

Bitcoin depends on mining in order to keep writing it's block chain and remain a functional currency.  Without 'mining' of the block chain, bitcoin shuts down.  Currently almost all the computer/energy costs associated with this are foisted upon individual miners which makes transaction costs as cheap as they'll ever be.  The miners choose to do this because they're paid for their busywork in bitcoin.  However, since bitcoin mining is designed to yield less and less bitcoin over time the motive to keep mining will drop and eventually end.  This is true even if the price of Bitcoin inflates to gigantic sums . . . because consistent returns will end and it will become a random boon like winning the lottery.

The solution to this problem that I've seen presented is that people who use bitcoin as a currency will be happy to pay 'miners' to keep wasting energy and computing cycles to allow their transactions to go through.  But this solution means that once Bitcoin starts to mature as a 'currency', it is guaranteed to become significantly more expensive to use.  Most purchases with currency are small . . . a donut, a coffee, some paper or a pen at a store.  Doesn't this all but guarantee that Bitcoin is doomed for use as a real currency?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on October 08, 2021, 01:01:00 PM
Yeah, I don't get the "missing out" angle.

I missed out on a zillion rocket to the moon investments in my life, because, you know, I'm not omniscient. But just plugging extra money into boring investments and not buying stuff I didn't need cut my (not particularly well paid, even) working career to something like 10 years. It's hard to say I "missed out" on anything there.

-W

Right.  I missed out on Bitcoin equally as much as I missed out on Enron. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on October 08, 2021, 01:07:26 PM
I have a question about bitcoin that has always bugged me, and hasn't really been satisfactorily answered.

Bitcoin depends on mining in order to keep writing it's block chain and remain a functional currency.  Without 'mining' of the block chain, bitcoin shuts down.  Currently almost all the computer/energy costs associated with this are foisted upon individual miners which makes transaction costs as cheap as they'll ever be.  The miners choose to do this because they're paid for their busywork in bitcoin.  However, since bitcoin mining is designed to yield less and less bitcoin over time the motive to keep mining will drop and eventually end.  This is true even if the price of Bitcoin inflates to gigantic sums . . . because consistent returns will end and it will become a random boon like winning the lottery.

The solution to this problem that I've seen presented is that people who use bitcoin as a currency will be happy to pay 'miners' to keep wasting energy and computing cycles to allow their transactions to go through.  But this solution means that once Bitcoin starts to mature as a 'currency', it is guaranteed to become significantly more expensive to use.  Most purchases with currency are small . . . a donut, a coffee, some paper or a pen at a store.  Doesn't this all but guarantee that Bitcoin is doomed for use as a real currency?

I think the factor your predictions don't take into account is the difficulty adjustment built into bitcoin's hashing.

In the long term people can mine as much or as little as they'd like, the blockchain still works, the same number of transactions get processed with the same transaction fees and the total mining rewards per day or per week.

So ultimately the amount of money spent by miners (buying hardware and electricity primarily), adjusts to how much money is being spent on transaction fees + the shrinking block mining rewards, rather than the cost of the transaction fees having to increase or decrease to match the amount of money the miners are spending on hardware and electricity.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 08, 2021, 01:11:27 PM
Quote by @onecoolcat   
Quote
I've been listening to people hate on Bitcoin since it was $1,200.  I hated on Bitcoin long before it got to $1,000.  Back then, I knew my arguments were weak, I understood what Bitcoin was doing, but I was stubborn and felt jealous of the folks that made a lot money in it.  I missed out on it for the longest time because of my stubbornness and that is on me.  I understand where GuitarStv is coming from.  He is a smart guy.  He won't admit it but he will come around sooner or later.
I don't doubt for a second that GuitarStv is a smart guy. In fact, he is one of my long-time favorite posters, even when he is like a dog with a bone when something irks him:). It wouldn't be a good forum if we couldn't have discussions and disagreements.

My personal view on crypto is fairly idealistic,
more like @taekvideo not a view all that welcome everywhere. I care to support a movement (that is all it was from the beginning) to make the world a better place. I see and embrace the global aspect.

I love that:
The first big bitcoin currency experiment in El Salvador is going well. It took a lot of work and guts to go up against the IMF.
Their people are benefitting, the country coffers gained a few million, the GDP is up and their real estate is on fire.

I rejoice for every poor person anywhere who gets to keep an extra five to ten bucks a week because there are no remittance fees to send money home. I care that people fleeing Afghanistan were able to get some or most of their money out - thanks to Crypto. It is amazing that there is a game that allows you to make money in-game so that a kid can support his family in Africa/Asia thanks to crypto. I love the projects that Cardano is pursuing in Africa.

Innovation - Money Transfer
Nobody is talking about it, but - Square - Cash App - After Pay - Twitter - their payment app is underpinned by bitcoin. It is a monumental shift taking place quietly. Social Networks that span the globe and connect us with the Bank of the Future. As they say - the future is here.
(166M active daily users for Twitter) (Cash app 40M active daily users)
Jack Dorsey CEO of Twitter, is a huge fan of bitcoin. So yes, I do think bitcoin will be around for a while longer.

I can't say that I have ever been envious of others making bank on crypto except for one friend who made what he called "a drunk purchase" on his cell while out with his friends at the local hotspot. $35K that turned into $280K and is still going up. Life is so unfair:).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 08, 2021, 02:10:02 PM
I'm glad for your friend's fortune.

But I couldn't imagine carrying out a $35,000 transaction on public wifi. Unless he used phones to buy the bitcoin off of one of his friends who was right there.

But then I wonder about performing a five-figure financial transaction with a friend when you have a whole market available.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 08, 2021, 02:51:53 PM
I have a question about bitcoin that has always bugged me, and hasn't really been satisfactorily answered.

Bitcoin depends on mining in order to keep writing it's block chain and remain a functional currency.  Without 'mining' of the block chain, bitcoin shuts down.  Currently almost all the computer/energy costs associated with this are foisted upon individual miners which makes transaction costs as cheap as they'll ever be.  The miners choose to do this because they're paid for their busywork in bitcoin.  However, since bitcoin mining is designed to yield less and less bitcoin over time the motive to keep mining will drop and eventually end.  This is true even if the price of Bitcoin inflates to gigantic sums . . . because consistent returns will end and it will become a random boon like winning the lottery.

The solution to this problem that I've seen presented is that people who use bitcoin as a currency will be happy to pay 'miners' to keep wasting energy and computing cycles to allow their transactions to go through.  But this solution means that once Bitcoin starts to mature as a 'currency', it is guaranteed to become significantly more expensive to use.  Most purchases with currency are small . . . a donut, a coffee, some paper or a pen at a store.  Doesn't this all but guarantee that Bitcoin is doomed for use as a real currency?

An economics-minded crypto-booster would answer that the transactions cost you'd pay to spend cryptocurrency would be less than the net difference in inflation between government fiat and crypto fiat currencies. In theory, cryptocurrencies would have a cost for using them, and government currencies would have a cost for holding them.

This would of course open up an arbitrage opportunity where you want to hold crypto and transact in govt. currencies. Thus in a world where you could buy goods with either, the markets can be expected to move toward an equilibrium where the cost (bid/ask spread plus transaction costs) to trade crypto for govt. currency is equal to the cost of simply transacting in crypto (transaction cost alone). This equilibrium would be impossible to actually achieve though, because the bid/ask + transaction cost must be greater than the transaction cost alone. Therefore, the incentive would be to simply transact in crypto, rather than paying to convert to dollars and then transacting with dollars. This incentive structure would lead to growing demand for transaction processing, which would lead to more processing supply, which would keep costs stable in the long run at some point just above the marginal supplier's cost of providing the service. The crypto-pundits keep saying it'll be any year now that lots of vendors/suppliers start accepting crypto. This would be because it's cheaper to just deal in crypto than to switch back and forth.

The end result of such a world, according to crypto-boosters, would be that we've traded/sold inflation in exchange for environmental degradation.

What the above analysis leaves out is that vendors will have to charge currency conversion costs to their buyers if they need to receive government currency in the end - i.e. the entire supply chain has not yet adopted the new currency. A retailer in the US or EU can sell you things for dollars and euros and pay their Chinese or Saudi suppliers in dollars in euros, but their Chinese or Saudi suppliers cannot/will not accept crypto. The vendor must pay the currency conversion cost to replenish, so they pass this cost along to their customers. You end up with a system like truck stops that will sell fuel for one price in cash and a higher price if credit cards are used, to recoup the credit card processing fee. For people in possession of dollars, why pay the cost to trade the dollars for crypto so that you can then pay the higher cost the vendor charges?

If neither consumers nor vendors can escape the dynamic of government currency having a cost to hold and cryptocurrency having a cost to transact, then it will be hard for people to do anything different with crypto than what they're doing now - holding it. Likewise it will be hard for people to do anything different with dollars/euros/yen than what they're doing now - spending it.

What we're still leaving out is the situation for people in countries who earn their local currency, but when buying imports must pay a retail price which includes the cost to convert to dollars or similar reserve currencies. In theory, they should be agnostic about using their local currency or a cryptocurrency when spending. Except there's the minor detail that wages are paid in their local currency, so they'd have to pay the conversion cost to exchange local currency for crypto, only to then pay another conversion cost - built into prices quoted in crypto - for the retailer to exchange crypto for dollars so that international suppliers can be paid. For people in this situation, using crypto would involve paying for two currency conversions instead of one. But what if they're paid in crypto by their employer? If that were the case, they'd pay one currency conversion, crypto-to-dollars perhaps, and be paying for the same number of conversions as they were when they were being paid in local currency.

This is all a roundabout way of explaining why cryptocurrencies still - after years and many billions of dollars of investment and R&D - are not routinely transacted as currencies for goods and services. Consumers would have to be willing to pay currency conversion costs, plus whatever their payment processing service charged, and in addition suffer the inconvenience of their cryptocurrency not being universally accepted - until the entire supply chain changed over. That's a PITA when I can just whip out my VISA, pay in dollars, and only pay the CC payment processing service charge as part of my vendor's price. For widespread adoption of crypto throughout the supply chain to happen, crypto would have to be easier and cheaper than continuing to use dollars.

So far, it hasn't happened for the same reason your keyboard has the QWERTY layout from the 1800s, even though better designs have been invented. Imagine being so devoted to making he Dvorak or Colemak keyboards work that you carried your own special keyboard everywhere you went. People aren't willing to suffer even the mildest inconveniences to save their lives, much less foot the bill for this level of changeover costs. That's why crypto will always be a collectible, not a currency.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 08, 2021, 03:10:04 PM
I feel like I missed out on Bitcoin. I am age 60, with NW = 80x my comfortable yearly spend...so no big deal. I did look at some tweets pumping up dozens of other coins, each with an animal or cartoon mascot all promising a rocket ship to the moon. The due diligence is usually a sub-penny price chart and a few sentence about why this coin is the best. Elon seems to be a common mascot of sorts. Then I saw some posts from people who said that their wallets got corrupted or they lost their secret number and I could really sense their misery.

So I continue to 'miss out' even though I do see great value in the technology, especially involving intellectual property. I am sorta waiting for that aspect to evolve and develop a bit more. However back in my 'risk-on' days I would have been all in on Bitcoin.

Are you seriously comparing $54K bitcoin to Doge at $0.22 ? - then it may be a good thing that you 'missed out'.
OK - I can't help myself - but wherever were you looking?:) Just kidding.
I promise you I have no investments involving an animal or a cartoon. But I do follow youtube channels that occasionally have rockets - you got me there.
How else would we get to the moon?:)

Shucks - BTC is $54K today and ETH is $3.6K today and to my never-ending chagrin, the altcoin I wanted to buy when it was $23 (SOL) is $164 or so today. Crypto has gotten expensive.

FWIW
You can look up the white paper for any project/coin online, see the use cases and review their network, see who the developer and the investors are. You can look at the tokenomics and evaluate from there. But that takes time and work beyond reading a Twitter from Elon and his doggies.

Well, actually I lied I do own Doge and I am not selling it either - that dog will have its day!:)

Congrats on the NW! I think if I were in your shoes I wouldn't bother with crypto either. Well done:).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 08, 2021, 03:31:26 PM
I'm glad for your friend's fortune.

But I couldn't imagine carrying out a $35,000 transaction on public wifi. Unless he used phones to buy the bitcoin off of one of his friends who was right there.

But then I wonder about performing a five-figure financial transaction with a friend when you have a whole market available.

Right:)
I think that is where the 'drunken' part of " drunken purchase" came in. It wasn't bitcoin. He had cash at the exchange and clicked on buy SOL.

Maybe we should ban rich people from investing in crypto and just make it available to desperate people.
But then what would Bitcoin be without the much maligned banks?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: taekvideo on October 08, 2021, 03:33:23 PM
the US dollar isn't and has never been backed by oil.  If it was, the price of the US dollar and the price of oil would move in lockstep.  They don't.  Closest I can figure is that the US dollar is backed by the GDP of the US.

Yeah that's my bad I shouldn't have said "backed by", I'm just looking at the mechanisms for what sustains its value over time. The dollar isn't pegged to oil like it was pegged to gold during the gold standard. The gold standard bootstrapped the dollar as the reserve currency, but now the dollar is fiat. Oil being traded only in dollars sets a demand floor and forces countries to keep a strategic reserve of dollars, which helps maintain it as the reserve currency. Without that deal the dollar would have collapsed once Nixon exit scammed.
The dollar isn't the reserve currency because it's the most stable, it's the most stable because it's the reserve currency, which is achieved by force and politics.

A decentralized currency backed by math & hashpower is a lot cleaner and more peaceful than empire notes backed by fossil fuel cartels and war.

Math isn't a backing.  'Hashpower' isn't even a real word.

I'm not sure you fully understand the other terms you're using either.  A 'backed currency' is a currency that comes with a guarantee that it can always be exchanged for a predetermined amount of another asset.  That's the dictionary definition.

Neither the US dollar, nor bitcoin are backed currencies.

"secured by" then?
Bitcoin isn't backed by an asset, it's the asset itself, like gold.
Gold doesn't need to be backed by anything, it's the layer 1 money because it's the commodity with the most scarcity and resistance to supply inflation.
Or at least it was before the discovery of Bitcoin.


Bitcoin will be a lot better for the people as well, both within the empire and outside. Abandoning the gold standard has been a disaster for the average US citizen, since 1971 real wages flatlined and the divide between rich and poor skyrocketed.  The gold standard wasn't perfect as it still allowed the banks to commit legalized fraud in the form of fractional reserve banking, but it at least limited the damage they could do and kept real interest rates from going negative.

The gold standard was abandoned in the US 1933 by FDR.  It was abandoned by Britian in 1931 and then the rest of the UK and most of it's allies as part of the Bretton Woods agreement in '44.  Not sure I understand what you're talking about here.  Since abandoning the gold standard in 1933, I'd argue that the lives of most Americans have significantly improved.

FDR banned citizens from owning gold, but nation states could redeem dollars for gold until 1971. Once the money printing got so extreme that other countries lost confidence & started draining our gold reserves Nixon pulled the rug out from under them.



Fractional reserve banking started in the 17th century.  It was a significant economic contributor as it allowed greater access to capital to people trying to start and build businesses.  Not exactly sure what your issue is with this, could you explain?

It's easier to understand in the context of a gold standard. Due to certain flaws with gold as a medium of exchange, people end up trusting 3rd party vaults to store the gold, which issue gold receipts that are "as good as gold", but more portable/divisible/etc.
This trust eventually gets betrayed and the banks issue more gold receipts than they have gold in their vaults, which is fraud. As long as not many people actually redeem the certificates for gold, they'll get away with it. But if people lose confidence, then they rush to redeem their certificates, and the scheme blows up. This is basically what happened at an international nation-state level in 1971 when the US scammed the rest of the world with their fraudulent gold receipts.

In a fiat economy things get a little more confusing, but the end result is the same. The banks push risk and leverage out into the system, privatize the gains, and socialize the losses when it all blows up. The same "dollars" are loaned out to a bunch of different people at the same time, at interest. It's a scam, a confidence game. If I did what the banks do every day they would call it check kiting and I would go to jail.

Issuing more on-demand cash receipts (eg checking/savings balances) than they have cash in the vault is legalized fraud.
If a bank wants to issue loans without being fraudulent, that's certainly possible:
1) they can loan out their own capital reserves, or
2) they can raise money by issuing bonds for at least the amount and maturity dates of the loans they want to issue.
Being a credit middle-man is okay, that's a useful service banks can provide. But creating fraudulent cash receipts is a confidence game that always blows up eventually and we all suffer the consequences.

FDIC insurance wouldn't be necessary if the owners & managers of banks were held personally liable for defaults (they used to be long ago), but limited liability creates a severe moral hazard. FDIC makes it worse.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 08, 2021, 03:42:36 PM
Square - Cash App - After Pay - Twitter - their payment app is underpinned by bitcoin.

Underpinned? As in, when I transfer dollar-denominated cash to someone via CashApp, you're saying they convert my dollars to Bitcoin and use Bitcoin to transfer the value to the recipient, only converting back to dollars at the last step before reaching the recipient's account??

Or do you mean that BTC is one of the items that I can transfer to someone, just like dollars are, and CashApp somehow makes a profit on the BTC transfers, with the result that the BTC line of business may be profitable to Square's Cash App division?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: taekvideo on October 08, 2021, 04:38:34 PM
... And when a nation like Iraq or Libya tries to sell oil for something other than dollars the US swiftly invades and puts a stop to that.

There are a couple big reasons I haven't invested in crypto-

1. The US and EU could follow China and outlay crypto mining and transactions tomorrow. Crypto getting too big takes the power away from central governments and governments tend not to give away power. You are making the argument the US uses its military to go in and prevent destruction of the petrodollar, then ignoring the possibility the government will use its pen to outlaw crypto to prevent destruction of the petrodollar? China did it last month.

2. The credit market is 10-12x the size of the money supply. Borrowing for an asset today and using more efficient future work (productivity gains) to later pay on that credit is a  fundamental way economics has worked since Roman times. How does lending work with BTC? Can I borrow 8 BTC to buy a home today and promise to pay back those 8 BTC with interest over 30 years? The fundamentals you are using to say BTC is a good investment make it a bad currency. If BTC is increasing in value faster than productivity then I am paying back BTC with more hours worked in the future then hours worked today. On a fundamental level, credit breaks down.

1) That's the biggest risk for sure. But I don't think so. The politics are a lot different here. It would violate the 1st amendment for starters, but that wouldn't necessarily stop them. There are interest groups here that strongly support it. And Congress is dysfunctional. But most of all, I think they know the dollar is on the way out, and they would rather nobody gain control of the reserve currency status than hand it over to China. But I could be wrong. Maybe I'm too much of an optimist.

2) After it levels off BTC will increase in value at the same rate as productivity, not faster.
The type of credit you describe is counter-productive. Taking from the future to consume in the present is a problem with the current system, not a benefit, especially if the government has the power to do that on our behalf. If borrowing is done to increase productivity (eg capital investments for a business), then it works just fine under a Bitcoin standard, and capital will be put to its most productive use on the free market. If borrowing is done to consume, then you'll have to pay more (interest) for the privilege, as you well should.
Low time preference is a good thing. It's a feature of the Bitcoin standard.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: taekvideo on October 08, 2021, 04:49:34 PM
I have a question about bitcoin that has always bugged me, and hasn't really been satisfactorily answered.

Bitcoin depends on mining in order to keep writing it's block chain and remain a functional currency.  Without 'mining' of the block chain, bitcoin shuts down.  Currently almost all the computer/energy costs associated with this are foisted upon individual miners which makes transaction costs as cheap as they'll ever be.  The miners choose to do this because they're paid for their busywork in bitcoin.  However, since bitcoin mining is designed to yield less and less bitcoin over time the motive to keep mining will drop and eventually end.  This is true even if the price of Bitcoin inflates to gigantic sums . . . because consistent returns will end and it will become a random boon like winning the lottery.

The solution to this problem that I've seen presented is that people who use bitcoin as a currency will be happy to pay 'miners' to keep wasting energy and computing cycles to allow their transactions to go through.  But this solution means that once Bitcoin starts to mature as a 'currency', it is guaranteed to become significantly more expensive to use.  Most purchases with currency are small . . . a donut, a coffee, some paper or a pen at a store.  Doesn't this all but guarantee that Bitcoin is doomed for use as a real currency?

Transaction fees are gradually taking over to pay the miners.
These fees are only for transactions on the blockchain... 99.9% of future transactions will be done off-chain (eg on the Lightning Network, which has much lower fees).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 08, 2021, 05:58:34 PM

2) After it levels off BTC will increase in value at the same rate as productivity, not faster.
The type of credit you describe is counter-productive. Taking from the future to consume in the present is a problem with the current system, not a benefit, especially if the government has the power to do that on our behalf. If borrowing is done to increase productivity (eg capital investments for a business), then it works just fine under a Bitcoin standard, and capital will be put to its most productive use on the free market. If borrowing is done to consume, then you'll have to pay more (interest) for the privilege, as you well should.
Low time preference is a good thing. It's a feature of the Bitcoin standard.

To me this sounds like you're describing an idealized "Bitcoin standard." It's pretty rare that something works exactly as designed, especially in a system as large as the world's finances. What happens if there's a deviation from the plan?

Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 08, 2021, 07:18:42 PM
I have a question about bitcoin that has always bugged me, and hasn't really been satisfactorily answered.

Bitcoin depends on mining in order to keep writing it's block chain and remain a functional currency.  Without 'mining' of the block chain, bitcoin shuts down.  Currently almost all the computer/energy costs associated with this are foisted upon individual miners which makes transaction costs as cheap as they'll ever be.  The miners choose to do this because they're paid for their busywork in bitcoin.  However, since bitcoin mining is designed to yield less and less bitcoin over time the motive to keep mining will drop and eventually end.  This is true even if the price of Bitcoin inflates to gigantic sums . . . because consistent returns will end and it will become a random boon like winning the lottery.

The solution to this problem that I've seen presented is that people who use bitcoin as a currency will be happy to pay 'miners' to keep wasting energy and computing cycles to allow their transactions to go through.  But this solution means that once Bitcoin starts to mature as a 'currency', it is guaranteed to become significantly more expensive to use.  Most purchases with currency are small . . . a donut, a coffee, some paper or a pen at a store.  Doesn't this all but guarantee that Bitcoin is doomed for use as a real currency?

I didn't read the next 20 posts so this may have been answered, but each block contains a fixed block reward (that halves every approx. 4 years) and miner fees.  Miner fees are akin to transaction fees the person sending a transaction pays.  In about 100 years the fixed block reward will be zero.  At that point, there will be a hard-cap on the amount of Bitcoin (21m) and the miners will only be incentivized by the miner fees. 

Bitcoin is not guaranteed to become more expensive to use in the future.  To the contrary, it is expected to be cheaper through safe, secure Layer 2 ("L2") solutions that are already in use by many Bitcoiners; including the entire nation of El Salvadore.  In theory, L2 solutions can process a near infinite amount of transactions per second (TPS) near instantaneously.  The Lightning Network already provides near free and instantaneous Bitcoin transactions to thousands of its users and it can scale seamlessly if needed by setting up additional nodes (we are nowhere near reaching congestion on the Lightning Network or paying noticeable fees for transactions so its just not necessary). 

So thinking 100 years into the future, Bitcoin already has the framework to scale to support exponentially more transactions that are already taking place and through L2 solutions these fees can be split amongst thousands of individuals at nominal rates and paid to the miners.  Finally, Bitcoin is not unchanging.  There are somethings that will probably never change with Bitcoin (e.g. the 21m cap) but Bitcoin and and does change.  The technology improves and so does Bitcoin so its possible L2 solutions wont even be necessary to fix the congestion problem (which is related to your concern about block rewards).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: taekvideo on October 08, 2021, 08:47:25 PM
I have a question about bitcoin that has always bugged me, and hasn't really been satisfactorily answered.

Bitcoin depends on mining in order to keep writing it's block chain and remain a functional currency.  Without 'mining' of the block chain, bitcoin shuts down.  Currently almost all the computer/energy costs associated with this are foisted upon individual miners which makes transaction costs as cheap as they'll ever be.  The miners choose to do this because they're paid for their busywork in bitcoin.  However, since bitcoin mining is designed to yield less and less bitcoin over time the motive to keep mining will drop and eventually end.  This is true even if the price of Bitcoin inflates to gigantic sums . . . because consistent returns will end and it will become a random boon like winning the lottery.

The solution to this problem that I've seen presented is that people who use bitcoin as a currency will be happy to pay 'miners' to keep wasting energy and computing cycles to allow their transactions to go through.  But this solution means that once Bitcoin starts to mature as a 'currency', it is guaranteed to become significantly more expensive to use.  Most purchases with currency are small . . . a donut, a coffee, some paper or a pen at a store.  Doesn't this all but guarantee that Bitcoin is doomed for use as a real currency?

An economics-minded crypto-booster would answer that the transactions cost you'd pay to spend cryptocurrency would be less than the net difference in inflation between government fiat and crypto fiat currencies. In theory, cryptocurrencies would have a cost for using them, and government currencies would have a cost for holding them.

This would of course open up an arbitrage opportunity where you want to hold crypto and transact in govt. currencies. Thus in a world where you could buy goods with either, the markets can be expected to move toward an equilibrium where the cost (bid/ask spread plus transaction costs) to trade crypto for govt. currency is equal to the cost of simply transacting in crypto (transaction cost alone). This equilibrium would be impossible to actually achieve though, because the bid/ask + transaction cost must be greater than the transaction cost alone. Therefore, the incentive would be to simply transact in crypto, rather than paying to convert to dollars and then transacting with dollars. This incentive structure would lead to growing demand for transaction processing, which would lead to more processing supply, which would keep costs stable in the long run at some point just above the marginal supplier's cost of providing the service. The crypto-pundits keep saying it'll be any year now that lots of vendors/suppliers start accepting crypto. This would be because it's cheaper to just deal in crypto than to switch back and forth.

The end result of such a world, according to crypto-boosters, would be that we've traded/sold inflation in exchange for environmental degradation.

What the above analysis leaves out is that vendors will have to charge currency conversion costs to their buyers if they need to receive government currency in the end - i.e. the entire supply chain has not yet adopted the new currency. A retailer in the US or EU can sell you things for dollars and euros and pay their Chinese or Saudi suppliers in dollars in euros, but their Chinese or Saudi suppliers cannot/will not accept crypto. The vendor must pay the currency conversion cost to replenish, so they pass this cost along to their customers. You end up with a system like truck stops that will sell fuel for one price in cash and a higher price if credit cards are used, to recoup the credit card processing fee. For people in possession of dollars, why pay the cost to trade the dollars for crypto so that you can then pay the higher cost the vendor charges?

If neither consumers nor vendors can escape the dynamic of government currency having a cost to hold and cryptocurrency having a cost to transact, then it will be hard for people to do anything different with crypto than what they're doing now - holding it. Likewise it will be hard for people to do anything different with dollars/euros/yen than what they're doing now - spending it.

What we're still leaving out is the situation for people in countries who earn their local currency, but when buying imports must pay a retail price which includes the cost to convert to dollars or similar reserve currencies. In theory, they should be agnostic about using their local currency or a cryptocurrency when spending. Except there's the minor detail that wages are paid in their local currency, so they'd have to pay the conversion cost to exchange local currency for crypto, only to then pay another conversion cost - built into prices quoted in crypto - for the retailer to exchange crypto for dollars so that international suppliers can be paid. For people in this situation, using crypto would involve paying for two currency conversions instead of one. But what if they're paid in crypto by their employer? If that were the case, they'd pay one currency conversion, crypto-to-dollars perhaps, and be paying for the same number of conversions as they were when they were being paid in local currency.

This is all a roundabout way of explaining why cryptocurrencies still - after years and many billions of dollars of investment and R&D - are not routinely transacted as currencies for goods and services. Consumers would have to be willing to pay currency conversion costs, plus whatever their payment processing service charged, and in addition suffer the inconvenience of their cryptocurrency not being universally accepted - until the entire supply chain changed over. That's a PITA when I can just whip out my VISA, pay in dollars, and only pay the CC payment processing service charge as part of my vendor's price. For widespread adoption of crypto throughout the supply chain to happen, crypto would have to be easier and cheaper than continuing to use dollars.

So far, it hasn't happened for the same reason your keyboard has the QWERTY layout from the 1800s, even though better designs have been invented. Imagine being so devoted to making he Dvorak or Colemak keyboards work that you carried your own special keyboard everywhere you went. People aren't willing to suffer even the mildest inconveniences to save their lives, much less foot the bill for this level of changeover costs. That's why crypto will always be a collectible, not a currency.


lol I love the analogy. I actually use Dvorak. Took a little bit to retrain but soooo worth it in the long run with how much I type. You don't need a special keyboard, you can change the layout in the settings on Windows.

Your analysis about transaction costs is wrong though. It's a lot cheaper to transact in crypto than in fiat. Just a couple cents on Lightning. BTC to fiat exchange fees are around 0.1% (and will be driven lower in time). So a payment with a currency conversion on both sides is only 0.2% + 2cents (compared to VISA which charges 2.9% + 30 cents). Stores won't charge a premium to pay with Bitcoin, if anything they might offer a discount to avoid the VISA fees, like some places do with cash.
Strike is making this process seamless, enabling peer-to-peer payments with automatic currency conversions, you only pay a ~2 cents for the Lightning Network fee plus the market-spread execution cost on the currency conversion so you can receive the payment in fiat. Only available in the US and El Salvador currently, but will be expanding globally. You can link your Strike account to your Twitter account and receive the Bitcoin tips in dollars from any Lightning-compatible source anywhere in the world (I think they support blockchain payments too but the fees are higher than Lightning).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 09, 2021, 02:35:55 AM
It's a lot cheaper to transact in crypto than in fiat. Just a couple cents on Lightning. BTC to fiat exchange fees are around 0.1% (and will be driven lower in time). So a payment with a currency conversion on both sides is only 0.2% + 2cents (compared to VISA which charges 2.9% + 30 cents). Stores won't charge a premium to pay with Bitcoin, if anything they might offer a discount to avoid the VISA fees, like some places do with cash.
Strike is making this process seamless, enabling peer-to-peer payments with automatic currency conversions, you only pay a ~2 cents for the Lightning Network fee plus the market-spread execution cost on the currency conversion so you can receive the payment in fiat.
Well, that got my hopes up, but there's "intermediate node fees", which can be far more expensive.  In this example, a transaction of $550 costs about $6.60 in node fees, which overwhelms all other fees.
https://medium.com/suredbits/lightning-101-lightning-network-fees-86abbbc17024

My hope is for crypto currency to do something useful.  That's even more interesting than making a profit off my 0.7% crypto allocation.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 09, 2021, 09:04:14 AM
The lightning network allows bitcoin transactions without writing to the block chain?  Doesn't that undermine the single thing that bitcoin has going for it . . . which it traceability and enforcement via blockchain?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on October 09, 2021, 10:49:59 AM

lol I love the analogy. I actually use Dvorak. Took a little bit to retrain but soooo worth it in the long run with how much I type. You don't need a special keyboard, you can change the layout in the settings on Windows.

Do you mind discussing the process to learn Dvorak?   I love to do it, but I type all the time for work, so I can't really have a downtime when in the middle of learning two systems.  Put it another way, can you use either while you are learning?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 10, 2021, 03:28:00 AM
The lightning network allows bitcoin transactions without writing to the block chain?  Doesn't that undermine the single thing that bitcoin has going for it . . . which it traceability and enforcement via blockchain?

No, you are mistaken.  There are only two Bitcoin transactions when one uses the Lightning Network.  The first is when you open a channel (i.e. you lock up you Bitcoin in a smart contract).  What you confuse is that what happens next are not Bitcoin transactions.  You transact peer-to-peer via the Lightning Network's smart contract.  Your wallet will show your Bitcoin balance that is in the smart contract and you can transact off-chain with whoever else you want that is on the Lightning Network.  Everytime you make a transaction off-chain it updates the smart contract.  You can do this millions of times off-chain and anyone can close the smart contract at anytime.  When that happens, the a second Bitcoin transaction occurs and the person that closed the channel gets whatever Bitcoin they are owed out of the smart contract. 

All the intermediary transactions are not recorded onto the Bitcoin blockchain because they are "off-chain".  Fundamentally, they are not Bitcoin transactions (they are Lightning Network transaction) so it makes no sense for them to be on the Bitcoin blockchain.  All Bitcoin transactions are recorded on the blockchain as normal and are just as secure as ever.

Finally, I don't understand what you are getting at by "traceability and enforcement via blockchain".  I think you are suggesting, incorrectly, that because all the intermediary transaction are not recorded on the Bitcoin blockchain that Bitcoin is somehow less secure.  That doesn't make any sense because the Lightning Network is its own thing and nothing that happens on the network changes Bitcoin's function or security.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 10, 2021, 08:39:14 AM
The lightning network allows bitcoin transactions without writing to the block chain?  Doesn't that undermine the single thing that bitcoin has going for it . . . which it traceability and enforcement via blockchain?

No, you are mistaken.  There are only two Bitcoin transactions when one uses the Lightning Network.  The first is when you open a channel (i.e. you lock up you Bitcoin in a smart contract).  What you confuse is that what happens next are not Bitcoin transactions.  You transact peer-to-peer via the Lightning Network's smart contract.  Your wallet will show your Bitcoin balance that is in the smart contract and you can transact off-chain with whoever else you want that is on the Lightning Network.  Everytime you make a transaction off-chain it updates the smart contract.  You can do this millions of times off-chain and anyone can close the smart contract at anytime.  When that happens, the a second Bitcoin transaction occurs and the person that closed the channel gets whatever Bitcoin they are owed out of the smart contract. 

All the intermediary transactions are not recorded onto the Bitcoin blockchain because they are "off-chain".  Fundamentally, they are not Bitcoin transactions (they are Lightning Network transaction) so it makes no sense for them to be on the Bitcoin blockchain.  All Bitcoin transactions are recorded on the blockchain as normal and are just as secure as ever.

Finally, I don't understand what you are getting at by "traceability and enforcement via blockchain".  I think you are suggesting, incorrectly, that because all the intermediary transaction are not recorded on the Bitcoin blockchain that Bitcoin is somehow less secure.  That doesn't make any sense because the Lightning Network is its own thing and nothing that happens on the network changes Bitcoin's function or security.

Y'all are saying the same thing.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 10, 2021, 10:26:16 AM
The lightning network allows bitcoin transactions without writing to the block chain?  Doesn't that undermine the single thing that bitcoin has going for it . . . which it traceability and enforcement via blockchain?

No, you are mistaken.  There are only two Bitcoin transactions when one uses the Lightning Network.  The first is when you open a channel (i.e. you lock up you Bitcoin in a smart contract).  What you confuse is that what happens next are not Bitcoin transactions.  You transact peer-to-peer via the Lightning Network's smart contract.  Your wallet will show your Bitcoin balance that is in the smart contract and you can transact off-chain with whoever else you want that is on the Lightning Network.  Everytime you make a transaction off-chain it updates the smart contract.  You can do this millions of times off-chain and anyone can close the smart contract at anytime.  When that happens, the a second Bitcoin transaction occurs and the person that closed the channel gets whatever Bitcoin they are owed out of the smart contract. 

All the intermediary transactions are not recorded onto the Bitcoin blockchain because they are "off-chain".  Fundamentally, they are not Bitcoin transactions (they are Lightning Network transaction) so it makes no sense for them to be on the Bitcoin blockchain.  All Bitcoin transactions are recorded on the blockchain as normal and are just as secure as ever.

Finally, I don't understand what you are getting at by "traceability and enforcement via blockchain".  I think you are suggesting, incorrectly, that because all the intermediary transaction are not recorded on the Bitcoin blockchain that Bitcoin is somehow less secure.  That doesn't make any sense because the Lightning Network is its own thing and nothing that happens on the network changes Bitcoin's function or security.

Y'all are saying the same thing.

Yes, I think we are.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 10, 2021, 11:16:56 AM
[quote the blockchain as normal and are just as secure as ever.

Finally, I don't understand what you are getting at by "traceability and enforcement via blockchain".  I think you are suggesting, incorrectly, that because all the intermediary transaction are not recorded on the Bitcoin blockchain that Bitcoin is somehow less secure.  That doesn't make any sense because the Lightningauthor=onecoolcat link=topic=123904.msg2914027#msg2914027 date=1633858080]
The lightning network allows bitcoin transactions without writing to the block chain?  Doesn't that undermine the single thing that bitcoin has going for it . . . which it traceability and enforcement via blockchain?

No, you are mistaken.  There are only two Bitcoin transactions when one uses the Lightning Network.  The first is when you open a channel (i.e. you lock up you Bitcoin in a smart contract).  What you confuse is that what happens next are not Bitcoin transactions.  You transact peer-to-peer via the Lightning Network's smart contract.  Your wallet will show your Bitcoin balance that is in the smart contract and you can transact off-chain with whoever else you want that is on the Lightning Network.  Everytime you make a transaction off-chain it updates the smart contract.  You can do this millions of times off-chain and anyone can close the smart contract at anytime.  When that happens, the a second Bitcoin transaction occurs and the person that closed the channel gets whatever Bitcoin they are owed out of the smart contract. 

All the intermediary transactions are not recorded onto the Bitcoin blockchain because they are "off-chain".  Fundamentally, they are not Bitcoin transactions (they are Lightning Network transaction) so it makes no sense for them to be on the Bitcoin blockchain.  All Bitcoin transactions are recorded on  Network is its own thing and nothing that happens on the network changes Bitcoin's function or security.

Y'all are saying the same thing.
  [/quote]


No, definitely not.
The traceability is off chain via smart contract and since every peer-to-peer smart contract is off chain it does not change Bitcoin's function or security.

Here is a rather good article and video about what the Lightning network is.
Excerpt from https://river.com/learn/what-is-the-lightning-network/

Quote
What Is the Lightning Network?
The Lightning Network is a second-layer protocol designed to enable off-chain Bitcoin transactions, which are not recorded on the blockchain. Because they are not recorded on the blockchain, and thus require no mining, Lightning payments are extremely fast and cheap.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 10, 2021, 03:50:08 PM
I know of a bunch of fast and free ways to pay people/buy stuff that don't involve bitcoin, though. Why would I use Lightning?

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: mjr on October 10, 2021, 05:41:15 PM
Bitcoin's transaction rate capacity is too slow, so let's build a whole new layer of payment processors on top of bitcoin.

Oh and there's an infinite number of potential cryptos other than bitcoin and an inifinite potential number of L2 processors that can sit on on the base currencies.

Genius!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 10, 2021, 07:52:08 PM
Bitcoin's transaction rate capacity is too slow, so let's build a whole new layer of payment processors on top of bitcoin..
SNIP Genius!

That is an old old old debate. Settled by consensus in 2015 by building the Lightning Network - the recent upgrades look pretty damn good.
The intent is to keep bitcoin secure.
You can't have your cake and eat it too. Bitcoin can handle 7 transactions per second that's it.
In comparison, Visa can handle 45,000+ transactions vs Lightning currently at 25Mil per second but with the potential to do hundreds of millions.
Lightning solved the scaleability issue in this instance but there are always new projects and improvements in the wings.

https://river.com/learn/what-is-the-lightning-network/
Quote
The Lightning Network is an example of how Bitcoin can become a global medium of exchange without sacrificing the security or decentralization of the Bitcoin network.

The Lightning network is growing exponentially.
The narrative surrounding bitcoin, its use, and scaleability continue to morph. If projects are not successfully implemented and adopted they die a natural death. Looks to me like the Lightning upgrades turned out to be wildly successful - judging from the number of investment dollars pouring in and the fact that nodes doubled in the space of three months. The need, speed and utility are firmly established. 

https://www.yahoo.com/now/nodes-bitcoin-lightning-network-double-213744044.html#:~:text=All%20in%20all%2C%20the%20first,Bitcoin%20blockchain%20as%20one%20transaction.
[quoteThere are several implementations of Lightning being developed by different teams, all working toward the same goal: making Lightning more stable, secure, efficient, private and easy to use.][/quote]
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 11, 2021, 10:39:37 AM
You mention "can handle" and "investment dollars".  What about actual purchase of goods on lightning network?

Also, if the article I quoted is correct, node fees could make Lightning Network costly:
... but there's "intermediate node fees", which can be far more expensive.  In this example, a transaction of $550 costs about $6.60 in node fees, which overwhelms all other fees.
https://medium.com/suredbits/lightning-101-lightning-network-fees-86abbbc17024

I recently came across DASH (digital cash) with thousands of nodes allowing crypto payments.  Is there any ranking of consumer usage of crypto?  Number of transactions doesn't cover it - many people are buying and selling BTC, without using it.  The consumer spending volume would be a key metric.  But I don't see it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 11, 2021, 01:05:37 PM
I'd guess it's a fraction of 1%/rounding error. Nobody has ever so much as offered to pay me/my business in bitcoin, and I do thousands of transactions a year. The bitcoin transactions being tracked are presumably all just people exchanging crypto with each other.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 11, 2021, 01:25:52 PM
If we're going to tout the benefits of cryptocurrency as a secure, trustless method of exchange utilizing blockchain, we cannot also tout Lightning as the solution to slow processing speeds, because by using Lightning it sounds like we are bypassing true blockchain and its benefits/drawbacks. In other words, it's fast OR secure, not fast AND secure. You lose one when you obtain the other, and this might be a fundamental tradeoff with cryptocurrencies.

If security is the most important thing, the current crop of cryptocurrencies will have to be replaced by new technologies that can scale while maintaining security. If instead the market rewards speed and low cost, we can expect non-blockchain currencies to emerge to meet this need. Either way, any crypto one can buy today is toast, right?

Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 11, 2021, 01:37:19 PM
If we're going to tout the benefits of cryptocurrency as a secure, trustless method of exchange utilizing blockchain, we cannot also tout Lightning as the solution to slow processing speeds, because by using Lightning it sounds like we are bypassing true blockchain and its benefits/drawbacks. In other words, it's fast OR secure, not fast AND secure. You lose one when you obtain the other, and this might be a fundamental tradeoff with cryptocurrencies.

If security is the most important thing, the current crop of cryptocurrencies will have to be replaced by new technologies that can scale while maintaining security. If instead the market rewards speed and low cost, we can expect non-blockchain currencies to emerge to meet this need. Either way, any crypto one can buy today is toast, right?

I think they're saying that the fast transactions on Lightning are fairly secure, just not via the permanent record provided by Blockchain, while recording the net effect of numerous fast transactions does get very securely recorded on the Blockchain. Kind of like saying the financial statements of a company are accurate and publicly known, but the individual transactions summarized therein are not themselves public. This method of blockchain recording for net effects of transactions allows even the fast transactions to be denominated usefully in the main currency, which means the system can be (and is) based on crypto one can buy today, in this case BTC.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 11, 2021, 01:52:29 PM
If we're going to tout the benefits of cryptocurrency as a secure, trustless method of exchange utilizing blockchain, we cannot also tout Lightning as the solution to slow processing speeds, because by using Lightning it sounds like we are bypassing true blockchain and its benefits/drawbacks. In other words, it's fast OR secure, not fast AND secure. You lose one when you obtain the other, and this might be a fundamental tradeoff with cryptocurrencies.

If security is the most important thing, the current crop of cryptocurrencies will have to be replaced by new technologies that can scale while maintaining security. If instead the market rewards speed and low cost, we can expect non-blockchain currencies to emerge to meet this need. Either way, any crypto one can buy today is toast, right?

i think this is most true of bitcoin - since its just code in cyberspace not being managed - many of the others are managed by some group like eth just did an upgrade so in theory it could keep pace if the technology underlying it doesn't fundamentally change significantly.   And if there is one thing i like to bet on its the tech today being the same in 30 years. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: taekvideo on October 13, 2021, 12:14:50 PM

lol I love the analogy. I actually use Dvorak. Took a little bit to retrain but soooo worth it in the long run with how much I type. You don't need a special keyboard, you can change the layout in the settings on Windows.

Do you mind discussing the process to learn Dvorak?   I love to do it, but I type all the time for work, so I can't really have a downtime when in the middle of learning two systems.  Put it another way, can you use either while you are learning?

I made the switch a few weeks before I started an online tutoring job.
It's not that hard, the brain can relearn a new layout 10x easier than mastering touch-typing for the first time.
There was a program I used to do the training I forget what it was called though.
It starts with just the middle row and adds more keys as you master them.
After an hour or 2 a day for ~ 2 weeks I was back up to speed.
They say you can type faster in Dvorak but my speed improvement after full mastery was only like 3%, I was already really fast, I mostly switched to reduce the strain on my fingers from long hours of constant typing and it worked wonders for that.
You should be able to do both but you'd make more typos during the learning process, and the learning process would take longer. I planned to do that but ended up abandoning qwerty entirely.
It might be easier to wait until you have at least a week off work and just grind it out.


The lightning network allows bitcoin transactions without writing to the block chain?  Doesn't that undermine the single thing that bitcoin has going for it . . . which it traceability and enforcement via blockchain?

There is an increased attack surface for the nodes because a node has to actively monitor the blockchain to prevent the nodes its connected to from stealing the funds, but it's still trustless and quite secure. The typical end user won't be running their own lightning node and won't have to worry about how any of it works. Most lightning wallets are custodial, so users are trusting their wallet provider. Muun & Breez have self-custodial lightning wallets but I'm not clear on how they work internally (submarine swaps?).
Best bet is to keep the bulk of your Bitcoin safe in cold storage and use Muun or Breez for fast/frequent transactions.

When a lightning transaction goes through a channel between 2 nodes, they exchange an update to the channel state off-chain.
Either party can close the channel any time by submitting the final channel state to the blockchain.
But any of the prior channel states could also be submitted to the blockchain in an attempt to steal Bitcoin, by using an earlier channel state where there was more BTC on your side of the channel than in the final valid state.
To prevent this, the channel closing has a wait period (I think 1 week is normal). During this time the other node can submit the actual final channel state which proves the fraud attempt, and the scammer loses the entire channel balance.
As an extra measure most nodes employ 1 or more "watchtower" services from 3rd parties that monitor the blockchain for these fraud attempts and submit the proofs (which could be necessary if your node is offline for a week and unable to do that).

Also, if the article I quoted is correct, node fees could make Lightning Network costly:
... but there's "intermediate node fees", which can be far more expensive.  In this example, a transaction of $550 costs about $6.60 in node fees, which overwhelms all other fees.
https://medium.com/suredbits/lightning-101-lightning-network-fees-86abbbc17024

That example is higher than most real-world Lightning fees, but even in that case VISA or PayPal would charge $16.25 in fees on a $550 transaction, so even in your over-estimate Lightning is still cheaper.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 14, 2021, 08:14:44 AM
Also, if the article I quoted is correct, node fees could make Lightning Network costly:
... but there's "intermediate node fees", which can be far more expensive.  In this example, a transaction of $550 costs about $6.60 in node fees, which overwhelms all other fees.
https://medium.com/suredbits/lightning-101-lightning-network-fees-86abbbc17024
That example is higher than most real-world Lightning fees, but even in that case VISA or PayPal would charge $16.25 in fees on a $550 transaction, so even in your over-estimate Lightning is still cheaper.
You are incorrectly attributing the estimate to me, when I have repeated twice already that it came from an article on the topic.  By the way, when are you going to quote a source with "most real-world Lightning fees"?

You also claim Visa charges 2.9%, which is false.  Three separate websites claim lower rates than that.
https://paymentdepot.com/blog/average-credit-card-processing-fees/
https://www.valuepenguin.com/what-credit-card-processing-fees-costs
https://www.bankrate.com/finance/credit-cards/merchants-guide-to-credit-card-processing-fees/
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 16, 2021, 01:32:02 PM
If we're going to tout the benefits of cryptocurrency as a secure, trustless method of exchange utilizing blockchain, we cannot also tout Lightning as the solution to slow processing speeds, because by using Lightning it sounds like we are bypassing true blockchain and its benefits/drawbacks. In other words, it's fast OR secure, not fast AND secure. You lose one when you obtain the other, and this might be a fundamental tradeoff with cryptocurrencies.

If security is the most important thing, the current crop of cryptocurrencies will have to be replaced by new technologies that can scale while maintaining security. If instead the market rewards speed and low cost, we can expect non-blockchain currencies to emerge to meet this need. Either way, any crypto one can buy today is toast, right?

Lightning is very fast and very secure.  Please read the basics on how it works.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 16, 2021, 02:38:33 PM
If we're going to tout the benefits of cryptocurrency as a secure, trustless method of exchange utilizing blockchain, we cannot also tout Lightning as the solution to slow processing speeds, because by using Lightning it sounds like we are bypassing true blockchain and its benefits/drawbacks. In other words, it's fast OR secure, not fast AND secure. You lose one when you obtain the other, and this might be a fundamental tradeoff with cryptocurrencies.

If security is the most important thing, the current crop of cryptocurrencies will have to be replaced by new technologies that can scale while maintaining security. If instead the market rewards speed and low cost, we can expect non-blockchain currencies to emerge to meet this need. Either way, any crypto one can buy today is toast, right?

Lightning is very fast and very secure.  Please read the basics on how it works.

Are you not aware of the long standing history of security problems with the lightning network?

The history of vulnerabilities and problems is not too encouraging . . . multiple security vulnerabilities that allowed for theft of bitcoin were reported last year - https://www.bleepingcomputer.com/news/security/lightning-network-discloses-concerning-crypto-vulnerabilities/ (https://www.bleepingcomputer.com/news/security/lightning-network-discloses-concerning-crypto-vulnerabilities/).  It's possible today to prevent someone from closing their channel and getting their bitcoin out by executing a 'griefing' attack - https://bitcoinmagazine.com/technical/good-griefing-a-lingering-vulnerability-on-lightning-network-that-still-needs-fixing (https://bitcoinmagazine.com/technical/good-griefing-a-lingering-vulnerability-on-lightning-network-that-still-needs-fixing).  There was this research paper published last year demonstrating how a 'time dilation attack' can occur in the lightning network allowing someone to steal the total contents of a channel - https://arxiv.org/abs/2006.01418 (https://arxiv.org/abs/2006.01418).  Then you've got all the disk management related issues described here - https://bitcoinmagazine.com/technical/why-the-bitcoin-lightning-network-doesnt-work (https://bitcoinmagazine.com/technical/why-the-bitcoin-lightning-network-doesnt-work) . . . basically, if the record of any transaction on lightning network is lost (say due to a disk failure) your transaction is also lost.  Theoretically, some day watchtowers will be working on all transactions to cover this problem . . . but that's not how it works today.

With the lightning network, you are relying on buggy software for security.  Fast it may well be, but 'very secure'?  Not really.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 16, 2021, 04:11:45 PM
If we're going to tout the benefits of cryptocurrency as a secure, trustless method of exchange utilizing blockchain, we cannot also tout Lightning as the solution to slow processing speeds, because by using Lightning it sounds like we are bypassing true blockchain and its benefits/drawbacks. In other words, it's fast OR secure, not fast AND secure. You lose one when you obtain the other, and this might be a fundamental tradeoff with cryptocurrencies.

If security is the most important thing, the current crop of cryptocurrencies will have to be replaced by new technologies that can scale while maintaining security. If instead the market rewards speed and low cost, we can expect non-blockchain currencies to emerge to meet this need. Either way, any crypto one can buy today is toast, right?

Lightning is very fast and very secure.  Please read the basics on how it works.

Are you not aware of the long standing history of security problems with the lightning network?

The history of vulnerabilities and problems is not too encouraging . . . multiple security vulnerabilities that allowed for theft of bitcoin were reported last year - https://www.bleepingcomputer.com/news/security/lightning-network-discloses-concerning-crypto-vulnerabilities/ (https://www.bleepingcomputer.com/news/security/lightning-network-discloses-concerning-crypto-vulnerabilities/).  It's possible today to prevent someone from closing their channel and getting their bitcoin out by executing a 'griefing' attack - https://bitcoinmagazine.com/technical/good-griefing-a-lingering-vulnerability-on-lightning-network-that-still-needs-fixing (https://bitcoinmagazine.com/technical/good-griefing-a-lingering-vulnerability-on-lightning-network-that-still-needs-fixing).  There was this research paper published last year demonstrating how a 'time dilation attack' can occur in the lightning network allowing someone to steal the total contents of a channel - https://arxiv.org/abs/2006.01418 (https://arxiv.org/abs/2006.01418).  Then you've got all the disk management related issues described here - https://bitcoinmagazine.com/technical/why-the-bitcoin-lightning-network-doesnt-work (https://bitcoinmagazine.com/technical/why-the-bitcoin-lightning-network-doesnt-work) . . . basically, if the record of any transaction on lightning network is lost (say due to a disk failure) your transaction is also lost.  Theoretically, some day watchtowers will be working on all transactions to cover this problem . . . but that's not how it works today.

With the lightning network, you are relying on buggy software for security.  Fast it may well be, but 'very secure'?  Not really.

The history of vulnerabilities with cash and credit card is even less encouraging because, unlike cash and credit card vulnerability, Lightning Network fixed their issues well over a year ago.  Also, no one lost funds due to a lightning network vulnerability.  The same cannot be said about the alternative.

I am not familiar with "griefing attacks" so I can't speak on them apart from what your articles wrote about it.  Its seems like a nuisance more than anything.  Additionally, its just another thing that can be patched if its real problem. 

The research papers theorizing on vulnerabilities is exactly why cryptocurrency is the best money we ever had.  Its open source and you have all the brightest folks looking for vulnerabilities, sharing their ideas, and making it better.  It's great.  That's the theme behind all your articles as well.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 18, 2021, 07:30:56 AM
If we're going to tout the benefits of cryptocurrency as a secure, trustless method of exchange utilizing blockchain, we cannot also tout Lightning as the solution to slow processing speeds, because by using Lightning it sounds like we are bypassing true blockchain and its benefits/drawbacks. In other words, it's fast OR secure, not fast AND secure. You lose one when you obtain the other, and this might be a fundamental tradeoff with cryptocurrencies.

If security is the most important thing, the current crop of cryptocurrencies will have to be replaced by new technologies that can scale while maintaining security. If instead the market rewards speed and low cost, we can expect non-blockchain currencies to emerge to meet this need. Either way, any crypto one can buy today is toast, right?

Lightning is very fast and very secure.  Please read the basics on how it works.

Are you not aware of the long standing history of security problems with the lightning network?

The history of vulnerabilities and problems is not too encouraging . . . multiple security vulnerabilities that allowed for theft of bitcoin were reported last year - https://www.bleepingcomputer.com/news/security/lightning-network-discloses-concerning-crypto-vulnerabilities/ (https://www.bleepingcomputer.com/news/security/lightning-network-discloses-concerning-crypto-vulnerabilities/).  It's possible today to prevent someone from closing their channel and getting their bitcoin out by executing a 'griefing' attack - https://bitcoinmagazine.com/technical/good-griefing-a-lingering-vulnerability-on-lightning-network-that-still-needs-fixing (https://bitcoinmagazine.com/technical/good-griefing-a-lingering-vulnerability-on-lightning-network-that-still-needs-fixing).  There was this research paper published last year demonstrating how a 'time dilation attack' can occur in the lightning network allowing someone to steal the total contents of a channel - https://arxiv.org/abs/2006.01418 (https://arxiv.org/abs/2006.01418).  Then you've got all the disk management related issues described here - https://bitcoinmagazine.com/technical/why-the-bitcoin-lightning-network-doesnt-work (https://bitcoinmagazine.com/technical/why-the-bitcoin-lightning-network-doesnt-work) . . . basically, if the record of any transaction on lightning network is lost (say due to a disk failure) your transaction is also lost.  Theoretically, some day watchtowers will be working on all transactions to cover this problem . . . but that's not how it works today.

With the lightning network, you are relying on buggy software for security.  Fast it may well be, but 'very secure'?  Not really.

The history of vulnerabilities with cash and credit card is even less encouraging because, unlike cash and credit card vulnerability, Lightning Network fixed their issues well over a year ago.  Also, no one lost funds due to a lightning network vulnerability.  The same cannot be said about the alternative.

I am not familiar with "griefing attacks" so I can't speak on them apart from what your articles wrote about it.  Its seems like a nuisance more than anything.  Additionally, its just another thing that can be patched if its real problem. 

The research papers theorizing on vulnerabilities is exactly why cryptocurrency is the best money we ever had.  Its open source and you have all the brightest folks looking for vulnerabilities, sharing their ideas, and making it better.  It's great.  That's the theme behind all your articles as well.

The lightning network is still vulnerable to all of the issues mentioned that are not in the first link.  I'd encourage you to read up the basics of how these existing vulnerabilities work - particularly if you're under the mistaken impression that the lightning network is safe and secure.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: yachi on October 18, 2021, 08:50:53 AM

That is the real reason why the IMF hated the idea of El Salvador choosing bitcoin as their legal tender. It means everyone incl the IMF has to accept it as currency.


There is a very big difference between El Salvador choosing bitcoin as their legal tender, and El Salvador making bitcoin legal tender.

El Salvador did not move their entire economy from the US dollar to Bitcoin, they just started accepting Bitcoin in addition to the US Dollar.  If you're imagining 90% of the population paying for meals, taxi rides, rent, and getting their salary in Bitcoin, then you've read it wrong.

Just because El Salvador made something legal tender in their country does not strong arm the IMF into accepting it for payment.  When the IMF makes a loan, it dictates what currency will be used for repayment.  That's true for all loans.  You see it happen all the time: countries with unstable currencies will not be able to borrow in their own currency.  Instead the loan will be denominated in US dollars or Euro.

Do you mean something different when you say "has to accept it as currency"?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 19, 2021, 08:35:41 AM
Bitcoin now has a futures ETF, which means more people can get exposure to cyrpto through their retirement accounts. 

https://www.cnbc.com/quotes/BITO (https://www.cnbc.com/quotes/BITO)

As of this post....
Over 100 million people own bitcoin...check
Nation States are beginning to accept it as currency....check
Large institutional buying is now occurring through ETF's....check

Look, I'm not trying to put Bitcoin on the same level as the Dollar, Yuan, or Euro at this point.  That would be nonsense.  But let's face it, there are MANY legitimate national currencies that can't check the three boxes above like Bitcoin does.  For those saying...sure, blockchain is here to stay, but it's to early to have ANY IDEA which will last...I think that's not giving Bitcoin enough credit.  To me I see real and tangible reasons why a PARTICULAR blockchain has staying power. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 19, 2021, 09:14:24 AM
I'm both excited about a Bitcoin Futures ETF (BITO), and also aware I shouldn't be excited.  I prefer to have an alternative to GBTC, even one that suffers from contango when rolling into new contracts.  But fundamentally payment systems is rather competitive, and I'm not sure Bitcoin will turn out to succeed there.

I now have equal investments in BITO and GBTC.  GBTC's market price changes trailed Bitcoin's price changes by 162% in the past 12 months.  Unless BITO spends that much renewing futures contracts, I expect their performance will beat GBTC.  Once that happens, I'm switching to BITO.

But there's a risk Bitcoin doesn't become something new and useful.  Facebook's payment system will likely gain more customers than Bitcoin.  China's two most popular payment apps already were well ahead of Bitcoin, before Bitcoin was banned there.  So while I'm happy BITO exists, I wonder about the long term prospects of Bitcoin doing something useful and unique.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: JohnnyZ on October 19, 2021, 09:14:58 AM
Bitcoin now has a futures ETF, which means more people can get exposure to cyrpto through their retirement accounts. 

https://www.cnbc.com/quotes/BITO (https://www.cnbc.com/quotes/BITO)

As of this post....
Over 100 million people own bitcoin...check
Nation States are beginning to accept it as currency....check
Large institutional buying is now occurring through ETF's....check

Look, I'm not trying to put Bitcoin on the same level as the Dollar, Yuan, or Euro at this point.  That would be nonsense.  But let's face it, there are MANY legitimate national currencies that can't check the three boxes above like Bitcoin does.  For those saying...sure, blockchain is here to stay, but it's to early to have ANY IDEA which will last...I think that's not giving Bitcoin enough credit.  To me I see real and tangible reasons why a PARTICULAR blockchain has staying power.

El Salvador's adoption of bitcoin didn't go as smoothly as one might think:
https://nypost.com/2021/09/16/protests-in-el-salvador-after-bitcoin-made-official-currency/
If I were a shop owner forced to accept a speculative and risky currency I'd probably take to the streets too.

Also there are fundamental issues already raised here that have never been answered by bitcoin proponents.
- How is a currency that is designed to have a ceiling to the amount of it that's ever created supposed to work? Who is going to actually spend (as opposed to swing-trade) a currency that's going to be worth more in the future?
- Proponents say it's awesome for poor and unbanked people, yet we constantly hear about bitcoin scams and hacks. If I'm poor and/or don't even have a bank account, what are the odds that I'm also tech-savvy enough not to have my wallet stolen or be otherwise robbed?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 19, 2021, 09:28:48 AM
@MustacheAndaHalf the other way to read all this good news for Bitcoin is as a sell signal. What other good news remains to catalyze even more appreciation? Bear in mind there’s a lot more bad news on the way, such as more hacks, more bans, higher interest rates, etc. At what point are things as good as they get for BTC?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 19, 2021, 09:55:03 AM
@MustacheAndaHalf the other way to read all this good news for Bitcoin is as a sell signal. What other good news remains to catalyze even more appreciation? Bear in mind there’s a lot more bad news on the way, such as more hacks, more bans, higher interest rates, etc. At what point are things as good as they get for BTC?
Bitcoin gained +429% in the past 12 months.  I think it can handle interest rates hitting 2%!  :)  I also question your point about "more hacks", as I'm not aware of any recent, significant hacks.

Only a ban in the U.S. would carry as much weight as the ban in China.  At the time China banned it, a majority of Bitcoin was mined in China.  I know BTC was over $60k earlier this year, and I have one purchase for below $30k... so it dropped in half (and has recovered above $60k now).  That's normal for Bitcoin - anyone who doesn't like losing half their balance should avoid it.

For whatever reason, Bitcoin is more likely to gain +50% than to collapse.  My guess is that Bitcoin has a 1 in 5 chance of collapse over the long term.  So I keep my allocation very small, such that if it hit zero, I wouldn't miss it.  A fat zero for BTC wouldn't even be my biggest loss this year.

Bitcoin reminds me of the dot-com era, both with the boom and potential bust.  That's why I stick to BTC and ETH.  Are they the Apple and Amazon of the crypto currency era?  I don't know, but they seem safer than new coins with no history or institutional investment.  BTC and ETH have massive volatility, while newer coins are volatility squared.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: JohnnyZ on October 19, 2021, 10:37:30 AM
I also question your point about "more hacks", as I'm not aware of any recent, significant hacks.

I guess that depends on your tolerance for "significant" or "recent".
https://www.cnbc.com/2021/08/13/poly-network-hack-nearly-all-of-600-million-in-crypto-returned.html
Title: Re: What do you think of adding a low% of crypto allocation
Post by: grmagne on October 19, 2021, 11:05:46 AM
Also there are fundamental issues already raised here that have never been answered by bitcoin proponents.
- How is a currency that is designed to have a ceiling to the amount of it that's ever created supposed to work? Who is going to actually spend (as opposed to swing-trade) a currency that's going to be worth more in the future?
- Proponents say it's awesome for poor and unbanked people, yet we constantly hear about bitcoin scams and hacks. If I'm poor and/or don't even have a bank account, what are the odds that I'm also tech-savvy enough not to have my wallet stolen or be otherwise robbed?

To be honest, I'm more concerned about the second than the first.

El Salvador & other countries considering adopting Bitcoin are some of the poorest countries on Earth with the vast majority of the population having savings rates near zero. The idea that they'll suddenly stop spending money because a deflationary currency disincentivizes consumption seems completely unrealistic to me. More likely they'll keep on spending nearly 100% of their income to sustain their subsistence lifestyle, but those tiny amounts of unspent Satoshis could give them a touch of extra wealth.

My biggest concern for the El Salvadoran people is that someone will find a security flaw in the Chivo app and steal any remittance payments before they can be cashed out. It's a very high crime country and the people are keeping their money on the Lightning Network and won't be able to afford the safer blockchain.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: bacchi on October 19, 2021, 12:30:41 PM
Bitcoin reminds me of the dot-com era, both with the boom and potential bust.  That's why I stick to BTC and ETH.  Are they the Apple and Amazon of the crypto currency era?  I don't know, but they seem safer than new coins with no history or institutional investment.  BTC and ETH have massive volatility, while newer coins are volatility squared.

Or maybe they're AOL and Yahoo! :) Those were great investments in 1998.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 19, 2021, 12:41:31 PM
Bitcoin reminds me of the dot-com era, both with the boom and potential bust.  That's why I stick to BTC and ETH.  Are they the Apple and Amazon of the crypto currency era?  I don't know, but they seem safer than new coins with no history or institutional investment.  BTC and ETH have massive volatility, while newer coins are volatility squared.

Or maybe they're AOL and Yahoo! :) Those were great investments in 1998.

Better than Pets.com, AskJeeves, Lycos, Web Crawler, Jumpstation, Altavista . . .

:P
Title: Re: What do you think of adding a low% of crypto allocation
Post by: yachi on October 19, 2021, 12:49:22 PM
Bitcoin gained +429% in the past 12 months.

This is what I see getting in the way of Bitcoin as a currency.  I can't imagine a contract or salary denominated in a currency whose value can swing by 400% in a year.
Can you imagine last October your hourly rate was set at the bitcoin equivalent of $10 an hour (0.00084 bitcoin), now you're making the bitcoin equivalent of $52.90 per hour (still 0.00084 bitcoin)?

When it starts gaining only 2% to 3% per year for years on end, then we can talk about it being a currency substitute.  But at that point, less people will be excited about it because it's not gaining by leaps and bounds.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on October 19, 2021, 12:55:12 PM
Bitcoin gained +429% in the past 12 months.

This is what I see getting in the way of Bitcoin as a currency.  I can't imagine a contract or salary denominated in a currency whose value can swing by 400% in a year.
Can you imagine last October your hourly rate was set at the bitcoin equivalent of $10 an hour (0.00084 bitcoin), now you're making the bitcoin equivalent of $52.90 per hour (still 0.00084 bitcoin)?

When it starts gaining only 2% to 3% per year for years on end, then we can talk about it being a currency substitute.  But at that point, less people will be excited about it because it's not gaining by leaps and bounds.

Interesting point, and one I hadn't considered.  Thanks.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 19, 2021, 01:09:21 PM
Bitcoin gained +429% in the past 12 months.

This is what I see getting in the way of Bitcoin as a currency.  I can't imagine a contract or salary denominated in a currency whose value can swing by 400% in a year.
Can you imagine last October your hourly rate was set at the bitcoin equivalent of $10 an hour (0.00084 bitcoin), now you're making the bitcoin equivalent of $52.90 per hour (still 0.00084 bitcoin)?

When it starts gaining only 2% to 3% per year for years on end, then we can talk about it being a currency substitute.  But at that point, less people will be excited about it because it's not gaining by leaps and bounds.

Interesting point, and one I hadn't considered.  Thanks.

its not a currency just b/c its called a currency doesnt make it one -

Currency - a system of money in general use in a particular country.

no country is using this generally as money still even though some have activated it as accepted as tender.

is it a store of value - well currently its a store of the value people believe it will have and the growth they expect.  Will that level of value be maintained over decades after it reaches the peak of growth - will it act similar to gold and younger generations see it as a safe place to keep value outside of under the mattress or in US dollars? Will it even continue to grow or will the massive amounts of coins bought with debt come crashing down like a house of cards and bring equities with it - i'd say this is the most likely outcome in the next 5-10 years.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: grmagne on October 19, 2021, 02:21:40 PM
Bitcoin gained +429% in the past 12 months.

This is what I see getting in the way of Bitcoin as a currency.  I can't imagine a contract or salary denominated in a currency whose value can swing by 400% in a year.
Can you imagine last October your hourly rate was set at the bitcoin equivalent of $10 an hour (0.00084 bitcoin), now you're making the bitcoin equivalent of $52.90 per hour (still 0.00084 bitcoin)?

When it starts gaining only 2% to 3% per year for years on end, then we can talk about it being a currency substitute.  But at that point, less people will be excited about it because it's not gaining by leaps and bounds.

Interesting point, and one I hadn't considered.  Thanks.

its not a currency just b/c its called a currency doesnt make it one -

Currency - a system of money in general use in a particular country.

no country is using this generally as money still even though some have activated it as accepted as tender.

is it a store of value - well currently its a store of the value people believe it will have and the growth they expect.  Will that level of value be maintained over decades after it reaches the peak of growth - will it act similar to gold and younger generations see it as a safe place to keep value outside of under the mattress or in US dollars? Will it even continue to grow or will the massive amounts of coins bought with debt come crashing down like a house of cards and bring equities with it - i'd say this is the most likely outcome in the next 5-10 years.

I don't think Bitcoin has any chance for long-term survival as just a "store of value". That would just make it a virtual version of gold, but with a ridiculously high carbon footprint. No way is that sustainable at all. Bitcoin has to achieve its destiny as a global currency (or regional currency, possibly in Latin America) to have any long-term value, which I'd guess is less than 15% likely, or its long-term value will crash down.

But I do invest in it, because it seems to be in the middle stages of a very lengthy bull run that could last several more years before we learn its long-term fate.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: bacchi on October 19, 2021, 02:32:31 PM
Bitcoin reminds me of the dot-com era, both with the boom and potential bust.  That's why I stick to BTC and ETH.  Are they the Apple and Amazon of the crypto currency era?  I don't know, but they seem safer than new coins with no history or institutional investment.  BTC and ETH have massive volatility, while newer coins are volatility squared.

Or maybe they're AOL and Yahoo! :) Those were great investments in 1998.

Better than Pets.com, AskJeeves, Lycos, Web Crawler, Jumpstation, Altavista . . .

:P

I've never heard of Jumpstation. The U of Stirling missed an opportunity.

https://en.wikipedia.org/wiki/JumpStation
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 19, 2021, 02:41:05 PM
Bitcoin gained +429% in the past 12 months.

This is what I see getting in the way of Bitcoin as a currency.  I can't imagine a contract or salary denominated in a currency whose value can swing by 400% in a year.
Can you imagine last October your hourly rate was set at the bitcoin equivalent of $10 an hour (0.00084 bitcoin), now you're making the bitcoin equivalent of $52.90 per hour (still 0.00084 bitcoin)?

When it starts gaining only 2% to 3% per year for years on end, then we can talk about it being a currency substitute.  But at that point, less people will be excited about it because it's not gaining by leaps and bounds.

Interesting point, and one I hadn't considered.  Thanks.

its not a currency just b/c its called a currency doesnt make it one -

Currency - a system of money in general use in a particular country.

no country is using this generally as money still even though some have activated it as accepted as tender.

is it a store of value - well currently its a store of the value people believe it will have and the growth they expect.  Will that level of value be maintained over decades after it reaches the peak of growth - will it act similar to gold and younger generations see it as a safe place to keep value outside of under the mattress or in US dollars? Will it even continue to grow or will the massive amounts of coins bought with debt come crashing down like a house of cards and bring equities with it - i'd say this is the most likely outcome in the next 5-10 years.

I don't think Bitcoin has any chance for long-term survival as just a "store of value". That would just make it a virtual version of gold, but with a ridiculously high carbon footprint. No way is that sustainable at all. Bitcoin has to achieve its destiny as a global currency (or regional currency, possibly in Latin America) to have any long-term value, which I'd guess is less than 15% likely, or its long-term value will crash down.

But I do invest in it, because it seems to be in the middle stages of a very lengthy bull run that could last several more years before we learn its long-term fate.

In the long term the grid won't have a ridiculously high carbon footprint.  We are likely in the last 50 years of using fossil fuels in my opinion, and hopefully less than 50 years. 


Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 19, 2021, 03:36:52 PM
Bitcoin now has a futures ETF, which means more people can get exposure to cyrpto through their retirement accounts. 

https://www.cnbc.com/quotes/BITO (https://www.cnbc.com/quotes/BITO)

As of this post....
Over 100 million people own bitcoin...check
Nation States are beginning to accept it as currency....check
Large institutional buying is now occurring through ETF's....check

Look, I'm not trying to put Bitcoin on the same level as the Dollar, Yuan, or Euro at this point.  That would be nonsense.  But let's face it, there are MANY legitimate national currencies that can't check the three boxes above like Bitcoin does.  For those saying...sure, blockchain is here to stay, but it's to early to have ANY IDEA which will last...I think that's not giving Bitcoin enough credit.  To me I see real and tangible reasons why a PARTICULAR blockchain has staying power.

PRO SHARES FUTURES ETF APPROVAL
It is really interesting to hear the reactions to this new Pro Shares Futures ETF. I agree that it could be good for large institutional buying.
What I don't like is this push to keep retail buyers out and let the big boys play their "high-level arbitration games".
Not that I'm familiar with contango or backwardation or understand the multitude of fees that go along with this arbitraged digital casino.
None of this involves buying actual Bitcoin at a spot exchange.

Gary Gensler knows damn well that the crypto community wanted a real Bitcoin ETF. We already have options and leverage for crypto; enough for any fool to get "rekt". Regulating and reducing the % of leverage allowed was a move I had no issue with.
But I am suspicious about the SEC's motives for not approving an ETF with direct bitcoin or ethereum ownership; not even for Grayscale.
We'll see what havoc if any this creates for the bitcoin spot exchange price in the future.
Bitcoin never does what one expects it to do.

MEANWHILE
Europe just approved another real Bitcoin ETF and Canada has continued to approve more ETFs as have other countries.

NATION STATES
The Nation States who do and will benefit from a bitcoin currency now or in the future are under intense scrutiny. El Salvador isn't even past its first three months and yet every yahoo who hates bitcoin even though they don't know the difference between a sh$t coin and bitcoin is hoping for the demise of this currency experiment. The best part is that the IMF has to accept bitcoin as a currency.

No one in El Salvador is forced to accept only bitcoin that's a convenient twist of the truth. Truth is that the app requires them to agree to accept bitcoin as legal tender. It does not force the use of bitcoin only since you can instantly convert to US $ or any other currency.
They'll have hiccups - it would be a miracle if they did not.
It will take time, there will be bonuses and interest and whatever else is needed to nudge and reach the population and slowly improve access and tech.

It took Europe a long time time to go from local currencies to the EURO for all and they didn't have any of the third world problems El Salvador faces.

I think El Salvador is doing a splendid job so far but it is too soon to tell whether it will be a long-term success.
What I'd like to see happening is for El Salvador to start their own bitcoin mining using their clean energy, volcanic thermopower. There was talk about that but implementation will require time, a huge amount of money and probably significant foreign investment.
Again, these are not projects that happen overnight.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 19, 2021, 04:35:47 PM
Y'all are really blind if you think Bitcoin is useable as currency. It's been stated oh so many times here how it doesn't work for that even by investors in it. Could some block chain become acceptable as world currency yes but that's not what Bitcoin is it destroys the entire debt system the world runs on.

It's not even currency today by definition. Legal tender of a country is not currency. Currency has to be generally accepted and used.

We should have called it bitsnocones then everyone would think they own a bunch of snow cones.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 19, 2021, 05:18:54 PM
Rosy, can you elaborate on the IMF thing? Doesn't the IMF require repayment of loans in a specific currency when they make the loan (all loans I'm aware of work this way)? Are you saying, for example, Argentina could decide to pay the IMF in bitcoin and they'd be required to accept it for some reason?

For what it's worth, I've run a business for ~20 years that is really popular with techie white dudes who are the prime demographic for bitcoin. Never, once, in what has to be 10,000 transactions has anyone tried to pay me with it. It's something (for better or worse) that you own, not something you spend. And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on October 19, 2021, 11:27:45 PM
And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W

This is  the sticky wicket of Bitcoin.  Bitcoin solved the trusted third party transaction problem.   But the creator(s) didn't think about what money actually is.  You do not want a currency that is inherently deflationary. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: JohnnyZ on October 20, 2021, 04:19:27 AM
The best part is that the IMF has to accept bitcoin as a currency.

 I think someone already told you that's not true, either higher in this thread or in another.


No one in El Salvador is forced to accept only bitcoin that's a convenient twist of the truth. Truth is that the app requires them to agree to accept bitcoin as legal tender.

If that's in reply to me, please re-read what I wrote. I didn't say people had to accept only bitcoins, but that they had to accept bitcoins, which is true because that's what legal tender means. No one claimed people couldn't pay in/accept dollars.


What I'd like to see happening is for El Salvador to start their own bitcoin mining using their clean energy, volcanic thermopower. There was talk about that but implementation will require time, a huge amount of money and probably significant foreign investment.
Again, these are not projects that happen overnight.

I really don't think more mining is the solution to anything. Wasted clean energy is still wasted energy.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: grmagne on October 20, 2021, 06:02:36 AM
And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W

This is  the sticky wicket of Bitcoin.  Bitcoin solved the trusted third party transaction problem.   But the creator(s) didn't think about what money actually is.  You do not want a currency that is inherently deflationary.

I don't see this as a problem in the long-term for Bitcoin:

1. The MMM philosophy of life discourages consumerism and encourages long-term savings & investment. A deflationary currency makes it easier for the world's poor to save for the future since they wouldn't even need access to capital markets. The currency itself becomes a savings vehicle.

2. The countries most likely to adopt a crypto-currency as legal tender in the next decade are in Latin America, Africa, Polynesia. In most countries of these regions the majority of people don't have access to traditional banking services and savings rates are near zero. I see little risk that El Salvadorans or Africans would suddenly stop spending money if their governments made Bitcoin the legal currency. That's a first world/middle class problem that wouldn't have any relevance for ~6 billion people alive today.

3. I think it's unlikely that Bitcoin would become a global currency in the 22nd century, but for the sake of argument let's suppose that it does. After the last Bitcoin is mined early next century it would become a truly deflationary currency. But economists in the future keep proclaiming that this currency doesn't work, undermining public confidence. So the Bitcoin community might decide to expand the supply above 21 million by restarting mining operations, solving the problem. And yes, they can do this despite its decentralized nature. For example, right now Bitcoin is being upgraded with the Taproot project which includes security and functionality upgrades agreed upon by the community near unanimously. An unpopular modification to the algorithm (such as expanding the supply above 21 million) could cause an uproar and lead to a hard fork into 2 currencies: the original version versus the modified version. In that case there would be 2 competing currencies and economists would get to observe in real-time whether the inflationary version is superior to the deflationary one.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 20, 2021, 07:00:13 AM
And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W

This is  the sticky wicket of Bitcoin.  Bitcoin solved the trusted third party transaction problem.   But the creator(s) didn't think about what money actually is.  You do not want a currency that is inherently deflationary.

I don't see this as a problem in the long-term for Bitcoin:

1. The MMM philosophy of life discourages consumerism and encourages long-term savings & investment. A deflationary currency makes it easier for the world's poor to save for the future since they wouldn't even need access to capital markets. The currency itself becomes a savings vehicle.

2. The countries most likely to adopt a crypto-currency as legal tender in the next decade are in Latin America, Africa, Polynesia. In most countries of these regions the majority of people don't have access to traditional banking services and savings rates are near zero. I see little risk that El Salvadorans or Africans would suddenly stop spending money if their governments made Bitcoin the legal currency. That's a first world/middle class problem that wouldn't have any relevance for ~6 billion people alive today.

3. I think it's unlikely that Bitcoin would become a global currency in the 22nd century, but for the sake of argument let's suppose that it does. After the last Bitcoin is mined early next century it would become a truly deflationary currency. But economists in the future keep proclaiming that this currency doesn't work, undermining public confidence. So the Bitcoin community might decide to expand the supply above 21 million by restarting mining operations, solving the problem. And yes, they can do this despite its decentralized nature. For example, right now Bitcoin is being upgraded with the Taproot project which includes security and functionality upgrades agreed upon by the community near unanimously. An unpopular modification to the algorithm (such as expanding the supply above 21 million) could cause an uproar and lead to a hard fork into 2 currencies: the original version versus the modified version. In that case there would be 2 competing currencies and economists would get to observe in real-time whether the inflationary version is superior to the deflationary one.

When I think to myself "I can live in a world where my savings are in a deflationary currency but I actually spend and borrow in a slightly inflationary currency" then I realize I've fallen into a mental trap. If everyone does this, then Bitcoin will never be a currency, and will thus be doomed forever to inhabit the dangerous realm of trendy collectibles like the Confederate notes traded for beer money by white supremacists at gun shows. No more of those are being minted either.

When I think to myself "I can buy the limited-edition currency today that impoverished people around the world will be using in 30 years when it costs a million dollars a coin" I have to ask myself why the global poor will choose to work all their lives producing goods and services for my chain of digits, when this digital slavery is actually a worse situation than their status quo. At least they can borrow money in their local currencies - or if not that, then in dollars - and finance their farms and businesses. Deflation shuts down lending. And at least their entire life savings doesn't disappear one day because their online exchange got hacked (btw, how exactly does this keep happening? You don't hear about Bank of America losing all their clients' funds with no recourse.). Why would people with no savings be more attracted to a deflationary cryptocurrency than they are to a currency that can be borrowed, loaned, invested, and securely exchanged worldwide - i.e. the dollar?

El Salvador? People are on the verge of starvation in that gang-run dictatorship, and they're walking the entire continent to escape it and enjoy the privileges of US immigration prisons. My guess is the E.S. government found a way to pilfer the entire treasury because their Bitcoin holdings can be obscured from audit. Move $ into Bitcoin within the treasury, take Bitcoin home and trade back for $, treasury reports it still has Bitcoin, repeat until rich enough to disappear to a Caribbean island. Maybe I'm a pessimist on E.S. but I've been reading the world news long enough to spot the patterns by now. it's always the same.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 20, 2021, 07:13:13 AM
And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W

This is  the sticky wicket of Bitcoin.  Bitcoin solved the trusted third party transaction problem.   But the creator(s) didn't think about what money actually is.  You do not want a currency that is inherently deflationary.

I don't see this as a problem in the long-term for Bitcoin:

1. The MMM philosophy of life discourages consumerism and encourages long-term savings & investment. A deflationary currency makes it easier for the world's poor to save for the future since they wouldn't even need access to capital markets. The currency itself becomes a savings vehicle.

2. The countries most likely to adopt a crypto-currency as legal tender in the next decade are in Latin America, Africa, Polynesia. In most countries of these regions the majority of people don't have access to traditional banking services and savings rates are near zero. I see little risk that El Salvadorans or Africans would suddenly stop spending money if their governments made Bitcoin the legal currency. That's a first world/middle class problem that wouldn't have any relevance for ~6 billion people alive today.

3. I think it's unlikely that Bitcoin would become a global currency in the 22nd century, but for the sake of argument let's suppose that it does. After the last Bitcoin is mined early next century it would become a truly deflationary currency. But economists in the future keep proclaiming that this currency doesn't work, undermining public confidence. So the Bitcoin community might decide to expand the supply above 21 million by restarting mining operations, solving the problem. And yes, they can do this despite its decentralized nature. For example, right now Bitcoin is being upgraded with the Taproot project which includes security and functionality upgrades agreed upon by the community near unanimously. An unpopular modification to the algorithm (such as expanding the supply above 21 million) could cause an uproar and lead to a hard fork into 2 currencies: the original version versus the modified version. In that case there would be 2 competing currencies and economists would get to observe in real-time whether the inflationary version is superior to the deflationary one.

When I think to myself "I can live in a world where my savings are in a deflationary currency but I actually spend and borrow in a slightly inflationary currency" then I realize I've fallen into a mental trap. If everyone does this, then Bitcoin will never be a currency, and will thus be doomed forever to inhabit the dangerous realm of trendy collectibles like the Confederate notes traded for beer money by white supremacists at gun shows. No more of those are being minted either.

When I think to myself "I can buy the limited-edition currency today that impoverished people around the world will be using in 30 years when it costs a million dollars a coin" I have to ask myself why the global poor will choose to work all their lives producing goods and services for my chain of digits, when this digital slavery is actually a worse situation than their status quo. At least they can borrow money in their local currencies - or if not that, then in dollars - and finance their farms and businesses. Deflation shuts down lending. And at least their entire life savings doesn't disappear one day because their online exchange got hacked (btw, how exactly does this keep happening? You don't hear about Bank of America losing all their clients' funds with no recourse.). Why would people with no savings be more attracted to a deflationary cryptocurrency than they are to a currency that can be borrowed, loaned, invested, and securely exchanged worldwide - i.e. the dollar?

El Salvador? People are on the verge of starvation in that gang-run dictatorship, and they're walking the entire continent to escape it and enjoy the privileges of US immigration prisons. My guess is the E.S. government found a way to pilfer the entire treasury because their Bitcoin holdings can be obscured from audit. Move $ into Bitcoin within the treasury, take Bitcoin home and trade back for $, treasury reports it still has Bitcoin, repeat until rich enough to disappear to a Caribbean island. Maybe I'm a pessimist on E.S. but I've been reading the world news long enough to spot the patterns by now. it's always the same.

Isn't the nature of the Bitcoin ledger such that El Salvador's Bitcoin stake is publicly visible?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 20, 2021, 07:17:23 AM
And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W

This is  the sticky wicket of Bitcoin.  Bitcoin solved the trusted third party transaction problem.   But the creator(s) didn't think about what money actually is.  You do not want a currency that is inherently deflationary.

It makes me furious. I really, really hate paying credit card transaction fees. Crypto has the promise to solve this and make humanity vastly better off, but because bitcoin is so terribly designed it is actually preventing that scenario from becoming a reality.

You can have a long argument about whether 0 or 1 or 2% inflation is ideal in a currency, but there's no coherent argument for one that is actually *deflationary*.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 20, 2021, 07:26:30 AM
And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W

This is  the sticky wicket of Bitcoin.  Bitcoin solved the trusted third party transaction problem.   But the creator(s) didn't think about what money actually is.  You do not want a currency that is inherently deflationary.

It makes me furious. I really, really hate paying credit card transaction fees. Crypto has the promise to solve this and make humanity vastly better off, but because bitcoin is so terribly designed it is actually preventing that scenario from becoming a reality.

You can have a long argument about whether 0 or 1 or 2% inflation is ideal in a currency, but there's no coherent argument for one that is actually *deflationary*.

-W

agreed this is fundamentally why some block chain is likely to become useable as a currency world wide or country wide. Just b/c bitcoin was first doesn't mean its best and we already know its likely the worst.  I do not understand how someone investing in bitcoin doesn't see this.  Many here have stated they have an allocation they are glad to lose b/c its highly speculative.  But no one has laid out a roadmap to what BTC is specifically going to be used for in the future.  The US accumulates 750B a year in debt to fund defense.  The largest military in the world is not going to allow something deflationary to become standard exchange - This does not just shut down the person to person/bank borrowing problem it kills entire countries propped up on debt and something tells me between china who is 2nd who already made this illegal and the us who is first in defense spending with a combined total of 1T dollars arent just going to let something like this take hold and replace fiat.

so then someone please explain the use case for this thing called bitcoin and dont go down the path of the value of blockchain which almost everyone here who doesnt speculate in crypto agrees has value.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 20, 2021, 07:32:09 AM
Rosy, can you elaborate on the IMF thing? Doesn't the IMF require repayment of loans in a specific currency when they make the loan (all loans I'm aware of work this way)? Are you saying, for example, Argentina could decide to pay the IMF in bitcoin and they'd be required to accept it for some reason?

For what it's worth, I've run a business for ~20 years that is really popular with techie white dudes who are the prime demographic for bitcoin. Never, once, in what has to be 10,000 transactions has anyone tried to pay me with it. It's something (for better or worse) that you own, not something you spend. And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W

Walt and Johnny Z
No - the IMF agreement states that it must accept payment in the legal tender of their member countries. Since bitcoin is now legal tender in El Salvador and there is no exclusion of bitcoin that means El Salvador can pay the IMF in bitcoin.

Quote from the IMF
Quote
Jul 26, 2021 — If a cryptoasset were granted legal tender status, it would have to be accepted by creditors in payment of monetary obligations, including taxes ...

You raise an excellent point Walt in whether this might apply to an existing loan contract if that contract names only one currency. I don't know if the primary clause would override a specific contract.
It would not apply to your example of Argentina since they do not use bitcoin as legal tender.

Quote from Bloomberg - Oct 19, 2021
Quote
El Salvador’s first-of-its-kind adoption of Bitcoin won’t be an obstacle for the government to reach a $1.3 billion loan agreement with the International Monetary Fund, according to the country’s central bank president.
This Bloomberg article makes it crystal clear that the IMF is playing hard ball.

Since El Salvador is still using the US$ as legal tender alongside crypto (it takes time to convert to a new currency) who is to say they will not simply convert their crypto into dollars anyway?
If the day ever comes where they declare the US$ a foreign currency then it is a new ball game.

I like your comment Walt:)
"Any freshman macro econ student could have designed a better currency."
That may well be true for all I know but then maybe those deficiencies can be addressed? I'm neither an economist nor an expert on currencies and don't pretend to be. So I will leave discussions on the finer points of a currency to the experts.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 20, 2021, 07:35:24 AM
Rosy, can you elaborate on the IMF thing? Doesn't the IMF require repayment of loans in a specific currency when they make the loan (all loans I'm aware of work this way)? Are you saying, for example, Argentina could decide to pay the IMF in bitcoin and they'd be required to accept it for some reason?

For what it's worth, I've run a business for ~20 years that is really popular with techie white dudes who are the prime demographic for bitcoin. Never, once, in what has to be 10,000 transactions has anyone tried to pay me with it. It's something (for better or worse) that you own, not something you spend. And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W

Walt and Johnny Z
No - the IMF agreement states that it must accept payment in the legal tender of their member countries. Since bitcoin is now legal tender in El Salvador and there is no exclusion of bitcoin that means El Salvador can pay the IMF in bitcoin.

Quote from the IMF
Quote
Jul 26, 2021 — If a cryptoasset were granted legal tender status, it would have to be accepted by creditors in payment of monetary obligations, including taxes ...

You raise an excellent point Walt in whether this might apply to an existing loan contract if that contract names only one currency. I don't know if the primary clause would override a specific contract.
It would not apply to your example of Argentina since they do not use bitcoin as legal tender.

Quote from Bloomberg - Oct 19, 2021
Quote
El Salvador’s first-of-its-kind adoption of Bitcoin won’t be an obstacle for the government to reach a $1.3 billion loan agreement with the International Monetary Fund, according to the country’s central bank president.
This Bloomberg article makes it crystal clear that the IMF is playing hard ball.

Since El Salvador is still using the US$ as legal tender alongside crypto (it takes time to convert to a new currency) who is to say they will not simply convert their crypto into dollars anyway?
If the day ever comes where they declare the US$ a foreign currency then it is a new ball game.

I like your comment Walt:)
"Any freshman macro econ student could have designed a better currency."
That may well be true for all I know but then maybe those deficiencies can be addressed? I'm neither an economist nor an expert on currencies and don't pretend to be. So I will leave discussions on the finer points of a currency to the experts.

this statement right here - you said it yourself its been stated multiple times here why BTC is not useable as a currency and never can be but you choose to claim ignorance on the issue - great way to invest your green soldiers.

BTC deficiencies cannot be addressed b/c there are a finite number of coins per how the code is written - that's an unsolvable deficiency for BTC
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 20, 2021, 07:50:39 AM
You don't need to be an economics professor here. Just imagine you have some bitcoin, which is limited in supply, and hence is going to slowly gain value, forever, because it's the world currency.

I come to you asking for a loan. Do you give me a loan? If so, how much interest do you charge me? Worldwide, are people more or less likely to loan each other money and buy/sell things to each other if their money is constantly gaining value?

-W

Title: Re: What do you think of adding a low% of crypto allocation
Post by: grmagne on October 20, 2021, 08:02:56 AM
When I think to myself "I can live in a world where my savings are in a deflationary currency but I actually spend and borrow in a slightly inflationary currency" then I realize I've fallen into a mental trap. If everyone does this, then Bitcoin will never be a currency, and will thus be doomed forever to inhabit the dangerous realm of trendy collectibles like the Confederate notes traded for beer money by white supremacists at gun shows. No more of those are being minted either.

When I think to myself "I can buy the limited-edition currency today that impoverished people around the world will be using in 30 years when it costs a million dollars a coin" I have to ask myself why the global poor will choose to work all their lives producing goods and services for my chain of digits, when this digital slavery is actually a worse situation than their status quo. At least they can borrow money in their local currencies - or if not that, then in dollars - and finance their farms and businesses. Deflation shuts down lending. And at least their entire life savings doesn't disappear one day because their online exchange got hacked (btw, how exactly does this keep happening? You don't hear about Bank of America losing all their clients' funds with no recourse.). Why would people with no savings be more attracted to a deflationary cryptocurrency than they are to a currency that can be borrowed, loaned, invested, and securely exchanged worldwide - i.e. the dollar?

El Salvador? People are on the verge of starvation in that gang-run dictatorship, and they're walking the entire continent to escape it and enjoy the privileges of US immigration prisons. My guess is the E.S. government found a way to pilfer the entire treasury because their Bitcoin holdings can be obscured from audit. Move $ into Bitcoin within the treasury, take Bitcoin home and trade back for $, treasury reports it still has Bitcoin, repeat until rich enough to disappear to a Caribbean island. Maybe I'm a pessimist on E.S. but I've been reading the world news long enough to spot the patterns by now. it's always the same.

I don't expect Bitcoin to work miracles in El Salvador, but I can easily imagine that thousands of people are already seeing tangible benefits. Let's say my neighbor and I both receive $100/month remittance from a relative in the United States, which is a very common situation there. Every month we walk to the Western Union office where we collect $94 after fees. Only this month I've received $100 through the Chivo App with no fees and didn't have to leave my home. I'm already $6 ahead, which is the first real-world tangible benefit most El Salvadorans will notice. My neighbor still receives the $94 cash and spent it all. I spent $94 and decided to hold on to the other $6. Now, one month later I learn that my $6 is actually worth $8 because Bitcoin's been going up a lot. A lightbulb goes on in my brain that if I save that extra $6 every month, not only will I be saving significant money (by their standards) for the first time in my life, but it can actually grow very quickly. Of course, it can also go down very quickly, but if this becomes a common currency in Latin America it should tend to grow more than shrink for years to come.

At first it seems most people are just taking their remittance money, converting to $USD and then spending that, just as they always have. So maybe people will just save a tiny bit on their Chivo app, but shun using Bitcoin as cash. But eventually people will notice that they can save a step. Instead of converting Bitcoin to cash, and spending that, it's actually faster to just skip the ATM and just spend the Bitcoin. I could easily imagine 20-25% of El Salvador using Bitcoin as their primary savings & spending currency by 2025, given that public sentiment has turned a bit more favorable after just 7 weeks of usage.

I know there are potential pitfalls. I can imagine anything from EU/US regulation crushing cryptocurrency in the future and wiping out El Salvadorans savings, to a security glitch in the Chivo app leading to widespread thefts, or the dangers of having both your savings & short-term spending cash all lumped together on one phone app. But, given that Bitcoin can introduce poor people to an easy way to save for the future, I'm mostly optimistic.

I don't really buy into the argument that a deflationary currency can't work. And even if it doesn't, I described in an earlier post that it's possible to modify Bitcoin into an inflationary currency if that's ever needed. There have already been multiple upgrades to Bitcoin's protocol in the first 13 years. But if someone says we're only incentivized to invest for the future by holding fiat currency with a -2% annual value due to inflation, I'd ask why I can't also be incentivized to invest for the future while holding a digital currency that grows 2% in value annually? After all, I'm still better off investing at 7% per year than saving at 2%. And, if I lived in a country where corruption and hyperinflation were daily realities, I'd jump at the opportunity to have Bitcoin as a currency alternative.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 20, 2021, 08:16:59 AM
We already can see how a deflationary currency doesn't work, though. Nobody, and I mean nobody uses bitcoin to buy or sell things or to pay salaries. Because they hold onto it instead, expecting it to sporadically and randomly increase in value.

Contrast this to dollars - nobody thinks twice about making loans, purchasing things, etc. Because holding onto the currency itself is a losing proposition.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 20, 2021, 08:37:57 AM
My guess is the E.S. government found a way to pilfer the entire treasury because their Bitcoin holdings can be obscured from audit. Move $ into Bitcoin within the treasury, take Bitcoin home and trade back for $, treasury reports it still has Bitcoin, repeat until rich enough to disappear to a Caribbean island.
The amount of Bitcoin in every wallet / account is public knowledge.  If they lie about how much Bitcoin is present in one of their accounts, they will be proved wrong within minutes of saying it.

A good example is the excitement over seeing a 9 year old Bitcoin wallet suddenly become active.  That old wallet has 616 BTC, and since Bitcoin recently shot up in value, that's worth over $40 million now ($29 million when the article was written).  Lying about the contents of a bitcoin wallet just won't work.
https://finance.yahoo.com/news/bitcoin-wallet-satoshi-nakamoto-era-075836330.html


BTC deficiencies cannot be addressed b/c there are a finite number of coins per how the code is written - that's an unsolvable deficiency for BTC
If Bitcoin miners agree, the code can be changed.  It's rare, but happened earlier this year.
https://www.cnbc.com/2021/06/12/bitcoin-taproot-upgrade-what-it-means.html

Bitcoin's security is that a majority of the computing power needs to confirm blocks.  Someone who has control of most of the computing power can, in theory, make changes until others relent and adopt the changes.  This "51% attack" is only theoretical, it's never been done.  Controlling an entire datacenter wouldn't be enough.
https://www.investopedia.com/terms/1/51-attack.asp
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 20, 2021, 08:45:23 AM
My guess is the E.S. government found a way to pilfer the entire treasury because their Bitcoin holdings can be obscured from audit. Move $ into Bitcoin within the treasury, take Bitcoin home and trade back for $, treasury reports it still has Bitcoin, repeat until rich enough to disappear to a Caribbean island.
The amount of Bitcoin in every wallet / account is public knowledge.  If they lie about how much Bitcoin is present in one of their accounts, they will be proved wrong within minutes of saying it.

A good example is the excitement over seeing a 9 year old Bitcoin wallet suddenly become active.  That old wallet has 616 BTC, and since Bitcoin recently shot up in value, that's worth over $40 million now ($29 million when the article was written).  Lying about the contents of a bitcoin wallet just won't work.
https://finance.yahoo.com/news/bitcoin-wallet-satoshi-nakamoto-era-075836330.html


BTC deficiencies cannot be addressed b/c there are a finite number of coins per how the code is written - that's an unsolvable deficiency for BTC
If Bitcoin miners agree, the code can be changed.  It's rare, but happened earlier this year.
https://www.cnbc.com/2021/06/12/bitcoin-taproot-upgrade-what-it-means.html

Bitcoin's security is that a majority of the computing power needs to confirm blocks.  Someone who has control of most of the computing power can, in theory, make changes until others relent and adopt the changes.  This "51% attack" is only theoretical, it's never been done.  Controlling an entire datacenter wouldn't be enough.
https://www.investopedia.com/terms/1/51-attack.asp

so what you're saying is in order for this to be money the people holding the computing power have to decide to deflate the value of their assets -  that sounds like something people would willing choose to do who like above admittedly dont actually understand monetary policy.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 20, 2021, 09:37:40 AM

I don't really buy into the argument that a deflationary currency can't work.

Your belief isn't the issue. You certainly have a right to your opinion, but consider why most people who study currencies conclude differently. It's simply this: if a deflationary currency is the dominant currency of a nation, its deflationary character has the tendency to slow down the real economy, causing worsened life conditions for the people. A currency with slight inflation works better.

The decision driving this isn't normally a person deciding to use one currency instead of another. It's the decision of a person who has temporarily saved some money, deciding what to do next. The savings are already in the dominant currency of the day, be it dollars or BTC or seashells. If the currency is deflationary, keeping the seashells or BTC is a safe choice that is likely to be profitable. #WinningBySaving, yay!

Unfortunately for everyone, this means that in an economy dominated by deflationary currency, the common choice is not to invest. By contrast, in an inflationary currency, the saver faces the unpleasant reality that if they do nothing, their savings will evaparate over time due to the currency's inflation. Sadly for them, the only way to preserve their capital is take the risky course of doing something with it - investing it in some business that does work, produces things, provides services, somehow provides value to customers. The inflating currency motivates investment and thus stimulates the real economy. In a nation with deflating currency, the motivation to invest declines and the real economy follows. Everyone becomes poorer in real life than they would have been, eagerly hoarding their seashells while houses rot and children start to get hungry.

I may yet invest in crypto and even BTC, but not because I believe in deflationary currency being something that "works" in the sense of being a good currency, a currency that has a positive effect.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 20, 2021, 09:51:49 AM
BTC deficiencies cannot be addressed b/c there are a finite number of coins per how the code is written - that's an unsolvable deficiency for BTC
If Bitcoin miners agree, the code can be changed.  It's rare, but happened earlier this year.
https://www.cnbc.com/2021/06/12/bitcoin-taproot-upgrade-what-it-means.html

Bitcoin's security is that a majority of the computing power needs to confirm blocks.  Someone who has control of most of the computing power can, in theory, make changes until others relent and adopt the changes.  This "51% attack" is only theoretical, it's never been done.  Controlling an entire datacenter wouldn't be enough.
https://www.investopedia.com/terms/1/51-attack.asp
so what you're saying is in order for this to be money the people holding the computing power have to decide to deflate the value of their assets -  that sounds like something people would willing choose to do who like above admittedly dont actually understand monetary policy.
I didn't say anything about money - maybe you're conflating my comments with another poster?  I actually don't consider Bitcoin to be money.

Bitcoin's volatility has been more significant than inflation.  Social security is giving a cost of living increase of 5.9%, which is more inflation than we've seen in some time.  If Bitcoin only went up 6% per year for a couple years, I think large numbers of people would abandon it.

Restaurants and move theaters have thin profit margins.  The volatility of BTC would make them either change their prices hourly, or potentially get underpaid by a percentage greater than their profit margin.  Five days ago (Oct 15), Bitcoin rose +7.4% in one day - but it could easily have dropped that much.  While Bitcoin remains volatile, it seems more appropriate for online transactions, where prices can be changed more smoothly than a printed menu.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 20, 2021, 10:03:20 AM
BTC deficiencies cannot be addressed b/c there are a finite number of coins per how the code is written - that's an unsolvable deficiency for BTC
If Bitcoin miners agree, the code can be changed.  It's rare, but happened earlier this year.
https://www.cnbc.com/2021/06/12/bitcoin-taproot-upgrade-what-it-means.html

Bitcoin's security is that a majority of the computing power needs to confirm blocks.  Someone who has control of most of the computing power can, in theory, make changes until others relent and adopt the changes.  This "51% attack" is only theoretical, it's never been done.  Controlling an entire datacenter wouldn't be enough.
https://www.investopedia.com/terms/1/51-attack.asp
so what you're saying is in order for this to be money the people holding the computing power have to decide to deflate the value of their assets -  that sounds like something people would willing choose to do who like above admittedly dont actually understand monetary policy.
I didn't say anything about money - maybe you're conflating my comments with another poster?  I actually don't consider Bitcoin to be money.

Bitcoin's volatility has been more significant than inflation.  Social security is giving a cost of living increase of 5.9%, which is more inflation than we've seen in some time.  If Bitcoin only went up 6% per year for a couple years, I think large numbers of people would abandon it.

Restaurants and move theaters have thin profit margins.  The volatility of BTC would make them either change their prices hourly, or potentially get underpaid by a percentage greater than their profit margin.  Five days ago (Oct 15), Bitcoin rose +7.4% in one day - but it could easily have dropped that much.  While Bitcoin remains volatile, it seems more appropriate for online transactions, where prices can be changed more smoothly than a printed menu.

bitcoin going up 6% is not the same as inflation its deflation bitcoin has to decrease by 6% in value to be the same as the COL adjustment given by the SSA to account for inflation which means 1 dollar is worth 6% less this year than last.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on October 20, 2021, 10:09:43 AM
Deflation shuts down lending.

Out of curiosity, do we have strong evidence that the above is true? I know interest rates in many parts of the EU went negative and banks were making home loans at negative interest rates and investors were buying debt at negative interest rates.

So negative interest rates in of themselves don't appear to be a barrier to lending. But not sure if the EU experienced genuine deflation or not during that period.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 20, 2021, 10:09:57 AM
The amount of Bitcoin in every wallet / account is public knowledge.  If they lie about how much Bitcoin is present in one of their accounts, they will be proved wrong within minutes of saying it.

This is not true, though, right? All of these transactions go through Chivo, which is not transparent. It's allowing Bukele to make up wildly ridiculous stats about the success (https://twitter.com/nayibbukele/status/1442624279028408321), like there are more transactions in ES on Chivo than Visa handles worldwide. That seems rather unlikely.

To ChpBstrd's point, much of this is deeply suspicious. A lawyer prosecuted for falsifying a will helped create the company running Chivo Wallet. The notary who attested to the legality of Chivo SA de CV, created with public resources by the Government, was accused of documentary falsification in 2020 [1]. President Bukele’s Chief of Staff, Marta Carolina Recinos de Bernal, is on the US State Department’s Engel List of corrupt officials. She’s also a director of Chivo SA [2].

It really is depressing seeing a bunch of crypto enthusiasts—who claim to be wholly against corruption—cheer on this naked pillaging of some of the most impoverished people on Earth all because "number go up" on their pet Ponzi scheme.

[1] https://www.revistafactum.com/abogada-chivo/
[2] https://www.elsalvador.com/noticias/nacional/funcionaria-bukele-lista-engel-directora-empresa-detras-chivo/877437/2021/
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 20, 2021, 10:23:52 AM
BTC deficiencies cannot be addressed b/c there are a finite number of coins per how the code is written - that's an unsolvable deficiency for BTC
If Bitcoin miners agree, the code can be changed.  It's rare, but happened earlier this year.
https://www.cnbc.com/2021/06/12/bitcoin-taproot-upgrade-what-it-means.html

Bitcoin's security is that a majority of the computing power needs to confirm blocks.  Someone who has control of most of the computing power can, in theory, make changes until others relent and adopt the changes.  This "51% attack" is only theoretical, it's never been done.  Controlling an entire datacenter wouldn't be enough.
https://www.investopedia.com/terms/1/51-attack.asp
so what you're saying is in order for this to be money the people holding the computing power have to decide to deflate the value of their assets -  that sounds like something people would willing choose to do who like above admittedly dont actually understand monetary policy.
I didn't say anything about money - maybe you're conflating my comments with another poster?  I actually don't consider Bitcoin to be money.

Bitcoin's volatility has been more significant than inflation.  Social security is giving a cost of living increase of 5.9%, which is more inflation than we've seen in some time.  If Bitcoin only went up 6% per year for a couple years, I think large numbers of people would abandon it.

Restaurants and move theaters have thin profit margins.  The volatility of BTC would make them either change their prices hourly, or potentially get underpaid by a percentage greater than their profit margin.  Five days ago (Oct 15), Bitcoin rose +7.4% in one day - but it could easily have dropped that much.  While Bitcoin remains volatile, it seems more appropriate for online transactions, where prices can be changed more smoothly than a printed menu.

bitcoin going up 6% is not the same as inflation its deflation bitcoin has to decrease by 6% in value to be the same as the COL adjustment given by the SSA to account for inflation which means 1 dollar is worth 6% less this year than last.
Oh, I see what you're saying.  The U.S. can print more dollars (or buy treasuries in the bond market, like it's doing now), which dilutes existing dollars.  Bitcoin is still generating block rewards, which create more Bitcoin.

Google says the current reward is 6.25 BTC (over $400k!), and a block is created 6 times an hour.  Dividing annual block rewards by Bitcoin in circulation gives me 1.7%.  Bitcoin went up +450% in the past 12 months (last I checked), so the extra 1.7% of Bitcoin rewards don't seem to matter much.

Viewing Bitcoin as a currency, wouldn't it be in extreme deflation?  If you look at the behavior of people with BTC, they just hold onto it.  Holding a currency and refusing to buy anything would be like a currency with extreme deflation... hyper-deflation?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 20, 2021, 10:25:54 AM
BTC deficiencies cannot be addressed b/c there are a finite number of coins per how the code is written - that's an unsolvable deficiency for BTC
If Bitcoin miners agree, the code can be changed.  It's rare, but happened earlier this year.
https://www.cnbc.com/2021/06/12/bitcoin-taproot-upgrade-what-it-means.html

Bitcoin's security is that a majority of the computing power needs to confirm blocks.  Someone who has control of most of the computing power can, in theory, make changes until others relent and adopt the changes.  This "51% attack" is only theoretical, it's never been done.  Controlling an entire datacenter wouldn't be enough.
https://www.investopedia.com/terms/1/51-attack.asp
so what you're saying is in order for this to be money the people holding the computing power have to decide to deflate the value of their assets -  that sounds like something people would willing choose to do who like above admittedly dont actually understand monetary policy.
I didn't say anything about money - maybe you're conflating my comments with another poster?  I actually don't consider Bitcoin to be money.

Bitcoin's volatility has been more significant than inflation.  Social security is giving a cost of living increase of 5.9%, which is more inflation than we've seen in some time.  If Bitcoin only went up 6% per year for a couple years, I think large numbers of people would abandon it.

Restaurants and move theaters have thin profit margins.  The volatility of BTC would make them either change their prices hourly, or potentially get underpaid by a percentage greater than their profit margin.  Five days ago (Oct 15), Bitcoin rose +7.4% in one day - but it could easily have dropped that much.  While Bitcoin remains volatile, it seems more appropriate for online transactions, where prices can be changed more smoothly than a printed menu.

bitcoin going up 6% is not the same as inflation its deflation bitcoin has to decrease by 6% in value to be the same as the COL adjustment given by the SSA to account for inflation which means 1 dollar is worth 6% less this year than last.
Oh, I see what you're saying.  The U.S. can print more dollars (or buy treasuries in the bond market, like it's doing now), which dilutes existing dollars.  Bitcoin is still generating block rewards, which create more Bitcoin.

Google says the current reward is 6.25 BTC (over $400k!), and a block is created 6 times an hour.  Dividing annual block rewards by Bitcoin in circulation gives me 1.7%.  Bitcoin went up +450% in the past 12 months (last I checked), so the extra 1.7% of Bitcoin rewards don't seem to matter much.

Viewing Bitcoin as a currency, wouldn't it be in extreme deflation?  If you look at the behavior of people with BTC, they just hold onto it.  Holding a currency and refusing to buy anything would be like a currency with extreme deflation... hyper-deflation?

correct that was the entire point i was making when you snipped off part of my post and started a different thread.  Basically btc isnt a currency unless something dramatically changes which most of the BTC holders here agree to but then you have quite a few still spouting its benefits as currency which with out heavy modification can never happen.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 20, 2021, 04:08:02 PM
Rosy, can you elaborate on the IMF thing? Doesn't the IMF require repayment of loans in a specific currency when they make the loan (all loans I'm aware of work this way)? Are you saying, for example, Argentina could decide to pay the IMF in bitcoin and they'd be required to accept it for some reason?

For what it's worth, I've run a business for ~20 years that is really popular with techie white dudes who are the prime demographic for bitcoin. Never, once, in what has to be 10,000 transactions has anyone tried to pay me with it. It's something (for better or worse) that you own, not something you spend. And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W

Walt and Johnny Z
No - the IMF agreement states that it must accept payment in the legal tender of their member countries. Since bitcoin is now legal tender in El Salvador and there is no exclusion of bitcoin that means El Salvador can pay the IMF in bitcoin.

Quote from the IMF
Quote
Jul 26, 2021 — If a cryptoasset were granted legal tender status, it would have to be accepted by creditors in payment of monetary obligations, including taxes ...

You raise an excellent point Walt in whether this might apply to an existing loan contract if that contract names only one currency. I don't know if the primary clause would override a specific contract.
It would not apply to your example of Argentina since they do not use bitcoin as legal tender.

Quote from Bloomberg - Oct 19, 2021
Quote
El Salvador’s first-of-its-kind adoption of Bitcoin won’t be an obstacle for the government to reach a $1.3 billion loan agreement with the International Monetary Fund, according to the country’s central bank president.
This Bloomberg article makes it crystal clear that the IMF is playing hard ball.

Since El Salvador is still using the US$ as legal tender alongside crypto (it takes time to convert to a new currency) who is to say they will not simply convert their crypto into dollars anyway?
If the day ever comes where they declare the US$ a foreign currency then it is a new ball game.

I like your comment Walt:)
"Any freshman macro econ student could have designed a better currency."
That may well be true for all I know but then maybe those deficiencies can be addressed? I'm neither an economist nor an expert on currencies and don't pretend to be. So I will leave discussions on the finer points of a currency to the experts.

this statement right here - you said it yourself its been stated multiple times here why BTC is not useable as a currency and never can be but you choose to claim ignorance on the issue - great way to invest your green soldiers.

BTC deficiencies cannot be addressed b/c there are a finite number of coins per how the code is written - that's an unsolvable deficiency for BTC

I doubt that it is an unsolvable deficiency for BTC. The consensus to change the code and implement a change takes years. Like MustacheandaHalf said it is rare and for good reason. I do see where the 'deflationary' aspect might be a problem in the long run. Believe it or not there are smart people in crypto who are arguing the pros and cons and the functionality of bitcoin as a true currency in its current state. It is not that I claim ignorance on the issue(s) what I said is that I am not an expert on currencies or an economist.

There is the issue of scarcity and finite coins, but I do think that since bitcoin is divisible by eight digits down to satoshis this will perhaps dilute and slow down the scarcity by eight as the smaller denominations gain in value prolonging the process. Just a thought.

To clarify, I invested in bitcoin because I see it as a store of value.
Ideologically I like the idea of a global currency that succeeds in more financial equality and opportunities for all.

Ideology and reality generally do not mix.
It would be ironic if bitcoin was destroyed by the very idea that conceived it - a global currency.
I don't see that happening - bitcoin is here to stay, whether it ever becomes a global currency or not is not relevant to its survival.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 20, 2021, 06:31:17 PM
LOL at these criticism of Bitcoin for being "deflationary". 

Also, just because its not inflationary at the whim of the treasury does not equal it being deflationary.  I guess we have to start with the basics.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: js82 on October 20, 2021, 07:12:34 PM
I'm currently 80% vtsax, 11% Ethereum, 9% Bitcoin.  I'll likely shift another 20% into crypto by the end of the year. 

So yeah, I'd endorcse a 95/5 split as not being too crazy:)

Somewhere along the way I allocated to a ~93% equity/7% crypto split.  That balance is now something like 70% equity/30% crypto(Oops!).  I haven't rebalanced yet because I'm waiting until it rolls over into long term cap gains so I can rebalance without killing myself too badly with taxes.

My general thought process is this:

1) Most Crypto is not a great choice as a long-term asset(i.e. performance once we get past the next 5 years or so) for the same reasons that Gold is not a great choice as a long-term asset.  Gold is mostly a dumb asset because it's non-productive and its price is somewhat detached from its intrinsic worth, and similarly most cryptocurrencies will be pretty useless as investments once they've reached full-scale adoption.

2) *HOWEVER* (and this is where I missed the boat on crypto earlier on), Crypto is still coming up its S-curve in terms of adoption - meaning that there will be an increase in demand in crypto over the next few years, which should drive a general increase in the crypto market cap and prices of non-junk cryptocurrencies.  Crypto *IS* likely to be an extremely strong asset class in the mid-term.

3) There's a lot of junk (and outright scams) in the crypto space right now - I think the soundest strategy in the crypto space is to A) diversify, and B) look for crypto applications with clearly-defined use cases and consider total potential markets, as opposed to chasing memecoins.  The latter is basically gambling as opposed to investing.

In general I'm bullish on the technology(blockchain) itself, moreso than any individual cryptocurrency.  I also think that future gains will not be as large as past gains due to how far we've come up the adoption curve already.  That said, I drastically underestimated crypto's potential in its early phases, and I could very well be wrong(in either direction) again.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 20, 2021, 07:36:34 PM
LOL at these criticism of Bitcoin for being "deflationary". 

Also, just because its not inflationary at the whim of the treasury does not equal it being deflationary.  I guess we have to start with the basics.

Basics are just what I need! Explain?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 20, 2021, 08:06:06 PM
LOL at these criticism of Bitcoin for being "deflationary". 

Also, just because its not inflationary at the whim of the treasury does not equal it being deflationary.  I guess we have to start with the basics.

Basics are just what I need! Explain?

Here you go (https://googlethatforyou.com?q=is%20bitcoin%20deflationary).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 20, 2021, 10:38:33 PM
LOL at these criticism of Bitcoin for being "deflationary". 

Also, just because its not inflationary at the whim of the treasury does not equal it being deflationary.  I guess we have to start with the basics.

Basics are just what I need! Explain?

Here you go (https://googlethatforyou.com?q=is%20bitcoin%20deflationary).

I will assume you meant this Connor Brown article: https://medium.com/the-bitcoin-times/stop-calling-bitcoin-deflationary-84462cb90345

He makes some interesting points, but does not successfully address the key mechanism by which I am suggesting that BTC would have a deflationary effect. He mentions the concern, but mis-states the mechanism by which "critics" say BTC would have a deflationary effect; therefore, he doesn't address my actual concern, which as I understand it is most economists' main concern about any fixed money supply relative to a growing economy.

Sure, technically it's not a shrinking money supply. It's slowly increasing until 2140, he says, then flatlining. Fine. But Brown asserts the price will stablize. He asserts that slowing population growth will cause demand for currency to just perfectly match the amount of currency BTC will provide.

That's unlikely. Setting aside the improbability of a precise enough match between population numbers and number of Bitcoins, the money supply needs to meet the needs of economic growth. We'd prefer for buying power to rise even if population doesn't. BTC isn't prepared for an expanding economy if the population is stable. A better solution would be a currency that can be adjusted to the economy's needs. BTC will only maximize productive incentives if its coin production and maintenance curve happens to exactly match the future needs of the global economy. Brown asserts this will approximately happen, but his proposed mechanism is basically to get lucky in matching the two things.

In any case, he claims that "investors would certainly still be motivated to invest" without providing realistic reasoning to support his assertion. The actual mechanism where a slightly inflating currency motivates investment wouldn't happen, and Brown agrees it wouldn't! He views this motivation as people being "forced to harbor their money into speculative ventures just to protect themselves against inflation's decay." I'd like a riskless store of value as much as the next person, but there's a difference between investing rationally and speculating, so he's putting up a straw man there a little bit. But he's right, inflation does prompt savers to invest.

Sure, some investment would occur if BTC achieved a perfectly stable currency status. But more would occur under slight inflation, so compared to case of light inflation, BTC would have a deflationary effect - because it would prevent exactly the motivations that Brown himself points out do exist. The article mentions the reason that the article itself is incorrect, I think.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 21, 2021, 03:23:23 AM
Sure, technically it's not a shrinking money supply.

But it is a shrinking supply. People lose their keys, die, send bitcoins to invalid addresses, etc. Those coins are as good as gone. Satoshi’s own 1 Million+ BTC have remained untouched for a decade—and I think it’s likely they never will be moved again.

Deflation was a deliberate design choice in Bitcoin. It was fundamentally inspired by Austrian economics. It’s an odd argument to simultaneously be pro-Bitcoin and deny its deflationary design. Almost like someone doesn’t understand the basics, and repeatedly weasels out of any serious discussion by slinging mud and linking to other cultish crypto propaganda.

Also, for what it’s worth, the Google answer I get when I click occ’s link is this:
Quote
On the other hand, Bitcoin is deflationary, meaning buying power increases over time. If you put your private key under your mattress for 20 years (assuming Bitcoin is still around in 20 years), it will buy you more then than it will today.

Smartassery kinda backfired there eh?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 21, 2021, 07:57:29 AM
The amount of Bitcoin in every wallet / account is public knowledge.  If they lie about how much Bitcoin is present in one of their accounts, they will be proved wrong within minutes of saying it.

This is not true, though, right? All of these transactions go through Chivo, which is not transparent. It's allowing Bukele to make up wildly ridiculous stats about the success (https://twitter.com/nayibbukele/status/1442624279028408321), like there are more transactions in ES on Chivo than Visa handles worldwide. That seems rather unlikely.

To ChpBstrd's point, much of this is deeply suspicious. A lawyer prosecuted for falsifying a will helped create the company running Chivo Wallet. The notary who attested to the legality of Chivo SA de CV, created with public resources by the Government, was accused of documentary falsification in 2020 [1]. President Bukele’s Chief of Staff, Marta Carolina Recinos de Bernal, is on the US State Department’s Engel List of corrupt officials. She’s also a director of Chivo SA [2].

It really is depressing seeing a bunch of crypto enthusiasts—who claim to be wholly against corruption—cheer on this naked pillaging of some of the most impoverished people on Earth all because "number go up" on their pet Ponzi scheme.

[1] https://www.revistafactum.com/abogada-chivo/
[2] https://www.elsalvador.com/noticias/nacional/funcionaria-bukele-lista-engel-directora-empresa-detras-chivo/877437/2021/

Wow @the_gastropod that's more than I knew, and my spidey senses were already tingling before I knew it.

To Summarize:
1) Bitcoin will someday be a superior currency because it allows for trustless transactions through blockchain technology, UNLESS you use Lightning or Chivo like everyone is doing because that's the only way to cheaply and quickly process large numbers of transactions.
2) Bitcoin will go up in value forever because it has a limited supply, UNLESS it is decided at some future fork in the road to increase the supply or split the currency, as already happens every few years. See https://en.wikipedia.org/wiki/List_of_bitcoin_forks (https://en.wikipedia.org/wiki/List_of_bitcoin_forks).
3) Bitcoin will help regular people in undeveloped, corrupt countries with unstable currencies, UNLESS crypto is simply a new angle on corruption as it appears to be in E.S. I wonder if the regime's opponents are comfortable using Chivo?

Is it just me or do all the proposed benefits have a solution that undermines another of the proposed benefits in a circular fashion?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lemonlyman on October 21, 2021, 08:57:57 AM
I think holding a small crypto piece in the portfolio is a good idea. Picking any particular platform is a shot in the dark, but an etf of some wouldn't be bad. Crypto isn't just for currencies; blockchain technology will be used for many things in the future because it can be used to create protected, distributed general ledgers. Currencies, stable coins, medical records, wills, physical asset records, all kinds of things.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 21, 2021, 09:05:18 AM
Crypto isn't just for currencies; blockchain technology will be used for many things in the future because it can be used to create protected, distributed general ledgers. Currencies, stable coins, medical records, wills, physical asset records, all kinds of things.

Blockchain technology certainly has uses.  The only use I've seen anyone touting though, and the entire raison d'etre for cryptocurrency is it's use as a store of value.  What crypto ETF is investing in blockchain technology as opposed to it's use as a currency?  I haven't been able to find one.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 21, 2021, 09:09:39 AM
I think holding a small crypto piece in the portfolio is a good idea. Picking any particular platform is a shot in the dark, but an etf of some wouldn't be bad. Crypto isn't just for currencies; blockchain technology will be used for many things in the future because it can be used to create protected, distributed general ledgers. Currencies, stable coins, medical records, wills, physical asset records, all kinds of things.

I disagree. I think this "eh, what's the harm! I'll hold a little" attitude is, sadly, harmful. There are other people on the other end of these trades that will be hurt. This is a negative sum game. If you "win", it's necessarily at the expense of someone else. Additionally, there's that whole aspect of its outrageous energy requirements. Participating in this charade only keeps the insanity going.

As for the "blockchain will be everywhere!" thing. No. It won't. This is a pretty detailed and easy-to-understand essay explaining why: https://onlinelibrary.wiley.com/doi/epdf/10.1111/1468-2230.12603

I really urge you—and everyone else buying into the hype—to think critically about this mess. There's a lot of techno-babble going on that seems to distract people from the reality of it all. Blockchain is new(ish) and it is neat in some sense. But it absolutely cannot solve virtually any problem it's touted as being able to solve. And "investing" in an obvious Ponzi that's also somehow a currency—even though virtually any rational person would understand those are fundamentally at odds with one another—is a really silly and very bad idea. (ETA: in before the "LOL BUT NUMBER GO UP UR JUST JEALOUS". Number go up is how every Ponzi in the history of ponzis have worked, too. Investors in Enron, Madoff, and, yes, tulip bulbs thought they were geniuses for a while, too)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lemonlyman on October 21, 2021, 09:42:11 AM
I don't have access to that paper and won't pay for it so I can't respond to it. Could be right, but I don't know who that person is or why an essay written a year ago is an authority today. There are literally smart contracts already being used today. Businesses building blockchain platforms for hosting ledgers, sharing information, and doing cross border payments is not a ponzi scheme.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lemonlyman on October 21, 2021, 09:50:29 AM
Crypto isn't just for currencies; blockchain technology will be used for many things in the future because it can be used to create protected, distributed general ledgers. Currencies, stable coins, medical records, wills, physical asset records, all kinds of things.

Blockchain technology certainly has uses.  The only use I've seen anyone touting though, and the entire raison d'etre for cryptocurrency is it's use as a store of value.  What crypto ETF is investing in blockchain technology as opposed to it's use as a currency?  I haven't been able to find one.

You can search for blockchain etf. There are a good bit now. BLOK, Global X BLockchain, FTEC. I don't hold any because I haven't researched what they hold and why, but it's on my to do list because I do think applications are exploding.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 21, 2021, 10:00:13 AM

Also, for what it’s worth, the Google answer I get when I click occ’s link is this:
Quote
On the other hand, Bitcoin is deflationary, meaning buying power increases over time. If you put your private key under your mattress for 20 years (assuming Bitcoin is still around in 20 years), it will buy you more then than it will today.

Smartassery kinda backfired there eh?

Sure looks like it.

PS. Hmm, that's a rather (ahem) deflating answer for the assertion that Bitcoin isn't deflationary.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 21, 2021, 10:33:04 AM

Also, for what it’s worth, the Google answer I get when I click occ’s link is this:
Quote
On the other hand, Bitcoin is deflationary, meaning buying power increases over time. If you put your private key under your mattress for 20 years (assuming Bitcoin is still around in 20 years), it will buy you more then than it will today.

Smartassery kinda backfired there eh?

Sure looks like it.

PS. Hmm, that's a rather (ahem) deflating answer for the assertion that Bitcoin isn't deflationary.

The first rule of bike club is you don't tempt the fates by talking about deflation.  That leads to flats and flats are the path to the dark side.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 21, 2021, 10:43:31 AM
I don't have access to that paper and won't pay for it so I can't respond to it. Could be right, but I don't know who that person is or why an essay written a year ago is an authority today.

Ahh, bummer. That's odd, I was able to view without paying. Maybe try this link? (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3476678 and then click on "View PDF"). Not to appeal to authority, but the author is a Professor of Law at London School of Economics. Regardless, I'll not quite do it justice, but I'll attempt to summarize here:

The raison d'être for the blockchain is to solve the double-spending problem. While this is an impressive technological feat, it does not necessarily follow that this solves any real-world problems. It's important to remember two things:

1. that the double-spending problem only arises in distributed systems lacking a trusted record keeper or authority. If such a record keeper or authority existed, they could accomplish the same feat orders of magnitude more efficiently. Remember, the solution to the double spending problem is by design inefficient. It was designed to be wasteful to make it prohibitively costly for bad actors to act badly. and
2. that as far as crypto-assets are concerned, the legal system and courts themselves are mandatory central authorities that are the final arbiters of assigning owners to assets.

Therefore, any blockchain-based system of property ownership is a redundancy and must be kept in-sync somehow with the legal centralized legal system. The article then thoroughly goes into why this is not only impossible for myriad of reasons, but also explains why doing so would just be unnecessary and offer no benefits, while being significantly costly.

There are literally smart contracts already being used today. Businesses building blockchain platforms for hosting ledgers, sharing information, and doing cross border payments is not a ponzi scheme.

There are psychics with paying customers, plenty of people devoting lots of time and money to astrology, and countless MLM businesses making significant money. It doesn't make these things good ideas or worth pursuing.

I will grant you, one of the actual use-cases for blockchain technology today is regulatory arbitrage. Whether that's a good thing or not is up for debate. But blockchain tech does currently allow this. Once laws catch up, this loophole mostly closes, though.

One of the reasons talking about this is so difficult, is that enthusiasts tend to weasel out of criticism by shifting goal posts. This is another example. From an investment context, Bitcoin is absolutely a Ponzi scheme. That it can be used to skirt regulation is irrelevant from the investment context.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 21, 2021, 11:07:56 AM
Sure, technically it's not a shrinking money supply.

But it is a shrinking supply. People lose their keys, die, send bitcoins to invalid addresses, etc. Those coins are as good as gone. Satoshi’s own 1 Million+ BTC have remained untouched for a decade—and I think it’s likely they never will be moved again.

Deflation was a deliberate design choice in Bitcoin. It was fundamentally inspired by Austrian economics. It’s an odd argument to simultaneously be pro-Bitcoin and deny its deflationary design. Almost like someone doesn’t understand the basics, and repeatedly weasels out of any serious discussion by slinging mud and linking to other cultish crypto propaganda.

Also, for what it’s worth, the Google answer I get when I click occ’s link is this:
Quote
On the other hand, Bitcoin is deflationary, meaning buying power increases over time. If you put your private key under your mattress for 20 years (assuming Bitcoin is still around in 20 years), it will buy you more then than it will today.

Smartassery kinda backfired there eh?

Naw - it's more like google knows "our" bias -
here is my top result
Quote
Bitcoin is not deflationary in the formal sense of the term. Its supply will continue to increase on a curve that should account for lost coins and a growing population over the next century.
Stop Calling Bitcoin Deflationary. | by Conner Brown | The ...
medium.com/the-bitcoin-times/stop-calling-bitcoin-deflationary-84462cb90345
medium.com/the-bitcoin-times/stop-calling-bitcoin-deflationary-84462cb90345

If crypto enthusiasts really wanted to be jackassery they can easily point to the current news:
One Billion US $ Trades were made on the first day of the Bitcoin Futures ETF on Oct 19, 2021
The highest natural volume for an ETF ever in the history of Wallstreet.

One billion US dollars undeniably reflects a mind-blowing interest in the futures of a digital asset.
The SEC just approved two more Futures ETFs - one of them for Ethereum.
Or maybe Wallstreet just likes to bet and the wealthy have more cash than they know what to do with.

The Grayscale Trust has also filed for SEC approval - converting their trust into a real ETF, not Futures.
We know that the SEC, Gary Gensler, is not keen on promoting the sale of real bitcoin.
They know that the retail investors will see the first real ETF as a stamp of approval for bitcoin.

Crypto isn't just for currencies; blockchain technology will be used for many things in the future because it can be used to create protected, distributed general ledgers. Currencies, stable coins, medical records, wills, physical asset records, all kinds of things.

Blockchain technology certainly has uses.  The only use I've seen anyone touting though, and the entire raison d'etre for cryptocurrency is it's use as a store of value.  What crypto ETF is investing in blockchain technology as opposed to it's use as a currency?  I haven't been able to find one.

I'm invested in a couple, like the BLOK ETF which is all about blockchain technology. Glad to see the acknowledgment of tech like blockchain and I agree that the current narrative is that bitcoin - not crypto et al - is a store of value or digital gold.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 21, 2021, 11:15:03 AM
Smartassery kinda backfired there eh?

Naw - it's more like google knows "our" bias -

(https://preview.redd.it/ma4zn7lwfuo11.jpg?width=640&crop=smart&auto=webp&s=a3bd22539396df6e180e59a5c357c76d14fa331a)

Quote from: Rosy
If crypto enthusiasts really wanted to be jackassery they can easily point to the current news:
One Billion US $ Trades were made on the first day of the Bitcoin Futures ETF on Oct 19, 2021
The highest natural volume for an ETF ever in the history of Wallstreet.

One billion US dollars undeniably reflects a mind-blowing interest in the futures of a digital asset.
The SEC just approved two more Futures ETFs - one of them for Ethereum.
Or maybe Wallstreet just likes to bet and the wealthy have more cash than they know what to do with.

Always comes back to NUMBER GO UPPPPPP!!!!

I just watched LuLaRich on Amazon Prime (highly recommended), and it's kinda funny. The execs of the LuLaRoe MLM cited the rapidly increasing number of LuLaRoe associates to demonstrate the success of the organization. Similarly, that uhh... enthusiasm... is certainly profitable for some Bitcoin participants. These numbers don't make me any more likely to participate, myself, though

Relatedly, 100,000+ people have had their eyes scanned to get this rad new Worldcoin cryptocurrency. You in? Everybody's doing it! https://www.ft.com/content/0f873676-26c8-4b57-b369-23a2b30f11a5
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on October 21, 2021, 11:18:30 AM

I will assume you meant this Connor Brown article: https://medium.com/the-bitcoin-times/stop-calling-bitcoin-deflationary-84462cb90345

He makes some interesting points, but does not successfully address the key mechanism by which I am suggesting that BTC would have a deflationary effect. He mentions the concern, but mis-states the mechanism by which "critics" say BTC would have a deflationary effect; therefore, he doesn't address my actual concern, which as I understand it is most economists' main concern about any fixed money supply relative to a growing economy.

I thought you made a good summation, but there are even more problems than that.  First, is that his definition of deflation isn't necessarily correct.  In fact, it isn't correct.
 Famously, one of the first pubic Bitcoin transactions was a guy who paid 10,000 Bitcoin for a pizza.  Now, that same 10,000 Bitcoin will buy you a chain of pizza restaurants.     From a consumer perspective that 100% meets the definition of deflation.  Saying that is not deflation is absurd. The reason why deflation is bad for the economy is that consumers believe that goods and services will become cheaper in the future and so delay spending money.   This puts downward pressure on prices and wages, and so people delay even more, rinse lather repeat.  To be clear, usually a depression causes deflation, not the other way around.  But once you are in the deflationary spiral it is hard to get out. 

His section on wages was even worse, if possible.  He missed some basic economic principles regarding wages and prices.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 21, 2021, 11:37:08 AM
I think having a system for withdrawing balance from crypto- over time can reduce the risk if it turns into a Ponzi scheme.

But I also see how problematic it would be for a person who sincerely believes this to be the future.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 21, 2021, 12:17:18 PM
Crypto isn't just for currencies; blockchain technology will be used for many things in the future because it can be used to create protected, distributed general ledgers. Currencies, stable coins, medical records, wills, physical asset records, all kinds of things.

Blockchain technology certainly has uses.  The only use I've seen anyone touting though, and the entire raison d'etre for cryptocurrency is it's use as a store of value.  What crypto ETF is investing in blockchain technology as opposed to it's use as a currency?  I haven't been able to find one.

I'm invested in a couple, like the BLOK ETF which is all about blockchain technology. Glad to see the acknowledgment of tech like blockchain and I agree that the current narrative is that bitcoin - not crypto et al - is a store of value or digital gold.

BLOCK ETF, top 10 holdings:
HUT 8 MNG CORP NEW COM    6.17% - Cryptocurrency miner (bitcoin and ethereum)
MARATHON DIGITAL HOLDINGS INC COM   6.02% - Bitcoin miner
MICROSTRATEGY INC   5.91% - Bitcoin speculator
COINBASE GLOBAL INC   4.68% - Cryptocurrency exchange platform
HIVE BLOCKCHAIN TECHNOLOGIES   4.33% - Cryptocurrency miner
SILVERGATE CAP CORP   4.11% - Cryptocurrency speculator
SQUARE INC   3.98% - Cryptocurrency speculator and point of sale provider for crypto currency
PAYPAL HLDGS INC   3.81% - Allows people to pay for things with bitcoin, ethereum, bitcoin cash, and litecoin
NVIDIA CORPORATION    3.51% - Builds graphics cards used by cryptocurrency miners
SBI HOLDINGS INC   3.23% - Bank that started a cryptocurrency fund


I'm seeing a lot to do with cryptocurrency, but little to nothing to do with 'blockchain technology'.  Which of the holdings in this fund are related to all the non-'currency' technology?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lemonlyman on October 21, 2021, 12:28:44 PM
One of the reasons talking about this is so difficult, is that enthusiasts tend to weasel out of criticism by shifting goal posts. This is another example. From an investment context, Bitcoin is absolutely a Ponzi scheme. That it can be used to skirt regulation is irrelevant from the investment context.

Even in an investment context, it's still not a ponzi scheme. A speculative asset doesn't meet the definition of a ponzi scheme. There's not a consistent level of cash going to people at the top of the pyramid. They either hold their coins or sell them. That's completely different than an asset going to zero value. Ponzi schemes also require someone actively running and operating the scheme. I don't believe Satoshi's activity is very equivalent to Ponzi or Madoff.

I think that link will work. I'll read that essay sometime. Thanks.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 21, 2021, 01:19:07 PM
Even in an investment context, it's still not a ponzi scheme. A speculative asset doesn't meet the definition of a ponzi scheme. There's not a consistent level of cash going to people at the top of the pyramid.

Miners. Miners get a consistent stream of cash that they remove from the system.

Quote from: lemonlyman
Ponzi schemes also require someone actively running and operating the scheme. I don't believe Satoshi's activity is very equivalent to Ponzi or Madoff.

It's certainly more sophisticated, I'll grant you that. But miners run and operate and profit from the scheme, do they not? Does the operator necessarily need to be one person? Is a distributed Ponzi any better than a centralized one?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on October 21, 2021, 07:25:53 PM
Even in an investment context, it's still not a ponzi scheme. A speculative asset doesn't meet the definition of a ponzi scheme. There's not a consistent level of cash going to people at the top of the pyramid.

Miners. Miners get a consistent stream of cash that they remove from the system.

Quote from: lemonlyman
Ponzi schemes also require someone actively running and operating the scheme. I don't believe Satoshi's activity is very equivalent to Ponzi or Madoff.



It's certainly more sophisticated, I'll grant you that. But miners run and operate and profit from the scheme, do they not? Does the operator necessarily need to be one person? Is a distributed Ponzi any better than a centralized one?

I hate to be a pedantic, but that never stopped me before  ;)    A Ponzi scheme is a specific type of fraud, where early investors are paid off by later investors, until there aren't enough investors to continue and the whole thing collapses.   Bitcoin is not that.   When a miner sells a bitcoin, the buyer gets exactly what she is expecting:  one bitcoin.  There's no fraud in that transaction.

I think it most correct to think of bitcoin as a speculative asset. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 21, 2021, 07:29:55 PM
Even in an investment context, it's still not a ponzi scheme. A speculative asset doesn't meet the definition of a ponzi scheme. There's not a consistent level of cash going to people at the top of the pyramid.

Miners. Miners get a consistent stream of cash that they remove from the system.

Quote from: lemonlyman
Ponzi schemes also require someone actively running and operating the scheme. I don't believe Satoshi's activity is very equivalent to Ponzi or Madoff.



It's certainly more sophisticated, I'll grant you that. But miners run and operate and profit from the scheme, do they not? Does the operator necessarily need to be one person? Is a distributed Ponzi any better than a centralized one?

I hate to be a pedantic, but that never stopped me before  ;)    A Ponzi scheme is a specific type of fraud, where early investors are paid off by later investors, until there aren't enough investors to continue and the whole thing collapses.   Bitcoin is not that.   When a miner sells a bitcoin, the buyer gets exactly what she is expecting:  one bitcoin.  There's no fraud in that transaction.

I think it most correct to think of bitcoin as a speculative asset.

I've got some copper engravings of Lincoln for sale for 10k a piece. Probably be more valuable an asset it 10 years than a Bitcoin.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on October 21, 2021, 08:03:39 PM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 21, 2021, 08:58:21 PM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

People who bought yesterday are in the red.  Also, people who short Bitcoin lost money.  Ban Bitcoin.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 21, 2021, 09:56:34 PM
Ponzi schemes are a very specific thing, and bitcoin (or other cryptocurrencies) are not that. You can make a very strong argument for "speculative bubble" (ie, bunch of people bidding the price of something of limited value up with each other) but it's not a ponzi.

Now, the effect when you finally don't have any new investors entering is similar, of course. If there's not new money going in, the upward spiral/returns vanish in both cases.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 21, 2021, 10:01:24 PM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

People who bought yesterday are in the red.  Also, people who short Bitcoin lost money.  Ban Bitcoin.

People who sold yesterday - red lambo ....:)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 22, 2021, 03:12:58 AM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

This isn’t even really up for debate. Bitcoin, as a matter of fact is a *negative-sum* game. The only way to make money is by new entrants paying you more money for your Bitcoin than you paid when you entered. Miners, meanwhile, suck money out of the system, ensuring that, on average, Bitcoin investors will have a negative expected return. That, thus far, NUMBER GO UP, is not a refutation at all of the claim that it’s a negative-sum-game.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 22, 2021, 07:53:00 AM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

This isn’t even really up for debate. Bitcoin, as a matter of fact is a *negative-sum* game. The only way to make money is by new entrants paying you more money for your Bitcoin than you paid when you entered. Miners, meanwhile, suck money out of the system, ensuring that, on average, Bitcoin investors will have a negative expected return. That, thus far, NUMBER GO UP, is not a refutation at all of the claim that it’s a negative-sum-game.

Are we also not counting the millions (billions?) of dollars in wasted environmental damage?  Last I was reading, bitcoin mining is using comperable power to that of the entire country of Poland (178.92 TWh) each year . . . with a carbon footprint equivalent to the entire country of Bangladesh (84.99 Mt CO2) . . . and generating equivalent electronic waste to that of the the entire country of the Netherlands (24.37 kt).
  - https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)

Just because people who buy and sell bitcoin pretend these issues don't exist doesn't mean that there isn't a significant cost associated with them.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 22, 2021, 09:19:16 AM
The amount of Bitcoin in every wallet / account is public knowledge.  If they lie about how much Bitcoin is present in one of their accounts, they will be proved wrong within minutes of saying it.

This is not true, though, right? All of these transactions go through Chivo, which is not transparent. It's allowing Bukele to make up wildly ridiculous stats about the success (https://twitter.com/nayibbukele/status/1442624279028408321), like there are more transactions in ES on Chivo than Visa handles worldwide. That seems rather unlikely.

To ChpBstrd's point, much of this is deeply suspicious. A lawyer prosecuted for falsifying a will helped create the company running Chivo Wallet. The notary who attested to the legality of Chivo SA de CV, created with public resources by the Government, was accused of documentary falsification in 2020 [1]. President Bukele’s Chief of Staff, Marta Carolina Recinos de Bernal, is on the US State Department’s Engel List of corrupt officials. She’s also a director of Chivo SA [2].

It really is depressing seeing a bunch of crypto enthusiasts—who claim to be wholly against corruption—cheer on this naked pillaging of some of the most impoverished people on Earth all because "number go up" on their pet Ponzi scheme.

[1] https://www.revistafactum.com/abogada-chivo/
[2] https://www.elsalvador.com/noticias/nacional/funcionaria-bukele-lista-engel-directora-empresa-detras-chivo/877437/2021/
Oh, no!  You're quite right, thanks for the correction.  I assumed they put accounts on the blockchain.

But they created a new wallet in a matter of months and put everyone's Bitcoin in that system.  Was the launch their first large scale test?

The accounts can't be verified in some hidden system that does not use the blockchain.  The wallets may or may not have Bitcoin in them, since there's no external way to verify it without moving Bitcoin out of the wallets (and paying a fee to get the transfer registered on Bitcoin's blockchain).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 22, 2021, 10:23:35 AM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

This isn’t even really up for debate. Bitcoin, as a matter of fact is a *negative-sum* game. The only way to make money is by new entrants paying you more money for your Bitcoin than you paid when you entered. Miners, meanwhile, suck money out of the system, ensuring that, on average, Bitcoin investors will have a negative expected return. That, thus far, NUMBER GO UP, is not a refutation at all of the claim that it’s a negative-sum-game.

Are we also not counting the millions (billions?) of dollars in wasted environmental damage?  Last I was reading, bitcoin mining is using comperable power to that of the entire country of Poland (178.92 TWh) each year . . . with a carbon footprint equivalent to the entire country of Bangladesh (84.99 Mt CO2) . . . and generating equivalent electronic waste to that of the the entire country of the Netherlands (24.37 kt).
  - https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)

Just because people who buy and sell bitcoin pretend these issues don't exist doesn't mean that there isn't a significant cost associated with them.
There is no question that Bitcoin consumes energy and harms the environment. And, if you completely reject the idea of Bitcoin having any useful purpose then, obviously, you have to conclude it's pure waste. But that doesn't mean it is - that's just your opinion.

If you can imagine that Bitcoin could be a useful store of value, how does it compare to the conventional alternatives ?
What environmental damage results from extracting, transporting, processing, storing and securing the many thousands of tons of gold just stacked up in vaults ?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 22, 2021, 11:17:57 AM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

This isn’t even really up for debate. Bitcoin, as a matter of fact is a *negative-sum* game. The only way to make money is by new entrants paying you more money for your Bitcoin than you paid when you entered. Miners, meanwhile, suck money out of the system, ensuring that, on average, Bitcoin investors will have a negative expected return. That, thus far, NUMBER GO UP, is not a refutation at all of the claim that it’s a negative-sum-game.

Are we also not counting the millions (billions?) of dollars in wasted environmental damage?  Last I was reading, bitcoin mining is using comperable power to that of the entire country of Poland (178.92 TWh) each year . . . with a carbon footprint equivalent to the entire country of Bangladesh (84.99 Mt CO2) . . . and generating equivalent electronic waste to that of the the entire country of the Netherlands (24.37 kt).
  - https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)

Just because people who buy and sell bitcoin pretend these issues don't exist doesn't mean that there isn't a significant cost associated with them.
There is no question that Bitcoin consumes energy and harms the environment. And, if you completely reject the idea of Bitcoin having any useful purpose then, obviously, you have to conclude it's pure waste. But that doesn't mean it is - that's just your opinion.

If you can imagine that Bitcoin could be a useful store of value, how does it compare to the conventional alternatives ?
What environmental damage results from extracting, transporting, processing, storing and securing the many thousands of tons of gold just stacked up in vaults ?

Instead of just posing the question, and (I guess?) assuming that it must be more: why don't you look into it, and tell us! (Hot tip: look up these values on your own, not from BITCOIN.ORG or some other crypto website)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 22, 2021, 11:57:50 AM
Ponzi schemes are a very specific thing, and bitcoin (or other cryptocurrencies) are not that. You can make a very strong argument for "speculative bubble" (ie, bunch of people bidding the price of something of limited value up with each other) but it's not a ponzi.

Now, the effect when you finally don't have any new investors entering is similar, of course. If there's not new money going in, the upward spiral/returns vanish in both cases.

-W

If the allegations about Tether are true, how is it different from a Ponzi scheme?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 22, 2021, 12:12:45 PM
Ponzi schemes are a very specific thing, and bitcoin (or other cryptocurrencies) are not that. You can make a very strong argument for "speculative bubble" (ie, bunch of people bidding the price of something of limited value up with each other) but it's not a ponzi.

Now, the effect when you finally don't have any new investors entering is similar, of course. If there's not new money going in, the upward spiral/returns vanish in both cases.

-W

If the allegations about Tether are true, how is it different from a Ponzi scheme?

I agree that Tether is probably 100% fraud. But that doesn't make the entire bitcoin ecosystem fraudulent, at least in theory.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 22, 2021, 12:31:46 PM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

This isn’t even really up for debate. Bitcoin, as a matter of fact is a *negative-sum* game. The only way to make money is by new entrants paying you more money for your Bitcoin than you paid when you entered. Miners, meanwhile, suck money out of the system, ensuring that, on average, Bitcoin investors will have a negative expected return. That, thus far, NUMBER GO UP, is not a refutation at all of the claim that it’s a negative-sum-game.

Are we also not counting the millions (billions?) of dollars in wasted environmental damage?  Last I was reading, bitcoin mining is using comperable power to that of the entire country of Poland (178.92 TWh) each year . . . with a carbon footprint equivalent to the entire country of Bangladesh (84.99 Mt CO2) . . . and generating equivalent electronic waste to that of the the entire country of the Netherlands (24.37 kt).
  - https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)

Just because people who buy and sell bitcoin pretend these issues don't exist doesn't mean that there isn't a significant cost associated with them.
There is no question that Bitcoin consumes energy and harms the environment. And, if you completely reject the idea of Bitcoin having any useful purpose then, obviously, you have to conclude it's pure waste. But that doesn't mean it is - that's just your opinion.

If you can imagine that Bitcoin could be a useful store of value, how does it compare to the conventional alternatives ?
What environmental damage results from extracting, transporting, processing, storing and securing the many thousands of tons of gold just stacked up in vaults ?

Instead of just posing the question, and (I guess?) assuming that it must be more: why don't you look into it, and tell us! (Hot tip: look up these values on your own, not from BITCOIN.ORG or some other crypto website)


It's kind of a tricky question to answer.  Bitcoin is a failure as a currency, so it doesn't seem fair to compare it to currencies and banking systems.  It's closest to a store of value like gold, silver, or beanie babies.

As of the publication of this 2018 study (https://www.nature.com/articles/s41893-018-0152-7.epdf?referrer_access_token=4WFhbLVH943fe3mcf8oZANRgN0jAjWel9jnR3ZoTv0NdJEcpPQZqiP9V_5sRM6OFeEt1maRlkYa2rAMRc-x1aVbfFmAZSeIy1BUabgBXZ5z6UQfH0t8xSV-r-npyxYVvgn4cGz5vnYe41OneS4y9iDEq9qg_P_yvZnh3zShMKtDW2Q4oj7ea5KOxnmJf-j_pUXVLuKqBdId1DeooWHyXBGTsaKAeh50jbelu7OUy1zXIkZZVtyhwK389Tt_6m7EusXgJedPs47tRpklbfG1lrE7zSz3Bqp6kqnD7z10SVdY%3D&tracking_referrer=blogs.discovermagazine.com (https://www.nature.com/articles/s41893-018-0152-7.epdf?referrer_access_token=4WFhbLVH943fe3mcf8oZANRgN0jAjWel9jnR3ZoTv0NdJEcpPQZqiP9V_5sRM6OFeEt1maRlkYa2rAMRc-x1aVbfFmAZSeIy1BUabgBXZ5z6UQfH0t8xSV-r-npyxYVvgn4cGz5vnYe41OneS4y9iDEq9qg_P_yvZnh3zShMKtDW2Q4oj7ea5KOxnmJf-j_pUXVLuKqBdId1DeooWHyXBGTsaKAeh50jbelu7OUy1zXIkZZVtyhwK389Tt_6m7EusXgJedPs47tRpklbfG1lrE7zSz3Bqp6kqnD7z10SVdY%3D&tracking_referrer=blogs.discovermagazine.com)), the worldwide energy costs of gold are equivalent to that of bitcoin.

This is still an apples to oranges comparison though, as the market capitalization of gold is 17x higher than bitcoin (https://ca.finance.yahoo.com/news/bitcoin-vs-gold-debate-reignited-125947770.html (https://ca.finance.yahoo.com/news/bitcoin-vs-gold-debate-reignited-125947770.html)) . . . and gold has real world uses (jewelry, electronics, etc.).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 22, 2021, 01:54:24 PM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

This isn’t even really up for debate. Bitcoin, as a matter of fact is a *negative-sum* game. The only way to make money is by new entrants paying you more money for your Bitcoin than you paid when you entered. Miners, meanwhile, suck money out of the system, ensuring that, on average, Bitcoin investors will have a negative expected return. That, thus far, NUMBER GO UP, is not a refutation at all of the claim that it’s a negative-sum-game.

Are we also not counting the millions (billions?) of dollars in wasted environmental damage?  Last I was reading, bitcoin mining is using comperable power to that of the entire country of Poland (178.92 TWh) each year . . . with a carbon footprint equivalent to the entire country of Bangladesh (84.99 Mt CO2) . . . and generating equivalent electronic waste to that of the the entire country of the Netherlands (24.37 kt).
  - https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)

Just because people who buy and sell bitcoin pretend these issues don't exist doesn't mean that there isn't a significant cost associated with them.
There is no question that Bitcoin consumes energy and harms the environment. And, if you completely reject the idea of Bitcoin having any useful purpose then, obviously, you have to conclude it's pure waste. But that doesn't mean it is - that's just your opinion.

If you can imagine that Bitcoin could be a useful store of value, how does it compare to the conventional alternatives ?
What environmental damage results from extracting, transporting, processing, storing and securing the many thousands of tons of gold just stacked up in vaults ?

Instead of just posing the question, and (I guess?) assuming that it must be more: why don't you look into it, and tell us! (Hot tip: look up these values on your own, not from BITCOIN.ORG or some other crypto website)


It's kind of a tricky question to answer.  Bitcoin is a failure as a currency, so it doesn't seem fair to compare it to currencies and banking systems.  It's closest to a store of value like gold, silver, or beanie babies.

As of the publication of this 2018 study (https://www.nature.com/articles/s41893-018-0152-7.epdf?referrer_access_token=4WFhbLVH943fe3mcf8oZANRgN0jAjWel9jnR3ZoTv0NdJEcpPQZqiP9V_5sRM6OFeEt1maRlkYa2rAMRc-x1aVbfFmAZSeIy1BUabgBXZ5z6UQfH0t8xSV-r-npyxYVvgn4cGz5vnYe41OneS4y9iDEq9qg_P_yvZnh3zShMKtDW2Q4oj7ea5KOxnmJf-j_pUXVLuKqBdId1DeooWHyXBGTsaKAeh50jbelu7OUy1zXIkZZVtyhwK389Tt_6m7EusXgJedPs47tRpklbfG1lrE7zSz3Bqp6kqnD7z10SVdY%3D&tracking_referrer=blogs.discovermagazine.com (https://www.nature.com/articles/s41893-018-0152-7.epdf?referrer_access_token=4WFhbLVH943fe3mcf8oZANRgN0jAjWel9jnR3ZoTv0NdJEcpPQZqiP9V_5sRM6OFeEt1maRlkYa2rAMRc-x1aVbfFmAZSeIy1BUabgBXZ5z6UQfH0t8xSV-r-npyxYVvgn4cGz5vnYe41OneS4y9iDEq9qg_P_yvZnh3zShMKtDW2Q4oj7ea5KOxnmJf-j_pUXVLuKqBdId1DeooWHyXBGTsaKAeh50jbelu7OUy1zXIkZZVtyhwK389Tt_6m7EusXgJedPs47tRpklbfG1lrE7zSz3Bqp6kqnD7z10SVdY%3D&tracking_referrer=blogs.discovermagazine.com)), the worldwide energy costs of gold are equivalent to that of bitcoin.

This is still an apples to oranges comparison though, as the market capitalization of gold is 17x higher than bitcoin (https://ca.finance.yahoo.com/news/bitcoin-vs-gold-debate-reignited-125947770.html (https://ca.finance.yahoo.com/news/bitcoin-vs-gold-debate-reignited-125947770.html)) . . . and gold has real world uses (jewelry, electronics, etc.).

I congratulate you on finding what seems to be a fairly well-balanced article ! Most out there seem to be ridiculously skewed one way or the other by the author's obvious agenda.

Apples and oranges ?
I don't think the current market capitalisation is relevant - the figures in the report are based on $ value of production.
I don't think jewellery and electronics are relevant - we're talking about it's use as a store of value.

What is probably more relevant is that the article is based on 2018 prices.

Overall, it seems like a reasonable article though and, at least, gives the energy considerations some perspective.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 22, 2021, 02:15:03 PM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

This isn’t even really up for debate. Bitcoin, as a matter of fact is a *negative-sum* game. The only way to make money is by new entrants paying you more money for your Bitcoin than you paid when you entered. Miners, meanwhile, suck money out of the system, ensuring that, on average, Bitcoin investors will have a negative expected return. That, thus far, NUMBER GO UP, is not a refutation at all of the claim that it’s a negative-sum-game.

Are we also not counting the millions (billions?) of dollars in wasted environmental damage?  Last I was reading, bitcoin mining is using comperable power to that of the entire country of Poland (178.92 TWh) each year . . . with a carbon footprint equivalent to the entire country of Bangladesh (84.99 Mt CO2) . . . and generating equivalent electronic waste to that of the the entire country of the Netherlands (24.37 kt).
  - https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)

Just because people who buy and sell bitcoin pretend these issues don't exist doesn't mean that there isn't a significant cost associated with them.
There is no question that Bitcoin consumes energy and harms the environment. And, if you completely reject the idea of Bitcoin having any useful purpose then, obviously, you have to conclude it's pure waste. But that doesn't mean it is - that's just your opinion.

If you can imagine that Bitcoin could be a useful store of value, how does it compare to the conventional alternatives ?
What environmental damage results from extracting, transporting, processing, storing and securing the many thousands of tons of gold just stacked up in vaults ?

Instead of just posing the question, and (I guess?) assuming that it must be more: why don't you look into it, and tell us! (Hot tip: look up these values on your own, not from BITCOIN.ORG or some other crypto website)


It's kind of a tricky question to answer.  Bitcoin is a failure as a currency, so it doesn't seem fair to compare it to currencies and banking systems.  It's closest to a store of value like gold, silver, or beanie babies.

As of the publication of this 2018 study (https://www.nature.com/articles/s41893-018-0152-7.epdf?referrer_access_token=4WFhbLVH943fe3mcf8oZANRgN0jAjWel9jnR3ZoTv0NdJEcpPQZqiP9V_5sRM6OFeEt1maRlkYa2rAMRc-x1aVbfFmAZSeIy1BUabgBXZ5z6UQfH0t8xSV-r-npyxYVvgn4cGz5vnYe41OneS4y9iDEq9qg_P_yvZnh3zShMKtDW2Q4oj7ea5KOxnmJf-j_pUXVLuKqBdId1DeooWHyXBGTsaKAeh50jbelu7OUy1zXIkZZVtyhwK389Tt_6m7EusXgJedPs47tRpklbfG1lrE7zSz3Bqp6kqnD7z10SVdY%3D&tracking_referrer=blogs.discovermagazine.com (https://www.nature.com/articles/s41893-018-0152-7.epdf?referrer_access_token=4WFhbLVH943fe3mcf8oZANRgN0jAjWel9jnR3ZoTv0NdJEcpPQZqiP9V_5sRM6OFeEt1maRlkYa2rAMRc-x1aVbfFmAZSeIy1BUabgBXZ5z6UQfH0t8xSV-r-npyxYVvgn4cGz5vnYe41OneS4y9iDEq9qg_P_yvZnh3zShMKtDW2Q4oj7ea5KOxnmJf-j_pUXVLuKqBdId1DeooWHyXBGTsaKAeh50jbelu7OUy1zXIkZZVtyhwK389Tt_6m7EusXgJedPs47tRpklbfG1lrE7zSz3Bqp6kqnD7z10SVdY%3D&tracking_referrer=blogs.discovermagazine.com)), the worldwide energy costs of gold are equivalent to that of bitcoin.

This is still an apples to oranges comparison though, as the market capitalization of gold is 17x higher than bitcoin (https://ca.finance.yahoo.com/news/bitcoin-vs-gold-debate-reignited-125947770.html (https://ca.finance.yahoo.com/news/bitcoin-vs-gold-debate-reignited-125947770.html)) . . . and gold has real world uses (jewelry, electronics, etc.).

I congratulate you on finding what seems to be a fairly well-balanced article ! Most out there seem to be ridiculously skewed one way or the other by the author's obvious agenda.

Apples and oranges ?
I don't think the current market capitalisation is relevant - the figures in the report are based on $ value of production.
I don't think jewellery and electronics are relevant - we're talking about it's use as a store of value.

What is probably more relevant is that the article is based on 2018 prices.

Overall, it seems like a reasonable article though and, at least, gives the energy considerations some perspective.

It is not irrelevant that it has uses besides a store of value it's actually extremely relevant and why it was prized so much was our natural instincts as humans to be drawn to shiny things like back 8n the day when shiny meant a water source. So it was used in prized jewelry which helped it maintain it's long term store of value then was utilized in electronics. One could assume gold is a store of value only because of our very deep animalistic instincts that made it so prized.

Bitcoin is for all purposes today no more than a collectable and we'll see how long it's prized as that.

Further gold was in fact used as currency for a long time in trade prior to it becoming stock piled bc of the very reasons stated here about why btc isn't a currency and can't be bc we know more today than we did then about how economics work.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on October 22, 2021, 02:27:31 PM
3. I think it's unlikely that Bitcoin would become a global currency in the 22nd century, but for the sake of argument let's suppose that it does. After the last Bitcoin is mined early next century it would become a truly deflationary currency. But economists in the future keep proclaiming that this currency doesn't work, undermining public confidence. So the Bitcoin community might decide to expand the supply above 21 million by restarting mining operations, solving the problem. And yes, they can do this despite its decentralized nature. For example, right now Bitcoin is being upgraded with the Taproot project which includes security and functionality upgrades agreed upon by the community near unanimously. An unpopular modification to the algorithm (such as expanding the supply above 21 million) could cause an uproar and lead to a hard fork into 2 currencies: the original version versus the modified version. In that case there would be 2 competing currencies and economists would get to observe in real-time whether the inflationary version is superior to the deflationary one.

One thing that is missed is that the money supply needs to expand at about the same rate as the economy, not the population.   That was a lesson learned when the US (and other countries) on the gold standard, but that lesson has been forgotten in recent times.  Back in the day, the US was on the gold standard which limited money supply and caused economic problems for some groups, but facilitated trade with England which benefited others.   So there were contentious factions arguing for each side.   William Jennings Bryan's 1900 Cross of Gold Speech (https://en.wikipedia.org/wiki/Cross_of_Gold_speech) is considered an American political classic. 

The Wizard of Oz, which is best known as a children's book, was actually political commentary on monetary policy.   The Yellow Brick Road was the gold standard, the silver slippers (ruby slippers in the movie) were the silver standard.  The wicked witch of the east and west were the big banks and industrialists on the coasts who were screwing the American people (Dorothy).  The scarecrow represented the farmers who were too dumb to avoid the debt trap, the tin man represented the broken down industrial workers who lacked heart to side with the farmers, and the Cowardly lion was the political class who weren't willing to do anything about it.   But as the story progressed,  the scarecrow was actually smart, the tin man had a heart, and the lion turned out to be brave. 

Point is, we already know what living with a deflationary currency is like.  In 1873, the US dropped the bimetallic standard and went to the gold standard.   The resulting deflation caused the Long Depression, which as the name suggests, was the longest depression in US history.   Worse, the country kept sinking back into depression.    The US was in the middle of one of the subsequent recessions in 1900 when L. Frank Baum wrote the book and Bryan made his speech blasting the gold standard.  Getting away from a deflating currency was a central political issue of the day.   We don't need to run the experiment again. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 22, 2021, 03:42:59 PM
The amount of Bitcoin in every wallet / account is public knowledge.  If they lie about how much Bitcoin is present in one of their accounts, they will be proved wrong within minutes of saying it.

This is not true, though, right? All of these transactions go through Chivo, which is not transparent. It's allowing Bukele to make up wildly ridiculous stats about the success (https://twitter.com/nayibbukele/status/1442624279028408321), like there are more transactions in ES on Chivo than Visa handles worldwide. That seems rather unlikely.

To ChpBstrd's point, much of this is deeply suspicious. A lawyer prosecuted for falsifying a will helped create the company running Chivo Wallet. The notary who attested to the legality of Chivo SA de CV, created with public resources by the Government, was accused of documentary falsification in 2020 [1]. President Bukele’s Chief of Staff, Marta Carolina Recinos de Bernal, is on the US State Department’s Engel List of corrupt officials. She’s also a director of Chivo SA [2].

It really is depressing seeing a bunch of crypto enthusiasts—who claim to be wholly against corruption—cheer on this naked pillaging of some of the most impoverished people on Earth all because "number go up" on their pet Ponzi scheme.

[1] https://www.revistafactum.com/abogada-chivo/
[2] https://www.elsalvador.com/noticias/nacional/funcionaria-bukele-lista-engel-directora-empresa-detras-chivo/877437/2021/
Oh, no!  You're quite right, thanks for the correction.  I assumed they put accounts on the blockchain.

But they created a new wallet in a matter of months and put everyone's Bitcoin in that system.  Was the launch their first large scale test?

The accounts can't be verified in some hidden system that does not use the blockchain.  The wallets may or may not have Bitcoin in them, since there's no external way to verify it without moving Bitcoin out of the wallets (and paying a fee to get the transfer registered on Bitcoin's blockchain).

Since Chivo runs on the bitcoin lightning network - why would it not be recorded on the bitcoin blockchain? The transaction itself does not happen on the blockchain but it is recorded on the bitcoin ledger.
Here is the first thing I came across:

Quote
Is Chivo a lightning wallet?
“Just like every other participant on Bitcoin's Lightning Network, Chivo runs a Lightning node. Since Chivo is a custodial wallet, all Lightning payments that Chivo users send to and from other Lightning wallets will transfer liquidity to and from Chivo's node.” ... The Chivo node “ranks 83rd among public Lightning nodes.”Sep 24, 2021

OK, now that I've looked a little deeper. It looks like Chivo bypasses the lightning network unless you specifically choose it under payment option in the Chivo wallet, they do provide the QR code for the lightning option in-app. Chivo seems to be a private network, a proprietary app using lightning. It will make it difficult to discover irregularities if there are any.

Either way, it is a private, closed system rather than open-sourced.
Three months for development was definitely ambitious but all in all, it appears to work well enough at this point. Whether the stats given by Bukele are spot on will be difficult to confirm without full transparency. Since when are government stats the absolute truth? All govts want to look good.

Inferring criminal intent is a big accusation and condemnation. The fact that you can use any bitcoin wallet like Moon (not just Chivo) and that you have the lightning network option right in your Chivo app speaks against it.   
US$ transactions are still the norm and anyone who wants to avoid the volatility of bitcoin can immediately switch from bitcoin to US $.
But hey, for all we know this is a South/Central American Syndicate setting up the scam of the century. There were two Venezuelans and five different companies involved in the app creation. That makes it even more impressive, with hyper coordination and given a deadline of three months.     

El Salvador is under such tight scrutiny at present, their every move is questioned. Not to mention the new loan discussions with the IMF.

After all, they are a sovereign government and if they choose to veer from the 'true path' of bitcoin (enthusiasts who want open source, no privacy, financial transactions) then they can. Maybe they are only concerned about the benefit for their own country.
Maybe they have developed more than we think and are already planning to integrate with other South and Central American countries. 
I still think that is a very gutsy move made more difficult by the lack of tech, pressure from the IMF, poor odds of success, and the realities of a third-world country.

Nothing but a clever criminal bitcoin scam?
Or an opportunist with a vision who wants to build a better country?

Too much rumor, bias, and skewed perspective from all sides, not to mention harsh judgment or idealistic hopium.
Time will tell - gangster or hero? 
t
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 22, 2021, 03:52:14 PM
Since Chivo runs on the bitcoin lightning network - why would it not be recorded on the bitcoin blockchain? The transaction itself does not happen on the blockchain but it is recorded on the bitcoin ledger.

The purpose of the Lightning network is to perform Bitcoin transactions without the cost, slowness, security, and protection of being recorded in the blockchain ledger.  Only when a payment channel on the lightning network is closed are transactions recorded, and the costs for using the Lightning network climb significantly if this is done often.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 22, 2021, 04:10:53 PM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

This isn’t even really up for debate. Bitcoin, as a matter of fact is a *negative-sum* game. The only way to make money is by new entrants paying you more money for your Bitcoin than you paid when you entered. Miners, meanwhile, suck money out of the system, ensuring that, on average, Bitcoin investors will have a negative expected return. That, thus far, NUMBER GO UP, is not a refutation at all of the claim that it’s a negative-sum-game.

Are we also not counting the millions (billions?) of dollars in wasted environmental damage?  Last I was reading, bitcoin mining is using comperable power to that of the entire country of Poland (178.92 TWh) each year . . . with a carbon footprint equivalent to the entire country of Bangladesh (84.99 Mt CO2) . . . and generating equivalent electronic waste to that of the the entire country of the Netherlands (24.37 kt).
  - https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)

Just because people who buy and sell bitcoin pretend these issues don't exist doesn't mean that there isn't a significant cost associated with them.
There is no question that Bitcoin consumes energy and harms the environment. And, if you completely reject the idea of Bitcoin having any useful purpose then, obviously, you have to conclude it's pure waste. But that doesn't mean it is - that's just your opinion.

If you can imagine that Bitcoin could be a useful store of value, how does it compare to the conventional alternatives ?
What environmental damage results from extracting, transporting, processing, storing and securing the many thousands of tons of gold just stacked up in vaults ?

Instead of just posing the question, and (I guess?) assuming that it must be more: why don't you look into it, and tell us! (Hot tip: look up these values on your own, not from BITCOIN.ORG or some other crypto website)


It's kind of a tricky question to answer.  Bitcoin is a failure as a currency, so it doesn't seem fair to compare it to currencies and banking systems.  It's closest to a store of value like gold, silver, or beanie babies.

As of the publication of this 2018 study (https://www.nature.com/articles/s41893-018-0152-7.epdf?referrer_access_token=4WFhbLVH943fe3mcf8oZANRgN0jAjWel9jnR3ZoTv0NdJEcpPQZqiP9V_5sRM6OFeEt1maRlkYa2rAMRc-x1aVbfFmAZSeIy1BUabgBXZ5z6UQfH0t8xSV-r-npyxYVvgn4cGz5vnYe41OneS4y9iDEq9qg_P_yvZnh3zShMKtDW2Q4oj7ea5KOxnmJf-j_pUXVLuKqBdId1DeooWHyXBGTsaKAeh50jbelu7OUy1zXIkZZVtyhwK389Tt_6m7EusXgJedPs47tRpklbfG1lrE7zSz3Bqp6kqnD7z10SVdY%3D&tracking_referrer=blogs.discovermagazine.com (https://www.nature.com/articles/s41893-018-0152-7.epdf?referrer_access_token=4WFhbLVH943fe3mcf8oZANRgN0jAjWel9jnR3ZoTv0NdJEcpPQZqiP9V_5sRM6OFeEt1maRlkYa2rAMRc-x1aVbfFmAZSeIy1BUabgBXZ5z6UQfH0t8xSV-r-npyxYVvgn4cGz5vnYe41OneS4y9iDEq9qg_P_yvZnh3zShMKtDW2Q4oj7ea5KOxnmJf-j_pUXVLuKqBdId1DeooWHyXBGTsaKAeh50jbelu7OUy1zXIkZZVtyhwK389Tt_6m7EusXgJedPs47tRpklbfG1lrE7zSz3Bqp6kqnD7z10SVdY%3D&tracking_referrer=blogs.discovermagazine.com)), the worldwide energy costs of gold are equivalent to that of bitcoin.

This is still an apples to oranges comparison though, as the market capitalization of gold is 17x higher than bitcoin (https://ca.finance.yahoo.com/news/bitcoin-vs-gold-debate-reignited-125947770.html (https://ca.finance.yahoo.com/news/bitcoin-vs-gold-debate-reignited-125947770.html)) . . . and gold has real world uses (jewelry, electronics, etc.).

I congratulate you on finding what seems to be a fairly well-balanced article ! Most out there seem to be ridiculously skewed one way or the other by the author's obvious agenda.

Apples and oranges ?
I don't think the current market capitalisation is relevant - the figures in the report are based on $ value of production.
I don't think jewellery and electronics are relevant - we're talking about it's use as a store of value.

What is probably more relevant is that the article is based on 2018 prices.

Overall, it seems like a reasonable article though and, at least, gives the energy considerations some perspective.

It is not irrelevant that it has uses besides a store of value it's actually extremely relevant and why it was prized so much was our natural instincts as humans to be drawn to shiny things like back 8n the day when shiny meant a water source. So it was used in prized jewelry which helped it maintain it's long term store of value then was utilized in electronics. One could assume gold is a store of value only because of our very deep animalistic instincts that made it so prized.

Bitcoin is for all purposes today no more than a collectable and we'll see how long it's prized as that.

Further gold was in fact used as currency for a long time in trade prior to it becoming stock piled bc of the very reasons stated here about why btc isn't a currency and can't be bc we know more today than we did then about how economics work.
We've discussed this point before  - the price of gold on the market has very little to do with any intrinsic value in terms of jewellery and electronics - it's as good as irrelevant.
I agree with your history lesson, that's why gold is where it is, but that history is history.

I won't go into the currency thing here - I need to catch up on the recent discussions on that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 22, 2021, 04:56:45 PM
Since Chivo runs on the bitcoin lightning network - why would it not be recorded on the bitcoin blockchain? The transaction itself does not happen on the blockchain but it is recorded on the bitcoin ledger.

The purpose of the Lightning network is to perform Bitcoin transactions without the cost, slowness, security, and protection of being recorded in the blockchain ledger.  Only when a payment channel on the lightning network is closed are transactions recorded, and the costs for using the Lightning network climb significantly if this is done often.

Yes, of course, I know that, but the assertion that was made is that Chivo is not on the blockchain at all and the answer from what I found is that it depends. (which is what I outlined below the quote)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 22, 2021, 05:34:31 PM
Since Chivo runs on the bitcoin lightning network - why would it not be recorded on the bitcoin blockchain? The transaction itself does not happen on the blockchain but it is recorded on the bitcoin ledger.

The purpose of the Lightning network is to perform Bitcoin transactions without the cost, slowness, security, and protection of being recorded in the blockchain ledger.  Only when a payment channel on the lightning network is closed are transactions recorded, and the costs for using the Lightning network climb significantly if this is done often.

Yes, of course, I know that, but the assertion that was made is that Chivo is not on the blockchain at all and the answer from what I found is that it depends. (which is what I outlined below the quote)

It doesn't depend.  Neither the lightning network nor Chivo are on blockchain.  You need to close your lightning payment channel or move your earnings out of Chivo to get your bitcoin recorded in the ledger.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 22, 2021, 09:23:50 PM
Since Chivo runs on the bitcoin lightning network - why would it not be recorded on the bitcoin blockchain? The transaction itself does not happen on the blockchain but it is recorded on the bitcoin ledger.

The purpose of the Lightning network is to perform Bitcoin transactions without the cost, slowness, security, and protection of being recorded in the blockchain ledger.  Only when a payment channel on the lightning network is closed are transactions recorded, and the costs for using the Lightning network climb significantly if this is done often.
Yes, of course, I know that, but the assertion that was made is that Chivo is not on the blockchain at all and the answer from what I found is that it depends. (which is what I outlined below the quote)
El Salvador's population is 6.5 million.  What percentage of Bitcoin deposits into accounts of El Salvadorians have happened on Bitcoin's blockchain?

The question isn't about what Chivo could do, it's about transparency of giving Bitcoin to citizens of El Salvador.  If all of those transactions were on the blockchain, they would be visible and fully transparent.  Of course, in the past 30 days, Bitcoin transactions have averaged $3.50 each, which is significant compared to the amount of money being given to each person in El Salvador.

I think the best answer we'll get is if reporters try and reach out to a number of people, and walk them through getting their Bitcoin accounts and seeing what happens.  Then we'll have an idea if people's allegations of having their accounts already claimed is significant or not.

Foolishly aiming towards the thread topic, acceptance by a government - however awkward - does suggest greater acceptance of Bitcoin.  Combined with new Bitcoin futures ETFs, maybe that's an indication to invest a very small percentage in it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 23, 2021, 07:53:38 AM
Returning to the bitcoin is deflationary 'problem' . . .

At what point would that 'problem' become a real problem ?

When/if BTC is widely accepted by retailers ?
When/if BTC is widely used by the general pop. for everyday transactions ?
When/if BTC is widely used by the general pop. to store wealth ?
When/if BTC is locally recognised as legal tender alongside a fiat currency ?
When/if BTC is globally recognised as legal tender alongside fiat currencies ?
When/if BTC starts to replace some fiat currencies ?
When/if BTC replaces all fiat currencies ?
Other ?

It seems to me that BTC would need to be broadly dominant for it's deflationary nature to start negatively impacting national economies in the ways described. But I'm no economist . . .


What about the problems associated with inflationary fiat currencies ? It's far from a perfect solution.
It seems pretty clear that inflation tends to take money from the poor and hand it to the asset-rich.
Are we not concerned about potential hyper-inflation / fiat-devaluation resulting from the rampant money-printing in recent years ?
Inflation can get away from you - runaway inflation causes horrific damage to economies. Inflation is all well and good - until it isn't.
What's the outlook for Joe Average's meagre savings over the next few years ?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 23, 2021, 02:13:04 PM
3. I think it's unlikely that Bitcoin would become a global currency in the 22nd century, but for the sake of argument let's suppose that it does. After the last Bitcoin is mined early next century it would become a truly deflationary currency. But economists in the future keep proclaiming that this currency doesn't work, undermining public confidence. So the Bitcoin community might decide to expand the supply above 21 million by restarting mining operations, solving the problem. And yes, they can do this despite its decentralized nature. For example, right now Bitcoin is being upgraded with the Taproot project which includes security and functionality upgrades agreed upon by the community near unanimously. An unpopular modification to the algorithm (such as expanding the supply above 21 million) could cause an uproar and lead to a hard fork into 2 currencies: the original version versus the modified version. In that case there would be 2 competing currencies and economists would get to observe in real-time whether the inflationary version is superior to the deflationary one.

One thing that is missed is that the money supply needs to expand at about the same rate as the economy, not the population.   That was a lesson learned when the US (and other countries) on the gold standard, but that lesson has been forgotten in recent times.  Back in the day, the US was on the gold standard which limited money supply and caused economic problems for some groups, but facilitated trade with England which benefited others.   So there were contentious factions arguing for each side.   William Jennings Bryan's 1900 Cross of Gold Speech (https://en.wikipedia.org/wiki/Cross_of_Gold_speech) is considered an American political classic. 

The Wizard of Oz, which is best known as a children's book, was actually political commentary on monetary policy.   The Yellow Brick Road was the gold standard, the silver slippers (ruby slippers in the movie) were the silver standard.  The wicked witch of the east and west were the big banks and industrialists on the coasts who were screwing the American people (Dorothy).  The scarecrow represented the farmers who were too dumb to avoid the debt trap, the tin man represented the broken down industrial workers who lacked heart to side with the farmers, and the Cowardly lion was the political class who weren't willing to do anything about it.   But as the story progressed,  the scarecrow was actually smart, the tin man had a heart, and the lion turned out to be brave. 

Point is, we already know what living with a deflationary currency is like.  In 1873, the US dropped the bimetallic standard and went to the gold standard.   The resulting deflation caused the Long Depression, which as the name suggests, was the longest depression in US history.   Worse, the country kept sinking back into depression.    The US was in the middle of one of the subsequent recessions in 1900 when L. Frank Baum wrote the book and Bryan made his speech blasting the gold standard.  Getting away from a deflating currency was a central political issue of the day.   We don't need to run the experiment again.

Great post, @Telecaster!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on October 24, 2021, 01:18:30 PM
It seems to me that BTC would need to be broadly dominant for it's deflationary nature to start negatively impacting national economies in the ways described. But I'm no economist . . .

Agree completely.  My claim is that Bitcoin is unsuitable as currency in the first place, so can never become a reserve currency.  Quick anecdote.  The Chivo app had a feature that would freeze the Bitcoin price for one minute to give the user time to complete the transaction.  However, one minute was enough time for users to search exchanges for arbitrage opportunities.  So if one minute is too long for Bitcoin pricing, what if you have a complex product like a dishwasher say where components ordered in advance and wages have to be paid before the product is sold?  How could you possibly calculate your costs or potential profit? 

On the consumer side, lets say I want to buy a car on credit and pay a fix amount of Bitcoin each month.   I will have no idea how much the car will wind up costing or even how expensive my next payment would be. 

Bitcoin proponents say that as Bitcoin becomes more widely adopted as a currency the the price will stabilize.  Two problems with that, first is the chicken and the egg.  It can't become more widely adopted until the prices stabilize and prices can't stabilize until it becomes more widely adopted.   Second problem is that it needs to be really stable.  Like fluctuating no more than a few percent a year.  Unless there is some entity in charge of keeping it stable I don't see how that is even possible.   

Quote
What about the problems associated with inflationary fiat currencies ? It's far from a perfect solution.
It seems pretty clear that inflation tends to take money from the poor and hand it to the asset-rich.
Are we not concerned about potential hyper-inflation / fiat-devaluation resulting from the rampant money-printing in recent years ?
Inflation can get away from you - runaway inflation causes horrific damage to economies. Inflation is all well and good - until it isn't.
What's the outlook for Joe Average's meagre savings over the next few years ?

All fair points.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 24, 2021, 01:31:42 PM
If bitcoin became really stable over a period of many years, tons of people holding only for gainz would sell it and crash the price, though.

So it's a chicken and egg problem twice - it can't become stable until it's not sexy for speculation, and it will crash if it's not sexy for speculation anymore, hence not being stable.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 24, 2021, 03:53:27 PM
If bitcoin became really stable over a period of many years, tons of people holding only for gainz would sell it and crash the price, though.

So it's a chicken and egg problem twice - it can't become stable until it's not sexy for speculation, and it will crash if it's not sexy for speculation anymore, hence not being stable.

-W

Nope.it only goes up
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 24, 2021, 04:20:25 PM
Sometimes I think of BTC (and crypto in general) like this:
1. No, won't be currency. Not broadly, not really really.
2. Will have some value over time but current price is probably above that value
3. Probably won't be stable in price but if it does, will take a long time to get there
4. Might end up having store-of-value utility even if prices are unstable

And:
5. Yes, is in a speculative bubble
6. Might be nowhere near the end of the speculative bubble
7. The limit on price might be social, not logical
8. A fair approximation of the upper price limit might be things like:
a. How many dollars are people willing to "invest" (store) in risk assets, minus the valuation of the stock market, during an optimistic period
b. When nearly all, not just some, of markets' speculative energy is in BTC
c. When speculative valuation on crypto is higher than the total value of the stock market
d. When valuation of crypto is larger than the stock market
e. (Some of these overlap) When total valuation of risk "assets" (say, stocks + crypto) is much higher than stocks alone have ever been.

8c, 8d, and 8e may well put the global financial system at risk of a BTC-triggered meltdown. So in a way, I'm rooting for a BTC crash before they happen.

It's hard to measure the items in 8, but my guess that if these thoughts are true, the upper limit on BTC is far higher than today. Like BTC at US$250,000 or $500,000. Maybe $1 million.

There's a part of me that then says "Well, then it's not too late to buy. Take the ride!" Haven't done it though.

Re the thread topic, if the upper limit of valuation is far higher than today, a small % crypto could have a big positive impact on returns - if you can get yourself out before the Last Big Crash. Sometimes I think the way to go is reset rarely, like maybe once a year instead of once a quarter, and set some share-of-risk-market boundaries for when to sell.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 24, 2021, 06:08:09 PM
Sometimes I think of BTC (and crypto in general) like this:
1. No, won't be currency. Not broadly, not really really.
2. Will have some value over time but current price is probably above that value
3. Probably won't be stable in price but if it does, will take a long time to get there
4. Might end up having store-of-value utility even if prices are unstable

And:
5. Yes, is in a speculative bubble
6. Might be nowhere near the end of the speculative bubble
7. The limit on price might be social, not logical
8. A fair approximation of the upper price limit might be things like:
a. How many dollars are people willing to "invest" (store) in risk assets, minus the valuation of the stock market, during an optimistic period
b. When nearly all, not just some, of markets' speculative energy is in BTC
c. When speculative valuation on crypto is higher than the total value of the stock market
d. When valuation of crypto is larger than the stock market
e. (Some of these overlap) When total valuation of risk "assets" (say, stocks + crypto) is much higher than stocks alone have ever been.

8c, 8d, and 8e may well put the global financial system at risk of a BTC-triggered meltdown. So in a way, I'm rooting for a BTC crash before they happen.

It's hard to measure the items in 8, but my guess that if these thoughts are true, the upper limit on BTC is far higher than today. Like BTC at US$250,000 or $500,000. Maybe $1 million.

There's a part of me that then says "Well, then it's not too late to buy. Take the ride!" Haven't done it though.

Re the thread topic, if the upper limit of valuation is far higher than today, a small % crypto could have a big positive impact on returns - if you can get yourself out before the Last Big Crash. Sometimes I think the way to go is reset rarely, like maybe once a year instead of once a quarter, and set some share-of-risk-market boundaries for when to sell.

The majority of people here supporting this are of the get rich quicker mindset.

Even in a forum with a simple equation for wealth accumulation you have people believing in this thing.

Take rosy for example. Hit a 6 figure number years ahead of schedule. Not by following the logic. But bc they bought a lottery ticket. Built in belief. Not a single person in any crypto thread has articulated it's value.  Other than it goes up. So I don't want to miss it. Austin take rosy. Proclaiming it's value as a currency and yet doesn't understand modern economics or admittedly how currency functions

I'm all about using inventive ways to get richer faster to shorten the timeline. Anyone can look at my history of posts and journals here to see that. But at some point you have to know when to fold em.  And these staunch advocates of a meer collectible can't see past their own greed.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 24, 2021, 10:34:55 PM
Sometimes I think of BTC (and crypto in general) like this:
1. No, won't be currency. Not broadly, not really really.
2. Will have some value over time but current price is probably above that value
3. Probably won't be stable in price but if it does, will take a long time to get there
4. Might end up having store-of-value utility even if prices are unstable

And:
5. Yes, is in a speculative bubble
6. Might be nowhere near the end of the speculative bubble
7. The limit on price might be social, not logical
8. A fair approximation of the upper price limit might be things like:
a. How many dollars are people willing to "invest" (store) in risk assets, minus the valuation of the stock market, during an optimistic period
b. When nearly all, not just some, of markets' speculative energy is in BTC
c. When speculative valuation on crypto is higher than the total value of the stock market
d. When valuation of crypto is larger than the stock market
e. (Some of these overlap) When total valuation of risk "assets" (say, stocks + crypto) is much higher than stocks alone have ever been.

8c, 8d, and 8e may well put the global financial system at risk of a BTC-triggered meltdown. So in a way, I'm rooting for a BTC crash before they happen.

It's hard to measure the items in 8, but my guess that if these thoughts are true, the upper limit on BTC is far higher than today. Like BTC at US$250,000 or $500,000. Maybe $1 million.

There's a part of me that then says "Well, then it's not too late to buy. Take the ride!" Haven't done it though.

Re the thread topic, if the upper limit of valuation is far higher than today, a small % crypto could have a big positive impact on returns - if you can get yourself out before the Last Big Crash. Sometimes I think the way to go is reset rarely, like maybe once a year instead of once a quarter, and set some share-of-risk-market boundaries for when to sell.

The majority of people here supporting this are of the get rich quicker mindset.

Even in a forum with a simple equation for wealth accumulation you have people believing in this thing.

Take rosy for example. Hit a 6 figure number years ahead of schedule. Not by following the logic. But bc they bought a lottery ticket. Built in belief. Not a single person in any crypto thread has articulated it's value.  Other than it goes up. So I don't want to miss it. Austin take rosy. Proclaiming it's value as a currency and yet doesn't understand modern economics or admittedly how currency functions

I'm all about using inventive ways to get richer faster to shorten the timeline. Anyone can look at my history of posts and journals here to see that. But at some point you have to know when to fold em.  And these staunch advocates of a meer collectible can't see past their own greed.

Resentment is not a good look on you.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 25, 2021, 04:28:56 AM
Sometimes I think of BTC (and crypto in general) like this:
1. No, won't be currency. Not broadly, not really really.
2. Will have some value over time but current price is probably above that value
3. Probably won't be stable in price but if it does, will take a long time to get there
4. Might end up having store-of-value utility even if prices are unstable

And:
5. Yes, is in a speculative bubble
6. Might be nowhere near the end of the speculative bubble
7. The limit on price might be social, not logical
8. A fair approximation of the upper price limit might be things like:
a. How many dollars are people willing to "invest" (store) in risk assets, minus the valuation of the stock market, during an optimistic period
b. When nearly all, not just some, of markets' speculative energy is in BTC
c. When speculative valuation on crypto is higher than the total value of the stock market
d. When valuation of crypto is larger than the stock market
e. (Some of these overlap) When total valuation of risk "assets" (say, stocks + crypto) is much higher than stocks alone have ever been.

8c, 8d, and 8e may well put the global financial system at risk of a BTC-triggered meltdown. So in a way, I'm rooting for a BTC crash before they happen.

It's hard to measure the items in 8, but my guess that if these thoughts are true, the upper limit on BTC is far higher than today. Like BTC at US$250,000 or $500,000. Maybe $1 million.

There's a part of me that then says "Well, then it's not too late to buy. Take the ride!" Haven't done it though.

Re the thread topic, if the upper limit of valuation is far higher than today, a small % crypto could have a big positive impact on returns - if you can get yourself out before the Last Big Crash. Sometimes I think the way to go is reset rarely, like maybe once a year instead of once a quarter, and set some share-of-risk-market boundaries for when to sell.

The majority of people here supporting this are of the get rich quicker mindset.

Even in a forum with a simple equation for wealth accumulation you have people believing in this thing.

Take rosy for example. Hit a 6 figure number years ahead of schedule. Not by following the logic. But bc they bought a lottery ticket. Built in belief. Not a single person in any crypto thread has articulated it's value.  Other than it goes up. So I don't want to miss it. Austin take rosy. Proclaiming it's value as a currency and yet doesn't understand modern economics or admittedly how currency functions

I'm all about using inventive ways to get richer faster to shorten the timeline. Anyone can look at my history of posts and journals here to see that. But at some point you have to know when to fold em.  And these staunch advocates of a meer collectible can't see past their own greed.

Resentment is not a good look on you.

Not sure where you came up with that thought I'm Fi. I have no resentment about this.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on October 25, 2021, 05:20:58 AM
The majority of people here supporting this are of the get rich quicker mindset.

Even in a forum with a simple equation for wealth accumulation you have people believing in this thing.

Take rosy for example. Hit a 6 figure number years ahead of schedule. Not by following the logic. But bc they bought a lottery ticket. Built in belief. Not a single person in any crypto thread has articulated it's value.  Other than it goes up. So I don't want to miss it. Austin take rosy. Proclaiming it's value as a currency and yet doesn't understand modern economics or admittedly how currency functions

I'm all about using inventive ways to get richer faster to shorten the timeline. Anyone can look at my history of posts and journals here to see that. But at some point you have to know when to fold em.  And these staunch advocates of a meer collectible can't see past their own greed.

Resentment is not a good look on you.

How did you read resentment from that post? I don't see it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 25, 2021, 06:16:50 AM
The uncertainty is what keeps BTC rising.  If everyone knew for certain the limits of what Bitcoin will do in the future, there would be certainty in Bitcoin's price.  I think it's the lack of certainty is what makes the price hard to define (which is also like the dot-com bubble, trying to define which websites would flourish on the internet).

I guess the case "for" Bitcoin is as a cheaper means of cross-border transactions.  Maybe subscriptions are handled by "smart contracts", so everyone can see the cost and how to end the subscription.  All speculation - which is what the "for" case has to be, at this point.  Most people don't do anything in Bitcoin in their daily lives.

Most crypto investors are probably relying on the price always going up.  Once you see that for a few years, it's easy to believe rationalizations that will let you participate in the easy money.  The hardest thing for the "pro" camp to consider is that Bitcoin might crash to zero.  If all of BTC's uses are done better elsewhere, why would BTC hold it's value?  There's a chance that happens, which is why I limit my crypto investment to a tiny percentage of net worth.  (But if I was young and in need of a lottery ticket, maybe I'd allocate much more).  While putting money in crypto, keep in mind it might crash and not recover, so diversify.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 25, 2021, 06:36:34 AM
Sometimes I think of BTC (and crypto in general) like this:
1. No, won't be currency. Not broadly, not really really.
2. Will have some value over time but current price is probably above that value
3. Probably won't be stable in price but if it does, will take a long time to get there
4. Might end up having store-of-value utility even if prices are unstable

And:
5. Yes, is in a speculative bubble
6. Might be nowhere near the end of the speculative bubble
7. The limit on price might be social, not logical
8. A fair approximation of the upper price limit might be things like:
a. How many dollars are people willing to "invest" (store) in risk assets, minus the valuation of the stock market, during an optimistic period
b. When nearly all, not just some, of markets' speculative energy is in BTC
c. When speculative valuation on crypto is higher than the total value of the stock market
d. When valuation of crypto is larger than the stock market
e. (Some of these overlap) When total valuation of risk "assets" (say, stocks + crypto) is much higher than stocks alone have ever been.

8c, 8d, and 8e may well put the global financial system at risk of a BTC-triggered meltdown. So in a way, I'm rooting for a BTC crash before they happen.

It's hard to measure the items in 8, but my guess that if these thoughts are true, the upper limit on BTC is far higher than today. Like BTC at US$250,000 or $500,000. Maybe $1 million.

There's a part of me that then says "Well, then it's not too late to buy. Take the ride!" Haven't done it though.

Re the thread topic, if the upper limit of valuation is far higher than today, a small % crypto could have a big positive impact on returns - if you can get yourself out before the Last Big Crash. Sometimes I think the way to go is reset rarely, like maybe once a year instead of once a quarter, and set some share-of-risk-market boundaries for when to sell.

The majority of people here supporting this are of the get rich quicker mindset.

Even in a forum with a simple equation for wealth accumulation you have people believing in this thing.

Take rosy for example. Hit a 6 figure number years ahead of schedule. Not by following the logic. But bc they bought a lottery ticket. Built in belief. Not a single person in any crypto thread has articulated it's value.  Other than it goes up. So I don't want to miss it. Austin take rosy. Proclaiming it's value as a currency and yet doesn't understand modern economics or admittedly how currency functions

I'm all about using inventive ways to get richer faster to shorten the timeline. Anyone can look at my history of posts and journals here to see that. But at some point you have to know when to fold em.  And these staunch advocates of a meer collectible can't see past their own greed.

Resentment is not a good look on you.

Rather than resentment, I read a deep philosophical theme here:

If we support the lifestyle of the FIRE movement, do we have a moral obligation to use our voices to speak toward replicable methods of achieving it over time. Because the traditional stock market, index fund route seems replicable over time (roughly a century of data), we feel comfortable growing our movement through investing using this method. And--because of the relatively short time frame and high volatility--we are much less secure in enouraging others to use crypto positions to reach FIRE.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 25, 2021, 11:40:13 AM
Sometimes I think of BTC (and crypto in general) like this:
1. No, won't be currency. Not broadly, not really really.
2. Will have some value over time but current price is probably above that value
3. Probably won't be stable in price but if it does, will take a long time to get there
4. Might end up having store-of-value utility even if prices are unstable

And:
5. Yes, is in a speculative bubble
6. Might be nowhere near the end of the speculative bubble
7. The limit on price might be social, not logical
8. A fair approximation of the upper price limit might be things like:
a. How many dollars are people willing to "invest" (store) in risk assets, minus the valuation of the stock market, during an optimistic period
b. When nearly all, not just some, of markets' speculative energy is in BTC
c. When speculative valuation on crypto is higher than the total value of the stock market
d. When valuation of crypto is larger than the stock market
e. (Some of these overlap) When total valuation of risk "assets" (say, stocks + crypto) is much higher than stocks alone have ever been.

8c, 8d, and 8e may well put the global financial system at risk of a BTC-triggered meltdown. So in a way, I'm rooting for a BTC crash before they happen.

It's hard to measure the items in 8, but my guess that if these thoughts are true, the upper limit on BTC is far higher than today. Like BTC at US$250,000 or $500,000. Maybe $1 million.

There's a part of me that then says "Well, then it's not too late to buy. Take the ride!" Haven't done it though.

Re the thread topic, if the upper limit of valuation is far higher than today, a small % crypto could have a big positive impact on returns - if you can get yourself out before the Last Big Crash. Sometimes I think the way to go is reset rarely, like maybe once a year instead of once a quarter, and set some share-of-risk-market boundaries for when to sell.

The majority of people here supporting this are of the get rich quicker mindset.

Even in a forum with a simple equation for wealth accumulation you have people believing in this thing.

Take rosy for example. Hit a 6 figure number years ahead of schedule. Not by following the logic. But bc they bought a lottery ticket. Built in belief. Not a single person in any crypto thread has articulated it's value.  Other than it goes up. So I don't want to miss it. Austin take rosy. Proclaiming it's value as a currency and yet doesn't understand modern economics or admittedly how currency functions

I'm all about using inventive ways to get richer faster to shorten the timeline. Anyone can look at my history of posts and journals here to see that. But at some point you have to know when to fold em.  And these staunch advocates of a meer collectible can't see past their own greed.

Resentment is not a good look on you.

Rather than resentment, I read a deep philosophical theme here:

If we support the lifestyle of the FIRE movement, do we have a moral obligation to use our voices to speak toward replicable methods of achieving it over time. Because the traditional stock market, index fund route seems replicable over time (roughly a century of data), we feel comfortable growing our movement through investing using this method. And--because of the relatively short time frame and high volatility--we are much less secure in enouraging others to use crypto positions to reach FIRE.

I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

If philosophy is what you're looking for, consider:
The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts.
Bertrand Russell
Title: Re: What do you think of adding a low% of crypto allocation
Post by: bacchi on October 25, 2021, 12:01:38 PM
I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

Only you used the phrases "greedy fool" and "dim-witted" in this thread.

A personal attack isn't simply disagreeing with someone's opinion, even if that opinion is strongly held.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 25, 2021, 12:07:42 PM
I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

Only you used the phrases "greedy fool" and "dim-witted" in this thread.

A personal attack isn't simply disagreeing with someone's opinion, even if that opinion is strongly held.

also i've never cited it as a pump and dump spectulative scam.  Beanie babies and tulip bulbs still have value and sell on the open market.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on October 25, 2021, 12:21:55 PM
I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

Only you used the phrases "greedy fool" and "dim-witted" in this thread.

A personal attack isn't simply disagreeing with someone's opinion, even if that opinion is strongly held.

Yeah, no personal attack, B42 just holds a very strong opinion, like he does about basically everything.

Agree or disagree with him, that's fine. You can think his opinion is totally ridiculous if you want, and you are totally free to call him out on it, people often do when he gets dogmatic about things. But that wouldn't be considered a personal attack, just as his post singling out what one person has said also isn't a personal attack.

He's heavily criticized ideas, which is entirely fair play. People are totally entitled to criticize his ideas in return, but instead the rebuttals seem to be getting personal, which is kind of ironic.

I say this as someone who is not pro or anti crypto. I have no skin in this game, but what I do observe are reactive, sarcastic, defensive comments from one side more than the other.

That may be just a product of this forum being predominantly anti-crypto, so the crypto folks feel frustrated here. I don't know.

But as someone who is avidly reading along and trying to better understand the two sides and where the truth lies between them, I can say that B42 has been extremely effective in articulating their side of the debate and I keep wishing that someone on the pro-crypto side would really articulately pick apart his arguments in a way that really made sense to me.

However, perhaps this is not the forum to find that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 25, 2021, 12:25:28 PM
Sometimes I think of BTC (and crypto in general) like this:
1. No, won't be currency. Not broadly, not really really.
2. Will have some value over time but current price is probably above that value
3. Probably won't be stable in price but if it does, will take a long time to get there
4. Might end up having store-of-value utility even if prices are unstable

And:
5. Yes, is in a speculative bubble
6. Might be nowhere near the end of the speculative bubble
7. The limit on price might be social, not logical
8. A fair approximation of the upper price limit might be things like:
a. How many dollars are people willing to "invest" (store) in risk assets, minus the valuation of the stock market, during an optimistic period
b. When nearly all, not just some, of markets' speculative energy is in BTC
c. When speculative valuation on crypto is higher than the total value of the stock market
d. When valuation of crypto is larger than the stock market
e. (Some of these overlap) When total valuation of risk "assets" (say, stocks + crypto) is much higher than stocks alone have ever been.

8c, 8d, and 8e may well put the global financial system at risk of a BTC-triggered meltdown. So in a way, I'm rooting for a BTC crash before they happen.

It's hard to measure the items in 8, but my guess that if these thoughts are true, the upper limit on BTC is far higher than today. Like BTC at US$250,000 or $500,000. Maybe $1 million.

There's a part of me that then says "Well, then it's not too late to buy. Take the ride!" Haven't done it though.

Re the thread topic, if the upper limit of valuation is far higher than today, a small % crypto could have a big positive impact on returns - if you can get yourself out before the Last Big Crash. Sometimes I think the way to go is reset rarely, like maybe once a year instead of once a quarter, and set some share-of-risk-market boundaries for when to sell.

The majority of people here supporting this are of the get rich quicker mindset.

Even in a forum with a simple equation for wealth accumulation you have people believing in this thing.

Take rosy for example. Hit a 6 figure number years ahead of schedule. Not by following the logic. But bc they bought a lottery ticket. Built in belief. Not a single person in any crypto thread has articulated it's value.  Other than it goes up. So I don't want to miss it. Austin take rosy. Proclaiming it's value as a currency and yet doesn't understand modern economics or admittedly how currency functions

I'm all about using inventive ways to get richer faster to shorten the timeline. Anyone can look at my history of posts and journals here to see that. But at some point you have to know when to fold em.  And these staunch advocates of a meer collectible can't see past their own greed.

Resentment is not a good look on you.

Rather than resentment, I read a deep philosophical theme here:

If we support the lifestyle of the FIRE movement, do we have a moral obligation to use our voices to speak toward replicable methods of achieving it over time. Because the traditional stock market, index fund route seems replicable over time (roughly a century of data), we feel comfortable growing our movement through investing using this method. And--because of the relatively short time frame and high volatility--we are much less secure in enouraging others to use crypto positions to reach FIRE.

I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

If philosophy is what you're looking for, consider:
The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts.
Bertrand Russell

Agreed.  The MMM audience, including myself, tends to be well-informed but rigid in their collective financial views.  We are predisposed to think the best way to obtain FIRE is to earn alot, live below our means, and invest heavily into traditional markets (S&P 500, REITS, Bonds, ect.).  Some people take this "best approach", which unites us, to the extremes and act as though it is the only approach.

Unevitably, when a Mustachian asks about crypto it instantly becomes controversial because some Mustachians explain why they believe it's not a bad idea to invest a small portion of their portfolio into it and other Mustachians attack them for trying to find shortcuts to the long, hard, but well-deserved journey to FIRE.  If you don't see the appeal to crypto that's fine, there is much more that unites us here.  However, you are being insulting when you personally target another Mustachian and dismiss their well-thought out strategy as a get rich quick scheme.  It is mean-spirited and intellectually dishonest.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 25, 2021, 12:26:05 PM
I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

Only you used the phrases "greedy fool" and "dim-witted" in this thread.

A personal attack isn't simply disagreeing with someone's opinion, even if that opinion is strongly held.

Yeah, no personal attack, B42 just holds a very strong opinion, like he does about basically everything.

Agree or disagree with him, that's fine. You can think his opinion is totally ridiculous if you want, and you are totally free to call him out on it, people often do when he gets dogmatic about things. But that wouldn't be considered a personal attack, just as his post singling out what one person has said also isn't a personal attack.

He's heavily criticized ideas, which is entirely fair play. People are totally entitled to criticize his ideas in return, but instead the rebuttals seem to be getting personal, which is kind of ironic.

I say this as someone who is not pro or anti crypto. I have no skin in this game, but what I do observe are reactive, sarcastic, defensive comments from one side more than the other.

That may be just a product of this forum being predominantly anti-crypto, so the crypto folks feel frustrated here. I don't know.

But as someone who is avidly reading along and trying to better understand the two sides and where the truth lies between them, I can say that B42 has been extremely effective in articulating their side of the debate and I keep wishing that someone on the pro-crypto side would really articulately pick apart his arguments in a way that really made sense to me.

However, perhaps this is not the forum to find that.

I'm waiting for that too - I'll get on any gravy train that i think has real long term traction.  I think i've proven that here -
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 25, 2021, 12:52:46 PM
I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

Only you used the phrases "greedy fool" and "dim-witted" in this thread.

A personal attack isn't simply disagreeing with someone's opinion, even if that opinion is strongly held.

Yeah, no personal attack, B42 just holds a very strong opinion, like he does about basically everything.

Agree or disagree with him, that's fine. You can think his opinion is totally ridiculous if you want, and you are totally free to call him out on it, people often do when he gets dogmatic about things. But that wouldn't be considered a personal attack, just as his post singling out what one person has said also isn't a personal attack.

He's heavily criticized ideas, which is entirely fair play. People are totally entitled to criticize his ideas in return, but instead the rebuttals seem to be getting personal, which is kind of ironic.

I say this as someone who is not pro or anti crypto. I have no skin in this game, but what I do observe are reactive, sarcastic, defensive comments from one side more than the other.

That may be just a product of this forum being predominantly anti-crypto, so the crypto folks feel frustrated here. I don't know.

But as someone who is avidly reading along and trying to better understand the two sides and where the truth lies between them, I can say that B42 has been extremely effective in articulating their side of the debate and I keep wishing that someone on the pro-crypto side would really articulately pick apart his arguments in a way that really made sense to me.

However, perhaps this is not the forum to find that.

I'm waiting for that too - I'll get on any gravy train that i think has real long term traction.  I think i've proven that here -

These things have been discussed ad nauseum here.  I am not going to dig it up but there was another thread from earlier in the year where you guitar, and Telecaster dismissed all the arguements for crypto.  Crypto has its pros and cons.  If your sound judgment tells you not to put a little skin in the game then it's best to just stay on the sidelines.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 25, 2021, 12:58:37 PM
I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

Only you used the phrases "greedy fool" and "dim-witted" in this thread.

A personal attack isn't simply disagreeing with someone's opinion, even if that opinion is strongly held.

Yeah, no personal attack, B42 just holds a very strong opinion, like he does about basically everything.

Agree or disagree with him, that's fine. You can think his opinion is totally ridiculous if you want, and you are totally free to call him out on it, people often do when he gets dogmatic about things. But that wouldn't be considered a personal attack, just as his post singling out what one person has said also isn't a personal attack.

He's heavily criticized ideas, which is entirely fair play. People are totally entitled to criticize his ideas in return, but instead the rebuttals seem to be getting personal, which is kind of ironic.

I say this as someone who is not pro or anti crypto. I have no skin in this game, but what I do observe are reactive, sarcastic, defensive comments from one side more than the other.

That may be just a product of this forum being predominantly anti-crypto, so the crypto folks feel frustrated here. I don't know.

But as someone who is avidly reading along and trying to better understand the two sides and where the truth lies between them, I can say that B42 has been extremely effective in articulating their side of the debate and I keep wishing that someone on the pro-crypto side would really articulately pick apart his arguments in a way that really made sense to me.

However, perhaps this is not the forum to find that.

I'm waiting for that too - I'll get on any gravy train that i think has real long term traction.  I think i've proven that here -

These things have been discussed ad nauseum here. I am not going to dig it up but there was another thread from earlier in the year where you guitar, and Telecaster dismissed all the arguements for crypto.  Crypto has its pros and cons.  If your sound judgment tells you not to put a little skin in the game then it's best to just stay on the sidelines.

The arguments for crypto haven't been dismissed . . . they've been debated and found wanting (repeatedly, and on many fronts).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on October 25, 2021, 01:02:53 PM
I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

Only you used the phrases "greedy fool" and "dim-witted" in this thread.

A personal attack isn't simply disagreeing with someone's opinion, even if that opinion is strongly held.

Yeah, no personal attack, B42 just holds a very strong opinion, like he does about basically everything.

Agree or disagree with him, that's fine. You can think his opinion is totally ridiculous if you want, and you are totally free to call him out on it, people often do when he gets dogmatic about things. But that wouldn't be considered a personal attack, just as his post singling out what one person has said also isn't a personal attack.

He's heavily criticized ideas, which is entirely fair play. People are totally entitled to criticize his ideas in return, but instead the rebuttals seem to be getting personal, which is kind of ironic.

I say this as someone who is not pro or anti crypto. I have no skin in this game, but what I do observe are reactive, sarcastic, defensive comments from one side more than the other.

That may be just a product of this forum being predominantly anti-crypto, so the crypto folks feel frustrated here. I don't know.

But as someone who is avidly reading along and trying to better understand the two sides and where the truth lies between them, I can say that B42 has been extremely effective in articulating their side of the debate and I keep wishing that someone on the pro-crypto side would really articulately pick apart his arguments in a way that really made sense to me.

However, perhaps this is not the forum to find that.

I'm waiting for that too - I'll get on any gravy train that i think has real long term traction.  I think i've proven that here -

These things have been discussed ad nauseum here.  I am not going to dig it up but there was another thread from earlier in the year where you guitar, and Telecaster dismissed all the arguements for crypto.  Crypto has its pros and cons.  If your sound judgment tells you not to put a little skin in the game then it's best to just stay on the sidelines.

That's not fair at all.

I am actively looking to understand crypto, I've been reading a bunch on it and feel like no matter how much I read, I can't make sense between the two sides.

I very much appreciate seeing arguments from both sides, and have no issue with someone staunchly arguing their point.

There are A LOT of us out there who want to better understand *both* sides.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 25, 2021, 01:18:18 PM
I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

Only you used the phrases "greedy fool" and "dim-witted" in this thread.

A personal attack isn't simply disagreeing with someone's opinion, even if that opinion is strongly held.

Yeah, no personal attack, B42 just holds a very strong opinion, like he does about basically everything.

Agree or disagree with him, that's fine. You can think his opinion is totally ridiculous if you want, and you are totally free to call him out on it, people often do when he gets dogmatic about things. But that wouldn't be considered a personal attack, just as his post singling out what one person has said also isn't a personal attack.

He's heavily criticized ideas, which is entirely fair play. People are totally entitled to criticize his ideas in return, but instead the rebuttals seem to be getting personal, which is kind of ironic.

I say this as someone who is not pro or anti crypto. I have no skin in this game, but what I do observe are reactive, sarcastic, defensive comments from one side more than the other.

That may be just a product of this forum being predominantly anti-crypto, so the crypto folks feel frustrated here. I don't know.

But as someone who is avidly reading along and trying to better understand the two sides and where the truth lies between them, I can say that B42 has been extremely effective in articulating their side of the debate and I keep wishing that someone on the pro-crypto side would really articulately pick apart his arguments in a way that really made sense to me.

However, perhaps this is not the forum to find that.

I'm waiting for that too - I'll get on any gravy train that i think has real long term traction.  I think i've proven that here -

These things have been discussed ad nauseum here.  I am not going to dig it up but there was another thread from earlier in the year where you guitar, and Telecaster dismissed all the arguements for crypto.  Crypto has its pros and cons.  If your sound judgment tells you not to put a little skin in the game then it's best to just stay on the sidelines.

That's not fair at all.

I am actively looking to understand crypto, I've been reading a bunch on it and feel like no matter how much I read, I can't make sense between the two sides.

I very much appreciate seeing arguments from both sides, and have no issue with someone staunchly arguing their point.

There are A LOT of us out there who want to better understand *both* sides.

What do you want to want to know? 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on October 25, 2021, 01:42:35 PM
What do you want to want to know?

The same thing I've been asking since the beginning of this thread: where does the truth lie between the two sides that tend to be quite extremely opposed?

What I find frustrating is that most pro crypto people argue as if it's just a given that crypto is the best thing ever, and that those who question it are just clueless, ignorant idiots.

This stance is hard to grasp since so many of the arguments from those against crypto sound quite informed and reasonable.

It's frustrating to read.

It doesn't help that I know a few people in the crypto tech world who don't invest in crypto coins themselves and even more who mount a lot of similar arguments as I see here against investing in hugely valued coins like Bitcoin.

I've got one "expert" saying Etherium is the only coin that makes sense to invest in, and yet another saying that despite some hiccups that EOS remains the "Etherium killer", and yet more saying that it's premature to heavily invest in any individual coins, except as pure speculation.

And then I have piles of really angry people on the internet basically calling everyone stupid for not buying Bitcoin.

It's fucking confusing.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 25, 2021, 03:51:45 PM
What do you want to want to know?

The same thing I've been asking since the beginning of this thread: where does the truth lie between the two sides that tend to be quite extremely opposed?

What I find frustrating is that most pro crypto people argue as if it's just a given that crypto is the best thing ever, and that those who question it are just clueless, ignorant idiots.

This stance is hard to grasp since so many of the arguments from those against crypto sound quite informed and reasonable.

It's frustrating to read.

It doesn't help that I know a few people in the crypto tech world who don't invest in crypto coins themselves and even more who mount a lot of similar arguments as I see here against investing in hugely valued coins like Bitcoin.

I've got one "expert" saying Etherium is the only coin that makes sense to invest in, and yet another saying that despite some hiccups that EOS remains the "Etherium killer", and yet more saying that it's premature to heavily invest in any individual coins, except as pure speculation.

And then I have piles of really angry people on the internet basically calling everyone stupid for not buying Bitcoin.

It's fucking confusing.

That's a really legitimate quandary! Quite interesting to hear the report of your crypto insiders, too. A key cautionary data point to my ears.

I know I'm not saying anything new here, but - the BTC attitude you see "piles" of seems like a motivated paradigm. A paradigm in that once you see the vision of BTC Shall Rule, everything fits into its gravity. Motivated in that, obviously, the inherent vision of rising wealth depends on acceptance by others at some point; acceptance makes it real, denial threatens the vision. It's only a store of value if people think it is. The feel seems a lot like MLM things that I've seen, except that the downline is replaced by acceptance of the BTC-centric future. And once you're in, breaking out requires a painful shift, so the stakes of denial get even higher, I guess. 

As far as the truth, I wonder too. It seems like kind of a Schrodinger's thing because it's not really determined yet. Yet the general picture seems clear-ish (??). There's something that might be of value, but exactly how and how much is unclear. The something's under feverish and varied development, like early autos (or 1600s tulip bulbs), while being both encouraged and obscured by the fever of excitement about the high financial value now ascribed to one of the early strains (BTC). Most of the what we see is the fever.

Unless people do end up accepting forever that BTC has value. Can't quite sort out the odds.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: solon on October 25, 2021, 04:09:31 PM
Could you all do me a favor? Suppose you were trying to summarize this thread for a CEO. You have to produce 3-4 good points for each side of the debate. Bonus points for using bullets. For example:

Pro Crypto

Anti Crypto



(I admit I haven't read through this thread. But it's so lengthy it seems like a quick summary might reset the debate and help everyone understand it better.)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on October 25, 2021, 04:14:45 PM
Could you all do me a favor? Suppose you were trying to summarize this thread for a CEO. You have to produce 3-4 good points for each side of the debate. Bonus points for using bullets. For example:

Pro Crypto
  • a really good argument
  • another really good argument
  • yet a third really good argument

Anti Crypto
  • a really good argument
  • another really good argument
  • yet a third really good argument



(I admit I haven't read through this thread. But it's so lengthy it seems like a quick summary might reset the debate and help everyone understand it better.)

From what I can tell the argument goes like this

Pro
"Something, something fiat, something, something gains, something something Bitcoin is legal currency in El Salvador"

Con

"Something, something crypto is actually useless, something, something, banned in China, something, something, slow and wasteful"
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 25, 2021, 04:57:04 PM
Could you all do me a favor? Suppose you were trying to summarize this thread for a CEO. You have to produce 3-4 good points for each side of the debate. Bonus points for using bullets. For example:

Pro Crypto
  • a really good argument
  • another really good argument
  • yet a third really good argument

Anti Crypto
  • a really good argument
  • another really good argument
  • yet a third really good argument



(I admit I haven't read through this thread. But it's so lengthy it seems like a quick summary might reset the debate and help everyone understand it better.)

Can't give you good, I'm here to learn. Common and semi-plausible from one reader's viewpoint:

Pro
1. Novel blockchain technology provides an electronic means of exchange and value storage with decentralized (aka nongovernmental) security, a unique value
2. Has been used to create electronic coins that rise in value at first, due to inherent features in the algorithm, but are limited in total number and thus can provide a store of value that's more reliable than fickle fiat currency. This can provide a useful store of value when governments inevitably inflate their currencies. Digital gold!
3. Realistically, the fact these are not inherently part of the existing financial system has offered a variety of opportunities that derive from avoiding financial regulation. For a while longer, these opportunities will be quite profitable.

Anti
4. The main use of decentralized crypto is evading government. That's of limited value, and as regulation increases, the value will fade away or at least be small. Advocates make bigger claims for it than this but none of them will really work.
5. The creation of individual "coins" uses large and increasing amounts of energy, making crypto destructive to the climate.
6. The original value rise was triggered by the algorithmic tricks from point 2 above, but it's primarily become a speculative bubble with no enduring value underneath - especially because new types of "coins" can be made at will, cheaply. Existing coins are far above any intrinsic value already and the bubble is going to pop.

PS. Argument zero is in the pro bucket. Namely, one day crypto will be fast reliable non-inflationary non-governmental electronic currency, solving the saver's problem that there is no risk free store of value, and until then it thrillingly rises in value. But the counterarguments that it can't do all that at once seem compelling enough that it's hard to count that as a "good" argument - it just looks like the most common.

(leaves to go buy popcorn with credit card)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 25, 2021, 05:16:05 PM
I'll give it a shot:

Pro:
-Existing ways of paying for stuff are expensive (ie credit card fees of 3-4%, wire transfer fees to/from foreign countries even higher) and crypto can allow people to pay each other, in theory at least, inexpensively and securely.
-Crypto can allow people to prove ownership of both digital and real-world items, and to create binding contracts without a third party.
-Crypto can prevent governments from debasing the value of fiat currency and causing hyperinflation crises.

Con:
-The leading cryptocurrency (bitcoin) has never succeeding in becoming a method of making payments as it is extremely volatile in value. This volatility, along with it's deflationary nature (fixed/limited supply of coins) make it unusable as a currency and it will never be used to make transactions in any meaningful way. Hence it has no utility and, at best, can function only as "digital gold" (or like a baseball card/collectible) as a store of value. No other cryptocurrencies, even those with better designs, have so far succeeded in becoming commonly used for commerce either.
-There are thousands of other cryptocurrencies, and a low bar to entry. There is nothing stopping national governments from creating their own cryptocurrencies and/or making any extant non-government currencies illegal (something that has already happened). This means that investing in any individual cryptocurrency is, at best, extremely risky as most or even all current versions will likely end up useless and valueless.
-The cryptocurrency world is rife with fraud (some would say it's mostly fraud) and existing values are propped up by orders of magnitude (ie tether) by said fraud.
-Crypto (or at least bitcoin) uses an incredible amount of energy and is an environmental disaster.

Hopefully that helps.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: JohnnyZ on October 25, 2021, 06:15:31 PM
Pro:
-Existing ways of paying for stuff are expensive (ie credit card fees of 3-4%, wire transfer fees to/from foreign countries even higher) and crypto can allow people to pay each other, in theory at least, inexpensively and securely.

 It may be my western privilege speaking, but I've never really understood that argument. I can wire money to any EU country without any fee, and I can use transferwise to send money in many countries with great exchange rates. It seems to me what we need is not a new currency, but a paypal without all the price-gouging.
 On the other hand, apparently you have to be an IT major, who has extensively researched exchanges and possibly bought some hardware, to be able to use bitcoin safely.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on October 25, 2021, 08:28:37 PM
I'll give it a shot:

Pro:
-Existing ways of paying for stuff are expensive (ie credit card fees of 3-4%, wire transfer fees to/from foreign countries even higher) and crypto can allow people to pay each other, in theory at least, inexpensively and securely.
-Crypto can allow people to prove ownership of both digital and real-world items, and to create binding contracts without a third party.
-Crypto can prevent governments from debasing the value of fiat currency and causing hyperinflation crises.

Con:
-The leading cryptocurrency (bitcoin) has never succeeding in becoming a method of making payments as it is extremely volatile in value. This volatility, along with it's deflationary nature (fixed/limited supply of coins) make it unusable as a currency and it will never be used to make transactions in any meaningful way. Hence it has no utility and, at best, can function only as "digital gold" (or like a baseball card/collectible) as a store of value. No other cryptocurrencies, even those with better designs, have so far succeeded in becoming commonly used for commerce either.
-There are thousands of other cryptocurrencies, and a low bar to entry. There is nothing stopping national governments from creating their own cryptocurrencies and/or making any extant non-government currencies illegal (something that has already happened). This means that investing in any individual cryptocurrency is, at best, extremely risky as most or even all current versions will likely end up useless and valueless.
-The cryptocurrency world is rife with fraud (some would say it's mostly fraud) and existing values are propped up by orders of magnitude (ie tether) by said fraud.
-Crypto (or at least bitcoin) uses an incredible amount of energy and is an environmental disaster.

Hopefully that helps.

-W

This seems a pretty good summary of both the strongest pro and strongest con arguments.

The only amendment I'd suggest is that I would extend the first "pro" point that not only do existing ways of paying for stuff not-in-person cost 3-4%, but they also create private gatekeeping of who does and does not get to receive payment via a relatively small number of corporations. This small set of companies may someday decide I'm not allowed to buy (legal) product A, pay for (legal) service B, or contribute to (legal) political cause C.

I first heard about bitcoin around the same time visa and mastercard had decided to cut off wikileaks from donations through credit card networks for choosing to publish leaked US diplomatic cables. It had never occurred to me that credit card companies could just decide a certain organization wouldn't be allowed to receive money. Was very formative to how I view the cryptocurrencies.

Also having had a fair bit of exposure to the Chinese banking system where there are various opaque, confusing, and changing rules about how much money you can take out and where and who you can send money to also probably played a role in how much more value I seem to put on the idea of being able to pay money to people without needing my bank to cooperate and agree with me than many other folks seem to value the same feature.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 25, 2021, 08:58:08 PM
Yeah, the one sentence summary, I think, is:

"Crypto has the amazing potential to improve the human condition and make everyone happier, wealthier, and more free, but bitcoin can't do that and is useless trash backed up by fraud."

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FrugalFukuoka on October 25, 2021, 10:54:59 PM
https://bitsonblocks.net/basics-bitcoins-blockchains-book/

I recommend this book to anyone serious about understanding any of the concepts discussed here. It's refreshing in the sense that the author is very knowledgeable and not trying to be persuasive.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 26, 2021, 07:36:49 AM
For those that wish to understand some aspects of the positive case for Bitcoin, I (again) recommend this piece (a 20-30 minute read):
https://www.lynalden.com/invest-in-bitcoin/ (https://www.lynalden.com/invest-in-bitcoin/)

To me, it comes across as balanced and objective, and the author seems knowledgeable and smart.

If someone can point me towards a similarly detailed, well-balanced and objective piece with an anti-Bitcoin conclusion, I would be very glad to read it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on October 26, 2021, 07:55:39 AM
For those that wish to understand some aspects of the positive case for Bitcoin, I (again) recommend this piece (a 20-30 minute read):
https://www.lynalden.com/invest-in-bitcoin/ (https://www.lynalden.com/invest-in-bitcoin/)

To me, it comes across as balanced and objective, and the author seems knowledgeable and smart.

If someone can point me towards a similarly detailed, well-balanced and objective piece with an anti-Bitcoin conclusion, I would be very glad to read it.

Yeah, that article doesn't say anything different than what has been said here, and it basically says that Bitcoin is appropriate as a small portion of an otherwise well diversified investment portfolio because of the speculative potential.

This is exactly in line with what basically everyone on this forum agrees with in terms of crypto as an investment. Some coins will explode in value, Bitcoin may continue to explode in value. A small portion of a well diversified portfolio invested in crypto is a reasonable way to capture some of that potential explosive growth.

I don't think anyone here would argue against that. I don't even think B42 would argue against anyone gambling a small part of their portfolio on a speculative investment, even if he believes the growth is based on nonsense. There's still potential money to be made in nonsense.

That's why I asked the question early on, if I'm not concerned about FOMO or speculation, is there any logical reason that I should be invested in crypto at this time, and the response from both sides was "not really".

I personally have an interesting perspective, because I'm very interested in understanding, I don't hold an anti-crypto position, but I have zero FOMO, so I'm not looking at it from an individual investment perspective.

I'm just trying to cut through the bullshit. And there is A TON of bullshit. ESPECIALLY from the pro-crypto side.

I'm sorry, but objectively, I have never seen more fucking nonsense than I have read and heard from tons and tons of morons who are intensely bullish on crypto.

Like the article you cited, the most rational, and reasonable perspectives I've seen that are pro-crypto have been very conservative in their investment recommendations.

I have yet to see a compelling source that recommends anything beyond a modest, speculative play.

Because I keep seeing what I'm hearing from the kind of people who are currently advising governments on future use of blockchain. The money in new inventions is almost never in the inventions, it's in the businesses who figure out how to use the inventions.

So the more I learn about this, the more I'm becoming convinced that individual coins are not the optimal crypto play, but that there are no ideal plays for individual consumers at this point. So small, speculative coin purchases remain the most reasonable bet for people with FOMO.

Exactly as that article states.

As always though, I am not at all confident in my position, and am very open to learning how my interpretation is wrong. I'm just REALLY struggling to find high quality pro-crypto content that says anything other than what you've already posted.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 26, 2021, 09:03:53 AM
Has anyone done a study of "new crypto coins" and their performance after 3 months or 12 months?  They have a significant chance of going nowhere, like the "venture capital" investing of the crypto world.  Very early, very risky investments.  I'd be curious if their gains are worth the coins that go to zero - especially compared to BTC or ETH.

I think the biggest gap between "pro crypto" and "anti crypto" is the time frame.  If you point to the future, you can make a case for what cryptocurrencies could become.  But "anti crypto" can point to the present, where not much has been done.

If Bitcoin's market cap was turned into a public U.S. company, it would land at #5 on the S&P 500, between Facebook and Amazon.  It would be +50% larger than Visa and Mastercard, combined.  Do you rely on Facebook or Bitcoin more?  Spend with Visa or Bitcoin more?  Market cap is a point against Bitcoin.

Maybe the best way to decide for yourselves is to look at the past 10 years of Bitcoin.  There's the Lightning Network for faster, more efficient transactions.  The potential for "smart contracts", but it's still a work in progress.  Adoption of Bitcoin into futures markets and large holdings by billionaires.  In the past 10 years, is that enough to justify Bitcoin's price or not?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 26, 2021, 09:21:07 AM
I got this email today from Venmo:
    
"Got a few bucks? You could use it to buy crypto.   
    
Did you know you can put that money sitting in your Venmo account to good use? You could use it to buy Bitcoin, Ethereum, and more in a few taps!"

There's also an amazing graphic of a dollar dissolving and turning into some kind of coin with a weird symbol on it.

-W

 
 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 26, 2021, 10:13:31 AM
For those that wish to understand some aspects of the positive case for Bitcoin, I (again) recommend this piece (a 20-30 minute read):
https://www.lynalden.com/invest-in-bitcoin/ (https://www.lynalden.com/invest-in-bitcoin/)

To me, it comes across as balanced and objective, and the author seems knowledgeable and smart.

If someone can point me towards a similarly detailed, well-balanced and objective piece with an anti-Bitcoin conclusion, I would be very glad to read it.

Yeah, that article doesn't say anything different than what has been said here, and it basically says that Bitcoin is appropriate as a small portion of an otherwise well diversified investment portfolio because of the speculative potential.

This is exactly in line with what basically everyone on this forum agrees with in terms of crypto as an investment. Some coins will explode in value, Bitcoin may continue to explode in value. A small portion of a well diversified portfolio invested in crypto is a reasonable way to capture some of that potential explosive growth.

I don't think anyone here would argue against that. I don't even think B42 would argue against anyone gambling a small part of their portfolio on a speculative investment, even if he believes the growth is based on nonsense. There's still potential money to be made in nonsense.

That's why I asked the question early on, if I'm not concerned about FOMO or speculation, is there any logical reason that I should be invested in crypto at this time, and the response from both sides was "not really".

I personally have an interesting perspective, because I'm very interested in understanding, I don't hold an anti-crypto position, but I have zero FOMO, so I'm not looking at it from an individual investment perspective.

I'm just trying to cut through the bullshit. And there is A TON of bullshit. ESPECIALLY from the pro-crypto side.

I'm sorry, but objectively, I have never seen more fucking nonsense than I have read and heard from tons and tons of morons who are intensely bullish on crypto.

Like the article you cited, the most rational, and reasonable perspectives I've seen that are pro-crypto have been very conservative in their investment recommendations.

I have yet to see a compelling source that recommends anything beyond a modest, speculative play.

Because I keep seeing what I'm hearing from the kind of people who are currently advising governments on future use of blockchain. The money in new inventions is almost never in the inventions, it's in the businesses who figure out how to use the inventions.

So the more I learn about this, the more I'm becoming convinced that individual coins are not the optimal crypto play, but that there are no ideal plays for individual consumers at this point. So small, speculative coin purchases remain the most reasonable bet for people with FOMO.

Exactly as that article states.

As always though, I am not at all confident in my position, and am very open to learning how my interpretation is wrong. I'm just REALLY struggling to find high quality pro-crypto content that says anything other than what you've already posted.

Like all investments, crypto is speculative.  I don't think anyone would say crypto isn't. 

I don't know any of the "pro-crypto" Mustachians that advocate for more than putting a small portion of their portfolio into crypto.  In fact, I don't tell anyone to buy it.  I can tell you that I personally only ever put in a very small portion of my own disposable income in crypto since 2017 and, while I feel Bitcoin has steadily become stronger and stronger with each year, I have no plans to change that.  So I would certainly not advocate for anyone putting anything more than a modent amount into crypto.  Personally, only 3% of my disposable income has gone into crypto since 2017; most of that went in when noone was talking about crypto (2018-2019) and almost all of it went into Bitcoin or Ethereum.  Like you, I read up on crypto.  Like you, I was turned off by the moonboys.  Like you, I was even more turned off by the altcoin shillers.  My sentiments are the same today than they were then.

Where we differ is that I determined that I like many of the characteristics of bitcoin that people here pass disparagments on: 21m cap, immutabie public Ledger, consensus design, POW security, thousands of developers working on bitcoin and side projects built on top of bitcoin (e.g. lightning network), it's track record of perseverance over years and track record of only improving, growing utility, and it's blossoming into a recognized asset class.  I made the determination that I wanted to see bitcoin to succeed and I wanted to be apart of it so I bought some and continued to read about it and frequent bitcoin forums.

Then I learned about ethereum and all the cool things people were doing with ethereum's smart contracts at the time.  I saw value in that. Then I learned about oracles on etheruem and how Eth3  will open doors that I didnt think were possible.  I saw even more value in Etheruem and by connection; bitcoin.

That said, I am truly glad you took the time to study it and make your own determination.  I am good with us being united on the other 94% if our sound portfolios (I have another 3% of my money tied into something that is non-crypto but pure speculative/hobby that I am too embarrassed to discuss!).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 26, 2021, 10:15:59 AM
I got this email today from Venmo:
    
"Got a few bucks? You could use it to buy crypto.   
    
Did you know you can put that money sitting in your Venmo account to good use? You could use it to buy Bitcoin, Ethereum, and more in a few taps!"

There's also an amazing graphic of a dollar dissolving and turning into some kind of coin with a weird symbol on it.

-W

You should see how hard Interactive Brokers is pushing crypto. Giant quote tables appear on your main screen. Messages appear in your inbox. Emails are sent weekly. The message is, "you're missing out and this investment is totally legitimate - on par with index funds!". If it all comes crashing down, expect class action lawsuits.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 26, 2021, 10:22:52 AM
You should see how hard Interactive Brokers is pushing crypto. Giant quote tables appear on your main screen. Messages appear in your inbox. Emails are sent weekly. The message is, "you're missing out and this investment is totally legitimate - on par with index funds!". If it all comes crashing down, expect class action lawsuits.

It feels like end-stage pyramid scheme/MLM stuff, where there aren't many investors/suckers left so you have to try harder and harder to rope more in.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 26, 2021, 10:28:35 AM
For those that wish to understand some aspects of the positive case for Bitcoin, I (again) recommend this piece (a 20-30 minute read):
https://www.lynalden.com/invest-in-bitcoin/ (https://www.lynalden.com/invest-in-bitcoin/)

To me, it comes across as balanced and objective, and the author seems knowledgeable and smart.

If someone can point me towards a similarly detailed, well-balanced and objective piece with an anti-Bitcoin conclusion, I would be very glad to read it.

Yeah, that article doesn't say anything different than what has been said here, and it basically says that Bitcoin is appropriate as a small portion of an otherwise well diversified investment portfolio because of the speculative potential.

This is exactly in line with what basically everyone on this forum agrees with in terms of crypto as an investment. Some coins will explode in value, Bitcoin may continue to explode in value. A small portion of a well diversified portfolio invested in crypto is a reasonable way to capture some of that potential explosive growth.

I don't think anyone here would argue against that. I don't even think B42 would argue against anyone gambling a small part of their portfolio on a speculative investment, even if he believes the growth is based on nonsense. There's still potential money to be made in nonsense.

The article does add a lot of context and background to some of the headline issues already discussed here, and it's a clear answer to the Topic question.

That's not my understanding. The article concludes with a positive recommendation. I think the anti consensus here is that you should steer clear (plus some varying opinions about those that invest so little that win/lose makes no difference anyway).

That's why I asked the question early on, if I'm not concerned about FOMO or speculation, is there any logical reason that I should be invested in crypto at this time, and the response from both sides was "not really".

I personally have an interesting perspective, because I'm very interested in understanding, I don't hold an anti-crypto position, but I have zero FOMO, so I'm not looking at it from an individual investment perspective.

I'm just trying to cut through the bullshit. And there is A TON of bullshit. ESPECIALLY from the pro-crypto side.

I'm sorry, but objectively, I have never seen more fucking nonsense than I have read and heard from tons and tons of morons who are intensely bullish on crypto.

Like the article you cited, the most rational, and reasonable perspectives I've seen that are pro-crypto have been very conservative in their investment recommendations.

I have yet to see a compelling source that recommends anything beyond a modest, speculative play.

Modest ? I agree. There is much uncertainty here.
Speculative ? I agree, but it's speculation based on some sound and detailed reasoning, as opposed to just some crazy hopeful punt.

Because I keep seeing what I'm hearing from the kind of people who are currently advising governments on future use of blockchain. The money in new inventions is almost never in the inventions, it's in the businesses who figure out how to use the inventions.

So the more I learn about this, the more I'm becoming convinced that individual coins are not the optimal crypto play, but that there are no ideal plays for individual consumers at this point. So small, speculative coin purchases remain the most reasonable bet for people with FOMO.

Exactly as that article states.
as that article states . . . specifically for Bitcoin - and including reasons why Bitcoin over other crypto.

And not just FOMO. For me personally, as a little (potential) insurance against devalued fiat / inflation / pumped up markets; all of which = risk to my primary conventional stash / income.

As always though, I am not at all confident in my position, and am very open to learning how my interpretation is wrong. I'm just REALLY struggling to find high quality pro-crypto content that says anything other than what you've already posted.

That's fair enough - I too have many doubts. The posts and the article have covered quite a wide range - is there a specific area that has been overlooked ?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 26, 2021, 10:41:30 AM


And not just FOMO. For me personally, as a little (potential) insurance against devalued fiat / inflation / pumped up markets; all of which = risk to my primary conventional stash / income.



whats the baseline for me to know if crypto is a pumped up market today or not and how this is insurance against that?  The last time the market crash BTC fell further than the market.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on October 26, 2021, 11:04:14 AM
Like all investments, crypto is speculative.  I don't think anyone would say crypto isn't. 

I don't know any of the "pro-crypto" Mustachians that advocate for more than putting a small portion of their portfolio into crypto.  In fact, I don't tell anyone to buy it.  I can tell you that I personally only ever put in a very small portion of my own disposable income in crypto since 2017 and, while I feel Bitcoin has steadily become stronger and stronger with each year, I have no plans to change that.  So I would certainly not advocate for anyone putting anything more than a modent amount into crypto.  Personally, only 3% of my disposable income has gone into crypto since 2017; most of that went in when noone was talking about crypto (2018-2019) and almost all of it went into Bitcoin or Ethereum.  Like you, I read up on crypto.  Like you, I was turned off by the moonboys.  Like you, I was even more turned off by the altcoin shillers.  My sentiments are the same today than they were then.

Where we differ is that I determined that I like many of the characteristics of bitcoin that people here pass disparagments on: 21m cap, immutabie public Ledger, consensus design, POW security, thousands of developers working on bitcoin and side projects built on top of bitcoin (e.g. lightning network), it's track record of perseverance over years and track record of only improving, growing utility, and it's blossoming into a recognized asset class.  I made the determination that I wanted to see bitcoin to succeed and I wanted to be apart of it so I bought some and continued to read about it and frequent bitcoin forums.

Then I learned about ethereum and all the cool things people were doing with ethereum's smart contracts at the time.  I saw value in that. Then I learned about oracles on etheruem and how Eth3  will open doors that I didnt think were possible.  I saw even more value in Etheruem and by connection; bitcoin.

That said, I am truly glad you took the time to study it and make your own determination.  I am good with us being united on the other 94% if our sound portfolios (I have another 3% of my money tied into something that is non-crypto but pure speculative/hobby that I am too embarrassed to discuss!).

I haven't made my own conclusions though, I am completely clueless as to where I stand on crypto. That's why I'm so confused and value well thought out perspectives of any sort.

I recently contemplated a speculative real estate investment and was left equally ambivalent.

But I do like to try and understand things.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 26, 2021, 11:36:27 AM
And not just FOMO. For me personally, as a little (potential) insurance against devalued fiat / inflation / pumped up markets; all of which = risk to my primary conventional stash / income.

whats the baseline for me to know if crypto is a pumped up market today or not and how this is insurance against that? 

The last time the market crash BTC fell further than the market.

I'm not sure there is a baseline. However, I see good potential for further growth in Bitcoin - the trend is towards greater adoption and it seems to be gathering breadth. Despite it's spectacular growth, it doesn't seem pumped-up to me. I made no claim that my Bitcoin investment is insurance against a Bitcoin crash (??).

A fair point that has been made before (in this topic, I think). My expectation is that Bitcoin will become (is becoming ?) less speculative and more of an established store-of-value as it matures.
There is undoubtedly a fair amount of nervous money in Bitcoin currently, and that's prone to jumping ship at the first sign of trouble in any market. Store-of-value money is likely to be more resilient and negatively-correlated to the stock markets - more like gold, yet very different to gold in terms of continued growth potential.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 26, 2021, 11:39:04 AM
And not just FOMO. For me personally, as a little (potential) insurance against devalued fiat / inflation / pumped up markets; all of which = risk to my primary conventional stash / income.

whats the baseline for me to know if crypto is a pumped up market today or not and how this is insurance against that? 

The last time the market crash BTC fell further than the market.

I'm not sure there is a baseline. However, I see good potential for further growth in Bitcoin - the trend is towards greater adoption and it seems to be gathering breadth. Despite it's spectacular growth, it doesn't seem pumped-up to me. I made no claim that my Bitcoin investment is insurance against a Bitcoin crash (??).

A fair point that has been made before (in this topic, I think). My expectation is that Bitcoin will become (is becoming ?) less speculative and more of an established store-of-value as it matures.
There is undoubtedly a fair amount of nervous money in Bitcoin currently, and that's prone to jumping ship at the first sign of trouble in any market. Store-of-value money is likely to be more resilient and negatively-correlated to the stock markets - more like gold, yet very different to gold in terms of continued growth potential.

you compare it to gold and yet it has yet to do anything like gold except consume massive amounts of energy being mined. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 26, 2021, 11:58:10 AM
And not just FOMO. For me personally, as a little (potential) insurance against devalued fiat / inflation / pumped up markets; all of which = risk to my primary conventional stash / income.

whats the baseline for me to know if crypto is a pumped up market today or not and how this is insurance against that? 

The last time the market crash BTC fell further than the market.

I'm not sure there is a baseline. However, I see good potential for further growth in Bitcoin - the trend is towards greater adoption and it seems to be gathering breadth. Despite it's spectacular growth, it doesn't seem pumped-up to me. I made no claim that my Bitcoin investment is insurance against a Bitcoin crash (??).

A fair point that has been made before (in this topic, I think). My expectation is that Bitcoin will become (is becoming ?) less speculative and more of an established store-of-value as it matures.
There is undoubtedly a fair amount of nervous money in Bitcoin currently, and that's prone to jumping ship at the first sign of trouble in any market. Store-of-value money is likely to be more resilient and negatively-correlated to the stock markets - more like gold, yet very different to gold in terms of continued growth potential.

you compare it to gold and yet it has yet to do anything like gold except consume massive amounts of energy being mined. 

I'm expecting that Bitcoin will become (is becoming ?) more like gold.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 26, 2021, 12:04:23 PM
And not just FOMO. For me personally, as a little (potential) insurance against devalued fiat / inflation / pumped up markets; all of which = risk to my primary conventional stash / income.

whats the baseline for me to know if crypto is a pumped up market today or not and how this is insurance against that? 

The last time the market crash BTC fell further than the market.

I'm not sure there is a baseline. However, I see good potential for further growth in Bitcoin - the trend is towards greater adoption and it seems to be gathering breadth. Despite it's spectacular growth, it doesn't seem pumped-up to me. I made no claim that my Bitcoin investment is insurance against a Bitcoin crash (??).

A fair point that has been made before (in this topic, I think). My expectation is that Bitcoin will become (is becoming ?) less speculative and more of an established store-of-value as it matures.
There is undoubtedly a fair amount of nervous money in Bitcoin currently, and that's prone to jumping ship at the first sign of trouble in any market. Store-of-value money is likely to be more resilient and negatively-correlated to the stock markets - more like gold, yet very different to gold in terms of continued growth potential.

you compare it to gold and yet it has yet to do anything like gold except consume massive amounts of energy being mined. 

I'm expecting that Bitcoin will become (is becoming ?) more like gold.
[/quote]

so your fundamental bet is on BTC being something collected or shall we just call it what it is a collectible.  Which have throughout history been very very almost extremely volatile with respect to how people feel about it and typically come in fads.  So you're picking one of the OLDEST BEST performing collectibles and saying yeah its going to be that.  Feel like you've been in a confirmation bias machine.  With all the things that have been collected through out time or just even all the stocks in the world making that proclamation is like trying to find a needle in a haystack. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 26, 2021, 12:08:25 PM
Just put it all in the new eNaira cryptocurrency out of Nigeria. What could go wrong?

https://finance.yahoo.com/video/nigeria-launches-cryptocurrency-enaira-amid-155450308.html (https://finance.yahoo.com/video/nigeria-launches-cryptocurrency-enaira-amid-155450308.html)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 26, 2021, 12:15:02 PM
Just put it all in the new eNaira cryptocurrency out of Nigeria. What could go wrong?

https://finance.yahoo.com/video/nigeria-launches-cryptocurrency-enaira-amid-155450308.html (https://finance.yahoo.com/video/nigeria-launches-cryptocurrency-enaira-amid-155450308.html)

Just the other day I was contacted by a Nigerian prince.  He needed access to my accounts to move some money.  I really would have lost out if he just used cryptocurrency instead!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 26, 2021, 01:07:25 PM
I have a flawed get rich scheme - hack Satoshi's wallets.  Now if the founder of Bitcoin had used only one wallet to store 1.1 million Bitcoin, that wallet would be worth about $68 billion.  If you set a computer working to hack it, and it succeeded... that computer would earn about one penny an hour, because it would take 0.65 billion years.

But the wallets are are more spread out, like the one that moved 616 BTC to another location ($38 million USD at current prices).  I wonder if Satoshi moved $38 million BTC into a brokerage account, and can now take our loans against it?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 26, 2021, 01:07:38 PM
Like all investments, crypto is speculative.

Technically, I don't believe that's accurate. "Speculative", as I understand it, means an investor expects to profit by timing price fluctuations correctly. And, as you've stated, this is the only way to make money by purchasing bitcoin—hoping you can sell it to someone else later for more money.

This is substantially different than other things people typically consider investments. Stocks pay (or have the expectation to eventually pay) dividends. Bonds have yields. There is a very obvious and "win-win" system whereby investors profit even if they never need to sell their shares to someone at a higher price later.

Where we differ is that I determined that I like many of the characteristics of bitcoin that people here pass disparagments on: 21m cap, immutabie public Ledger, consensus design, POW security, thousands of developers working on bitcoin and side projects built on top of bitcoin (e.g. lightning network), it's track record of perseverance over years and track record of only improving, growing utility, and it's blossoming into a recognized asset class.  I made the determination that I wanted to see bitcoin to succeed and I wanted to be apart of it so I bought some and continued to read about it and frequent bitcoin forums.

Many of us pass disparagements on these characteristics because these are characteristics that are detrimental. Let's go over them:

1. 21m cap. A fixed money supply will lead to deflation in a growing economy. Given the classical quantity theory formula 𝑀𝑉=𝑃𝑌, where M=the money supply, V = the velocity of money, P = the price, and Y = the quantity of real goods. Assuming M stays constant (21M bitcoins), and Y increases (a growing economy), you see that the price or the velocity. must compensate. By virtually any theory of economics, from Austrian to Keynesian, this is a very bad idea.
2. Immutable public ledger. Crypto enthusiasts like to mention this as evidence that Bitcoin is "secure". In my mind, this is tantamount to lying. It depends on a really bizarre definition of "secure" that misleads people into thinking they're less likely to be scammed if they transact in Bitcoin. But in reality, because there are no trusted 3rd parties, and because the ledger is immutable, if someone tricks you into a fraudulent transaction, there is nothing you can do about it. Credit card payments, by contrast, can be stopped and reversed. The immutability doesn't reduce fraud—it just shifts who suffers the consequences: to the consumer. Some merchants, and certainly most swindlers definitely like the immutable ledger idea, though.
3. Consensus design. I'm curious what you find beneficial here?
4. POW security. Proof of Work is another thing Bitcoin (rightfully, imo) gets attacked for. Proof of Work is the deliberately wasteful scheme by which Bitcoin solves the double spending problem. This problem only exists in authorityless distributed systems. So it's unclear what you like about PoW. Much like a Segway, it is a neat invention. But... I'm not convinced that it's particularly useful for much.

I think the remaining points can be summed up as "other people are spending time/money on it, therefore..." aka argumentum ad populum—so no point in arguing that one.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 26, 2021, 01:50:49 PM
Like all investments, crypto is speculative.

Technically, I don't believe that's accurate. "Speculative", as I understand it, means an investor expects to profit by timing price fluctuations correctly. And, as you've stated, this is the only way to make money by purchasing bitcoin—hoping you can sell it to someone else later for more money.

This is substantially different than other things people typically consider investments. Stocks pay (or have the expectation to eventually pay) dividends. Bonds have yields. There is a very obvious and "win-win" system whereby investors profit even if they never need to sell their shares to someone at a higher price later.

Where we differ is that I determined that I like many of the characteristics of bitcoin that people here pass disparagments on: 21m cap, immutabie public Ledger, consensus design, POW security, thousands of developers working on bitcoin and side projects built on top of bitcoin (e.g. lightning network), it's track record of perseverance over years and track record of only improving, growing utility, and it's blossoming into a recognized asset class.  I made the determination that I wanted to see bitcoin to succeed and I wanted to be apart of it so I bought some and continued to read about it and frequent bitcoin forums.

Many of us pass disparagements on these characteristics because these are characteristics that are detrimental. Let's go over them:

1. 21m cap. A fixed money supply will lead to deflation in a growing economy. Given the classical quantity theory formula 𝑀𝑉=𝑃𝑌, where M=the money supply, V = the velocity of money, P = the price, and Y = the quantity of real goods. Assuming M stays constant (21M bitcoins), and Y increases (a growing economy), you see that the price or the velocity. must compensate. By virtually any theory of economics, from Austrian to Keynesian, this is a very bad idea.
2. Immutable public ledger. Crypto enthusiasts like to mention this as evidence that Bitcoin is "secure". In my mind, this is tantamount to lying. It depends on a really bizarre definition of "secure" that misleads people into thinking they're less likely to be scammed if they transact in Bitcoin. But in reality, because there are no trusted 3rd parties, and because the ledger is immutable, if someone tricks you into a fraudulent transaction, there is nothing you can do about it. Credit card payments, by contrast, can be stopped and reversed. The immutability doesn't reduce fraud—it just shifts who suffers the consequences: to the consumer. Some merchants, and certainly most swindlers definitely like the immutable ledger idea, though.
3. Consensus design. I'm curious what you find beneficial here?
4. POW security. Proof of Work is another thing Bitcoin (rightfully, imo) gets attacked for. Proof of Work is the deliberately wasteful scheme by which Bitcoin solves the double spending problem. This problem only exists in authorityless distributed systems. So it's unclear what you like about PoW. Much like a Segway, it is a neat invention. But... I'm not convinced that it's particularly useful for much.

I think the remaining points can be summed up as "other people are spending time/money on it, therefore..." aka argumentum ad populum—so no point in arguing that one.

Speculating means you buy it with the goal of making money or not losing opportunity cost in the process.  We speculate everytime we buy a stock or and index fund; its not inherently harmful nor unmustachian. 

Bitcoin is an asset like gold.  It's fixed supply is a net positive because investors have the confidence that it's supply won't fluctuate at the whim of a central authority.  You can use bitcoin as a currency if you want, and some do, but I would wager most view it as an asset and have done so for atleast the past 7 years.

The immutable public Ledger means your coins can't be double spent.  This is a counter to wire fraud and also facilitates trustless transactions.  This has its downside, which some may say is an upside (including me), because it also allows government to seize funds (i.e. colonial pipeline) and enforce tax laws.  Alot of crypto proponents don't like these last two thing but I see it all as a positive.

Consensus is good because it, in theory, results in more careful, calculated, and popular updates.  The alternative is having legislators pass unpopular laws in the dead of night that the people don't want.  This happens all the time.

POW is not wasted energy because that energy ensures transactions are secure and immutable.  Moreover, if you don't like POW then crypto is not a zero sum game.  You can chose to back other cryptos that don't have POW. 

Finally, you aren't going to convince me that it's irrelevant that there are thousands of developers working on improving or building services ontop of bitcoin.  These developers help scale bitcoin.  It's only going to get better, cheaper, quicker, and more accessible from here. 

Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 26, 2021, 01:56:03 PM
And not just FOMO. For me personally, as a little (potential) insurance against devalued fiat / inflation / pumped up markets; all of which = risk to my primary conventional stash / income.

whats the baseline for me to know if crypto is a pumped up market today or not and how this is insurance against that? 

The last time the market crash BTC fell further than the market.

I'm not sure there is a baseline. However, I see good potential for further growth in Bitcoin - the trend is towards greater adoption and it seems to be gathering breadth. Despite it's spectacular growth, it doesn't seem pumped-up to me. I made no claim that my Bitcoin investment is insurance against a Bitcoin crash (??).

A fair point that has been made before (in this topic, I think). My expectation is that Bitcoin will become (is becoming ?) less speculative and more of an established store-of-value as it matures.
There is undoubtedly a fair amount of nervous money in Bitcoin currently, and that's prone to jumping ship at the first sign of trouble in any market. Store-of-value money is likely to be more resilient and negatively-correlated to the stock markets - more like gold, yet very different to gold in terms of continued growth potential.

you compare it to gold and yet it has yet to do anything like gold except consume massive amounts of energy being mined. 

I'm expecting that Bitcoin will become (is becoming ?) more like gold.

so your fundamental bet is on BTC being something collected or shall we just call it what it is a collectible.  Which have throughout history been very very almost extremely volatile with respect to how people feel about it and typically come in fads.  So you're picking one of the OLDEST BEST performing collectibles and saying yeah its going to be that.

No, you're misquoting me again. I clearly said I expect it to become something more like gold.
For clarity, my view (and that of many others) is that the Bitcoin price is likely to become less positively-correlated with the stock market and will tend towards negative-correlation - more like gold.

Feel like you've been in a confirmation bias machine.

Nope, I've seen, read and heard many different views - and I'm interested in all of them. Almost every one of my posts here includes a caveat of uncertainty and an acknowledgement of risk. Contrast that to the conviction and certainty expressed by many here, with regard to a novel technology and an inherently uncertain future.

I probably come across as more pro-Bitcoin than I really am. I am pro-Bitcoin, and I've disagreed with many of the anti concerns raised here but I haven't disagreed with all of them. The deflationary currency issue is interesting and I'm endeavouring to learn more about it.

With all the things that have been collected through out time or just even all the stocks in the world making that proclamation is like trying to find a needle in a haystack.

Well, maybe and maybe not. For someone that is positive about the future of crypto, there are legitimate 'network effect' arguments that put Bitcoin in a strong position vs the competition. See the article I linked previously if you're interested in the detail.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 26, 2021, 02:00:41 PM
Like all investments, crypto is speculative.

Technically, I don't believe that's accurate. "Speculative", as I understand it, means an investor expects to profit by timing price fluctuations correctly. And, as you've stated, this is the only way to make money by purchasing bitcoin—hoping you can sell it to someone else later for more money.

This is substantially different than other things people typically consider investments. Stocks pay (or have the expectation to eventually pay) dividends. Bonds have yields. There is a very obvious and "win-win" system whereby investors profit even if they never need to sell their shares to someone at a higher price later.

Where we differ is that I determined that I like many of the characteristics of bitcoin that people here pass disparagments on: 21m cap, immutabie public Ledger, consensus design, POW security, thousands of developers working on bitcoin and side projects built on top of bitcoin (e.g. lightning network), it's track record of perseverance over years and track record of only improving, growing utility, and it's blossoming into a recognized asset class.  I made the determination that I wanted to see bitcoin to succeed and I wanted to be apart of it so I bought some and continued to read about it and frequent bitcoin forums.

Many of us pass disparagements on these characteristics because these are characteristics that are detrimental. Let's go over them:

1. 21m cap. A fixed money supply will lead to deflation in a growing economy. Given the classical quantity theory formula 𝑀𝑉=𝑃𝑌, where M=the money supply, V = the velocity of money, P = the price, and Y = the quantity of real goods. Assuming M stays constant (21M bitcoins), and Y increases (a growing economy), you see that the price or the velocity. must compensate. By virtually any theory of economics, from Austrian to Keynesian, this is a very bad idea.
2. Immutable public ledger. Crypto enthusiasts like to mention this as evidence that Bitcoin is "secure". In my mind, this is tantamount to lying. It depends on a really bizarre definition of "secure" that misleads people into thinking they're less likely to be scammed if they transact in Bitcoin. But in reality, because there are no trusted 3rd parties, and because the ledger is immutable, if someone tricks you into a fraudulent transaction, there is nothing you can do about it. Credit card payments, by contrast, can be stopped and reversed. The immutability doesn't reduce fraud—it just shifts who suffers the consequences: to the consumer. Some merchants, and certainly most swindlers definitely like the immutable ledger idea, though.
3. Consensus design. I'm curious what you find beneficial here?
4. POW security. Proof of Work is another thing Bitcoin (rightfully, imo) gets attacked for. Proof of Work is the deliberately wasteful scheme by which Bitcoin solves the double spending problem. This problem only exists in authorityless distributed systems. So it's unclear what you like about PoW. Much like a Segway, it is a neat invention. But... I'm not convinced that it's particularly useful for much.

I think the remaining points can be summed up as "other people are spending time/money on it, therefore..." aka argumentum ad populum—so no point in arguing that one.

Speculating means you buy it with the goal of making money or not losing opportunity cost in the process.  We speculate everytime we buy a stock or and index fund; its not inherently harmful nor unmustachian. 

Bitcoin is an asset like gold.  It's fixed supply is a net positive because investors have the confidence that it's supply won't fluctuate at the whim of a central authority.  You can use bitcoin as a currency if you want, and some do, but I would wager most view it as an asset and have done so for atleast the past 7 years.

The immutable public Ledger means your coins can't be double spent.  This is a counter to wire fraud and also facilitates trustless transactions.  This has its downside, which some may say is an upside (including me), because it also allows government to seize funds (i.e. colonial pipeline) and enforce tax laws.  Alot of crypto proponents don't like these last two thing but I see it all as a positive.

Consensus is good because it, in theory, results in more careful, calculated, and popular updates.  The alternative is having legislators pass unpopular laws in the dead of night that the people don't want.  This happens all the time.

POW is not wasted energy because that energy ensures transactions are secure and immutable.  Moreover, if you don't like POW then crypto is not a zero sum game.  You can chose to back other cryptos that don't have POW. 

Finally, you aren't going to convince me that it's irrelevant that there are thousands of developers working on improving or building services ontop of bitcoin.  These developers help scale bitcoin.  It's only going to get better, cheaper, quicker, and more accessible from here.

so is it like gold or is it maybe going to become like gold b/c you've stated both in your analysis.  or is it like beanie babies of which many people produced lots of extra crap for including storage of and many sold at one point for many times over value today.  Same with sneakers today.  there are a finite number of air jordan's created in a given year there never will be any more of that specific shoe released in that specific vintage.  people produce lots of extra crap for sneakers too.  There is also only one mona lisa.  through out time there has been many many many ways to store value - you've selected that this will be gold got it ... but then you said maybe it will be ... but then you said it is.  man i'm confused.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 26, 2021, 02:09:53 PM
Speculating means you buy it with the goal of making money or not losing opportunity cost in the process.  We speculate everytime we buy a stock or and index fund; its not inherently harmful nor unmustachian.

You can use whatever word and/or definition you like. But at the end of the day businesses (stocks) have value because they earn profits, and in turn pay you money (in dividends). This also means there is something "there" to price them. Bitcoin is different in that it is 100% pure speculation. There is no revenue. This is substantially different from investments advocated by this community, generally, and much more similar to meme stocks. What's odd is we don't see many "What do you think about adding a low % of GME allocation?" threads...

Bitcoin is an asset like gold.  It's fixed supply is a net positive because investors have the confidence that it's supply won't fluctuate at the whim of a central authority.  You can use bitcoin as a currency if you want, and some do, but I would wager most view it as an asset and have done so for atleast the past 7 years.

And let the goal post shift game begin! Either Bitcoin is a currency or an asset. It cannot be both: the attributes that make a good asset necessarily make it a bad currency, and the attributes that make for a good currency necessarily make for a poor asset. That you—and frankly most—crypto enthusiasts fail to grasp this very basic rule of finance is part of the reason many of us struggle to take you seriously.

The immutable public Ledger means your coins can't be double spent.

And then there's this stuff. Like that's not at all the point of the immutable ledger. The immutable/public ledger is for audibility. Immutable public ledgers (merkle trees) have been widely used in software development for ~40 years. They are very cheap and efficient. Proof of Work is the mechanism that prevents double-spending. Proof of Work is necessarily VERY inefficient and expensive.

This is a counter to wire fraud and also facilitates trustless transactions.  This has its downside, which some may say is an upside (including me), because it also allows government to seize funds (i.e. colonial pipeline) and enforce tax laws.  Alot of crypto proponents don't like these last two thing but I see it all as a positive.

These are problems very few of us on this board will ever have to deal with. As I've repeatedly agreed: Bitcoin's single actual use-case is regulatory arbitrage. I think it's important to understand this is not a technical feat. This is only a temporary "too new to have yet been regulated" point in time. This use-case will evaporate eventually.

Consensus is good because it, in theory, results in more careful, calculated, and popular updates.  The alternative is having legislators pass unpopular laws in the dead of night that the people don't want.  This happens all the time.

But Bitcoin is digital gold, not a currency, right? What legislators are passing gold laws?! Or have you goal-post shifted back to currency chat already? Tough to keep track.

POW is not wasted energy because that energy ensures transactions are secure and immutable.  Moreover, if you don't like POW then crypto is not a zero sum game.  You can chose to back other cryptos that don't have POW. 

Again, PoW is only for solving the double spending problem. Immutability is easily solved with very basic cryptography. And "secure" is meaningless without mentioning an attack-vector (I'm guessing you mean mutating the values, which... again, is very simple and cheap to do).

As for zero sum game... I'm not sure if we agree on what that phrase means?! Every cryptocurrency I'm familiar with is, well, worse than a zero-sum game, they're negative-sum games. But I digress..

Finally, you aren't going to convince me that it's irrelevant that there are thousands of developers working on improving or building services ontop of bitcoin.  These developers help scale bitcoin.  It's only going to get better, cheaper, quicker, and more accessible from here.

It's not irrelevant, but it's not a good reason to get into a whole lot of anything. It's basically the old "if everybody else was jumping off a bridge..." wisdom your parents may've mentioned as a child.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 26, 2021, 02:16:29 PM
Like all investments, crypto is speculative.

Technically, I don't believe that's accurate. "Speculative", as I understand it, means an investor expects to profit by timing price fluctuations correctly. And, as you've stated, this is the only way to make money by purchasing bitcoin—hoping you can sell it to someone else later for more money.

This is substantially different than other things people typically consider investments. Stocks pay (or have the expectation to eventually pay) dividends. Bonds have yields. There is a very obvious and "win-win" system whereby investors profit even if they never need to sell their shares to someone at a higher price later.

Where we differ is that I determined that I like many of the characteristics of bitcoin that people here pass disparagments on: 21m cap, immutabie public Ledger, consensus design, POW security, thousands of developers working on bitcoin and side projects built on top of bitcoin (e.g. lightning network), it's track record of perseverance over years and track record of only improving, growing utility, and it's blossoming into a recognized asset class.  I made the determination that I wanted to see bitcoin to succeed and I wanted to be apart of it so I bought some and continued to read about it and frequent bitcoin forums.

Many of us pass disparagements on these characteristics because these are characteristics that are detrimental. Let's go over them:

1. 21m cap. A fixed money supply will lead to deflation in a growing economy. Given the classical quantity theory formula 𝑀𝑉=𝑃𝑌, where M=the money supply, V = the velocity of money, P = the price, and Y = the quantity of real goods. Assuming M stays constant (21M bitcoins), and Y increases (a growing economy), you see that the price or the velocity. must compensate. By virtually any theory of economics, from Austrian to Keynesian, this is a very bad idea.
2. Immutable public ledger. Crypto enthusiasts like to mention this as evidence that Bitcoin is "secure". In my mind, this is tantamount to lying. It depends on a really bizarre definition of "secure" that misleads people into thinking they're less likely to be scammed if they transact in Bitcoin. But in reality, because there are no trusted 3rd parties, and because the ledger is immutable, if someone tricks you into a fraudulent transaction, there is nothing you can do about it. Credit card payments, by contrast, can be stopped and reversed. The immutability doesn't reduce fraud—it just shifts who suffers the consequences: to the consumer. Some merchants, and certainly most swindlers definitely like the immutable ledger idea, though.
3. Consensus design. I'm curious what you find beneficial here?
4. POW security. Proof of Work is another thing Bitcoin (rightfully, imo) gets attacked for. Proof of Work is the deliberately wasteful scheme by which Bitcoin solves the double spending problem. This problem only exists in authorityless distributed systems. So it's unclear what you like about PoW. Much like a Segway, it is a neat invention. But... I'm not convinced that it's particularly useful for much.

I think the remaining points can be summed up as "other people are spending time/money on it, therefore..." aka argumentum ad populum—so no point in arguing that one.

Speculating means you buy it with the goal of making money or not losing opportunity cost in the process.  We speculate everytime we buy a stock or and index fund; its not inherently harmful nor unmustachian. 

Bitcoin is an asset like gold.  It's fixed supply is a net positive because investors have the confidence that it's supply won't fluctuate at the whim of a central authority.  You can use bitcoin as a currency if you want, and some do, but I would wager most view it as an asset and have done so for atleast the past 7 years.

The immutable public Ledger means your coins can't be double spent.  This is a counter to wire fraud and also facilitates trustless transactions.  This has its downside, which some may say is an upside (including me), because it also allows government to seize funds (i.e. colonial pipeline) and enforce tax laws.  Alot of crypto proponents don't like these last two thing but I see it all as a positive.

Consensus is good because it, in theory, results in more careful, calculated, and popular updates.  The alternative is having legislators pass unpopular laws in the dead of night that the people don't want.  This happens all the time.

POW is not wasted energy because that energy ensures transactions are secure and immutable.  Moreover, if you don't like POW then crypto is not a zero sum game.  You can chose to back other cryptos that don't have POW. 

Finally, you aren't going to convince me that it's irrelevant that there are thousands of developers working on improving or building services ontop of bitcoin.  These developers help scale bitcoin.  It's only going to get better, cheaper, quicker, and more accessible from here.

so is it like gold or is it maybe going to become like gold b/c you've stated both in your analysis.  or is it like beanie babies of which many people produced lots of extra crap for including storage of and many sold at one point for many times over value today.  Same with sneakers today.  there are a finite number of air jordan's created in a given year there never will be any more of that specific shoe released in that specific vintage.  people produce lots of extra crap for sneakers too.  There is also only one mona lisa.  through out time there has been many many many ways to store value - you've selected that this will be gold got it ... but then you said maybe it will be ... but then you said it is.  man i'm confused.

Yeah I am confused too because I don't know where you got that from.  I've received many criticism but I've never been called inconsistent.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 26, 2021, 02:18:24 PM
Speculating means you buy it with the goal of making money or not losing opportunity cost in the process.  We speculate everytime we buy a stock or and index fund; its not inherently harmful nor unmustachian.

This is not the financial usage as I understand it, and it doesn't seem to correspond with anything I can find online:

"In the world of finance, speculation, or speculative trading, refers to the act of conducting a financial transaction that has substantial risk of losing value but also holds the expectation of a significant gain or other major value." - https://www.investopedia.com/terms/s/speculation.asp (https://www.investopedia.com/terms/s/speculation.asp)

"Speculation involves trading a financial instrument involving high risk, in expectation of significant returns. The motive is to take maximum advantage from fluctuations in the market.

Speculators are prevalent in the markets where price movements of securities are highly frequent and volatile. They play very important roles in the markets by absorbing excess risk and providing much needed liquidity in the market by buying and selling when other investors don't participate."  - https://economictimes.indiatimes.com/definition/speculation (https://economictimes.indiatimes.com/definition/speculation)

"Speculation - Purchasing risky investments that present the possibility of large profits, but also pose a higher-than-average possibility of loss. A profitable strategy over the long term if undertaken by professionals who hedge their portfolios to control the amount of risk." - https://financial-dictionary.thefreedictionary.com/speculation (https://financial-dictionary.thefreedictionary.com/speculation)

"In finance, speculation is also the practice of engaging in risky financial transactions in an attempt to profit from short term fluctuations in the market value of a tradable financial instrument—rather than attempting to profit from the underlying financial attributes embodied in the instrument such as value addition, return on investment, or dividends.

Speculators play one of four primary roles in financial markets, along with hedgers, who engage in transactions to offset some other pre-existing risk, arbitrageurs who seek to profit from situations where fungible instruments trade at different prices in different market segments, and investors who seek profit through long-term ownership of an instrument's underlying attributes" - https://en.wikipedia.org/wiki/Speculation (https://en.wikipedia.org/wiki/Speculation)



I believe that most people on this forum advocate for investment rather than speculation.  They don't seem to be equivalent terms.  Speculation is a risky short term thing, that depends upon quick market changes . . . investment is less risky and involves holding the investment for extended periods of times (often decades or longer).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 26, 2021, 02:30:39 PM
Speculating means you buy it with the goal of making money or not losing opportunity cost in the process.  We speculate everytime we buy a stock or and index fund; its not inherently harmful nor unmustachian.

You can use whatever word and/or definition you like. But at the end of the day businesses (stocks) have value because they pay you money (in dividends). This also means there is something "there" to price them. Bitcoin is different in that it is 100% pure speculation. There is no revenue. This is substantially different from investments advocated by this community, generally, and much more similar to meme stocks.

Bitcoin is an asset like gold.  It's fixed supply is a net positive because investors have the confidence that it's supply won't fluctuate at the whim of a central authority.  You can use bitcoin as a currency if you want, and some do, but I would wager most view it as an asset and have done so for atleast the past 7 years.

And let the goal post shift game begin! Either Bitcoin is a currency or an asset. It cannot be both: the attributes that make a good asset necessarily make it a bad currency, and the attributes that make for a good currency necessarily make for a poor asset. That you—and frankly most—crypto enthusiasts fail to grasp this very basic rule of finance is part of the reason many of us struggle to take you seriously.

The immutable public Ledger means your coins can't be double spent.

And then there's this stuff. Like that's not at all the point of the immutable ledger. The immutable/public ledger is for audibility. Immutable public ledgers (merkle trees) have been widely used in software development for ~40 years. They are very cheap and efficient. Proof of Work is the mechanism that prevents double-spending. Proof of Work is necessarily VERY inefficient and expensive.

This is a counter to wire fraud and also facilitates trustless transactions.  This has its downside, which some may say is an upside (including me), because it also allows government to seize funds (i.e. colonial pipeline) and enforce tax laws.  Alot of crypto proponents don't like these last two thing but I see it all as a positive.

These are problems very few of us on this board will ever have to deal with. As I've repeatedly agreed: Bitcoin's single actual use-case is regulatory arbitrage. I think it's important to understand this is not a technical feat. This is only a temporary "too new to have yet been regulated" point in time. This use-case will evaporate eventually.

Consensus is good because it, in theory, results in more careful, calculated, and popular updates.  The alternative is having legislators pass unpopular laws in the dead of night that the people don't want.  This happens all the time.

But Bitcoin is digital gold, not a currency, right? What legislators are passing gold laws?! Or have you goal-post shifted back to currency chat already? Tough to keep track.

POW is not wasted energy because that energy ensures transactions are secure and immutable.  Moreover, if you don't like POW then crypto is not a zero sum game.  You can chose to back other cryptos that don't have POW. 

Again, PoW is only for solving the double spending problem. Immutability is easily solved with very basic cryptography. And "secure" is meaningless without mentioning an attack-vector (I'm guessing you mean mutating the values, which... again, is very simple and cheap to do).

As for zero sum game... I'm not sure if we agree on what that phrase means?! Every cryptocurrency I'm familiar with is, well, worse than a zero-sum game, they're negative-sum games. But I digress..

Finally, you aren't going to convince me that it's irrelevant that there are thousands of developers working on improving or building services ontop of bitcoin.  These developers help scale bitcoin.  It's only going to get better, cheaper, quicker, and more accessible from here.

It's not irrelevant, but it's not a good reason to get into a whole lot of anything. It's basically the old "if everybody else was jumping off a bridge..." wisdom your parents may've mentioned as a child.

Not all stocks pay dividends.  People buy stocks because they think it's a better place to grow their money than cash.  That's a form of speculation.  Is there more risk is speculating in crypto than the s&p 500 index - well yeah.  That doesn't mean an element of speculation is not in common between the two.

Truthfully, I don't want to convince you to change your views.  You do your thing and I'll do mine and only time will tell which of us is right.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 26, 2021, 02:36:48 PM
Not all stocks pay dividends.  People buy stocks because they think it's a better place to grow their money than cash.  That's a form of speculation.  Is there more risk is speculating in crypto than the s&p 500 index - well yeah.  That doesn't mean an element of speculation is not in common between the two.

Some stocks (e.g., Amazon) don't pay dividends because they reinvest their profits into the company. There is 100% an expectation that eventually Amazon will pay profits out as dividends. That is what stock is: entitlement to a company's assets and profits in proportion to how much of their stock you own.

Some other stocks (e.g., GME) are absolutely just speculative nightmares, no question. There is absolutely some grey between the black/white of "speculation" vs "investment". But... you were the one that made the assertion "all investment is speculation". I think that's obviously pretty bogus—there is a massive divide between investing in the S&P500 and investing in Bitcoin.

Truthfully, I don't want to convince you to change your views.  You do your thing and I'll do mine and only time will tell which of us is right.

Ay, that's cool. For your sake, I hope I'm wrong :) Let's mark our calendars to check this thread in 2031 and see what happens?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 26, 2021, 03:22:46 PM
People buy stocks because they think it's a better place to grow their money than cash. 

This, I think, sums it up. There are 2 types of people:

-People who want to save up *money* and not have it lose value, ie who want to grow their money by having cash or cash equivalents.

-People who just want to use money as a tool and have little interest in cash because their wealth is in other assets.

For example, I have low/middle 7 figure net worth, but I probably only have 2% of that in actual dollars (not physical cash) - and I only have that much because I want to have some ready money on hand in case I need to put a new roof on my house and buy a car at the same time or something and I don't want to deal with the hassle of selling stock to accomplish that. If I was less lazy and cared about optimizing more I would move most of that cash into something (stocks, bonds, RE, etc). Money is like a hammer - as long as I have enough hammers to pound the nails I need to pound, I really don't want more. If my on-hand cash loses 5 or 10 or even 20% of it's value in a year, I really don't care all that much.

Then there are the people with thousands of dollars in their walls/mattress, or a bunch of gold in their safe deposit box. People buy the collectors coins out of Parade magazine or off an ad on Fox News. Having that *money* physically in their possession is necessary for their sense of security. Inflation feels like an attack on their very being.

Folks who want money to never lose value predate bitcoin of course, we call them goldbugs. It's a personality type. Honestly it's not a mindset I really understand, but it is what it is.

So to a meaningful degree, some of us are never going to see eye to eye on this.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: thesis on October 26, 2021, 03:47:05 PM
I remember reading the first few pages of this thread when it first started, and now I've read the last few pages.

Most of the people I know who are buying cryptocurrencies are basically treating them like penny stocks, hoping to buy super low, thereafter to experience high growth and a massive net gain. "To the moon" is one of the most annoying phrases I have heard in this regard.

But this, in itself, is not an indictment of investing in crypto.

Moreover, a lot of libertarian-types are drawn to crytpo currencies because their "de-centralized" use as a store of value seems to appeal to their "fight the government" attitude.

But this, in itself, is not an indictment of investing in crypto.

I'm with Malcat on this one. I may have mentioned before, I keep hoping to see some core principle of understanding emerge from the debate, but I'm not seeing it either way.

What I am slightly concerned about is that financial institutions realize there is money to be made selling these "coins" to the masses, and as others have mentioned, they are pushing this very heavily. Having some crypto has become quite fashionable. But if crypto starts to be used as financial backing more and more, could it actually trigger a recession if it all implodes? This is pure speculation on my part, and it's not the reason I don't own any crytpo, but think of how people got fancy with mortgage-backed securities and how that all imploded in the great recession. Are there now crytpo-backed securities? The popularity it has experienced is not a good thing, IMO, especially since most investors are just trying to chase the gains of Bitcoin, just like how stock investors pine over how much Apple stock would now be worth if they had bought when it first went public (or at least, you get the idea).

I guess my point is, it's not my problem until it's everyone's problem (potentially). As it is, I don't like jumping on fads (or at least, if I'm being deeply honest, I don't like to be thought of as having jumped on any fads), and I don't yet have a compelling reason to invest in crytpo, so I'm comfortably on the outside at this point.

(I'm not overly committed to these views, just wanted to add something)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FLBiker on October 27, 2021, 09:44:14 AM
You should see how hard Interactive Brokers is pushing crypto. Giant quote tables appear on your main screen. Messages appear in your inbox. Emails are sent weekly. The message is, "you're missing out and this investment is totally legitimate - on par with index funds!". If it all comes crashing down, expect class action lawsuits.

It feels like end-stage pyramid scheme/MLM stuff, where there aren't many investors/suckers left so you have to try harder and harder to rope more in.

-W

Paypal too.  I just received some money from my dad and got this message: "Did you know your money can now do even more in PayPal?  Buy, sell, and hold crypto right from your PayPal Balance account."  Feels like the cab driver giving me stock tips...

Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on October 27, 2021, 10:20:31 AM
I've been following this thread since it began. I have read every single post. However, I haven't read every single word of every single post. When someone starts saying the same thing again, I tend to scroll to the bottom, looking for new information.

From my perspective, the pro-crypto side lacks consistency. It's all over the place. I'm less convinced.

From the anti-crypto side, there tends to be more consistency and logic.

This doesn't mean one side is right and one side is wrong. Maybe one side consists of better communicators? That is possible. I sometimes have great ideas, but do a poor job of explaining them.

We have beaten this topic to death, but I would like to attempt to add or expand on a topic that should get more attention. It seems like 90% of the discussions for pro-crypto are based on the technology alone. As a Social Psychologist, let's not forget the behavioral component of holding an investment. As many of you know, I love real estate. However, in 2002-2006, we had a large increase in unqualified buyers. The end result was a real estate crash, even though the asset itself was fundamentally correct. They were not poorly built houses that were falling down. The flaw was the people who owned them and their behavior.

This is not a knock on the people on this forum. This applies more to people outside of this forum. When I look at the people who own bitcoin and other types of crypto, it scares the shit out of me.

For example, I have a family member that believes he owns more than a million dollars in crypto. They want to make an offer on 2-3 million dollar house with the crypto. The real estate agent suggested that they convert their crypto into real U.S. currency and then make the offer in U.S. currency. The family member then comes up with really confusing explanations on why this is not possible. They get upset and blast others for "not understanding crypto"
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 27, 2021, 10:25:50 AM
Has anyone said this before?

No matter how many ponzi schemes I invest in, I am not diversifying my portfolio.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 27, 2021, 10:51:07 AM
I've been following this thread since it began. I have read every single post. However, I haven't read every single word of every single post. When someone starts saying the same thing again, I tend to scroll to the bottom, looking for new information.

From my perspective, the pro-crypto side lacks consistency. It's all over the place. I'm less convinced.

From the anti-crypto side, there tends to be more consistency and logic.

This doesn't mean one side is right and one side is wrong. Maybe one side consists of better communicators? That is possible. I sometimes have great ideas, but do a poor job of explaining them.

We have beaten this topic to death, but I would like to attempt to add or expand on a topic that should get more attention. It seems like 90% of the discussions for pro-crypto are based on the technology alone. As a Social Psychologist, let's not forget the behavioral component of holding an investment. As many of you know, I love real estate. However, in 2002-2006, we had a large increase in unqualified buyers. The end result was a real estate crash, even though the asset itself was fundamentally correct. They were not poorly built houses that were falling down. The flaw was the people who owned them and their behavior.

This is not a knock on the people on this forum. This applies more to people outside of this forum. When I look at the people who own bitcoin and other types of crypto, it scares the shit out of me.

For example, I have a family member that believes he owns more than a million dollars in crypto. They want to make an offer on 2-3 million dollar house with the crypto. The real estate agent suggested that they convert their crypto into real U.S. currency and then make the offer in U.S. currency. The family member then comes up with really confusing explanations on why this is not possible. They get upset and blast others for "not understanding crypto"

probably thinks he avoids the taxes he should be paying on his gains by using it to buy the house b/c its money right -
Title: Re: What do you think of adding a low% of crypto allocation
Post by: solon on October 27, 2021, 11:10:21 AM
I've been following this thread since it began. I have read every single post. However, I haven't read every single word of every single post. When someone starts saying the same thing again, I tend to scroll to the bottom, looking for new information.

From my perspective, the pro-crypto side lacks consistency. It's all over the place. I'm less convinced.

From the anti-crypto side, there tends to be more consistency and logic.

This doesn't mean one side is right and one side is wrong. Maybe one side consists of better communicators? That is possible. I sometimes have great ideas, but do a poor job of explaining them.

We have beaten this topic to death, but I would like to attempt to add or expand on a topic that should get more attention. It seems like 90% of the discussions for pro-crypto are based on the technology alone. As a Social Psychologist, let's not forget the behavioral component of holding an investment. As many of you know, I love real estate. However, in 2002-2006, we had a large increase in unqualified buyers. The end result was a real estate crash, even though the asset itself was fundamentally correct. They were not poorly built houses that were falling down. The flaw was the people who owned them and their behavior.

This is not a knock on the people on this forum. This applies more to people outside of this forum. When I look at the people who own bitcoin and other types of crypto, it scares the shit out of me.

For example, I have a family member that believes he owns more than a million dollars in crypto. They want to make an offer on 2-3 million dollar house with the crypto. The real estate agent suggested that they convert their crypto into real U.S. currency and then make the offer in U.S. currency. The family member then comes up with really confusing explanations on why this is not possible. They get upset and blast others for "not understanding crypto"

What do you mean he "believes" he owns? Is he not sure? Ownership should be pretty easy to know.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on October 27, 2021, 11:29:01 AM
I've been following this thread since it began. I have read every single post. However, I haven't read every single word of every single post. When someone starts saying the same thing again, I tend to scroll to the bottom, looking for new information.

From my perspective, the pro-crypto side lacks consistency. It's all over the place. I'm less convinced.

From the anti-crypto side, there tends to be more consistency and logic.

This doesn't mean one side is right and one side is wrong. Maybe one side consists of better communicators? That is possible. I sometimes have great ideas, but do a poor job of explaining them.

We have beaten this topic to death, but I would like to attempt to add or expand on a topic that should get more attention. It seems like 90% of the discussions for pro-crypto are based on the technology alone. As a Social Psychologist, let's not forget the behavioral component of holding an investment. As many of you know, I love real estate. However, in 2002-2006, we had a large increase in unqualified buyers. The end result was a real estate crash, even though the asset itself was fundamentally correct. They were not poorly built houses that were falling down. The flaw was the people who owned them and their behavior.

This is not a knock on the people on this forum. This applies more to people outside of this forum. When I look at the people who own bitcoin and other types of crypto, it scares the shit out of me.

For example, I have a family member that believes he owns more than a million dollars in crypto. They want to make an offer on 2-3 million dollar house with the crypto. The real estate agent suggested that they convert their crypto into real U.S. currency and then make the offer in U.S. currency. The family member then comes up with really confusing explanations on why this is not possible. They get upset and blast others for "not understanding crypto"

What do you mean he "believes" he owns? Is he not sure? Ownership should be pretty easy to know.

It's fake crypto that is not worth anything. Literally zero. He fell for a scam but is in denial. He owns it. He believes it to be worth over one million. It's actually worth zero.

I'm guessing some random guy in India created a website claiming to sell "the new crypto". He probably posts the price and artificially increases the price every few months on his website. It always goes up. You just send him a few thousand dollars and you will be worth millions in a few short months. The problem is that if you ever try to cash out your crypto, it cannot be exchanged for real money. You just need to convince someone else to accept it as real currency. 

According to him, everyone else is an idiot because they will not accept his crypto for real currency. The conversations are incredibly bizarre.

 

Title: Re: What do you think of adding a low% of crypto allocation
Post by: JohnnyZ on October 27, 2021, 11:31:47 AM
I've been following this thread since it began. I have read every single post. However, I haven't read every single word of every single post. When someone starts saying the same thing again, I tend to scroll to the bottom, looking for new information.

From my perspective, the pro-crypto side lacks consistency. It's all over the place. I'm less convinced.

From the anti-crypto side, there tends to be more consistency and logic.

This doesn't mean one side is right and one side is wrong. Maybe one side consists of better communicators? That is possible. I sometimes have great ideas, but do a poor job of explaining them.

I for one have found this thread very interesting, though probably no one has changed their mind, but there was some interesting discussion and from the crypto side, even if I don't find they very persuasive, finally some actual arguments instead of "I made so much money LMAO have fun staying poor" and "if you're against crypto you don't understand it" the same few posters contributed in previous threads.


For example, I have a family member that believes he owns more than a million dollars in crypto. They want to make an offer on 2-3 million dollar house with the crypto. The real estate agent suggested that they convert their crypto into real U.S. currency and then make the offer in U.S. currency. The family member then comes up with really confusing explanations on why this is not possible. They get upset and blast others for "not understanding crypto"

 Maybe they can buy something in El Salvador instead?
 Seriously though, this is not about "understanding crypto"; why would the seller accept when they don't even know how much they'll get? It could be up or down 20% before they're even done with the papers.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 27, 2021, 11:32:29 AM
I've been following this thread since it began. I have read every single post. However, I haven't read every single word of every single post. When someone starts saying the same thing again, I tend to scroll to the bottom, looking for new information.

From my perspective, the pro-crypto side lacks consistency. It's all over the place. I'm less convinced.

From the anti-crypto side, there tends to be more consistency and logic.

This doesn't mean one side is right and one side is wrong. Maybe one side consists of better communicators? That is possible. I sometimes have great ideas, but do a poor job of explaining them.

We have beaten this topic to death, but I would like to attempt to add or expand on a topic that should get more attention. It seems like 90% of the discussions for pro-crypto are based on the technology alone. As a Social Psychologist, let's not forget the behavioral component of holding an investment. As many of you know, I love real estate. However, in 2002-2006, we had a large increase in unqualified buyers. The end result was a real estate crash, even though the asset itself was fundamentally correct. They were not poorly built houses that were falling down. The flaw was the people who owned them and their behavior.

This is not a knock on the people on this forum. This applies more to people outside of this forum. When I look at the people who own bitcoin and other types of crypto, it scares the shit out of me.

For example, I have a family member that believes he owns more than a million dollars in crypto. They want to make an offer on 2-3 million dollar house with the crypto. The real estate agent suggested that they convert their crypto into real U.S. currency and then make the offer in U.S. currency. The family member then comes up with really confusing explanations on why this is not possible. They get upset and blast others for "not understanding crypto"

What do you mean he "believes" he owns? Is he not sure? Ownership should be pretty easy to know.

Maybe it's in one of these companies that is lending "your" BTC to several borrowers, but you have to buy in from a non-US address because <reasons>, with the unspoken reason that the firm can't legally operate in the US? And the practical one that you sent your original investment out using a fake non-US computer address, now you have no ability to compel its return?

I think I've read that getting your money out of those is tricky.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on October 27, 2021, 11:54:25 AM
Lost a decade long friendship because I tried to smile and nod, but just couldn't for too long and told a guy exactly what I thought of his day-trading Dogecoin scheme - that coin is pretty stupid, but not nearly the most stupid coin out there. Also found myself unable to ignore him when he escalated to mining and was lying about the price of electricity in our city. So much of this stuff is obviously a scam. Guaranteed 10% per day returns. Your chosen platform's website is one page with no details at all? C'mon man. This is an unregulated space and the hype this time around is all people who still don't understand the technology in the slightest but are experiencing big time FOMO.

And I had this written up yesterday much lengthier - but as an anti-crypto person, I have absolutely nothing to prove. This is just another thing in the sea of ideas that might become something worthwhile or more likely will prove to be nothing of consequence ever. If I'm wrong, I'll benefit via my index funds all the same. With a side bonus of being able to benefit from almost anything else that becomes as huge as the pro-crypto crowd claims this will be. All without having to waste a minute thinking about it (I'm still working on actually doing this last part, but at least I know I don't have any reason to think about this). I might bring up some points on why not to get into crypto because, as with any investment and particularly with one that is very new to you, and even more particularly with one that is very new to pretty much everyone, you should be starting from a place of deep skepticism.

Pro-crypto crowd, on the other hand, actually needs to really prove the case because they're the ones making the outlandish claim and trying to convince people to buy into this stuff. And super important to make a good case right now because you really need those greater fools if you want to exchange your crypto for anything useful. So far, the arguments are just not very convincing, particularly to those of us who got to hear all of them back in 2018 or whenever that last big BTC runup happened, and the time before that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on October 27, 2021, 12:17:05 PM
I've been following this thread since it began. I have read every single post. However, I haven't read every single word of every single post. When someone starts saying the same thing again, I tend to scroll to the bottom, looking for new information.

From my perspective, the pro-crypto side lacks consistency. It's all over the place. I'm less convinced.

From the anti-crypto side, there tends to be more consistency and logic.

This doesn't mean one side is right and one side is wrong. Maybe one side consists of better communicators? That is possible. I sometimes have great ideas, but do a poor job of explaining them.


I for one have found this thread very interesting, though probably no one has changed their mind, but there was some interesting discussion and from the crypto side, even if I don't find they very persuasive, finally some actual arguments instead of "I made so much money LMAO have fun staying poor" and "if you're against crypto you don't understand it" the same few posters contributed in previous threads.


For example, I have a family member that believes he owns more than a million dollars in crypto. They want to make an offer on 2-3 million dollar house with the crypto. The real estate agent suggested that they convert their crypto into real U.S. currency and then make the offer in U.S. currency. The family member then comes up with really confusing explanations on why this is not possible. They get upset and blast others for "not understanding crypto"

 Maybe they can buy something in El Salvador instead?
 Seriously though, this is not about "understanding crypto"; why would the seller accept when they don't even know how much they'll get? It could be up or down 20% before they're even done with the papers.


It's not real. It's fake and it's a scam. Someone created a fake website with fake crypto and sells it to conspiracy theory followers that have a poor understanding of economics.

I am obviously doing a poor job of explaining myself. For that, I apologize.

Here is my best analogy.

Please send me $2,000 in U.S. currency and I will send you $2,000 in my crypto currency. I guarantee you that it will be worth $80,000 in two months. However, you can never actually collect real money from me. Then I go off and list a bunch of excuses.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 27, 2021, 12:24:46 PM
It's fake crypto that is not worth anything. Literally zero. He fell for a scam but is in denial. He owns it. He believes it to be worth over one million. It's actually worth zero.
... The problem is that if you ever try to cash out your crypto, it cannot be exchanged for real money. You just need to convince someone else to accept it as real currency. 
Is the fake crypto he bought on this list of 6800+ crypto currencies?
https://coinmarketcap.com/

That's the angle I would use to pressure his belief.  If this crypto has been so profitable, why isn't it on the list with 6800 other crypto currencies?  Some of those have gone up +1000% as well, so the special returns are no reason to keep it off the list.


You could also ask "which crypto exchange do you use?", or ask him to look up the crypto exchange himself, on this list of 300:
https://coinmarketcap.com/rankings/exchanges/

Almost all of those exchanges have a market called "BTCUSDT" - the most popular market by far.  As a buyer, you pay USDT and buy BTC.  As a seller, you sell BTC and get USDT.  Almost every crypto exchange will have USDT.  Which means this guy should be able to sell his crypto for USDT.  If it's a scam, there will be no way to trade his crypto for USDT.  It's a really bad sign if he can't convert his crypto holdings into USDT.

(International crypto exchanges aren't allowed to transact in USD.  The U.S. Treasury Department will come after them with anti-money laundering rules, and can force their bank to drop them.  Banks do not want to be sanctioned by the U.S. - they can be dropped off the international banking system.  But those rules don't apply to USDT, so crypto exchanges use that, instead)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on October 27, 2021, 01:54:52 PM
It's fake crypto that is not worth anything. Literally zero. He fell for a scam but is in denial. He owns it. He believes it to be worth over one million. It's actually worth zero.
... The problem is that if you ever try to cash out your crypto, it cannot be exchanged for real money. You just need to convince someone else to accept it as real currency. 
Is the fake crypto he bought on this list of 6800+ crypto currencies?
https://coinmarketcap.com/

That's the angle I would use to pressure his belief.  If this crypto has been so profitable, why isn't it on the list with 6800 other crypto currencies?  Some of those have gone up +1000% as well, so the special returns are no reason to keep it off the list.


You could also ask "which crypto exchange do you use?", or ask him to look up the crypto exchange himself, on this list of 300:
https://coinmarketcap.com/rankings/exchanges/

Almost all of those exchanges have a market called "BTCUSDT" - the most popular market by far.  As a buyer, you pay USDT and buy BTC.  As a seller, you sell BTC and get USDT.  Almost every crypto exchange will have USDT.  Which means this guy should be able to sell his crypto for USDT.  If it's a scam, there will be no way to trade his crypto for USDT.  It's a really bad sign if he can't convert his crypto holdings into USDT.

(International crypto exchanges aren't allowed to transact in USD.  The U.S. Treasury Department will come after them with anti-money laundering rules, and can force their bank to drop them.  Banks do not want to be sanctioned by the U.S. - they can be dropped off the international banking system.  But those rules don't apply to USDT, so crypto exchanges use that, instead)

"It's a really bad sign if he can't convert his crypto holdings into USDT."

I agree that it is a really bad sign. There is no exchange. It's a fake website with a fake currency. I immediately realized that it was a scam. He was in denial. He just blamed everyone else for "not understanding crypto"

It's now one year later and he hasn't mentioned it. It's possible that he realized that he lost all his money to a scam. He doesn't want to talk about it because it's embarrassing and that is understandable.

The bigger part that is super embarrassing that he doesn't realize is when he gives the hard sell to the real estate agent to use his 1 million of "crypto" to buy a 2-3 million dollar house. It's the equivalent of offering monopoly money for the house. When the realtor won't even put their name on it, they blame the realtor. They just don't understand monopoly money.

I'm not pressing him for any details. I've heard enough of this crap over the past 5 years. It's not possible for him to realize that these are scams because he is so invested in conspiracy theories. Unfortunately, his group is a pretty easy target on the internet for scams. People make a living taking money from these people. 

 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on October 27, 2021, 05:16:55 PM
Pro-crypto crowd, on the other hand, actually needs to really prove the case because they're the ones making the outlandish claim and trying to convince people to buy into this stuff.

Just to clarify, you can be pro-crypto and not think it makes sense an investment (I also don't think turkish lira, japanese yen, or gold coins make sense as investments).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 27, 2021, 05:25:21 PM
Pro-crypto crowd, on the other hand, actually needs to really prove the case because they're the ones making the outlandish claim and trying to convince people to buy into this stuff.

Just to clarify, you can be pro-crypto and not think it makes sense an investment (I also don't think turkish lira, japanese yen, or gold coins make sense as investments).

I'd agree with this statement. I think the underlying tech has a future. I don't think BTC does eth might but not enough for me to buy any. Just like I don't buy individual stocks. Or invest in ultra specific market sectors.

The whole financial world could run on Blockchain some day that doesn't mean BTC has to exist for that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on October 27, 2021, 05:55:10 PM
Fair point - we are in a thread about allocating a portion of your portfolio to crypto currency, but I didn't write out "pro direct ownership of crypto crowd".
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on October 27, 2021, 06:03:06 PM
Pro-crypto crowd, on the other hand, actually needs to really prove the case because they're the ones making the outlandish claim and trying to convince people to buy into this stuff.

Just to clarify, you can be pro-crypto and not think it makes sense an investment (I also don't think turkish lira, japanese yen, or gold coins make sense as investments).

I'd agree with this statement. I think the underlying tech has a future. I don't think BTC does eth might but not enough for me to buy any. Just like I don't buy individual stocks. Or invest in ultra specific market sectors.

The whole financial world could run on Blockchain some day that doesn't mean BTC has to exist for that.
Or any other crypto currency - there might be something to the underlying tech (emphasis on might) but crypto currency - this particular application of that technology is a solution looking for a problem. But the IBM private Blockchain is not as sexy as the brand new casino.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: js82 on October 27, 2021, 06:09:29 PM
It's fake crypto that is not worth anything. Literally zero. He fell for a scam but is in denial. He owns it. He believes it to be worth over one million. It's actually worth zero.
... The problem is that if you ever try to cash out your crypto, it cannot be exchanged for real money. You just need to convince someone else to accept it as real currency. 
Is the fake crypto he bought on this list of 6800+ crypto currencies?
https://coinmarketcap.com/

That's the angle I would use to pressure his belief.  If this crypto has been so profitable, why isn't it on the list with 6800 other crypto currencies?  Some of those have gone up +1000% as well, so the special returns are no reason to keep it off the list.


You could also ask "which crypto exchange do you use?", or ask him to look up the crypto exchange himself, on this list of 300:
https://coinmarketcap.com/rankings/exchanges/

Almost all of those exchanges have a market called "BTCUSDT" - the most popular market by far.  As a buyer, you pay USDT and buy BTC.  As a seller, you sell BTC and get USDT.  Almost every crypto exchange will have USDT.  Which means this guy should be able to sell his crypto for USDT.  If it's a scam, there will be no way to trade his crypto for USDT.  It's a really bad sign if he can't convert his crypto holdings into USDT.

(International crypto exchanges aren't allowed to transact in USD.  The U.S. Treasury Department will come after them with anti-money laundering rules, and can force their bank to drop them.  Banks do not want to be sanctioned by the U.S. - they can be dropped off the international banking system.  But those rules don't apply to USDT, so crypto exchanges use that, instead)

For the sake of pointing it out: Just because it's on CoinMarketCap doesn't mean it's not a scam.  There's a bunch of garbage that's listed on there that's basically a bunch of dudes saying "let's make a coin from some open source code, hype it on reddit/social media to sucker people in, get the price to go up, and then we can cash out".  I'd go so far as to say that *most* of these coins will eventually be worthless (and a non-trivial number are outright scams), but there will be a handful of genuine ones that survive to become important/impactful beyond an investment tool.


Just to clarify, you can be pro-crypto and not think it makes sense an investment (I also don't think turkish lira, japanese yen, or gold coins make sense as investments).

Agreed.  And FWIW, crypto is pretty clearly not a good investment once the adoption cycle winds down - just like cash is trash, so will be crypto once rising demand stops driving prices.  I see Crypto as interesting in the near to mid term, useless(as an asset class, not a technology) in the long term.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 27, 2021, 08:42:50 PM
I'm not pressing him for any details. I've heard enough of this crap over the past 5 years. It's not possible for him to realize that these are scams because he is so invested in conspiracy theories. Unfortunately, his group is a pretty easy target on the internet for scams. People make a living taking money from these people. 

People are just going to have to wise up or get wiped out. Hundreds of thousands of Americans have just lost their lives to COVID, after vaccines became available, because they believed social media influencers over doctors, scientists, and public health experts. Millions more will suffer long COVID or disability. People are sitting in jail right now because they believed online nonsense and committed some act of violence or fraud. Now you have people putting everything into this hybrid ponzi / MLM coin scam because it keeps attracting marks and all the influencers are making (monetized) videos about it. If you wouldn't take stock-picking advice from Wall Street Bets, and you wouldn't take healthcare advice from Dr. Fucking Oz, and you're not doing the latest TikTok challenge that involves huffing WD-40 and trying to run down the street or whatever, then WTF would you let social media / media influence you to buy something that is both worthless and useless??? It's. All. The. Same. Gullibility.

Literal death and the loss of one's fortune is the price of believing disinformation on the internet. Wise up or die. Only the skeptical will survive in the 21st century.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FrugalFukuoka on October 27, 2021, 11:52:59 PM
I'm not pressing him for any details. I've heard enough of this crap over the past 5 years. It's not possible for him to realize that these are scams because he is so invested in conspiracy theories. Unfortunately, his group is a pretty easy target on the internet for scams. People make a living taking money from these people. 

People are just going to have to wise up or get wiped out. Hundreds of thousands of Americans have just lost their lives to COVID, after vaccines became available, because they believed social media influencers over doctors, scientists, and public health experts. Millions more will suffer long COVID or disability. People are sitting in jail right now because they believed online nonsense and committed some act of violence or fraud. Now you have people putting everything into this hybrid ponzi / MLM coin scam because it keeps attracting marks and all the influencers are making (monetized) videos about it. If you wouldn't take stock-picking advice from Wall Street Bets, and you wouldn't take healthcare advice from Dr. Fucking Oz, and you're not doing the latest TikTok challenge that involves huffing WD-40 and trying to run down the street or whatever, then WTF would you let social media / media influence you to buy something that is both worthless and useless??? It's. All. The. Same. Gullibility.

Literal death and the loss of one's fortune is the price of believing disinformation on the internet. Wise up or die. Only the skeptical will survive in the 21st century.

https://www.rationaloptimist.com/ ;)

It looks like the discussion is derailing a bit into an argument about a new invention called the bicycle that is supposedly a great boat by it's proponents which is vehemently denied by it's opponents saying it will sink like a rock. We'll have some really smart and creative people explain how a contraption with the bicycle on top could potentially power the boat and therefore justify the utility of the bicycle, which naturally will be 'too complicated' to understand by intelligent opponents who really try to understand it all but cannot see how this would possibly be better than a paddle. In the meanwhile there is a small group of people seeing the bicycle for what it is, a great tool for transport on land.

Digital tokens, blockchain technology, smart contracts, they all have great potential to make our lives easier, but they do not all mean BTC and the only use case is not limited to 'digital currency'. Firstly, if you're not aware what each part is, and it's potential utility, read up on those separately (preferably outside of the context of BTC ).

Secondly, if we do want to have an argument what drives the price of a cryptocurrency, let's dive in systematically: just like any other financial asset it's driven by buyers and sellers who make trading decisions. As predominantly index investors we probably all know this to be emotional in the short term, enter your favorite Warren Buffet or Benjamin Graham quote. Luckily for an asset class such as equity this gets dampened over time as there is some real undeniable activity (or lack thereof) represented by the token (stock) you buy or sell. With a cryptocurrency, it's true that a lot of it's owners do not fully grasp the utility thereof, proving a lot of the opponents in this thread right that it tends to be a pump and dump scheme. Look at the volatility of BTC and read twitter, and the pump and dump is so transparent you wonder who would possibly fall for this.
Which brings us to the next point, aside from just popularity keeping the price from going to 0 frequently, what is the reason behind BTC and ETH, and other more accepted cryptocurrencies having an increasingly higher bottom? That is some form of utility. Whether in the case of BTC that utility is the decentralized nature of transferring value, or it's volatility by itself, or any other of a myriad of reasons, is all very debatable; but one thing that is increasingly clear is that the concept and underlying technology are persistent.
So lastly, why invest in BTC or ETH or other cryptocurrencies?
1. The volatility, if properly risk managed by e.g. assigning only a low allocation, can increase portfolio performance
2. The correlation to other asset classes can contribute in terms of diversification
3. The project that will see widespread adoption in the real world will likely see the value of it's associated tokens increase by a many-fold

And why not invest? The same reasons, it's volatile, you can find diversification in lower risk products, and you don't necessarily want to follow a Taleb style portfolio of 90% security and 10% high risk high return. Fair enough.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 28, 2021, 05:26:44 AM
I'm not pressing him for any details. I've heard enough of this crap over the past 5 years. It's not possible for him to realize that these are scams because he is so invested in conspiracy theories. Unfortunately, his group is a pretty easy target on the internet for scams. People make a living taking money from these people. 

People are just going to have to wise up or get wiped out. Hundreds of thousands of Americans have just lost their lives to COVID, after vaccines became available, because they believed social media influencers over doctors, scientists, and public health experts. Millions more will suffer long COVID or disability. People are sitting in jail right now because they believed online nonsense and committed some act of violence or fraud. Now you have people putting everything into this hybrid ponzi / MLM coin scam because it keeps attracting marks and all the influencers are making (monetized) videos about it. If you wouldn't take stock-picking advice from Wall Street Bets, and you wouldn't take healthcare advice from Dr. Fucking Oz, and you're not doing the latest TikTok challenge that involves huffing WD-40 and trying to run down the street or whatever, then WTF would you let social media / media influence you to buy something that is both worthless and useless??? It's. All. The. Same. Gullibility.

Literal death and the loss of one's fortune is the price of believing disinformation on the internet. Wise up or die. Only the skeptical will survive in the 21st century.

https://www.rationaloptimist.com/ ;)

It looks like the discussion is derailing a bit into an argument about a new invention called the bicycle that is supposedly a great boat by it's proponents which is vehemently denied by it's opponents saying it will sink like a rock. We'll have some really smart and creative people explain how a contraption with the bicycle on top could potentially power the boat and therefore justify the utility of the bicycle, which naturally will be 'too complicated' to understand by intelligent opponents who really try to understand it all but cannot see how this would possibly be better than a paddle. In the meanwhile there is a small group of people seeing the bicycle for what it is, a great tool for transport on land.

Digital tokens, blockchain technology, smart contracts, they all have great potential to make our lives easier, but they do not all mean BTC and the only use case is not limited to 'digital currency'. Firstly, if you're not aware what each part is, and it's potential utility, read up on those separately (preferably outside of the context of BTC ).

Secondly, if we do want to have an argument what drives the price of a cryptocurrency, let's dive in systematically: just like any other financial asset it's driven by buyers and sellers who make trading decisions. As predominantly index investors we probably all know this to be emotional in the short term, enter your favorite Warren Buffet or Benjamin Graham quote. Luckily for an asset class such as equity this gets dampened over time as there is some real undeniable activity (or lack thereof) represented by the token (stock) you buy or sell. With a cryptocurrency, it's true that a lot of it's owners do not fully grasp the utility thereof, proving a lot of the opponents in this thread right that it tends to be a pump and dump scheme. Look at the volatility of BTC and read twitter, and the pump and dump is so transparent you wonder who would possibly fall for this.
Which brings us to the next point, aside from just popularity keeping the price from going to 0 frequently, what is the reason behind BTC and ETH, and other more accepted cryptocurrencies having an increasingly higher bottom? That is some form of utility. Whether in the case of BTC that utility is the decentralized nature of transferring value, or it's volatility by itself, or any other of a myriad of reasons, is all very debatable; but one thing that is increasingly clear is that the concept and underlying technology are persistent.
So lastly, why invest in BTC or ETH or other cryptocurrencies?
1. The volatility, if properly risk managed by e.g. assigning only a low allocation, can increase portfolio performance
2. The correlation to other asset classes can contribute in terms of diversification
3. The project that will see widespread adoption in the real world will likely see the value of it's associated tokens increase by a many-fold

And why not invest? The same reasons, it's volatile, you can find diversification in lower risk products, and you don't necessarily want to follow a Taleb style portfolio of 90% security and 10% high risk high return. Fair enough.

its not just volatility that matters here its that there is no underlying value to BTC other than it was the first one and people are buying it today.  if BTC had a patent on blockchain they'd probably have something but they don't.

it doesn't have a long enough history of anything to even begin to discuss correlation and diversification.  Its best comparison still is a lottery ticket or a beanie baby or some tulip bulbs.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on October 28, 2021, 06:47:30 AM
I'm not pressing him for any details. I've heard enough of this crap over the past 5 years. It's not possible for him to realize that these are scams because he is so invested in conspiracy theories. Unfortunately, his group is a pretty easy target on the internet for scams. People make a living taking money from these people. 

People are just going to have to wise up or get wiped out. Hundreds of thousands of Americans have just lost their lives to COVID, after vaccines became available, because they believed social media influencers over doctors, scientists, and public health experts. Millions more will suffer long COVID or disability. People are sitting in jail right now because they believed online nonsense and committed some act of violence or fraud. Now you have people putting everything into this hybrid ponzi / MLM coin scam because it keeps attracting marks and all the influencers are making (monetized) videos about it. If you wouldn't take stock-picking advice from Wall Street Bets, and you wouldn't take healthcare advice from Dr. Fucking Oz, and you're not doing the latest TikTok challenge that involves huffing WD-40 and trying to run down the street or whatever, then WTF would you let social media / media influence you to buy something that is both worthless and useless??? It's. All. The. Same. Gullibility.

Literal death and the loss of one's fortune is the price of believing disinformation on the internet. Wise up or die. Only the skeptical will survive in the 21st century.

It's actually the skeptical who are the most subject to scams these days. It's people who have a lack of faith in "the system," but not enough ability to assess information, who end up the most susceptible.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FrugalFukuoka on October 28, 2021, 06:48:24 AM

its not just volatility that matters here its that there is no underlying value to BTC other than it was the first one and people are buying it today.  if BTC had a patent on blockchain they'd probably have something but they don't.

it doesn't have a long enough history of anything to even begin to discuss correlation and diversification.  Its best comparison still is a lottery ticket or a beanie baby or some tulip bulbs.

It's not BTC, it's cryptocurrency. Again, BTC = cryptocurrency is an assumption too many people mistakenly make.
As for BTC, it's undeniable underlying value is that it's just that. Well known. Is Tom Cruise a better actor than your average Netflix flick line-up? I doubt it. Does he bring in more money? Surely. Not saying that just because it's well known, it's a wise investment, but it's not entirely without underlying value either.

And denying that correlation and diversification have nothing to do with it because it's not around for long enough sounds like missing the point behind why correlation and diversification matter in investing in the first place. Past performance is no guarantee for future returns is literally something every investor is told; so why does it need to have enough past performance before you start considering it's role in it all? If bonds and equity have a correlation of 0 for the past 10 years, but historically they had a positive correlation of 0.9, would you still make the decision based on the historical correlation rather than the last 10 years?

Also, a lottery ticket loses all of it value the moment it expires out of the money. A beanie baby still retains some value. And unless you can get your tulip bulbs for free every winter,  they still retain their value quite nicely as well hundreds of years later. Surely, 1 bulb won't buy you a house anymore,  but they're not for free either.

And lastly, let's not think for even one second that everything VTI invests in is pure undeniable value. It's not. Yet we all understand it's role in our portfolio. Cryptocurrency can serve a role if you're looking for something that's highly volatile and not moving in step with the markets. Should everyone therefore invest in it? No, it's high risk and completely uncertain where it will end up in the end. It's not guaranteed to succeed nor is it guaranteed to fail. No way of knowing. That's all I am trying to say.



Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 28, 2021, 07:42:34 AM
I'm not pressing him for any details. I've heard enough of this crap over the past 5 years. It's not possible for him to realize that these are scams because he is so invested in conspiracy theories. Unfortunately, his group is a pretty easy target on the internet for scams. People make a living taking money from these people. 

People are just going to have to wise up or get wiped out. Hundreds of thousands of Americans have just lost their lives to COVID, after vaccines became available, because they believed social media influencers over doctors, scientists, and public health experts. Millions more will suffer long COVID or disability. People are sitting in jail right now because they believed online nonsense and committed some act of violence or fraud. Now you have people putting everything into this hybrid ponzi / MLM coin scam because it keeps attracting marks and all the influencers are making (monetized) videos about it. If you wouldn't take stock-picking advice from Wall Street Bets, and you wouldn't take healthcare advice from Dr. Fucking Oz, and you're not doing the latest TikTok challenge that involves huffing WD-40 and trying to run down the street or whatever, then WTF would you let social media / media influence you to buy something that is both worthless and useless??? It's. All. The. Same. Gullibility.

Literal death and the loss of one's fortune is the price of believing disinformation on the internet. Wise up or die. Only the skeptical will survive in the 21st century.

https://www.rationaloptimist.com/ ;)

It looks like the discussion is derailing a bit into an argument about a new invention called the bicycle that is supposedly a great boat by it's proponents which is vehemently denied by it's opponents saying it will sink like a rock. We'll have some really smart and creative people explain how a contraption with the bicycle on top could potentially power the boat and therefore justify the utility of the bicycle, which naturally will be 'too complicated' to understand by intelligent opponents who really try to understand it all but cannot see how this would possibly be better than a paddle. In the meanwhile there is a small group of people seeing the bicycle for what it is, a great tool for transport on land.

Digital tokens, blockchain technology, smart contracts, they all have great potential to make our lives easier, but they do not all mean BTC and the only use case is not limited to 'digital currency'. Firstly, if you're not aware what each part is, and it's potential utility, read up on those separately (preferably outside of the context of BTC ).

Secondly, if we do want to have an argument what drives the price of a cryptocurrency, let's dive in systematically: just like any other financial asset it's driven by buyers and sellers who make trading decisions. As predominantly index investors we probably all know this to be emotional in the short term, enter your favorite Warren Buffet or Benjamin Graham quote. Luckily for an asset class such as equity this gets dampened over time as there is some real undeniable activity (or lack thereof) represented by the token (stock) you buy or sell. With a cryptocurrency, it's true that a lot of it's owners do not fully grasp the utility thereof, proving a lot of the opponents in this thread right that it tends to be a pump and dump scheme. Look at the volatility of BTC and read twitter, and the pump and dump is so transparent you wonder who would possibly fall for this.
Which brings us to the next point, aside from just popularity keeping the price from going to 0 frequently, what is the reason behind BTC and ETH, and other more accepted cryptocurrencies having an increasingly higher bottom? That is some form of utility. Whether in the case of BTC that utility is the decentralized nature of transferring value, or it's volatility by itself, or any other of a myriad of reasons, is all very debatable; but one thing that is increasingly clear is that the concept and underlying technology are persistent.
So lastly, why invest in BTC or ETH or other cryptocurrencies?
1. The volatility, if properly risk managed by e.g. assigning only a low allocation, can increase portfolio performance
2. The correlation to other asset classes can contribute in terms of diversification
3. The project that will see widespread adoption in the real world will likely see the value of it's associated tokens increase by a many-fold

And why not invest? The same reasons, it's volatile, you can find diversification in lower risk products, and you don't necessarily want to follow a Taleb style portfolio of 90% security and 10% high risk high return. Fair enough.

Imagine if Bernie Madoff's Ponzi scheme was discovered by the markets, but for some obscure legal reason he could not be prosecuted or shut down. While some of today's investors would seek immediate exit, others would see value. They would see how his fund's stated performance has a low correlation to other assets. They would note the volatility but also note how Madoff's fund tends to go up and see in that "some form of utility" which will continue to attract future buyers due to FOMO. Certainly, they'd say, there is some risk associated with investing in a known Ponzi scheme, but that risk "can increase portfolio performance" as a diversifier "if properly risk managed" with a modest allocation. Madoff juices things by noting that his fund is buying back a few shares here and there, making the fund inherently deflationary - like a currency during a depression!

Now suppose Bernie Madoff declared "it is necessary for me to collect all of your money because we are investing in a new cold fusion powered quantum computing chip infrastructure that will completely change the world. It's all very hard for most people to understand." Now the flow of funds into his scheme increases. But wait, there's more! Madoff continues, "the chips with cold fusion reactors installed on them don't actually work very well right now, and can only complete a couple of clock cycles, so until the tech matures we will be using these 'lightning' chips which are surplus Intel chromebook processors." Now investors' mouths are watering. Madoff's fund represents both the tech of the future and a proof-of-concept today!

Shares in Madoff's known ponzi scheme go to the moon. Traders are doing technical analysis on YouTube, while others take a HODL approach. Kids on WallStreetBets start posting seven-figure gain porn and doing CNBC interviews from their parents' basements. Long-term thinkers discuss the implications of quantum-fusion-chips regarding radiation and the eventual plutonium contamination of the entire planet, but these thoughts are drowned out by debates over whether the 18 year old who bought a house with proceeds from Madoff's fund sold too soon and is going to regret it.

Occasionally, random investors in the fund see their assets go to zero. Madoff simply explains to them that "hackers" stole their shares and there's nothing he can do. Everyone accepts this.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 28, 2021, 07:45:51 AM
I'm not pressing him for any details. I've heard enough of this crap over the past 5 years. It's not possible for him to realize that these are scams because he is so invested in conspiracy theories. Unfortunately, his group is a pretty easy target on the internet for scams. People make a living taking money from these people. 

People are just going to have to wise up or get wiped out. Hundreds of thousands of Americans have just lost their lives to COVID, after vaccines became available, because they believed social media influencers over doctors, scientists, and public health experts. Millions more will suffer long COVID or disability. People are sitting in jail right now because they believed online nonsense and committed some act of violence or fraud. Now you have people putting everything into this hybrid ponzi / MLM coin scam because it keeps attracting marks and all the influencers are making (monetized) videos about it. If you wouldn't take stock-picking advice from Wall Street Bets, and you wouldn't take healthcare advice from Dr. Fucking Oz, and you're not doing the latest TikTok challenge that involves huffing WD-40 and trying to run down the street or whatever, then WTF would you let social media / media influence you to buy something that is both worthless and useless??? It's. All. The. Same. Gullibility.

Literal death and the loss of one's fortune is the price of believing disinformation on the internet. Wise up or die. Only the skeptical will survive in the 21st century.

https://www.rationaloptimist.com/ ;)

It looks like the discussion is derailing a bit into an argument about a new invention called the bicycle that is supposedly a great boat by it's proponents which is vehemently denied by it's opponents saying it will sink like a rock. We'll have some really smart and creative people explain how a contraption with the bicycle on top could potentially power the boat and therefore justify the utility of the bicycle, which naturally will be 'too complicated' to understand by intelligent opponents who really try to understand it all but cannot see how this would possibly be better than a paddle. In the meanwhile there is a small group of people seeing the bicycle for what it is, a great tool for transport on land.

Digital tokens, blockchain technology, smart contracts, they all have great potential to make our lives easier, but they do not all mean BTC and the only use case is not limited to 'digital currency'. Firstly, if you're not aware what each part is, and it's potential utility, read up on those separately (preferably outside of the context of BTC ).

Secondly, if we do want to have an argument what drives the price of a cryptocurrency, let's dive in systematically: just like any other financial asset it's driven by buyers and sellers who make trading decisions. As predominantly index investors we probably all know this to be emotional in the short term, enter your favorite Warren Buffet or Benjamin Graham quote. Luckily for an asset class such as equity this gets dampened over time as there is some real undeniable activity (or lack thereof) represented by the token (stock) you buy or sell. With a cryptocurrency, it's true that a lot of it's owners do not fully grasp the utility thereof, proving a lot of the opponents in this thread right that it tends to be a pump and dump scheme. Look at the volatility of BTC and read twitter, and the pump and dump is so transparent you wonder who would possibly fall for this.
Which brings us to the next point, aside from just popularity keeping the price from going to 0 frequently, what is the reason behind BTC and ETH, and other more accepted cryptocurrencies having an increasingly higher bottom? That is some form of utility. Whether in the case of BTC that utility is the decentralized nature of transferring value, or it's volatility by itself, or any other of a myriad of reasons, is all very debatable; but one thing that is increasingly clear is that the concept and underlying technology are persistent.
So lastly, why invest in BTC or ETH or other cryptocurrencies?
1. The volatility, if properly risk managed by e.g. assigning only a low allocation, can increase portfolio performance
2. The correlation to other asset classes can contribute in terms of diversification
3. The project that will see widespread adoption in the real world will likely see the value of it's associated tokens increase by a many-fold

And why not invest? The same reasons, it's volatile, you can find diversification in lower risk products, and you don't necessarily want to follow a Taleb style portfolio of 90% security and 10% high risk high return. Fair enough.

its not just volatility that matters here its that there is no underlying value to BTC other than it was the first one and people are buying it today.  if BTC had a patent on blockchain they'd probably have something but they don't.

it doesn't have a long enough history of anything to even begin to discuss correlation and diversification.  Its best comparison still is a lottery ticket or a beanie baby or some tulip bulbs.

These comparisons are what are awkward for me. Even if I miss a genuine opportunity for value with Bitcoin, I enable behavior within myself that could well lose all those gains when the next rapidly surging asset is created.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 28, 2021, 09:35:26 AM
Lost a decade long friendship because I tried to smile and nod, but just couldn't for too long and told a guy exactly what I thought of his day-trading Dogecoin scheme - that coin is pretty stupid, but not nearly the most stupid coin out there.

I'm sorry to hear this Dandarc.  Losing friendships over how another person chooses to allocate their retirement savings seems super sad to me. 

And super important to make a good case right now because you really need those greater fools if you want to exchange your crypto for anything useful. So far, the arguments are just not very convincing, particularly to those of us who got to hear all of them back in 2018 or whenever that last big BTC runup happened, and the time before that.

I don't need greater fools to make money in this space.  Take, for example, a small investment I've made in VeChain (about 3k).  The purpose of this crypto is to use a blockchain as a validator/authenticator.  If you are a maker of name brand sunglasses, you may choose to use VeChain to allow consumers to quickly and with confidence know that you are buying the legit product instead of a knockoff.  It can be used in supply chain management to track/verify where goods are, that they have been stored at the correct temperature along the way, etc. 

Here's a brief quote that I think does a good job of summing up the plans for VeChain:  VeChain is a blockchain-enabled platform that is designed to enhance supply chain management processes. By utilizing tamper-proof and distributed ledger technology, VeChain provides retailers and consumers with the ability to determine the quality and authenticity of products that are bought. From product source materials, to servicing history, and spare part replacements, every single piece of information about the supply chain movement of a product can be recorded and verified to bring about a supply chain management ecosystem that is secure for all participants. VeChain plans to achieve this secure supply chain management ecosystem via the method of asset digitization. VeChain enables manufactures to assign products with unique identities to the platform. This will allow manufacturers, supply chain partners, and even consumers, to track the movement of products through their supply chain.


Although the work I've put into studying VeChain suggests to me that they are doing this better than other companies at the moment, it's possible that another crypto or technology could overtake VeChain, in the same way that any business venture can get beat by a stronger company over time.  But to say that my success in this cypto depends on someone even more foolish to buy my stake in VeChain is false. 

If you want to criticize me for investing in a single company rather than an index, I can see merit for that.  Personally, I have been nothing but 100% VTSAX since I started my FIRE journey 6 years ago.  We are, after all, on Mr. Money Mustache's forum, where face punches for buying individual ventures is part of the fun.  But to hold a position that crypto is just fools looking for even greater fools only hurting yourself in the long run. 

Finally, I want to say that this sentiment is WHY I'm venturing out of purely VTSAX.  I find that 95% plus of people I talk to and read on the internet seem to share your view that crypto is fools looking for bigger fools.  Because of this, my thesis is that groups trying to solve real-world problems using crypto are vastly underpriced in the market.  The total market cap of all things crypto is about 2.5 trillion dollars.  It will be MANY times that when the world realizes that it's actually pretty straightforward to tell which cryptos are composed of legit teams who are finding ways to solve problems that businesses and individuals currently face.  So, while this space is still massively misunderstood and under funded, I will be deviating from my all Index Fund strategy and finding a variety of projects that are solving real problems. 

Cheers. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 28, 2021, 10:03:26 AM
Lost a decade long friendship because I tried to smile and nod, but just couldn't for too long and told a guy exactly what I thought of his day-trading Dogecoin scheme - that coin is pretty stupid, but not nearly the most stupid coin out there.

I'm sorry to hear this Dandarc.  Losing friendships over how another person chooses to allocate their retirement savings seems super sad to me. 

And super important to make a good case right now because you really need those greater fools if you want to exchange your crypto for anything useful. So far, the arguments are just not very convincing, particularly to those of us who got to hear all of them back in 2018 or whenever that last big BTC runup happened, and the time before that.

I don't need greater fools to make money in this space.  Take, for example, a small investment I've made in VeChain (about 3k).  The purpose of this crypto is to use a blockchain as a validator/authenticator.  If you are a maker of name brand sunglasses, you may choose to use VeChain to allow consumers to quickly and with confidence know that you are buying the legit product instead of a knockoff.  It can be used in supply chain management to track/verify where goods are, that they have been stored at the correct temperature along the way, etc. 

Here's a brief quote that I think does a good job of summing up the plans for VeChain:  VeChain is a blockchain-enabled platform that is designed to enhance supply chain management processes. By utilizing tamper-proof and distributed ledger technology, VeChain provides retailers and consumers with the ability to determine the quality and authenticity of products that are bought. From product source materials, to servicing history, and spare part replacements, every single piece of information about the supply chain movement of a product can be recorded and verified to bring about a supply chain management ecosystem that is secure for all participants. VeChain plans to achieve this secure supply chain management ecosystem via the method of asset digitization. VeChain enables manufactures to assign products with unique identities to the platform. This will allow manufacturers, supply chain partners, and even consumers, to track the movement of products through their supply chain.


Although the work I've put into studying VeChain suggests to me that they are doing this better than other companies at the moment, it's possible that another crypto or technology could overtake VeChain, in the same way that any business venture can get beat by a stronger company over time.  But to say that my success in this cypto depends on someone even more foolish to buy my stake in VeChain is false. 

If you want to criticize me for investing in a single company rather than an index, I can see merit for that.  Personally, I have been nothing but 100% VTSAX since I started my FIRE journey 6 years ago.  We are, after all, on Mr. Money Mustache's forum, where face punches for buying individual ventures is part of the fun.  But to hold a position that crypto is just fools looking for even greater fools only hurting yourself in the long run. 

Finally, I want to say that this sentiment is WHY I'm venturing out of purely VTSAX.  I find that 95% plus of people I talk to and read on the internet seem to share your view that crypto is fools looking for bigger fools.  Because of this, my thesis is that groups trying to solve real-world problems using crypto are vastly underpriced in the market.  The total market cap of all things crypto is about 2.5 trillion dollars.  It will be MANY times that when the world realizes that it's actually pretty straightforward to tell which cryptos are composed of legit teams who are finding ways to solve problems that businesses and individuals currently face.  So, while this space is still massively misunderstood and under funded, I will be deviating from my all Index Fund strategy and finding a variety of projects that are solving real problems. 

Cheers.

This seems to be almost a space where you can be a venture capitalist as a small guy.  I can kinda get behind this explanation and could see allocating money to this with a group of people that are all researching and studying similar trends in the blockchain application industry.  Why haven't you stated your stake in something like this before.  For the most part people here are talking about BTC i know there are other things out there and a few others have been mentioned but very few things here have been mentioned like what you just did about vechain which IMO greatly changes the entire discussion about investing in blockchain technologies.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on October 28, 2021, 11:32:04 AM
@aceyou - the friend thing, at least from my perspective, was just another of this friend's MLM-adjacent activities, and probably ultimately good he got super pissed off that I wasn't impressed by his new-found financially responsibility demonstrated by DAY TRADING DOGECOIN. FFS - you had a kid and want to be more financially responsible, so your big solution is ramping up your gambling.
 
My point about needing to find the greater fool was if your investment is in the form of crypto currency, then you do need someone to sell it to if you want to exchange that for something other than other crypto currency - as clarkfan pointed out, you can't buy a house with crypto. I don't think VeChain is an exception to this. You don't own anything other than the VET. It doesn't pay dividends - actually it is a non-profit, so paying a dividend would be illegal, at least in the US (assuming they want to be a real non-profit and have the benefits that come with that and not just a company that doesn't make money).

So please, explain to me how this coin is making you money without selling it - your post just claims you're making money with VeChain without explaining how you're making money from owning it.

Or maybe we're just crossing wires because I used what I thought was a common idiom - when you have a purely speculative investment, for the investment to work out, you need someone to sell it to. This is why we don't tax unrealized capital gains - until you sell you actually haven't gained anything. "The greater fool" I'm referring to is whoever buys the thing from the person currently holding it. If your investment is crypto or gold or baseball cards or old silver coins or a house that you're not renting out, you haven't made a profit until you sell (or borrow against, although to borrow against something there generally needs to be a reasonable belief the lender could sell the thing if they have to).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 28, 2021, 11:42:56 AM
Is the fake crypto he bought on this list of 6800+ crypto currencies?
https://coinmarketcap.com/
For the sake of pointing it out: Just because it's on CoinMarketCap doesn't mean it's not a scam.  There's a bunch of garbage that's listed on there that's basically a bunch of dudes saying "let's make a coin from some open source code, hype it on reddit/social media to sucker people in, get the price to go up, and then we can cash out".  I'd go so far as to say that *most* of these coins will eventually be worthless (and a non-trivial number are outright scams), but there will be a handful of genuine ones that survive to become important/impactful beyond an investment tool.
That's an important point: worthless or scam coins can appear there, especially near the bottom of those 6800 coins.  I had a suspicion the scammer mentioned earlier didn't even go to that much effort.

A more detailed approach would find the coin in that list, view the 24h trade volume and markets.  Are top exchanges providing a market?  If not, I'd stay away.  For example, "SushiSwap" ranked #81 is listed on top exchanges.  But "Greenpower" ranked #6000 is listed on two exchanges - one with $0 volume, and the other with $28 daily volume.  It's weird that the #191 exchange picked this specific token as one of it's 8 markets - I suspect something odd is going on, and would stay away.
https://coinmarketcap.com/currencies/sushiswap/markets/
https://coinmarketcap.com/currencies/greenpower/markets/
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 28, 2021, 12:24:54 PM
I don't need greater fools to make money in this space.  Take, for example, a small investment I've made in VeChain (about 3k).

Oh, neat! How do you make money? Where's it come from?

The purpose of this crypto is to use a blockchain as a validator/authenticator.  If you are a maker of name brand sunglasses, you may choose to use VeChain to allow consumers to quickly and with confidence know that you are buying the legit product instead of a knockoff.  It can be used in supply chain management to track/verify where goods are, that they have been stored at the correct temperature along the way, etc. 

How's that work? What prevents someone from, say, writing false temperature values or false location data? Or a false "these are totally legit D&G sunglasses!" data? Is there an authority needed to verify these things?

Although the work I've put into studying VeChain suggests to me that they are doing this better than other companies at the moment, it's possible that another crypto or technology could overtake VeChain, in the same way that any business venture can get beat by a stronger company over time.  But to say that my success in this cypto depends on someone even more foolish to buy my stake in VeChain is false. 

Oh? Then how do you "succeed" here? Or is your point that the next buyer isn't foolish?

If you want to criticize me for investing in a single company rather than an index, I can see merit for that.  Personally, I have been nothing but 100% VTSAX since I started my FIRE journey 6 years ago.  We are, after all, on Mr. Money Mustache's forum, where face punches for buying individual ventures is part of the fun.  But to hold a position that crypto is just fools looking for even greater fools only hurting yourself in the long run. 
Wait... did you invest in a business (buy stock in this company?) or did you buy some cryptocurrency on this VeChain blockchain?

Finally, I want to say that this sentiment is WHY I'm venturing out of purely VTSAX.  I find that 95% plus of people I talk to and read on the internet seem to share your view that crypto is fools looking for bigger fools.  Because of this, my thesis is that groups trying to solve real-world problems using crypto are vastly underpriced in the market.  The total market cap of all things crypto is about 2.5 trillion dollars.  It will be MANY times that when the world realizes that it's actually pretty straightforward to tell which cryptos are composed of legit teams who are finding ways to solve problems that businesses and individuals currently face.  So, while this space is still massively misunderstood and under funded, I will be deviating from my all Index Fund strategy and finding a variety of projects that are solving real problems. 

Couple things:
1. I have yet to see a single real-world problem solved by blockchain (this VeChain example included). What you've described does not at all make sense to me as a use-case for a blockchain. There are necessarily trusted authorities (e.g., who verifies a pair of Oakley sunglasses are Oakley sunglasses? How do you verify the location data of the shipping containers? The temperature? What is verifiable from the physical product to the digital blockchain? Is there a encrypted message printed on the products? How do you guarantee that isn't simply copied? etc.) A hot tip for analyzing future ventures like this: if someone is claiming to use the blockchain to do anything in the real world, it's guaranteed malarkey. You've been swindled, as have any investors who've given this company money.
2. A market cap of a speculative asset is a hilarious concept. It makes no sense whatsoever. If I sell you 1 of 1,000,000,000,000 gastro-tokens I've just created out-of-thin-air (it's on the blockchain, and will definitely solve world hunger by tracking and producing lots of healthy food on the blockchain—you want to invest?) for $1, I'm not suddenly the world's richest man, and worth further investment because of my freshly-minted $1T market cap. That's obviously ridiculous. That Shiba Inu Coin—a blatant copy of another joke-coin, DogeCoin—has a larger market cap than General Mills, Delta Airlines, Best Buy, etc. should probably give you a hint that this is a silly measurement.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 28, 2021, 12:50:30 PM
Lost a decade long friendship because I tried to smile and nod, but just couldn't for too long and told a guy exactly what I thought of his day-trading Dogecoin scheme - that coin is pretty stupid, but not nearly the most stupid coin out there.

I'm sorry to hear this Dandarc.  Losing friendships over how another person chooses to allocate their retirement savings seems super sad to me. 

And super important to make a good case right now because you really need those greater fools if you want to exchange your crypto for anything useful. So far, the arguments are just not very convincing, particularly to those of us who got to hear all of them back in 2018 or whenever that last big BTC runup happened, and the time before that.

I don't need greater fools to make money in this space.  Take, for example, a small investment I've made in VeChain (about 3k).  The purpose of this crypto is to use a blockchain as a validator/authenticator.  If you are a maker of name brand sunglasses, you may choose to use VeChain to allow consumers to quickly and with confidence know that you are buying the legit product instead of a knockoff.  It can be used in supply chain management to track/verify where goods are, that they have been stored at the correct temperature along the way, etc. 

Here's a brief quote that I think does a good job of summing up the plans for VeChain:  VeChain is a blockchain-enabled platform that is designed to enhance supply chain management processes. By utilizing tamper-proof and distributed ledger technology, VeChain provides retailers and consumers with the ability to determine the quality and authenticity of products that are bought. From product source materials, to servicing history, and spare part replacements, every single piece of information about the supply chain movement of a product can be recorded and verified to bring about a supply chain management ecosystem that is secure for all participants. VeChain plans to achieve this secure supply chain management ecosystem via the method of asset digitization. VeChain enables manufactures to assign products with unique identities to the platform. This will allow manufacturers, supply chain partners, and even consumers, to track the movement of products through their supply chain.


Although the work I've put into studying VeChain suggests to me that they are doing this better than other companies at the moment, it's possible that another crypto or technology could overtake VeChain, in the same way that any business venture can get beat by a stronger company over time.  But to say that my success in this cypto depends on someone even more foolish to buy my stake in VeChain is false. 

If you want to criticize me for investing in a single company rather than an index, I can see merit for that.  Personally, I have been nothing but 100% VTSAX since I started my FIRE journey 6 years ago.  We are, after all, on Mr. Money Mustache's forum, where face punches for buying individual ventures is part of the fun.  But to hold a position that crypto is just fools looking for even greater fools only hurting yourself in the long run. 

Finally, I want to say that this sentiment is WHY I'm venturing out of purely VTSAX.  I find that 95% plus of people I talk to and read on the internet seem to share your view that crypto is fools looking for bigger fools.  Because of this, my thesis is that groups trying to solve real-world problems using crypto are vastly underpriced in the market.  The total market cap of all things crypto is about 2.5 trillion dollars.  It will be MANY times that when the world realizes that it's actually pretty straightforward to tell which cryptos are composed of legit teams who are finding ways to solve problems that businesses and individuals currently face.  So, while this space is still massively misunderstood and under funded, I will be deviating from my all Index Fund strategy and finding a variety of projects that are solving real problems. 

Cheers.

This seems to be almost a space where you can be a venture capitalist as a small guy.  I can kinda get behind this explanation and could see allocating money to this with a group of people that are all researching and studying similar trends in the blockchain application industry.  Why haven't you stated your stake in something like this before.  For the most part people here are talking about BTC i know there are other things out there and a few others have been mentioned but very few things here have been mentioned like what you just did about vechain which IMO greatly changes the entire discussion about investing in blockchain technologies.

Hey Boarder, I haven't stated my stake in this before, because it's all super new to me and I'm learning as fast as I can.  Here's the best I can describe a timeline of my growing understanding/mindset since June...

1.  At the start of this summer - "This crypto thing doesn't seem to be going away as I thought it would.  I think I'm going to dig in a bit and see if I can make sense of what the hell it's even about."
 
2.  Middle of Summer - "Wow, there's a ton of legitimately cool and important stuff happening in the space.  There's tons of viable projects, but I don't know enough to tell a viable project from shit project that won't go anywhere."

3.  August - "Alright I understand Bitcoin and Ethereum.  These things aren't going away any time soon.  Bitcoin at worst is an amazing store of value, and at best, can become a currency if the Lightning Network pans out(which appears to be happening).  Ethereum, however, has TONS of use cases, particularly in the realm of Decentralized Finance, Non-Fungible Tokens, the gaming community, and the list goes on.  I'm ready to stake an amount of money that matters to me on those chains." 

4.  September/Early October - "I could just ride out Ethereum/Bitcoin, but you know what, studying all the different groups of coders around the world who are trying to use blockchains to solve real-world problems is absolutely fascinating to me.  At this point, I'm daily reading the white papers where the founders of projects state their intentions with their coins, watching an hour or two of youtube channels where people smarter than me explain in detail what various blockchains are, what problems they solve, the strength of the team of developers behind them, the established corporations they have contracts with for their services, and so forth". 

5.  Mid-October - "Ok, my 700k stache back in August is now up to 800k, mostly due to crypto gains.  I now have incredible confidence from my growing understanding of the space that Ethereum and Bitcoin have so much more upside than downside.  People have no idea how undervalued it is, and until they do, I can buy things at a MASSIVE discount. I feel comfortable putting 400k of my 800k stache into cyrpto. My wife and I are 10 years from a pension that will pay out a combined 100k per year and have a 400k house that is 75% paid off.  This 400k will make absolutely no difference in my ability to FIRE in 10 years, but if my thesis is correct, I may be able to justify retiring far before the pensions vest.  I have high upside if I'm right, and low downside if I'm wrong".

6.  Past Week - It's now time for me to stop just reading about all these cool projects and create a portfolio that gives me some exposure to them.  I am still working out a few kinks and executing trades, but here is where I expect my positions to be when the dust settles in the coming days:

VTSAX: 400k
Ethereum: 235k
Bitcoin: 127k
Altcoins (Currently: VeChain, Enjin, Polkadot, Chainlink, Avalanche, Aave, Cardano, Solana, Uniswap): 40k

7.  Moving forward: My son is 9 and is very into playing Pokemon Go.  Now that I have a portfolio of cryptos that I feel comfortable holding for a year or two, I want to explore the space as a user and not just as an investor.  There are videogames on blockchains where you can buy characters (as Non-Fungible Tokens) and use those characters to play video games where you get paid to play.  I'm looking to buy some of these characters as a way to help my son learn about the space in a way that will motivate him.  I see coding as a possible career option for him, and I want him to feel like a digital native in the cypto space.  I expect to make a low hourly rate in doing this, but see it as high value if it provides a way to get my children learning about a growing field.  Plus it's something fun we can do together. 

So yeah, I don't always post tons of specifics on this message board because there's a lag time between when you understand something, and when you can competently explain it to other really smart people.  I'm trying to stay in my lane, and only delve into details when I am confident I can competently explain what the hell I'm talking about. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 28, 2021, 01:04:08 PM
@aceyou - the friend thing, at least from my perspective, was just another of this friend's MLM-adjacent activities, and probably ultimately good he got super pissed off that I wasn't impressed by his new-found financially responsibility demonstrated by DAY TRADING DOGECOIN. FFS - you had a kid and want to be more financially responsible, so your big solution is ramping up your gambling.
 
My point about needing to find the greater fool was if your investment is in the form of crypto currency, then you do need someone to sell it to if you want to exchange that for something other than other crypto currency - as clarkfan pointed out, you can't buy a house with crypto. I don't think VeChain is an exception to this. You don't own anything other than the VET. It doesn't pay dividends - actually it is a non-profit, so paying a dividend would be illegal, at least in the US (assuming they want to be a real non-profit and have the benefits that come with that and not just a company that doesn't make money).

So please, explain to me how this coin is making you money without selling it - your post just claims you're making money with VeChain without explaining how you're making money from owning it.

Or maybe we're just crossing wires because I used what I thought was a common idiom - when you have a purely speculative investment, for the investment to work out, you need someone to sell it to. This is why we don't tax unrealized capital gains - until you sell you actually haven't gained anything. "The greater fool" I'm referring to is whoever buys the thing from the person currently holding it. If your investment is crypto or gold or baseball cards or old silver coins or a house that you're not renting out, you haven't made a profit until you sell (or borrow against, although to borrow against something there generally needs to be a reasonable belief the lender could sell the thing if they have to).

When people say they are investing in VTSAX, do you bring up the "greater fool" argument?  I mean, in the way you are describing it, isn't investing in VTSAX is equally a greater fool situation.  I can't go to the store and buy milk with VTSAX in retirement.  Rather, I find a "greater fool" to give me dollars for my VTSAX, then I use that fool's money to buy milk. 

Actually, I could argue that VTSAX more of a greater fool situation than my crypto.   With VTSAX I gotta find a fool to buy my shares before I can buy anything.  But with my bitcoin, I could technically fly to El Salvador, and directly buy milk with the Bitcoin through the Lightning Network.  So I guess cyrpto isn't AS MUCH of a greater fool situation as VTSAX, but we would never use that kind of verbiage around here for someone buying their index fund. 

Oh, and I much better understand your fallout with your friend, thanks for the explanation.  When people are putting their family's security at stake repeatedly by taking risks that they don't understand and can't afford to take, that's tough to be around.  At some point, it's best for your own happiness to not be around that anymore. 

Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on October 28, 2021, 01:14:42 PM
Right - you don't actually know what you're holding in VTSAX, nor do you know how your VET is making you money as you claimed. So, congratulations @aceyou, you're on the ignore list as someone who really, truly should be ignored.

FFS - 3 months where you got lucky (and haven't yet cashed out, so haven't actually made any real gains yet with this) and you're lecturing others?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 28, 2021, 01:20:27 PM
1. I have yet to see a single real-world problem solved by blockchain (this VeChain example included). What you've described does not at all make sense to me as a use-case for a blockchain.
Criminals robbing people with ransom ware?  That's the largest category of criminal activity with Bitcoin, according to an analysis I read.  Gone are years past when Bitcoin solved the problem of buying illegal drugs!  The FBI got rather good at catching illegal websites that way (as an aside, I believe the FBI now holds the largest Bitcoin wallet in the world, from all the BTC they seized from criminals).


Actually, I could argue that VTSAX more of a greater fool situation than my crypto.   With VTSAX I gotta find a fool to buy my shares before I can buy anything.  But with my bitcoin, I could technically fly to El Salvador, and directly buy milk with the Bitcoin through the Lightning Network.
VTSAX issues dividends in cash.  If they keep dividends that should be paid to shareholders, that violates security laws.  It's not really fair to claim ownership rights over U.S. companies have no resale value, since the underlying company has value.  None of those laws and rights apply to Bitcoin.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 28, 2021, 01:35:05 PM
When people say they are investing in VTSAX, do you bring up the "greater fool" argument?  I mean, in the way you are describing it, isn't investing in VTSAX is equally a greater fool situation.  I can't go to the store and buy milk with VTSAX in retirement.  Rather, I find a "greater fool" to give me dollars for my VTSAX, then I use that fool's money to buy milk. 

Crypto enthusiasts paint in whataboutism like DaVinci used paints. It's impressive to watch—truly.

But no. VTSAX pays a dividend, currently right around $1.50/share, with a long track record of increasing because... y'know, the actual businesses that you own as part of holding VTSAX tend to turn a profit, and since the economy tends to grow, profits do too, so dividends tend to grow.

Now, a posession that produces $1.50 every year on its own has some value, don't you think? If it cost $1.00, for example, you'd be an absolute buffoon to not to put every dollar you owned into that. So there's a floor—VTSAX absolutely cannot—assuming dividends continue to flow as they have—go below some "reasonably good deal" threshold, because VTSAX shares are little money printers.

Cryptocurrencies are not shares in businesses. They're numbers in a database on the internet. The floor is 0. There's no reason anyone should want to hold a crypto coin, unless there's an expectation someone will give you more money for it later. That is the only way to make money in this system.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 28, 2021, 01:41:28 PM
Criminals robbing people with ransom ware?  That's the largest category of criminal activity with Bitcoin, according to an analysis I read.  Gone are years past when Bitcoin solved the problem of buying illegal drugs!  The FBI got rather good at catching illegal websites that way (as an aside, I believe the FBI now holds the largest Bitcoin wallet in the world, from all the BTC they seized from criminals).

Hah! Touché. And I guess to be fully fair, I have heard one other arguably valid use-case: gambling. I could create, for example, a smart contract "game" of a coin flip. Players would put up a bet, the coin flip happens, and money is transferred accordingly. It'd have to be a fairly trivial game like this, because everyone would need to be able to read the "contract" (code), making any sufficiently complex game unlikely doable. But... I guess that's something?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 28, 2021, 01:48:50 PM
1. I have yet to see a single real-world problem solved by blockchain (this VeChain example included). What you've described does not at all make sense to me as a use-case for a blockchain.
Criminals robbing people with ransom ware?  That's the largest category of criminal activity with Bitcoin, according to an analysis I read.  Gone are years past when Bitcoin solved the problem of buying illegal drugs!  The FBI got rather good at catching illegal websites that way (as an aside, I believe the FBI now holds the largest Bitcoin wallet in the world, from all the BTC they seized from criminals).


Actually, I could argue that VTSAX more of a greater fool situation than my crypto.   With VTSAX I gotta find a fool to buy my shares before I can buy anything.  But with my bitcoin, I could technically fly to El Salvador, and directly buy milk with the Bitcoin through the Lightning Network.
VTSAX issues dividends in cash.  If they keep dividends that should be paid to shareholders, that violates security laws.  It's not really fair to claim ownership rights over U.S. companies have no resale value, since the underlying company has value.  None of those laws and rights apply to Bitcoin.

the FBI needs to be cashing those in to pay down the national debt.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on October 28, 2021, 01:49:06 PM
Criminals robbing people with ransom ware?  That's the largest category of criminal activity with Bitcoin, according to an analysis I read.  Gone are years past when Bitcoin solved the problem of buying illegal drugs!  The FBI got rather good at catching illegal websites that way (as an aside, I believe the FBI now holds the largest Bitcoin wallet in the world, from all the BTC they seized from criminals).

Hah! Touché. And I guess to be fully fair, I have heard one other arguably valid use-case: gambling. I could create, for example, a smart contract "game" of a coin flip. Players would put up a bet, the coin flip happens, and money is transferred accordingly. It'd have to be a fairly trivial game like this, because everyone would need to be able to read the "contract" (code), making any sufficiently complex game unlikely doable. But... I guess that's something?
I know a guy who charges something like $500 / hour to validate that the lottery's random-number generator is indeed sufficiently random. Let me find out how much BTC it would take for him to give your game legitimacy. Then you just code it so the coin you're flipping lands on-edge once every 100 or 1000 times and both players lose to the developers. Assuming your coin can be exchanged for real money somewhere you've got yourself a nice little business if you can find people to play it. Until the gambling regulators come calling anyway.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on October 28, 2021, 02:20:18 PM
I'd argue the floor for value with any given coin is less than zero. At least until there are widespread and tested laws along with some actual court rulings establishing that liability for activity involving that coin cannot be passed on to the coin holders & traders just for holding and transacting with the coin. Is what you or whatever is happening with the coins you're supporting by holding them legal? What are the consequences if it is found to be illegal? Aside from obvious illegal activity, the answer is "I don't know", and even then - might BTC holders one day be found liable for supporting those ransomware attacks? Has a court even been asked that question yet?

Publicly traded companies on the other hand have long-standing and battle-tested laws shielding small individual shareholders from the company's liabilities. And that comes with some massive tradeoffs for the company - regulatory requirements and fundamentally unfavorable tax treatment. There is big upside to having easily accessible investments to individuals, but it absolutely must come with these big trade offs because the opportunity is so great to take unfair advantage of people and society at large. Is it perfect? Obviously not, but there is at least an attempt at making this whole situation workable so all of us retail investors don't get too screwed over when we stick to regulated investments.

Crypto as an investment has the potential big upside for people, and the massive opportunity to exploit people is obviously there too. What is lacking are the necessary laws and regulations to make this all a reasonable thing for society at large - it hasn't gotten big enough for regulators to really do anything until quite recently (someone made this point upthread). So buyer beware.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 28, 2021, 05:40:06 PM

I don't need greater fools to make money in this space.  Take, for example, a small investment I've made in VeChain (about 3k).  The purpose of this crypto is to use a blockchain as a validator/authenticator.  If you are a maker of name brand sunglasses, you may choose to use VeChain to allow consumers to quickly and with confidence know that you are buying the legit product instead of a knockoff.  It can be used in supply chain management to track/verify where goods are, that they have been stored at the correct temperature along the way, etc. 

Here's a brief quote that I think does a good job of summing up the plans for VeChain:  VeChain is a blockchain-enabled platform that is designed to enhance supply chain management processes. By utilizing tamper-proof and distributed ledger technology, VeChain provides retailers and consumers with the ability to determine the quality and authenticity of products that are bought. From product source materials, to servicing history, and spare part replacements, every single piece of information about the supply chain movement of a product can be recorded and verified to bring about a supply chain management ecosystem that is secure for all participants. VeChain plans to achieve this secure supply chain management ecosystem via the method of asset digitization. VeChain enables manufactures to assign products with unique identities to the platform. This will allow manufacturers, supply chain partners, and even consumers, to track the movement of products through their supply chain.


Although the work I've put into studying VeChain suggests to me that they are doing this better than other companies at the moment, it's possible that another crypto or technology could overtake VeChain, in the same way that any business venture can get beat by a stronger company over time.  But to say that my success in this cypto depends on someone even more foolish to buy my stake in VeChain is false. 
.

This seems to be almost a space where you can be a venture capitalist as a small guy.  I can kinda get behind this explanation and could see allocating money to this with a group of people that are all researching and studying similar trends in the blockchain application industry.  Why haven't you stated your stake in something like this before.  For the most part people here are talking about BTC i know there are other things out there and a few others have been mentioned but very few things here have been mentioned like what you just did about vechain which IMO greatly changes the entire discussion about investing in blockchain technologies.

Hey Boarder, I haven't stated my stake in this before, because it's all super new to me and I'm learning as fast as I can.  Here's the best I can describe a timeline of my growing understanding/mindset since June...

1.  At the start of this summer - "This crypto thing doesn't seem to be going away as I thought it would.  I think I'm going to dig in a bit and see if I can make sense of what the hell it's even about."
 
2.  Middle of Summer - "Wow, there's a ton of legitimately cool and important stuff happening in the space.  There's tons of viable projects, but I don't know enough to tell a viable project from shit project that won't go anywhere."

3.  August - "Alright I understand Bitcoin and Ethereum.  These things aren't going away any time soon.  Bitcoin at worst is an amazing store of value, and at best, can become a currency if the Lightning Network pans out(which appears to be happening).  Ethereum, however, has TONS of use cases, particularly in the realm of Decentralized Finance, Non-Fungible Tokens, the gaming community, and the list goes on.  I'm ready to stake an amount of money that matters to me on those chains." 

4.  September/Early October - "I could just ride out Ethereum/Bitcoin, but you know what, studying all the different groups of coders around the world who are trying to use blockchains to solve real-world problems is absolutely fascinating to me.  At this point, I'm daily reading the white papers where the founders of projects state their intentions with their coins, watching an hour or two of youtube channels where people smarter than me explain in detail what various blockchains are, what problems they solve, the strength of the team of developers behind them, the established corporations they have contracts with for their services, and so forth". 

5.  Mid-October - "Ok, my 700k stache back in August is now up to 800k, mostly due to crypto gains.  I now have incredible confidence from my growing understanding of the space that Ethereum and Bitcoin have so much more upside than downside.  People have no idea how undervalued it is, and until they do, I can buy things at a MASSIVE discount. I feel comfortable putting 400k of my 800k stache into cyrpto. My wife and I are 10 years from a pension that will pay out a combined 100k per year and have a 400k house that is 75% paid off.  This 400k will make absolutely no difference in my ability to FIRE in 10 years, but if my thesis is correct, I may be able to justify retiring far before the pensions vest.  I have high upside if I'm right, and low downside if I'm wrong".

6.  Past Week - It's now time for me to stop just reading about all these cool projects and create a portfolio that gives me some exposure to them.  I am still working out a few kinks and executing trades, but here is where I expect my positions to be when the dust settles in the coming days:

VTSAX: 400k
Ethereum: 235k
Bitcoin: 127k
Altcoins (Currently: VeChain, Enjin, Polkadot, Chainlink, Avalanche, Aave, Cardano, Solana, Uniswap): 40k

7.  Moving forward: My son is 9 and is very into playing Pokemon Go.  Now that I have a portfolio of cryptos that I feel comfortable holding for a year or two, I want to explore the space as a user and not just as an investor.  There are videogames on blockchains where you can buy characters (as Non-Fungible Tokens) and use those characters to play video games where you get paid to play.  I'm looking to buy some of these characters as a way to help my son learn about the space in a way that will motivate him.  I see coding as a possible career option for him, and I want him to feel like a digital native in the cypto space.  I expect to make a low hourly rate in doing this, but see it as high value if it provides a way to get my children learning about a growing field.  Plus it's something fun we can do together. 

So yeah, I don't always post tons of specifics on this message board because there's a lag time between when you understand something, and when you can competently explain it to other really smart people.  I'm trying to stay in my lane, and only delve into details when I am confident I can competently explain what the hell I'm talking about. 

Interesting explanation! Good luck, @aceyou.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 29, 2021, 09:22:19 AM
Thanks BicycleB!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 29, 2021, 09:35:24 AM
When people say they are investing in VTSAX, do you bring up the "greater fool" argument?  I mean, in the way you are describing it, isn't investing in VTSAX is equally a greater fool situation.  I can't go to the store and buy milk with VTSAX in retirement.  Rather, I find a "greater fool" to give me dollars for my VTSAX, then I use that fool's money to buy milk. 

Crypto enthusiasts paint in whataboutism like DaVinci used paints. It's impressive to watch—truly.

But no. VTSAX pays a dividend, currently right around $1.50/share, with a long track record of increasing because... y'know, the actual businesses that you own as part of holding VTSAX tend to turn a profit, and since the economy tends to grow, profits do too, so dividends tend to grow.

Now, a posession that produces $1.50 every year on its own has some value, don't you think? If it cost $1.00, for example, you'd be an absolute buffoon to not to put every dollar you owned into that. So there's a floor—VTSAX absolutely cannot—assuming dividends continue to flow as they have—go below some "reasonably good deal" threshold, because VTSAX shares are little money printers.

Cryptocurrencies are not shares in businesses. They're numbers in a database on the internet. The floor is 0. There's no reason anyone should want to hold a crypto coin, unless there's an expectation someone will give you more money for it later. That is the only way to make money in this system.

In the stock market, some stocks pay dividends, and others do not.  Some cryptos, in their own way, behaves in this manner as well. 

An example is Ethereum.  They are currently shifting from a "proof of work" to a "proof of stake" method to secure their network.  This means that people have to be willing to "stake" their eth, which means they agree to lock up their Eth for a set time period before they have access to it again.  Staking requires like 100 times less energy to secure the network compared to a proof of work system like Bitcoin, so most coins are now going in that type of a direction.  Don't quote me, but I think you get 5% interest for Eth that you choose to stake. 

I don't stake Eth, because I prefer to retain the ability to buy/sell when I want at this time as I continue to gain familiarity with the space.  But if I DID choose to stake, then my investment returns would come in two ways: 1) appreciation/depreciation of Eth compared to the US Dollar (just like the growth/decay of a stock price), and 2) the 5% interest, which effectively acts like a dividend, except it's way higher than the 1.5% I'm currently receiving from VTSAX. 

So, if I wanted, I could stake lots of my cyrpto investments, and live off the interest, which I could use to buy goods and services, without ever needing to sell my initial Eth.  Not exactly the same as a dividend, but the end result is about the same IMO. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 29, 2021, 11:34:13 AM
@aceyou , I appreciate your candor and specifics.

I don't have access to key details, like Aceyou's retirement horizon, or ability to generate income today, but that is a massive allocation to Bitcoin and Ether, far in excess of the "low%" that is advertised in the title of this thread. If you're a new reader considering crypto, please consider carefully whether making crypto 40% of a seven digit net worth will work within your risk tolerance. Emotionally, I'd find it difficult to experience 10% of my NW evaporating in twelve hours several times a year.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 29, 2021, 11:42:14 AM
In the stock market, some stocks pay dividends, and others do not.  Some cryptos, in their own way, behaves in this manner as well. 

An example is Ethereum.  They are currently shifting from a "proof of work" to a "proof of stake" method to secure their network.  This means that people have to be willing to "stake" their eth, which means they agree to lock up their Eth for a set time period before they have access to it again.  Staking requires like 100 times less energy to secure the network compared to a proof of work system like Bitcoin, so most coins are now going in that type of a direction.  Don't quote me, but I think you get 5% interest for Eth that you choose to stake. 

I don't stake Eth, because I prefer to retain the ability to buy/sell when I want at this time as I continue to gain familiarity with the space.  But if I DID choose to stake, then my investment returns would come in two ways: 1) appreciation/depreciation of Eth compared to the US Dollar (just like the growth/decay of a stock price), and 2) the 5% interest, which effectively acts like a dividend, except it's way higher than the 1.5% I'm currently receiving from VTSAX. 

So, if I wanted, I could stake lots of my cyrpto investments, and live off the interest, which I could use to buy goods and services, without ever needing to sell my initial Eth.  Not exactly the same as a dividend, but the end result is about the same IMO.

Ultimately, what is the source of the money one receives from staking? A 5% interest rate in a low-interest environment raises my "too good to be true" suspicions. Where is this money coming from?

For example, when a stock pays dividends, that money ultimately comes from customers paying the businesses money for the goods/services they produce. The business passes some of that money onto you, as an owner. From where do staking payouts come?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 29, 2021, 12:28:13 PM
(as an aside, I believe the FBI now holds the largest Bitcoin wallet in the world, from all the BTC they seized from criminals).
the FBI needs to be cashing those in to pay down the national debt.
Actually that might be old news - the FBI has hundreds of thousands of wallets now.  Even if the FBI still held 1.5% of Bitcoin, it wouldn't be enough to pay off 0.1% of the current $29 trillion U.S. debt.  I'm guessing the FBI auctions it off over time.
https://www.cnbc.com/2021/08/04/irs-has-seized-1point2-billion-worth-of-cryptocurrency-this-year-.html
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 29, 2021, 12:31:47 PM
An example is Ethereum.  They are currently shifting from a "proof of work" to a "proof of stake" method to secure their network.
...
I don't stake Eth, because I prefer to retain the ability to buy/sell when I want at this time as I continue to gain familiarity with the space.
Thanks for the reminder - I just signed up for Coinbase's waitlist to stake ETH.  I don't plan on selling for years, so why not try it out.

I wonder if "proof of stake", being much more environmentally friendly, is a risk to BTC?  Bitcoin still uses "proof of work", which is many datacenters worth of computers all working to win the next block reward.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 29, 2021, 12:51:13 PM
In the stock market, some stocks pay dividends, and others do not.  Some cryptos, in their own way, behaves in this manner as well. 

An example is Ethereum.  They are currently shifting from a "proof of work" to a "proof of stake" method to secure their network.  This means that people have to be willing to "stake" their eth, which means they agree to lock up their Eth for a set time period before they have access to it again.  Staking requires like 100 times less energy to secure the network compared to a proof of work system like Bitcoin, so most coins are now going in that type of a direction.  Don't quote me, but I think you get 5% interest for Eth that you choose to stake. 

I don't stake Eth, because I prefer to retain the ability to buy/sell when I want at this time as I continue to gain familiarity with the space.  But if I DID choose to stake, then my investment returns would come in two ways: 1) appreciation/depreciation of Eth compared to the US Dollar (just like the growth/decay of a stock price), and 2) the 5% interest, which effectively acts like a dividend, except it's way higher than the 1.5% I'm currently receiving from VTSAX. 

So, if I wanted, I could stake lots of my cyrpto investments, and live off the interest, which I could use to buy goods and services, without ever needing to sell my initial Eth.  Not exactly the same as a dividend, but the end result is about the same IMO.

Ultimately, what is the source of the money one receives from staking? A 5% interest rate in a low-interest environment raises my "too good to be true" suspicions. Where is this money coming from?

For example, when a stock pays dividends, that money ultimately comes from customers paying the businesses money for the goods/services they produce. The business passes some of that money onto you, as an owner. From where do staking payouts come?

There are two common ways to add blocks to the chain.  Proof of Work and Proof of Stake (POW & POS respectively).  You should already know what POW is since its been discussed here in the context of Bitcoin.  POS does the same thing but without mining and arguably less security than POW.  You set up a node that verifies transactions.  If your node is chosen to verify then you, or if you are in a pool - the pool, get the block reward (which goes to miners in the POW method).  POS is faster than POW and makes it easier to scale on chain, but again, its got a lot of critics in the industry because POW is the gold standard for security.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on October 29, 2021, 12:58:10 PM
I think it is worth pointing out proof of stake is also like a performance bond. You make the deposit, promising to do whatever the amount of work is to get the reward. Your do the work, you get your deposit back with the additional reward. Fail to perform as agreed and you lose your deposit.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 29, 2021, 01:09:23 PM
There are two common ways to add blocks to the chain.  Proof of Work and Proof of Stake (POW & POS respectively).  You should already know what POW is since its been discussed here in the context of Bitcoin.  POS does the same thing but without mining and arguably less security than POW.  You set up a node that verifies transactions.  If your node is chosen to verify then you, or if you are in a pool - the pool, get the block reward (which goes to miners in the POW method).  POS is faster than POW and makes it easier to scale on chain, but again, its got a lot of critics in the industry because POW is the gold standard for security.

I'm less interested in talking about the technicals here— I'm curious if you can explain where the money actually comes from?

I'll give a few examples for things I understand:
1. Bank interest. I earn (a tiny amount) of interest in my checking account. The bank uses the money it holds to give loans with interest. It shares some of the interest it earns with its customers.
2. Stock dividends. Businesses sell goods and services for money. Businesses tend to earn more from selling goods than they spend on expenses. Those are profits. Some of those profits are shared with shareholders (owners) of the business.
3. Real Estate. A landlord can lease land (or a space in a building) to a tenant in exchange for money.

Can anyone give a simple "ELI5" example of the source of interest payments from staking?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 29, 2021, 01:10:04 PM
I think it is worth pointing out proof of stake is also like a performance bond. You make the deposit, promising to do whatever the amount of work is to get the reward. Your do the work, you get your deposit back with the additional reward. Fail to perform as agreed and you lose your deposit.

Thanks, you are right, that does need to be pointed out. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 29, 2021, 01:14:07 PM
I think it is worth pointing out proof of stake is also like a performance bond. You make the deposit, promising to do whatever the amount of work is to get the reward. Your do the work, you get your deposit back with the additional reward. Fail to perform as agreed and you lose your deposit.

It can be.  There are a thousand different way to do POS and there are a lot of people smarter than me determining which is the best way of writing the code.  Cardano for instance, uses a delegated proof of stake model inwhich you can stop staking anytime you want without penalty.  Meanwhile, Polkadot, also a delegated POS model, requires you to bond your stake for a period of 30-days and moreover, if your pool does anything to compromise the network, can punish you by striking you bonded amount - potentially to zero (but strikes are very rare and I don't think any pool has qualified for a severe strike yet).  Not going to pretend to be an expert on POS models but the takeaway is that there is a lot of different models and there is no widespread agreement on which is the best model - its definitely being figured out though.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 29, 2021, 01:18:31 PM
There are two common ways to add blocks to the chain.  Proof of Work and Proof of Stake (POW & POS respectively).  You should already know what POW is since its been discussed here in the context of Bitcoin.  POS does the same thing but without mining and arguably less security than POW.  You set up a node that verifies transactions.  If your node is chosen to verify then you, or if you are in a pool - the pool, get the block reward (which goes to miners in the POW method).  POS is faster than POW and makes it easier to scale on chain, but again, its got a lot of critics in the industry because POW is the gold standard for security.

I'm less interested in talking about the technicals here— I'm curious if you can explain where the money actually comes from?

I'll give a few examples for things I understand:
1. Bank interest. I earn (a tiny amount) of interest in my checking account. The bank uses the money it holds to give loans with interest. It shares some of the interest it earns with its customers.
2. Stock dividends. Businesses sell goods and services for money. Businesses tend to earn more from selling goods than they spend on expenses. Those are profits. Some of those profits are shared with shareholders (owners) of the business.
3. Real Estate. A landlord can lease land (or a space in a building) to a tenant in exchange for money.

Can anyone give a simple "ELI5" example of the source of interest payments from staking?

It's a block reward.  It rewards you for your effort in securing the network.  Its written in the code of the whatever project we are talking about. 

I am definitely less troubled by where the block rewards come from than where US Dollars come from and its not even close.  That is not a debate you want to get into, lol.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 29, 2021, 01:19:08 PM
@aceyou , I appreciate your candor and specifics.

I don't have access to key details, like Aceyou's retirement horizon, or ability to generate income today, but that is a massive allocation to Bitcoin and Ether, far in excess of the "low%" that is advertised in the title of this thread. If you're a new reader considering crypto, please consider carefully whether making crypto 40% of a seven digit net worth will work within your risk tolerance. Emotionally, I'd find it difficult to experience 10% of my NW evaporating in twelve hours several times a year.

Yeah, I do consider it to be a massive allocation, I did not start thread, just a contributor to the discussion.  A few details of why I am comfortable doing it:

Age: 38 (DW is 37)
NW: 1.1 Million
Stache: 800k
Other: Pension that kicks in in 10 years.  Between my wife and myself, that will be about 100k total per year, starting in 2031. 

Worst case scenario: I lose the entire 400k, and we still have over a million stache at age 48, plus paid off house, plus 100k pension for the rest of our life (goes up to account for inflation).  And I still am retired at age 48.  (I'd give this a less than 10% chance of happening)

Best case scenario: The 400k does something like a 5x in the next couple years, and at age 40 I have a net worth of about 3 million, and my wife and I just retire, which drastically reduces pension, but who cares, we have enough for a fat fire at 40.  (I'd give this a 40-50% chance of happening)

So basically, my thesis is that the best case scenario is more likely than the worst case scenario.  The worst case scenario doesn't markedly hurt my life in any significant way, but the best case scenario makes a big improvement in happiness.  Oh, and my wife and I have sat down and talked about it, and she is in agreement that this is a worthwhile risk to take. 

So even though it's a massive allocation, it doesn't seem to be a massive risk, if that makes sense?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 29, 2021, 01:19:59 PM
There are two common ways to add blocks to the chain.  Proof of Work and Proof of Stake (POW & POS respectively).  You should already know what POW is since its been discussed here in the context of Bitcoin.  POS does the same thing but without mining and arguably less security than POW.  You set up a node that verifies transactions.  If your node is chosen to verify then you, or if you are in a pool - the pool, get the block reward (which goes to miners in the POW method).  POS is faster than POW and makes it easier to scale on chain, but again, its got a lot of critics in the industry because POW is the gold standard for security.

I'm less interested in talking about the technicals here— I'm curious if you can explain where the money actually comes from?

I'll give a few examples for things I understand:
1. Bank interest. I earn (a tiny amount) of interest in my checking account. The bank uses the money it holds to give loans with interest. It shares some of the interest it earns with its customers.
2. Stock dividends. Businesses sell goods and services for money. Businesses tend to earn more from selling goods than they spend on expenses. Those are profits. Some of those profits are shared with shareholders (owners) of the business.
3. Real Estate. A landlord can lease land (or a space in a building) to a tenant in exchange for money.

Can anyone give a simple "ELI5" example of the source of interest payments from staking?

It's a block reward.  It rewards you for your effort in securing the network.  Its written in the code of the whatever project we are talking about. 

I am definitely less troubled by where the block rewards come from than where US Dollars come from and its not even close.  That is not a debate you want to get into, lol.

I should clarify, its generally a block reward + transaction fees of whatever transactions are verified. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 29, 2021, 01:20:49 PM
It's a block reward.  It rewards you for your effort in securing the network.  Its written in the code of the whatever project we are talking about. 

Ok, so it's effectively spawned from thin air, yes? And the value that that freshly-spawned-from-thin-air token holds comes from where?

I am definitely less troubled by where the block rewards come from than where US Dollars come from and its not even close.  That is not a debate you want to get into, lol.

Like I said...
Quote
Crypto enthusiasts paint in whataboutism like DaVinci used paints.


Paint, DaVinci, paint! Nobody here is talking about currencies. We're talking about revenue-generating assets.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on October 29, 2021, 01:25:15 PM
Can anyone give a simple "ELI5" example of the source of interest payments from staking?

Sure thing. It comes from two sources:

1) The block reward. These are new units of currency which are created by the built in rules of the currency and controlled by whoever produced that particular block (in bitcoin the amount of new currency declines over time towards and ultimately reaching zero). This is the same way the fed creates new units of dollars when it buys governments bonds or other securities.

2) Transaction fees. These are existing units of currency that people who want to transfer currency from one wallet to another pay to have their transactions processed. In principle transaction fees can be zero, but if there are more transactions that people want to make queued up than room to make them in a current block, the transactions with the highest fees cut to the front of the line. This is like the percentage of each transaction that goes to mastercard/visa/paypal when you make a payment using one of those avanue to move dollars around.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 29, 2021, 01:27:02 PM
Can anyone give a simple "ELI5" example of the source of interest payments from staking?

Sure thing. It comes from two sources:

1) The block reward. These are new units of currency which are created by the built in rules of the currency and controlled by whoever produced that particular block (in bitcoin the amount of new currency declines over time towards and ultimately reaching zero). This is the same way the fed creates new units of dollars when it buys governments bonds or other securities.

2) Transaction fees. These are existing units of currency that people who want to transfer currency from one wallet to another pay to have their transactions processed. In principle transaction fees can be zero, but if there are more transactions that people want to make queued up than room to make them in a current block, the transactions with the highest fees cut to the front of the line. This is like the percentage of each transaction that goes to mastercard/visa/paypal when you make a payment using one of those avanue to move dollars around.

Cool. I appreciate the straightforwardness :)

For item 1, do you see any trouble with that? Is there value in this block reward that's summoned from nothing? Where's the value come from?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 29, 2021, 01:28:55 PM
@aceyou , I appreciate your candor and specifics.

I don't have access to key details, like Aceyou's retirement horizon, or ability to generate income today, but that is a massive allocation to Bitcoin and Ether, far in excess of the "low%" that is advertised in the title of this thread. If you're a new reader considering crypto, please consider carefully whether making crypto 40% of a seven digit net worth will work within your risk tolerance. Emotionally, I'd find it difficult to experience 10% of my NW evaporating in twelve hours several times a year.

Yeah, I do consider it to be a massive allocation, I did not start thread, just a contributor to the discussion.  A few details of why I am comfortable doing it:

Age: 38 (DW is 37)
NW: 1.1 Million
Stache: 800k
Other: Pension that kicks in in 10 years.  Between my wife and myself, that will be about 100k total per year, starting in 2031. 

Worst case scenario: I lose the entire 400k, and we still have over a million stache, plus paid off house, plus 100k pension for the rest of our life (goes up to account for inflation).  And I still am retired at age 48.  (I'd give this a less than 10% chance of happening)

Best case scenario: The 400k does something like a 5x in the next couple years, and at age 40 I have a net worth of about 3 million, and my wife and I just retire, which drastically reduces pension, but who cares, we have enough for a fat fire at 40.  (I'd give this a 40-50% chance of happening)

So basically, my thesis is that the best case scenario is more likely than the worst case scenario.  The worst case scenario doesn't markedly hurt my life in any significant way, but the best case scenario makes a big improvement in happiness. 

So even though it's a massive allocation, it doesn't seem to be a massive risk, if that makes sense?

I can almost guarantee you that at some point your crypto portfolio will see a 50% drop in value.  IDK if it will be tomorrow, or in June 2022, but people will lose interest and it will enter a decline.  Atleast that is what the trend has been and, due to the volatility we are still experiencing I do not suspect it will change anytime soon.  I am also, fairly confident that it will reach newer highs sometime after that.  However, as bullish as i am on crypto, I wouldn't bet the farm on it because government regulation can hamper that.

Personally, I could care less what anyone does with their money.  Buy Bitcoin, sell Bitcoin, curse Bitcoin - I just don't care.  But, as someone has spent considerable time doing my own research, I think the prudent thing to do is to invest a small amount into crypto (less than 3% of your network) and take profits when it surges (like right now) and to buy periodically as well (DCA maybe 1-2% of your disposable income or just wait for a real crash in price).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 29, 2021, 01:36:26 PM
It's a block reward.  It rewards you for your effort in securing the network.  Its written in the code of the whatever project we are talking about. 

Ok, so it's effectively spawned from thin air, yes? And the value that that freshly-spawned-from-thin-air token holds comes from where?

I am definitely less troubled by where the block rewards come from than where US Dollars come from and its not even close.  That is not a debate you want to get into, lol.

Like I said...
Quote
Crypto enthusiasts paint in whataboutism like DaVinci used paints.


Paint, DaVinci, paint! Nobody here is talking about currencies. We're talking about revenue-generating assets.

Its not from the air - its from the code that that the participants consent to.  Its a piece of the pie for securing the blockchain.  If you don't understand the difference between pulling something from the air (ironically, like how the US Dollar is minted) and code then I cannot help you.

Its not a whataboutism.  You criticize crypto in favor of fiat currency so naturally you have faith in the system of those fiat currencies.  I am simply pointing out, on topic, why crypto is better on this concise issue.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 29, 2021, 01:48:57 PM
Let me try an ELI5 on it.

People hold Bitcoin in an account.  To spend it, they need to move it to someone else's account.  There are millions and millions (you're 5, right?) of computers helping with this need.

Someone decides how much of a "fee" they will pay to move Bitcoin into someone else's account.  Computers check that the person isn't cheating - that they really own that Bitcoin.  Then they try to take that fee, and build a "block" in the block chain.  Like a row of (a) and (b) blocks, where they are adding the (c).

Computers pick up the movement of Bitcoin because they want the fee each person contributes.  Computers then guess at the answer to a really hard math problem.  One of them wins, and collects all the fees in their "block".  But all the computers also agree that a new account is created to reward the computer with the right guess.  They made the next block, so they get a reward - a "block reward".

If someone tries to cheat, other computers will use math and discover they are cheating.  The cheaters are ignored, and don't get rewards.  The cheaters play in a corner by themselves with fake Bitcoin.  Everyone else uses the blocks made by millions and millions of computers.

The end.

(Is this the part where I teach kids "Just say no to crypto?")
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 29, 2021, 01:57:04 PM
Each computer uses an account it controls, and creates a block where all the transaction fees move into it's account.  And the block reward - that moves into it's account as well.  But nobody cares, unless that computer wins the competition, and decides the next block.

The blockchain is essentially driven by greed.  Computers want to win the block reward, but they also want more money from fees.  If someone modifies their software to cheat, they will generate results that don't match all of the other computers running the original software.  The cheat will be ignored, since their block will fail to verify.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 29, 2021, 01:59:11 PM
Its not from the air - its from the code that that the participants consent to.  Its a piece of the pie for securing the blockchain.  If you don't understand the difference between pulling something from the air (ironically, like how the US Dollar is minted) and code then I cannot help you.

It's an expression ;-) What I'm struggling to get you to point to is: ok, so this coin—which no money exchanged hands to create—has value, where does the value come from? And the answer is: *tada* people buying the token.

In other words, if *no new buyers* came into the market, these block rewards would dilute everybody else's holdings, and everybody would be losing money.

Let's review some of the Ponzi scheme red flags from Wikipedia [1]:
1. High investment returns with little or no risk. Does staking fit this bill? It certainly sounds like it...
2. Overly consistent returns. Sounds like it promises these, too...
3. Unregistered investments. Check...
4. Secretive or complex strategies... I'd sure say so

So once again, it may not technically fit every aspect of a Ponzi, but this staking scheme is certainly Ponzi-like.

[1] https://en.wikipedia.org/wiki/Ponzi_scheme

Its not a whataboutism.  You criticize crypto in favor of fiat currency so naturally you have faith in the system of those fiat currencies.  I am simply pointing out, on topic, why crypto is better on this concise issue.

It absolutely is. Nobody "invests" in the USD. It's a terrible investment, as any currency should be. Only you crypto maxis play this constant goal-post shifting game where, when pinned down about how a cryptocurrency is a terrible asset, revert to "WELL, USD IS WORSE!". When it's pointed out that a cryptocurrency is a terrible currency, the excuse that it's an asset, and should be thought of more like digital gold or a world computer! This is whataboutism.

This is very common behavior, for whatever reason, in crypto circles. I, frankly, find it a bit troubling. Not only because it's kinda cult-like, and makes you make really bad arguments. But because cryptocurrency is inherently very political. At its core is—in my opinion—a rather gross extreme form of anti-state libertarianism. I don't think it's a stretch to draw a direct line between that particular philosophy and some of our more... embarrassing recent political situations. I think "investing" in cryptocurrency and parroting its (bad) talking points is actively helping to spread this dangerous ideology, and is therefore harmful. I find it upsetting that it's gotten such a grip on people, because, hey, you can maybe earn a few bucks while helping to destroy democracy!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 29, 2021, 02:21:24 PM
Let me try an ELI5 on it.

People hold Bitcoin in an account.  To spend it, they need to move it to someone else's account.  There are millions and millions (you're 5, right?) of computers helping with this need.

Someone decides how much of a "fee" they will pay to move Bitcoin into someone else's account.  Computers check that the person isn't cheating - that they really own that Bitcoin.  Then they try to take that fee, and build a "block" in the block chain.  Like a row of (a) and (b) blocks, where they are adding the (c).

Computers pick up the movement of Bitcoin because they want the fee each person contributes.  Computers then guess at the answer to a really hard math problem.  One of them wins, and collects all the fees in their "block".  But all the computers also agree that a new account is created to reward the computer with the right guess.  They made the next block, so they get a reward - a "block reward".

If someone tries to cheat, other computers will use math and discover they are cheating.  The cheaters are ignored, and don't get rewards.  The cheaters play in a corner by themselves with fake Bitcoin.  Everyone else uses the blocks made by millions and millions of computers.

The end.

(Is this the part where I teach kids "Just say no to crypto?")

If this were it, just transaction fees, there wouldn't be an issue (and the interest rates would be *significantly* lower).

The problem is the Ponzi aspect, where the bulk of the reward is in the freshly minted tokens, which have value because of the newcomers to the network. I haven't even yet brought up *this* aspect, but there is no transparency about: 1. how much leverage is in this system, 2. many of these purchases are with tether coins, loaned to companies (e.g., Bitfinex) with the very tokens purchased with the tethers used as collateral. This system is basically constructed of red flags. 

I know I keep making the MLM analogy, but that fits here, too. LuLaRoe members make some money selling pants. There's nothing inherently wrong with that. But those making any real money make the vast majority of their earnings by bringing on new LuLaRoe members. That is deeply problematic and unsustainable.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 29, 2021, 02:25:03 PM
Its not from the air - its from the code that that the participants consent to.  Its a piece of the pie for securing the blockchain.  If you don't understand the difference between pulling something from the air (ironically, like how the US Dollar is minted) and code then I cannot help you.

It's an expression ;-) What I'm struggling to get you to point to is: ok, so this coin—which no money exchanged hands to create—has value, where does the value come from? And the answer is: *tada* people buying the token.

In other words, if *no new buyers* came into the market, these block rewards would dilute everybody else's holdings, and everybody would be losing money.

Let's review some of the Ponzi scheme red flags from Wikipedia [1]:
1. High investment returns with little or no risk. Does staking fit this bill? It certainly sounds like it...
2. Overly consistent returns. Sounds like it promises these, too...
3. Unregistered investments. Check...
4. Secretive or complex strategies... I'd sure say so

So once again, it may not technically fit every aspect of a Ponzi, but this staking scheme is certainly Ponzi-like.

[1] https://en.wikipedia.org/wiki/Ponzi_scheme

Its not a whataboutism.  You criticize crypto in favor of fiat currency so naturally you have faith in the system of those fiat currencies.  I am simply pointing out, on topic, why crypto is better on this concise issue.

It absolutely is. Nobody "invests" in the USD. It's a terrible investment, as any currency should be. Only you crypto maxis play this constant goal-post shifting game where, when pinned down about how a cryptocurrency is a terrible asset, revert to "WELL, USD IS WORSE!". When it's pointed out that a cryptocurrency is a terrible currency, the excuse that it's an asset, and should be thought of more like digital gold or a world computer! This is whataboutism.

This is very common behavior, for whatever reason, in crypto circles. I, frankly, find it a bit troubling. Not only because it's kinda cult-like, and makes you make really bad arguments. But because cryptocurrency is inherently very political. At its core is—in my opinion—a rather gross extreme form of anti-state libertarianism. I don't think it's a stretch to draw a direct line between that particular philosophy and some of our more... embarrassing recent political situations. I think "investing" in cryptocurrency and parroting its (bad) talking points is actively helping to spread this dangerous ideology, and is therefore harmful. I find it upsetting that it's gotten such a grip on people, because, hey, you can maybe earn a few bucks while helping to destroy democracy!

Have you been reading anything here about risk of staking?  For one, we are just talking about how its not risk free because you can lose your bonded amount.  Also, most of the project have 5-10% rewards and its not taken from others as a return on investment - its earned for securing the network.  You secure the network, which would not exist without stakers in a POS model, in return for getting a set block reward that is set in stone and visible to everyone.  This doesn't even remotely come close to your wikipedia argument.

Next, talk about whataboutism.  Half your post is rant out of left-field about how cryptocurrency is backed by Trump supporters that want to destroy democracy or something.  Look man, you believe what you believe, and I don't want to detract from talking about POS, but for what its worth - I am a liberal.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 29, 2021, 02:43:01 PM
Have you been reading anything here about risk of staking?  For one, we are just talking about how its not risk free because you can lose your bonded amount.

Cool. These you?

Quote from: onecoolcat
Cardano for instance, uses a delegated proof of stake model inwhich you can stop staking anytime you want without penalty

Quote from: onecoolcat
but strikes are very rare and I don't think any pool has qualified for a severe strike yet

  Also, most of the project have 5-10% rewards and its not taken from others as a return on investment - its earned for securing the network.  You secure the network, which would not exist without stakers in a POS model, in return for getting a set block reward that is set in stone and visible to everyone.  This doesn't even remotely come close to your wikipedia argument.

I must really be bad at asking questions, because you still seem to be missing the point. The value of that generated reward comes from somewhere. You don't seem to grok the source of that value.

Next, talk about whataboutism.  Half your post is rant out of left-field about how cryptocurrency is backed by Trump supporters that want to destroy democracy or something.  Look man, you believe what you believe, and I don't want to detract from talking about POS, but for what its worth - I am a liberal.

I did, indeed, rant. And it was, in part, because I kind of thought you (and seemingly most?) crypto enthusiasts deep down are not people with ANCAP beliefs. But you 100% are helping to perpetuate ANCAP ideology here. I find that most people who really get into crypto never took an economics course in university or read an economics textbook. Their interest in economics began as they began to learn about cryptocurrency. And things like inflation seemed bad and weird and maybe even evil. And a fixed money supply sounded like a really good idea, and what do you know, Bitcoin has that.

These are very extreme ideologies with some pretty sinister histories.

This isn't some fringe belief. Bitcoin was designed this way on purpose.
- https://www.theatlantic.com/technology/archive/2017/05/blockchain-of-command/528543/
- https://www.washingtonpost.com/news/wonk/wp/2018/01/08/bitcoin-is-the-new-middle-ages/
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 29, 2021, 03:08:15 PM
Have you been reading anything here about risk of staking?  For one, we are just talking about how its not risk free because you can lose your bonded amount.

Cool. These you?

Quote from: onecoolcat
Cardano for instance, uses a delegated proof of stake model inwhich you can stop staking anytime you want without penalty

Quote from: onecoolcat
but strikes are very rare and I don't think any pool has qualified for a severe strike yet

  Also, most of the project have 5-10% rewards and its not taken from others as a return on investment - its earned for securing the network.  You secure the network, which would not exist without stakers in a POS model, in return for getting a set block reward that is set in stone and visible to everyone.  This doesn't even remotely come close to your wikipedia argument.

I must really be bad at asking questions, because you still seem to be missing the point. The value of that generated reward comes from somewhere. You don't seem to grok the source of that value.

Next, talk about whataboutism.  Half your post is rant out of left-field about how cryptocurrency is backed by Trump supporters that want to destroy democracy or something.  Look man, you believe what you believe, and I don't want to detract from talking about POS, but for what its worth - I am a liberal.

I did, indeed, rant. And it was, in part, because I kind of thought you (and seemingly most?) crypto enthusiasts deep down are not people with ANCAP beliefs. But you 100% are helping to perpetuate ANCAP ideology here. I find that most people who really get into crypto never took an economics course in university or read an economics textbook. Their interest in economics began as they began to learn about cryptocurrency. And things like inflation seemed bad and weird and maybe even evil. And a fixed money supply sounded like a really good idea, and what do you know, Bitcoin has that.

These are very extreme ideologies with some pretty sinister histories.

This isn't some fringe belief. Bitcoin was designed this way on purpose.
- https://www.theatlantic.com/technology/archive/2017/05/blockchain-of-command/528543/
- https://www.washingtonpost.com/news/wonk/wp/2018/01/08/bitcoin-is-the-new-middle-ages/

Yeah, those are me and they are entirely consistent with everything else I said.  I feel like i am talking to a wall here but at least now we know your criticisms come from a place of irrational hatred of cryptocurrencies based upon assumptions about those who own it.  You know what they say about assumptions?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on October 29, 2021, 03:13:22 PM
So, onecoolcat, since you are so rational actually answer the question - where does your investment return come from? As Jerry McGuire's client said - show me the money!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 29, 2021, 03:16:20 PM
So, onecoolcat, since you are so rational actually answer the question - where does your investment return come from? As Jerry McGuire's client said - show me the money!

Mostly from people buying my VTSMX at a higher price than I paid for it.  You?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 29, 2021, 03:19:06 PM
Yeah, those are me and they are entirely consistent with everything else I said.  I feel like i am talking to a wall here but at least now we know your criticisms come from a place of irrational hatred of cryptocurrencies based upon assumptions about those who own it.  You know what they say about assumptions?

Agreed. This shall be my final response to you:

I do not hate the people who hold cryptocurrency. As I stated, the system was designed around a set of ideas. I do not like those ideas, and believe them to be dangerous. I believe most crypto enthusiasts lack understanding of these systems and the effects they were designed to produce.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on October 29, 2021, 03:20:47 PM
Can anyone give a simple "ELI5" example of the source of interest payments from staking?

Sure thing. It comes from two sources:

1) The block reward. These are new units of currency which are created by the built in rules of the currency and controlled by whoever produced that particular block (in bitcoin the amount of new currency declines over time towards and ultimately reaching zero). This is the same way the fed creates new units of dollars when it buys governments bonds or other securities.

2) Transaction fees. These are existing units of currency that people who want to transfer currency from one wallet to another pay to have their transactions processed. In principle transaction fees can be zero, but if there are more transactions that people want to make queued up than room to make them in a current block, the transactions with the highest fees cut to the front of the line. This is like the percentage of each transaction that goes to mastercard/visa/paypal when you make a payment using one of those avanue to move dollars around.

Cool. I appreciate the straightforwardness :)

For item 1, do you see any trouble with that? Is there value in this block reward that's summoned from nothing? Where's the value come from?

Define trouble?

The value of the new units of whatever cryptocurrency are created as part of a block reward come from the same place the value of new USD comes from when the fed decides the economy needs quantitative easing*: People are placing value on the existing units (for whatever reason) and these new units are fungible with the old units so they also have value. In both cases if you create a lot of new units, people will value individual units less so issuing more units doesn't really create NEW value, it's moving a tiny fraction of the existing value from all the existing units into the new ones.

In normal currencies we'd call that inflation. In cryptocurrencies, the amount of value people place on them jumps around so much for other reasons at the moment that the small amount of value being shifted to existing units to newly created units is hard or impossible to measure.

*Or when the fed pays out whatever interest rate they've set each quarter on bank reserves I think. Although I'm less sure about that one as it's not a topic I know much about.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 29, 2021, 03:26:28 PM
Define trouble?

The value of the new units of whatever cryptocurrency are created as part of a block reward come from the same place the value of new USD comes from when the fed decides the economy needs quantitative easing*: People are placing value on the existing units (for whatever reason) and these new units are fungible with the old units so they also have value. In both cases if you create a lot of new units, people will value individual units less so issuing more units doesn't really create NEW value, it's moving a tiny fraction of the existing value from all the existing units into the new ones.

In normal currencies we'd call that inflation. In cryptocurrencies, the amount of value people place on them jumps around so much for other reasons at the moment that the small amount of value being shifted to existing units to newly created units is hard or impossible to measure.

*Or when the fed pays out whatever interest rate they've set each quarter on bank reserves I think. Although I'm less sure about that one as it's not a topic I know much about.

Yep. I think you are very close to getting my point. This behaves much in the same way a Ponzi scheme does: existing investors (stakers) are paid out in tokens whose value depends on new investment into the scheme. That’s it.

There is a lot of techno-babble and complexity around it, but it’s ultimately irrelevant from a strictly financial perspective.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on October 29, 2021, 03:33:16 PM
Yep. I think you are very close to getting my point. This behaves much in the same way a Ponzi scheme does: existing investors (stakers) are paid out in tokens whose value depends on new investment into the scheme. That’s it.

There is a lot of techno-babble and complexity around it, but it’s ultimately irrelevant from a strictly financial perspective.

Yup. I can see the point you are making. But I do hope you realize that if you apply the concept of a ponzi scheme that broadly then the federal reserve also behaves much in the same way as a ponzi scheme since the interest they pay out on banks deposits with them is also in the form of newly created tokens that depend on the value people place on those tokens.

Money (in whatever form) is a fascinating social phenomenon, it makes our civilization possible, and it's also a terrible investment vehicle.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on October 29, 2021, 09:49:11 PM
Yep. I think you are very close to getting my point. This behaves much in the same way a Ponzi scheme does: existing investors (stakers) are paid out in tokens whose value depends on new investment into the scheme. That’s it.

There is a lot of techno-babble and complexity around it, but it’s ultimately irrelevant from a strictly financial perspective.

Yup. I can see the point you are making. But I do hope you realize that if you apply the concept of a ponzi scheme that broadly then the federal reserve also behaves much in the same way as a ponzi scheme since the interest they pay out on banks deposits with them is also in the form of newly created tokens that depend on the value people place on those tokens.

The easiest way to deal with this is to simply use the existing definitions.  A Ponzi scheme is a type of fraud.  Bitcoin is does not meet that definition.  The Federal Reserve is not fraud either.   When we start using wrong definitions then discussions get sidetracked.   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on October 29, 2021, 10:03:08 PM
Yep. I think you are very close to getting my point. This behaves much in the same way a Ponzi scheme does: existing investors (stakers) are paid out in tokens whose value depends on new investment into the scheme. That’s it.

There is a lot of techno-babble and complexity around it, but it’s ultimately irrelevant from a strictly financial perspective.

Yup. I can see the point you are making. But I do hope you realize that if you apply the concept of a ponzi scheme that broadly then the federal reserve also behaves much in the same way as a ponzi scheme since the interest they pay out on banks deposits with them is also in the form of newly created tokens that depend on the value people place on those tokens.

The easiest way to deal with this is to simply use the existing definitions.  A Ponzi scheme is a type of fraud.  Bitcoin is does not meet that definition.  The Federal Reserve is not fraud either.   When we start using wrong definitions then discussions get sidetracked.

I agree that leads to a clearer discussion.

At the same time it's been my observation that when people try to redefine words in order to try to win arguments it is often more effective to think through point out the other ridiculous implications of their new proposed definitions of words that already have existing meanings than to just argue with them that they are using words to mean things that most speakers of the english language don't understand those words to me.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 30, 2021, 03:25:01 AM
Let me try an ELI5 on it.

People hold Bitcoin in an account.  To spend it, they need to move it to someone else's account.  There are millions and millions (you're 5, right?) of computers helping with this need.

Someone decides how much of a "fee" they will pay to move Bitcoin into someone else's account.  Computers check that the person isn't cheating - that they really own that Bitcoin.  Then they try to take that fee, and build a "block" in the block chain.  Like a row of (a) and (b) blocks, where they are adding the (c).

Computers pick up the movement of Bitcoin because they want the fee each person contributes.  Computers then guess at the answer to a really hard math problem.  One of them wins, and collects all the fees in their "block".  But all the computers also agree that a new account is created to reward the computer with the right guess.  They made the next block, so they get a reward - a "block reward".

If someone tries to cheat, other computers will use math and discover they are cheating.  The cheaters are ignored, and don't get rewards.  The cheaters play in a corner by themselves with fake Bitcoin.  Everyone else uses the blocks made by millions and millions of computers.

The end.

(Is this the part where I teach kids "Just say no to crypto?")
If this were it, just transaction fees, there wouldn't be an issue (and the interest rates would be *significantly* lower).

The problem is the Ponzi aspect, where the bulk of the reward is in the freshly minted tokens, which have value because of the newcomers to the network. I haven't even yet brought up *this* aspect, but there is no transparency about: 1. how much leverage is in this system, 2. many of these purchases are with tether coins, loaned to companies (e.g., Bitfinex) with the very tokens purchased with the tethers used as collateral. This system is basically constructed of red flags. 

I know I keep making the MLM analogy, but that fits here, too. LuLaRoe members make some money selling pants. There's nothing inherently wrong with that. But those making any real money make the vast majority of their earnings by bringing on new LuLaRoe members. That is deeply problematic and unsustainable.
Notice how you say "if this were it", like I left something out.  I mentioned both transaction fees and block rewards, not just transaction fees as you implied.

"Freshly minted tokens" have the same value as all other Bitcoin.  How can you say those tokens "have value because of the newcomers"?  That claim is false - new Bitcoins have the exact same value as all other Bitcoins.

A Ponzi scheme collapses when there's too many withdrawals.  Bitcoin has been through multiple crashes of greater than 90%.  Ponzi schemes don't survive that.

Are you even aware that open source software runs the Bitcoin Blockchain?  You can download all the blockchain data, and view the code yourself.  There's nothing hidden.  Does that sound like a fraud?  Everything in public view?

If you have a problem with staking, my post said nothing about it.  It's not relevant to my post.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 30, 2021, 04:47:13 AM
Notice how you say "if this were it", like I left something out.  I mentioned both transaction fees and block rewards, not just transaction fees as you implied.

Ah, sorry. It wasn’t clear to me that “block reward” meant “freshly minted cryptocurrency tokens”. I thought you meant the reward was just the transaction fees.

"Freshly minted tokens" have the same value as all other Bitcoin.  How can you say those tokens "have value because of the newcomers"?  That claim is false - new Bitcoins have the exact same value as all other Bitcoins.

…I don’t know how to respond. This should be self-evident. This isn’t really a debatable point—this is how the system operates. Let me try to illustrate:

- 10 coins exist, 5 held by Alice, 5 by Bob. The coins are cumulatively are worth $10. That is $1 / coin
- Alice buys a widget from Bob, and pays him 1 coin.
- The transaction is verified, a new coin is minted
- There are now 11 coins in the system
- How much is each coin worth now? (The answer is ~$0.91)
- How does that get valued back up to $1 or higher?

Are you even aware that open source software runs the Bitcoin Blockchain?  You can download all the blockchain data, and view the code yourself.  There's nothing hidden.  Does that sound like a fraud?  Everything in public view?

If you have a problem with staking, my post said nothing about it.  It's not relevant to my post.

To bring out the MLM analogy again—MLM contracts are readable, the system of MLM’s have been around for over half a century and they’re typically completely legal! Nor are they technically ponzis. No fraud there, either. But I’d hardly suggest participating is a wise decision.

My original question was specifically about the source of revenues one earns from staking. Many responses later, no one has successfully answered. I’m trying to show y’all the answer, but there is much hard-headedness 😂
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 30, 2021, 06:20:36 AM
Notice how you say "if this were it", like I left something out.  I mentioned both transaction fees and block rewards, not just transaction fees as you implied.

Ah, sorry. It wasn’t clear to me that “block reward” meant “freshly minted cryptocurrency tokens”. I thought you meant the reward was just the transaction fees.

"Freshly minted tokens" have the same value as all other Bitcoin.  How can you say those tokens "have value because of the newcomers"?  That claim is false - new Bitcoins have the exact same value as all other Bitcoins.

…I don’t know how to respond. This should be self-evident. This isn’t really a debatable point—this is how the system operates. Let me try to illustrate:

- 10 coins exist, 5 held by Alice, 5 by Bob. The coins are cumulatively are worth $10. That is $1 / coin
- Alice buys a widget from Bob, and pays him 1 coin.
- The transaction is verified, a new coin is minted
- There are now 11 coins in the system
- How much is each coin worth now? (The answer is ~$0.91)
- How does that get valued back up to $1 or higher?

Are you even aware that open source software runs the Bitcoin Blockchain?  You can download all the blockchain data, and view the code yourself.  There's nothing hidden.  Does that sound like a fraud?  Everything in public view?

If you have a problem with staking, my post said nothing about it.  It's not relevant to my post.

To bring out the MLM analogy again—MLM contracts are readable, the system of MLM’s have been around for over half a century and they’re typically completely legal! Nor are they technically ponzis. No fraud there, either. But I’d hardly suggest participating is a wise decision.

My original question was specifically about the source of revenues one earns from staking. Many responses later, no one has successfully answered. I’m trying to show y’all the answer, but there is much hard-headedness 😂

You're arguing with someone who is citing the last 10-15 years as reasons for investing strategy in multiple threads on here. Also someone trading gme options I'm not sure it's worth the effort.

MOD NOTE: Attack an argument, not a person, please.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on October 30, 2021, 09:51:28 AM
"Freshly minted tokens" have the same value as all other Bitcoin.  How can you say those tokens "have value because of the newcomers"?  That claim is false - new Bitcoins have the exact same value as all other Bitcoins.

…I don’t know how to respond. This should be self-evident. This isn’t really a debatable point—this is how the system operates. Let me try to illustrate:

- 10 coins exist, 5 held by Alice, 5 by Bob. The coins are cumulatively are worth $10. That is $1 / coin
- Alice buys a widget from Bob, and pays him 1 coin.
- The transaction is verified, a new coin is minted
- There are now 11 coins in the system
- How much is each coin worth now? (The answer is ~$0.91)
- How does that get valued back up to $1 or higher?


You're asking a separate question about how the value of a currency is set, which is different from the point that each unit of a currency has the same value as each other unit.

When there are 10 coins in the system each is worth the same as every other coin. When there are 11 coins in the system each is worth the same as every other coin because units of currency are fungible. You, like Peter Schiff and other gold bugs, are argue that creating a new units of a currency out of thin air inflates away the value of each unit of the currency in a precise mathematical relationship. Schiff is constantly running around complaining that, because the fed created an extra $3T since the start of 2020 and doubled the M0 money supply, that means all of our dollars are inherently worth half as much. I don't know about you, but while prices have gone up a little, it certainly does not cost me 2x as much to buy the same things I would buy in 2019. Has your cost of living doubled since the start of 2020?

In any case, let's imagine you and Peter Schiff were right and the value of currencies were determined by some mathematical formula and not the emergent behavior of hordes of irrational human beings. Even so, that doesn't require any newcomers to participate in a cryptocurrency in order to transfer value to the people who are either mining or staking. The block reward transfers value from all holders of existing coins to the people doing the mining or staking. Transaction fees transfer value from people making transactions to people doing the mining and staking. And that system for transferring value works perfectly well even if the creation of 10% more units of currency (1.1/1) inherently produces an approximately ~9% decline in the value of the currency (1/1.1).

I (and many others) have explained to you multiple times in different ways is that what seems to be bothering you about how cryptocurrencies work is actually how ALL currencies work. New units are created out of thin air, whether by a computer algorithm, an expert at the fed pushing a button, or (back in the day) a printing press stamping words on a piece of paper, or (further back in the day) somebody dumping extra lead into a crucible of molten metal so the same amount of silver would produce more total coins. In every case each unit is worth the same as each other unit. In every case the value of the units of a currency will change over time for a whole host of reasons (including as a result of creating new units of the currency, but, as the example of the dollar shows, not by a fixed and predictable mathematical formula).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on October 30, 2021, 10:38:46 AM
So, onecoolcat, since you are so rational actually answer the question - where does your investment return come from? As Jerry McGuire's client said - show me the money!

Mostly from people buying my VTSMX at a higher price than I paid for it.  You?

That's incomplete.  It is like saying it gets dark because the sun goes down without explaining why the sun goes down.     Why does VTSMX go up in price?  Over any reasonably long period of time, the broader markets increase in price by GDP growth, plus inflation, plus dividends.  That's exactly as you'd expect.  To put it another way, the price (ultimately) goes up because the underlying businesses make more money and therefore become more valuable.  Obviously, the price can be whacky in either direction, but over time the returns follow that formula. 

Why does Bitcoin go up in price?   Bitcoin goes up in price because more people want to own it today than owned it yesterday.  Supply and demand.  That's it.  There is no underlying enterprise that is generating value. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on November 01, 2021, 01:01:48 PM
https://www.cnn.com/2021/11/01/investing/squid-game-cryptocurrency-scam/index.html?utm_source=optzlynewmarketribbon (https://www.cnn.com/2021/11/01/investing/squid-game-cryptocurrency-scam/index.html?utm_source=optzlynewmarketribbon)

^Does this nudge anyone into admitting "well, maybe it could all be a giant pump and dump scam"?

Or do the particulars get in the way? I.e. that cryptocurrency had a different name / smaller market cap than the ones I'm invested in.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on November 01, 2021, 01:28:55 PM
I don't think bitcoin is a pump and dump scam.  The price has risen so much and it has been around for so long now that I have to believe anyone considering pumping and dumping would have done so already.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 01, 2021, 03:09:59 PM
I don't think bitcoin is a pump and dump scam.  The price has risen so much and it has been around for so long now that I have to believe anyone considering pumping and dumping would have done so already.

I'm not so sure. I don't think it's outside the realm of possibility that the whole market is fraudulent. With Tether, there's possibly ~$60B of completely fabricated-from-thin-air fake Tether dollars being used to pump up the value of many cryptocurrencies. I think Tether has been "dumping" USD from the system and re-injecting fake USDT, maintaining just enough USD to handle day-to-day withdrawals and YOLOing it until then.

Here's a flowchart of how this scheme could work: (https://miro.medium.com/max/1400/1*DqW4VKu9TqDc1a0vxInRpg.jpeg)

Sourced from: https://medium.com/nerd-for-tech/greatest-scam-in-history-by-tether-76ac059b9550
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 01, 2021, 05:41:14 PM
What timing! The Treasury just put out a report on stable coins very much suggesting Tether is a huge systemic risk.  https://home.treasury.gov/system/files/136/StableCoinReport_Nov1_508.pdf
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 02, 2021, 09:13:29 AM
Notice how you say "if this were it", like I left something out.  I mentioned both transaction fees and block rewards, not just transaction fees as you implied.

Ah, sorry. It wasn’t clear to me that “block reward” meant “freshly minted cryptocurrency tokens”. I thought you meant the reward was just the transaction fees.

"Freshly minted tokens" have the same value as all other Bitcoin.  How can you say those tokens "have value because of the newcomers"?  That claim is false - new Bitcoins have the exact same value as all other Bitcoins.

…I don’t know how to respond. This should be self-evident. This isn’t really a debatable point—this is how the system operates. Let me try to illustrate:

- 10 coins exist, 5 held by Alice, 5 by Bob. The coins are cumulatively are worth $10. That is $1 / coin
- Alice buys a widget from Bob, and pays him 1 coin.
- The transaction is verified, a new coin is minted
- There are now 11 coins in the system
- How much is each coin worth now? (The answer is ~$0.91)
- How does that get valued back up to $1 or higher?

Are you even aware that open source software runs the Bitcoin Blockchain?  You can download all the blockchain data, and view the code yourself.  There's nothing hidden.  Does that sound like a fraud?  Everything in public view?

If you have a problem with staking, my post said nothing about it.  It's not relevant to my post.

To bring out the MLM analogy again—MLM contracts are readable, the system of MLM’s have been around for over half a century and they’re typically completely legal! Nor are they technically ponzis. No fraud there, either. But I’d hardly suggest participating is a wise decision.

My original question was specifically about the source of revenues one earns from staking. Many responses later, no one has successfully answered. I’m trying to show y’all the answer, but there is much hard-headedness 😂

You're arguing with someone who is citing the last 10-15 years as reasons for investing strategy in multiple threads on here. Also someone trading gme options I'm not sure it's worth the effort.
You like to do character assassination, do you?

Could you quote where I say "the last 10-15 years" determine investment strategy?  When you attack someone, maybe you should be accurate, instead of slandering them?

Nothing in your post relates to the content of what I posted earlier in this thread.  If you think that's how this forum works, re-read the forum rules.  It's not.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 02, 2021, 09:18:37 AM
"Freshly minted tokens" have the same value as all other Bitcoin.  How can you say those tokens "have value because of the newcomers"?  That claim is false - new Bitcoins have the exact same value as all other Bitcoins.

…I don’t know how to respond. This should be self-evident. This isn’t really a debatable point—this is how the system operates. Let me try to illustrate:

- 10 coins exist, 5 held by Alice, 5 by Bob. The coins are cumulatively are worth $10. That is $1 / coin
- Alice buys a widget from Bob, and pays him 1 coin.
- The transaction is verified, a new coin is minted
- There are now 11 coins in the system
- How much is each coin worth now? (The answer is ~$0.91)
- How does that get valued back up to $1 or higher?
Maybe you don't know what to say because you removed the key quote that started this part of the discussion.  Here it is, quoted again:

The problem is the Ponzi aspect, where the bulk of the reward is in the freshly minted tokens, which have value because of the newcomers to the network.
Here you said "freshly minted tokens, which have value because of newcomers to the network".  Is that false or not?  That was my point, not the strawman argument about coins going above $1, which I never brought up.

Freshly minted tokens do not go up in isolation from other tokens.  Or drop in isolation - all tokens have the same value.  So it was incorrect to single out freshly minted tokens as being the only one which have value owing to newcomers.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: mattpew on November 02, 2021, 04:44:40 PM
Unfamiliar with Crypto - hoping someone can answer this:

It seems the valuation of cryptocurrency is a result of weighing the downside risk of a given token being obsolete (worthless) vs the massive upside of potentially replacing a portion of the current fiat currency system.

Is this a correct take?

Furthermore - if that is correct, what reason do investors currently have to believe that the existing power structure supporting fiat currency will be so amicable in relinquishing this incredible power?  It seems fairly easy to regulate on the supply side (ie make it illegal for businesses to accept payment in cryptocurrency) to effectively nullify the bull case.

Any help is appreciated.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 02, 2021, 06:15:00 PM
Bitcoin doesn't go up in value because it may one day be used in businesses to buy goods and services.  It goes up in value because it is a scarce asset  that people want to hold and don't want to sell.  There's only 21 million bitcoins and that's all there will ever be.  The network is still in its growth phase with millions of new users coming in and we're all just fighting for a piece of that pie.  The amount traded on exchanges which sets the price is actually very low, the vast majority of bitcoin is stored away in offline wallets for the long term, no one is looking to spend it in shops, noone spends gold bullion or apple shares in shops either, it's a long term investment.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: solon on November 02, 2021, 08:18:33 PM
Bitcoin doesn't go up in value because it may one day be used in businesses to buy goods and services.  It goes up in value because it is a scarce asset  that people want to hold and don't want to sell.  There's only 21 million bitcoins and that's all there will ever be.  The network is still in its growth phase with millions of new users coming in and we're all just fighting for a piece of that pie.  The amount traded on exchanges which sets the price is actually very low, the vast majority of bitcoin is stored away in offline wallets for the long term, no one is looking to spend it in shops, noone spends gold bullion or apple shares in shops either, it's a long term investment.

So bitcoin isn't a currency. It's an asset?

It's literally called a cryptocurrency.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 02, 2021, 08:36:45 PM
Bitcoin doesn't go up in value because it may one day be used in businesses to buy goods and services.  It goes up in value because it is a scarce asset  that people want to hold and don't want to sell.  There's only 21 million bitcoins and that's all there will ever be.  The network is still in its growth phase with millions of new users coming in and we're all just fighting for a piece of that pie.  The amount traded on exchanges which sets the price is actually very low, the vast majority of bitcoin is stored away in offline wallets for the long term, no one is looking to spend it in shops, noone spends gold bullion or apple shares in shops either, it's a long term investment.

I was told earlier it could be a currency bc a consensus could decide to change the 21 million limit. So is it actually a limit?  Also scarcity of something does not make it valuable. Definition of value is determined by humans. Today it has value. Tomorrow it could be worth 0. It's 100% a human emotion play giving value to this thing. It doesn't produce anything. It doesn't do anything except people are stuffing it in their "mattresses" it's an anomaly of a digital age and an inflated market with people misunderstanding the stock market as a risky gamble. And then assuming BTC is the same risky gamble but look at the returns. Fomo heaven. Likely propped up on illegal stable coins and over marketing. 1929 rush on stable coins comes and this all collapses.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on November 02, 2021, 09:44:08 PM
Bitcoin doesn't go up in value because it may one day be used in businesses to buy goods and services.  It goes up in value because it is a scarce asset  that people want to hold and don't want to sell.  There's only 21 million bitcoins and that's all there will ever be.  The network is still in its growth phase with millions of new users coming in and we're all just fighting for a piece of that pie.  The amount traded on exchanges which sets the price is actually very low, the vast majority of bitcoin is stored away in offline wallets for the long term, no one is looking to spend it in shops, noone spends gold bullion or apple shares in shops either, it's a long term investment.

I was told earlier it could be a currency bc a consensus could decide to change the 21 million limit. So is it actually a limit?  Also scarcity of something does not make it valuable. Definition of value is determined by humans. Today it has value. Tomorrow it could be worth 0. It's 100% a human emotion play giving value to this thing. It doesn't produce anything. It doesn't do anything except people are stuffing it in their "mattresses" it's an anomaly of a digital age and an inflated market with people misunderstanding the stock market as a risky gamble. And then assuming BTC is the same risky gamble but look at the returns. Fomo heaven. Likely propped up on illegal stable coins and over marketing. 1929 rush on stable coins comes and this all collapses.

That is not what you were told.  Bitcoin has been described as many things; an asset, a currency, even a commodity.  Contrary to your obsession, there is nothing fundamentally wrong with it occupying each of those spaces depending upon how the owner treats it.  In the end, its governed by the code and secured by the network that we value.  If that has no value to you then don't buy it.  No one cares.   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on November 02, 2021, 11:07:30 PM
Bitcoin doesn't go up in value because it may one day be used in businesses to buy goods and services.  It goes up in value because it is a scarce asset  that people want to hold and don't want to sell.  There's only 21 million bitcoins and that's all there will ever be.  The network is still in its growth phase with millions of new users coming in and we're all just fighting for a piece of that pie.  The amount traded on exchanges which sets the price is actually very low, the vast majority of bitcoin is stored away in offline wallets for the long term, no one is looking to spend it in shops, noone spends gold bullion or apple shares in shops either, it's a long term investment.

Very direct answer, much respect for that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 02, 2021, 11:19:57 PM
Bitcoin doesn't go up in value because it may one day be used in businesses to buy goods and services.  It goes up in value because it is a scarce asset  that people want to hold and don't want to sell.  There's only 21 million bitcoins and that's all there will ever be.  The network is still in its growth phase with millions of new users coming in and we're all just fighting for a piece of that pie.  The amount traded on exchanges which sets the price is actually very low, the vast majority of bitcoin is stored away in offline wallets for the long term, no one is looking to spend it in shops, noone spends gold bullion or apple shares in shops either, it's a long term investment.

So bitcoin isn't a currency. It's an asset?

It's literally called a cryptocurrency.

It's quite obviously an asset, it has a current market cap of nearly $1.2Trillion.  You can call it whatever you want and by this stage it doesn't matter what the original intentions of some supposed Japanese guy in a basement were when he created Bitcoin, bitcoin is now it's own beast and all that matters now is how bitcoin is being used and valued and adopted globally and where it is headed into the future.  Bitcoin and crypto in general is here to stay, I honestly would not want to be one of the people who knew all about bitcoin in these early days, argued about it on the internet all day until they were blue in the face but never owned any and completely missed the bus. 

Soon Bitcoins market cap value will flip silver and after that there is only Amazon, Google, Saudi Aramco, Apple and Microsoft to go on the way to flipping Gold which is about a 10x away for BTC.  For reference BTC has done roughly a 238x since 2015.  It has been said that Bitcoin is a monetary black hole that will suck up and dominate all other asset classes.  I'm yet to see anything to suggest that it is not progressively doing exactly that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 03, 2021, 04:58:48 AM
Bitcoin doesn't go up in value because it may one day be used in businesses to buy goods and services.  It goes up in value because it is a scarce asset  that people want to hold and don't want to sell.  There's only 21 million bitcoins and that's all there will ever be.  The network is still in its growth phase with millions of new users coming in and we're all just fighting for a piece of that pie.  The amount traded on exchanges which sets the price is actually very low, the vast majority of bitcoin is stored away in offline wallets for the long term, no one is looking to spend it in shops, noone spends gold bullion or apple shares in shops either, it's a long term investment.

So bitcoin isn't a currency. It's an asset?

It's literally called a cryptocurrency.

It's quite obviously an asset, it has a current market cap of nearly $1.2Trillion.  You can call it whatever you want and by this stage it doesn't matter what the original intentions of some supposed Japanese guy in a basement were when he created Bitcoin, bitcoin is now it's own beast and all that matters now is how bitcoin is being used and valued and adopted globally and where it is headed into the future.  Bitcoin and crypto in general is here to stay, I honestly would not want to be one of the people who knew all about bitcoin in these early days, argued about it on the internet all day until they were blue in the face but never owned any and completely missed the bus. 

Soon Bitcoins market cap value will flip silver and after that there is only Amazon, Google, Saudi Aramco, Apple and Microsoft to go on the way to flipping Gold which is about a 10x away for BTC.  For reference BTC has done roughly a 238x since 2015.  It has been said that Bitcoin is a monetary black hole that will suck up and dominate all other asset classes.  I'm yet to see anything to suggest that it is not progressively doing exactly that.

so its only gone up since 2015 so based on that information i've decided it can only go up and dominate the world.  Good luck 6 years is an infinitely small time in the money game.

and FOMO sorry i missed that part of your post in the middle there. 

so there we have it folks the reason to hold BTC is FOMO and it always goes up.  If you don't have FOMO over this and don't believe 6 years of it always goes up makes it "a long term investment" there is no reason to be in it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 03, 2021, 05:30:32 AM
Bitcoin doesn't go up in value because it may one day be used in businesses to buy goods and services.  It goes up in value because it is a scarce asset  that people want to hold and don't want to sell.  There's only 21 million bitcoins and that's all there will ever be.  The network is still in its growth phase with millions of new users coming in and we're all just fighting for a piece of that pie.  The amount traded on exchanges which sets the price is actually very low, the vast majority of bitcoin is stored away in offline wallets for the long term, no one is looking to spend it in shops, noone spends gold bullion or apple shares in shops either, it's a long term investment.

So bitcoin isn't a currency. It's an asset?

It's literally called a cryptocurrency.

It's quite obviously an asset, it has a current market cap of nearly $1.2Trillion.  You can call it whatever you want and by this stage it doesn't matter what the original intentions of some supposed Japanese guy in a basement were when he created Bitcoin, bitcoin is now it's own beast and all that matters now is how bitcoin is being used and valued and adopted globally and where it is headed into the future.  Bitcoin and crypto in general is here to stay, I honestly would not want to be one of the people who knew all about bitcoin in these early days, argued about it on the internet all day until they were blue in the face but never owned any and completely missed the bus. 

Soon Bitcoins market cap value will flip silver and after that there is only Amazon, Google, Saudi Aramco, Apple and Microsoft to go on the way to flipping Gold which is about a 10x away for BTC.  For reference BTC has done roughly a 238x since 2015.  It has been said that Bitcoin is a monetary black hole that will suck up and dominate all other asset classes.  I'm yet to see anything to suggest that it is not progressively doing exactly that.

so its only gone up since 2015 so based on that information i've decided it can only go up and dominate the world.  Good luck 6 years is an infinitely small time in the money game.

and FOMO sorry i missed that part of your post in the middle there. 

so there we have it folks the reason to hold BTC is FOMO and it always goes up.  If you don't have FOMO over this and don't believe 6 years of it always goes up makes it "a long term investment" there is no reason to be in it.

You sound very upset, please try not to get emotional over this.  I'll stick to my opinion and you stick to yours.  My opinion has made me a lot of money this year so I'm fairly happy with it for now.  Let's see what the future brings.  So exciting isn't it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 03, 2021, 05:37:20 AM
Bitcoin doesn't go up in value because it may one day be used in businesses to buy goods and services.  It goes up in value because it is a scarce asset  that people want to hold and don't want to sell.  There's only 21 million bitcoins and that's all there will ever be.  The network is still in its growth phase with millions of new users coming in and we're all just fighting for a piece of that pie.  The amount traded on exchanges which sets the price is actually very low, the vast majority of bitcoin is stored away in offline wallets for the long term, no one is looking to spend it in shops, noone spends gold bullion or apple shares in shops either, it's a long term investment.

So bitcoin isn't a currency. It's an asset?

It's literally called a cryptocurrency.

It's quite obviously an asset, it has a current market cap of nearly $1.2Trillion.  You can call it whatever you want and by this stage it doesn't matter what the original intentions of some supposed Japanese guy in a basement were when he created Bitcoin, bitcoin is now it's own beast and all that matters now is how bitcoin is being used and valued and adopted globally and where it is headed into the future.  Bitcoin and crypto in general is here to stay, I honestly would not want to be one of the people who knew all about bitcoin in these early days, argued about it on the internet all day until they were blue in the face but never owned any and completely missed the bus. 

Soon Bitcoins market cap value will flip silver and after that there is only Amazon, Google, Saudi Aramco, Apple and Microsoft to go on the way to flipping Gold which is about a 10x away for BTC.  For reference BTC has done roughly a 238x since 2015.  It has been said that Bitcoin is a monetary black hole that will suck up and dominate all other asset classes.  I'm yet to see anything to suggest that it is not progressively doing exactly that.

so its only gone up since 2015 so based on that information i've decided it can only go up and dominate the world.  Good luck 6 years is an infinitely small time in the money game.

and FOMO sorry i missed that part of your post in the middle there. 

so there we have it folks the reason to hold BTC is FOMO and it always goes up.  If you don't have FOMO over this and don't believe 6 years of it always goes up makes it "a long term investment" there is no reason to be in it.

You sound very upset, please try not to get emotional over this.  I'll stick to my opinion and you stick to yours.  My opinion has made me a lot of money this year so I'm fairly happy with it for now.  Let's see what the future brings.  So exciting isn't it.

i'm not upset over it i've got more money than i'll ever need invested in predictable long term assets.

this entire thread is an opinion thread on our thoughts of adding crypto - hope you're right - you being right doesn't negatively affect me in any way.  but it could negatively affect future investments for those who choose to use 6 year returns and FOMO as reasons for "investing" in something.  I bought lottery tickets for 6 years and i won 1B dollars now i'm going to "invest" 100MM a year in lotto tickets!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on November 03, 2021, 06:49:27 AM
Bitcoin doesn't go up in value because it may one day be used in businesses to buy goods and services.  It goes up in value because it is a scarce asset  that people want to hold and don't want to sell.  There's only 21 million bitcoins and that's all there will ever be.  The network is still in its growth phase with millions of new users coming in and we're all just fighting for a piece of that pie.  The amount traded on exchanges which sets the price is actually very low, the vast majority of bitcoin is stored away in offline wallets for the long term, no one is looking to spend it in shops, noone spends gold bullion or apple shares in shops either, it's a long term investment.

So bitcoin isn't a currency. It's an asset?

It's literally called a cryptocurrency.

It's quite obviously an asset, it has a current market cap of nearly $1.2Trillion.  You can call it whatever you want and by this stage it doesn't matter what the original intentions of some supposed Japanese guy in a basement were when he created Bitcoin, bitcoin is now it's own beast and all that matters now is how bitcoin is being used and valued and adopted globally and where it is headed into the future.  Bitcoin and crypto in general is here to stay, I honestly would not want to be one of the people who knew all about bitcoin in these early days, argued about it on the internet all day until they were blue in the face but never owned any and completely missed the bus. 

Soon Bitcoins market cap value will flip silver and after that there is only Amazon, Google, Saudi Aramco, Apple and Microsoft to go on the way to flipping Gold which is about a 10x away for BTC.  For reference BTC has done roughly a 238x since 2015.  It has been said that Bitcoin is a monetary black hole that will suck up and dominate all other asset classes.  I'm yet to see anything to suggest that it is not progressively doing exactly that.

so its only gone up since 2015 so based on that information i've decided it can only go up and dominate the world.  Good luck 6 years is an infinitely small time in the money game.

and FOMO sorry i missed that part of your post in the middle there. 

so there we have it folks the reason to hold BTC is FOMO and it always goes up.  If you don't have FOMO over this and don't believe 6 years of it always goes up makes it "a long term investment" there is no reason to be in it.

You sound very upset, please try not to get emotional over this.  I'll stick to my opinion and you stick to yours.  My opinion has made me a lot of money this year so I'm fairly happy with it for now.  Let's see what the future brings.  So exciting isn't it.

@Juan Ponce de León , are there conditions under which you'd sell some Bitcoin to lock in those gains?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 03, 2021, 12:21:49 PM
Bitcoin doesn't go up in value because it may one day be used in businesses to buy goods and services.  It goes up in value because it is a scarce asset  that people want to hold and don't want to sell.  There's only 21 million bitcoins and that's all there will ever be.  The network is still in its growth phase with millions of new users coming in and we're all just fighting for a piece of that pie.  The amount traded on exchanges which sets the price is actually very low, the vast majority of bitcoin is stored away in offline wallets for the long term, no one is looking to spend it in shops, noone spends gold bullion or apple shares in shops either, it's a long term investment.

So bitcoin isn't a currency. It's an asset?

It's literally called a cryptocurrency.

It's quite obviously an asset, it has a current market cap of nearly $1.2Trillion.  You can call it whatever you want and by this stage it doesn't matter what the original intentions of some supposed Japanese guy in a basement were when he created Bitcoin, bitcoin is now it's own beast and all that matters now is how bitcoin is being used and valued and adopted globally and where it is headed into the future.  Bitcoin and crypto in general is here to stay, I honestly would not want to be one of the people who knew all about bitcoin in these early days, argued about it on the internet all day until they were blue in the face but never owned any and completely missed the bus. 

Soon Bitcoins market cap value will flip silver and after that there is only Amazon, Google, Saudi Aramco, Apple and Microsoft to go on the way to flipping Gold which is about a 10x away for BTC.  For reference BTC has done roughly a 238x since 2015.  It has been said that Bitcoin is a monetary black hole that will suck up and dominate all other asset classes.  I'm yet to see anything to suggest that it is not progressively doing exactly that.

so its only gone up since 2015 so based on that information i've decided it can only go up and dominate the world.  Good luck 6 years is an infinitely small time in the money game.

and FOMO sorry i missed that part of your post in the middle there. 

so there we have it folks the reason to hold BTC is FOMO and it always goes up.  If you don't have FOMO over this and don't believe 6 years of it always goes up makes it "a long term investment" there is no reason to be in it.

You sound very upset, please try not to get emotional over this.  I'll stick to my opinion and you stick to yours.  My opinion has made me a lot of money this year so I'm fairly happy with it for now.  Let's see what the future brings.  So exciting isn't it.

@Juan Ponce de León , are there conditions under which you'd sell some Bitcoin to lock in those gains?

Yeah absolutely.  If we get a parabolic move up I'll be looking to de-risk some but mainly from my alt coin positions which I have way too much of.  I also cash out some of my defi yield every week but mainly I use it to buy more crypto.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on November 03, 2021, 12:48:10 PM
Bitcoin doesn't go up in value because it may one day be used in businesses to buy goods and services.  It goes up in value because it is a scarce asset  that people want to hold and don't want to sell.  There's only 21 million bitcoins and that's all there will ever be.  The network is still in its growth phase with millions of new users coming in and we're all just fighting for a piece of that pie.  The amount traded on exchanges which sets the price is actually very low, the vast majority of bitcoin is stored away in offline wallets for the long term, no one is looking to spend it in shops, noone spends gold bullion or apple shares in shops either, it's a long term investment.

So bitcoin isn't a currency. It's an asset?

It's literally called a cryptocurrency.

It's quite obviously an asset, it has a current market cap of nearly $1.2Trillion.  You can call it whatever you want and by this stage it doesn't matter what the original intentions of some supposed Japanese guy in a basement were when he created Bitcoin, bitcoin is now it's own beast and all that matters now is how bitcoin is being used and valued and adopted globally and where it is headed into the future.  Bitcoin and crypto in general is here to stay, I honestly would not want to be one of the people who knew all about bitcoin in these early days, argued about it on the internet all day until they were blue in the face but never owned any and completely missed the bus. 

Soon Bitcoins market cap value will flip silver and after that there is only Amazon, Google, Saudi Aramco, Apple and Microsoft to go on the way to flipping Gold which is about a 10x away for BTC.  For reference BTC has done roughly a 238x since 2015.  It has been said that Bitcoin is a monetary black hole that will suck up and dominate all other asset classes.  I'm yet to see anything to suggest that it is not progressively doing exactly that.

so its only gone up since 2015 so based on that information i've decided it can only go up and dominate the world.  Good luck 6 years is an infinitely small time in the money game.

and FOMO sorry i missed that part of your post in the middle there. 

so there we have it folks the reason to hold BTC is FOMO and it always goes up.  If you don't have FOMO over this and don't believe 6 years of it always goes up makes it "a long term investment" there is no reason to be in it.

You sound very upset, please try not to get emotional over this.  I'll stick to my opinion and you stick to yours.  My opinion has made me a lot of money this year so I'm fairly happy with it for now.  Let's see what the future brings.  So exciting isn't it.

@Juan Ponce de León , are there conditions under which you'd sell some Bitcoin to lock in those gains?

Yeah absolutely.  If we get a parabolic move up I'll be looking to de-risk some but mainly from my alt coin positions which I have way too much of.  I also cash out some of my defi yield every week but mainly I use it to buy more crypto.

Do you have a number/spreadsheet somewhere where you're tracking this, or is it more of a "gut" thing?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: forgerator on November 03, 2021, 02:31:36 PM
Yeah absolutely.  If we get a parabolic move up I'll be looking to de-risk some but mainly from my alt coin positions which I have way too much of.  I also cash out some of my defi yield every week but mainly I use it to buy more crypto.

it looks like me and you are exactly the same person! Been observing BTC first when it was around $100 in 2012, then $1k in 2013. Followed its crash back to $100 after the Mount Gox fiasco and dismissed it as a fad / ponzi. Then when I heard in Dec 2017 that BTC was at $17k I had had enough and invested a small bag and also in a smattering of other alts mostly in Eth. That's when everything crashed but I kept buying dips again and again. Today around 50% of my NW is tied to crypto. Not the most wise decision but at this point I am failing to see any other asset class outperform crypto, everything else including stocks looks dull and old fashioned.
I too am looking to offload a good chunk early next year depending on a 2017 style parabolic run, and yes I cash out my DeFi yields every day for some of the most lucrative passive income I have ever generated (even high risk REITS don't come close).
My plan by mid next year - start a huge stable coin LP on beefy.finance or other compounding vaults, stake for 20% returns and re-enter crypto as it goes through yet another boom to bust cycle.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on November 03, 2021, 02:51:45 PM

@Juan Ponce de León , are there conditions under which you'd sell some Bitcoin to lock in those gains?

Yeah absolutely.  If we get a parabolic move up I'll be looking to de-risk some but mainly from my alt coin positions which I have way too much of.  I also cash out some of my defi yield every week but mainly I use it to buy more crypto.

Sorry if I missed this earlier. If you don't mind my asking, @Juan Ponce de León, what % of your portfolio is in crypto vs conventional financial assets?

Is % the way you allocate to the non-crypto portion, or do you have other criteria instead (5 years' conventional assets, paid off house but the rest is crypto, etc)?

Are you seeking a FIRE target in some conventional way (eg, 25x annual spending) or using other goals for your accumulation strategies?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 03, 2021, 05:07:02 PM
Bitcoin doesn't go up in value because it may one day be used in businesses to buy goods and services.  It goes up in value because it is a scarce asset  that people want to hold and don't want to sell.  There's only 21 million bitcoins and that's all there will ever be.  The network is still in its growth phase with millions of new users coming in and we're all just fighting for a piece of that pie.  The amount traded on exchanges which sets the price is actually very low, the vast majority of bitcoin is stored away in offline wallets for the long term, no one is looking to spend it in shops, noone spends gold bullion or apple shares in shops either, it's a long term investment.

So bitcoin isn't a currency. It's an asset?

It's literally called a cryptocurrency.

It's quite obviously an asset, it has a current market cap of nearly $1.2Trillion.  You can call it whatever you want and by this stage it doesn't matter what the original intentions of some supposed Japanese guy in a basement were when he created Bitcoin, bitcoin is now it's own beast and all that matters now is how bitcoin is being used and valued and adopted globally and where it is headed into the future.  Bitcoin and crypto in general is here to stay, I honestly would not want to be one of the people who knew all about bitcoin in these early days, argued about it on the internet all day until they were blue in the face but never owned any and completely missed the bus. 

Soon Bitcoins market cap value will flip silver and after that there is only Amazon, Google, Saudi Aramco, Apple and Microsoft to go on the way to flipping Gold which is about a 10x away for BTC.  For reference BTC has done roughly a 238x since 2015.  It has been said that Bitcoin is a monetary black hole that will suck up and dominate all other asset classes.  I'm yet to see anything to suggest that it is not progressively doing exactly that.

so its only gone up since 2015 so based on that information i've decided it can only go up and dominate the world.  Good luck 6 years is an infinitely small time in the money game.

and FOMO sorry i missed that part of your post in the middle there. 

so there we have it folks the reason to hold BTC is FOMO and it always goes up.  If you don't have FOMO over this and don't believe 6 years of it always goes up makes it "a long term investment" there is no reason to be in it.

You sound very upset, please try not to get emotional over this.  I'll stick to my opinion and you stick to yours.  My opinion has made me a lot of money this year so I'm fairly happy with it for now.  Let's see what the future brings.  So exciting isn't it.

@Juan Ponce de León , are there conditions under which you'd sell some Bitcoin to lock in those gains?

Yeah absolutely.  If we get a parabolic move up I'll be looking to de-risk some but mainly from my alt coin positions which I have way too much of.  I also cash out some of my defi yield every week but mainly I use it to buy more crypto.

Do you have a number/spreadsheet somewhere where you're tracking this, or is it more of a "gut" thing?

There's portfolio tracking sites that keep an eye on a lot of it for you, you just enter in your wallet addresses.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on November 03, 2021, 05:11:33 PM
Bitcoin doesn't go up in value because it may one day be used in businesses to buy goods and services.  It goes up in value because it is a scarce asset  that people want to hold and don't want to sell.  There's only 21 million bitcoins and that's all there will ever be.  The network is still in its growth phase with millions of new users coming in and we're all just fighting for a piece of that pie.  The amount traded on exchanges which sets the price is actually very low, the vast majority of bitcoin is stored away in offline wallets for the long term, no one is looking to spend it in shops, noone spends gold bullion or apple shares in shops either, it's a long term investment.

I was told earlier it could be a currency bc a consensus could decide to change the 21 million limit. So is it actually a limit?  Also scarcity of something does not make it valuable. Definition of value is determined by humans. Today it has value. Tomorrow it could be worth 0. It's 100% a human emotion play giving value to this thing. It doesn't produce anything. It doesn't do anything except people are stuffing it in their "mattresses" it's an anomaly of a digital age and an inflated market with people misunderstanding the stock market as a risky gamble. And then assuming BTC is the same risky gamble but look at the returns. Fomo heaven. Likely propped up on illegal stable coins and over marketing. 1929 rush on stable coins comes and this all collapses.

That is not what you were told.  Bitcoin has been described as many things; an asset, a currency, even a commodity.  Contrary to your obsession, there is nothing fundamentally wrong with it occupying each of those spaces depending upon how the owner treats it.  In the end, its governed by the code and secured by the network that we value.  If that has no value to you then don't buy it.  No one cares.

He just likes to rile up the troops:). He must have seen the latest media article on stable coins - now he's even more confused. Obviously jumped to the conclusion that they are now illegal. Clueless.
You can buy them all day on any of the US exchanges and earn 8-9-10% interest on them at places like Block Fi.
He just forgot to insert "illegal beanie babies collection" his usual MO when giving his three or four liner diatribe on crypto.

All the President's Work Group said in their report about stable coins is that they want to regulate stablecoins.
The report calls for legislation to limit stable coin issuance to "insured depositories" aka banks and credit unions.

It is no surprise that the FED and the SEC/CFTC want full control, stable coins are a threat to the system. The banks just want the money back that flowed out of our no-interest bank accounts into crypto.
This is of course US-centric for US$ backed/pegged stable coins. We want regulation for crypto - so there you go.

In essence, this is just another indication that crypto is here to stay. It will work itself out. It's not like Mastercard or Visa will give up their new blockchain technology giving them speed and security and of course profit. The banks get their funds and custodial powers and everyone will benefit from the efficiency of the payment platforms from the hedge funds to the little guy sending money home to Timbuktu.

The idea that bitcoin is 'likely propped up on illegal stable coins" is so out in left field it is laughable.
Bitcoin and stable coins have nothing at all to do with each other. That's like pointing to the sun and calling it the moon.     
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 03, 2021, 05:29:04 PM
Bitcoin doesn't go up in value because it may one day be used in businesses to buy goods and services.  It goes up in value because it is a scarce asset  that people want to hold and don't want to sell.  There's only 21 million bitcoins and that's all there will ever be.  The network is still in its growth phase with millions of new users coming in and we're all just fighting for a piece of that pie.  The amount traded on exchanges which sets the price is actually very low, the vast majority of bitcoin is stored away in offline wallets for the long term, no one is looking to spend it in shops, noone spends gold bullion or apple shares in shops either, it's a long term investment.

I was told earlier it could be a currency bc a consensus could decide to change the 21 million limit. So is it actually a limit?  Also scarcity of something does not make it valuable. Definition of value is determined by humans. Today it has value. Tomorrow it could be worth 0. It's 100% a human emotion play giving value to this thing. It doesn't produce anything. It doesn't do anything except people are stuffing it in their "mattresses" it's an anomaly of a digital age and an inflated market with people misunderstanding the stock market as a risky gamble. And then assuming BTC is the same risky gamble but look at the returns. Fomo heaven. Likely propped up on illegal stable coins and over marketing. 1929 rush on stable coins comes and this all collapses.

That is not what you were told.  Bitcoin has been described as many things; an asset, a currency, even a commodity.  Contrary to your obsession, there is nothing fundamentally wrong with it occupying each of those spaces depending upon how the owner treats it.  In the end, its governed by the code and secured by the network that we value.  If that has no value to you then don't buy it.  No one cares.

He just likes to rile up the troops:). He must have seen the latest media article on stable coins - now he's even more confused. Obviously jumped to the conclusion that they are now illegal. Clueless.
You can buy them all day on any of the US exchanges and earn 8-9-10% interest on them at places like Block Fi.
He just forgot to insert "illegal beanie babies collection" his usual MO when giving his three or four liner diatribe on crypto.

All the President's Work Group said in their report about stable coins is that they want to regulate stablecoins.
The report calls for legislation to limit stable coin issuance to "insured depositories" aka banks and credit unions.

It is no surprise that the FED and the SEC/CFTC want full control, stable coins are a threat to the system. The banks just want the money back that flowed out of our no-interest bank accounts into crypto.
This is of course US-centric for US$ backed/pegged stable coins. We want regulation for crypto - so there you go.

In essence, this is just another indication that crypto is here to stay. It will work itself out. It's not like Mastercard or Visa will give up their new blockchain technology giving them speed and security and of course profit. The banks get their funds and custodial powers and everyone will benefit from the efficiency of the payment platforms from the hedge funds to the little guy sending money home to Timbuktu.

The idea that bitcoin is 'likely propped up on illegal stable coins" is so out in left field it is laughable.
Bitcoin and stable coins have nothing at all to do with each other. That's like pointing to the sun and calling it the moon.   

Almost like point at BTC and saying to the moon bc look at the last 6 years. I got moon analogies all day.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 03, 2021, 05:46:32 PM

@Juan Ponce de León , are there conditions under which you'd sell some Bitcoin to lock in those gains?

Yeah absolutely.  If we get a parabolic move up I'll be looking to de-risk some but mainly from my alt coin positions which I have way too much of.  I also cash out some of my defi yield every week but mainly I use it to buy more crypto.

Sorry if I missed this earlier. If you don't mind my asking, @Juan Ponce de León, what % of your portfolio is in crypto vs conventional financial assets?

Is % the way you allocate to the non-crypto portion, or do you have other criteria instead (5 years' conventional assets, paid off house but the rest is crypto, etc)?

Are you seeking a FIRE target in some conventional way (eg, 25x annual spending) or using other goals for your accumulation strategies?

It's about 60/40 crypto vs stocks.  That was never the plan it's just the way it's worked out.  I don't put any new money into crypto and I try not to pull too much out, I'm basically playing with house money now so I'm happy to let it ride.  I'm not getting ahead of myself in regards to FIRE targets or anything like that.  If it happens, it happens.  If it all crashes to zero I'll diversify into tulip bulbs.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 03, 2021, 06:11:47 PM
Bitcoin doesn't go up in value because it may one day be used in businesses to buy goods and services.  It goes up in value because it is a scarce asset  that people want to hold and don't want to sell.  There's only 21 million bitcoins and that's all there will ever be.  The network is still in its growth phase with millions of new users coming in and we're all just fighting for a piece of that pie.  The amount traded on exchanges which sets the price is actually very low, the vast majority of bitcoin is stored away in offline wallets for the long term, no one is looking to spend it in shops, noone spends gold bullion or apple shares in shops either, it's a long term investment.

I was told earlier it could be a currency bc a consensus could decide to change the 21 million limit. So is it actually a limit?  Also scarcity of something does not make it valuable. Definition of value is determined by humans. Today it has value. Tomorrow it could be worth 0. It's 100% a human emotion play giving value to this thing. It doesn't produce anything. It doesn't do anything except people are stuffing it in their "mattresses" it's an anomaly of a digital age and an inflated market with people misunderstanding the stock market as a risky gamble. And then assuming BTC is the same risky gamble but look at the returns. Fomo heaven. Likely propped up on illegal stable coins and over marketing. 1929 rush on stable coins comes and this all collapses.

That is not what you were told.  Bitcoin has been described as many things; an asset, a currency, even a commodity.  Contrary to your obsession, there is nothing fundamentally wrong with it occupying each of those spaces depending upon how the owner treats it.  In the end, its governed by the code and secured by the network that we value.  If that has no value to you then don't buy it.  No one cares.

He just likes to rile up the troops:). He must have seen the latest media article on stable coins - now he's even more confused. Obviously jumped to the conclusion that they are now illegal. Clueless.
You can buy them all day on any of the US exchanges and earn 8-9-10% interest on them at places like Block Fi.
He just forgot to insert "illegal beanie babies collection" his usual MO when giving his three or four liner diatribe on crypto.

All the President's Work Group said in their report about stable coins is that they want to regulate stablecoins.
The report calls for legislation to limit stable coin issuance to "insured depositories" aka banks and credit unions.

It is no surprise that the FED and the SEC/CFTC want full control, stable coins are a threat to the system. The banks just want the money back that flowed out of our no-interest bank accounts into crypto.
This is of course US-centric for US$ backed/pegged stable coins. We want regulation for crypto - so there you go.

In essence, this is just another indication that crypto is here to stay. It will work itself out. It's not like Mastercard or Visa will give up their new blockchain technology giving them speed and security and of course profit. The banks get their funds and custodial powers and everyone will benefit from the efficiency of the payment platforms from the hedge funds to the little guy sending money home to Timbuktu.

The idea that bitcoin is 'likely propped up on illegal stable coins" is so out in left field it is laughable.
Bitcoin and stable coins have nothing at all to do with each other. That's like pointing to the sun and calling it the moon.   

Almost like point at BTC and saying to the moon bc look at the last 6 years. I got moon analogies all day.

Anyone that bought BTC back then doesn't need to look to the moon, they're already on the moon LMAO
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 04, 2021, 08:26:47 AM
According to Yahoo Finance, BTC opened at $403.66/BTC on Nov 4, 2015.  Currently, BTC costs $62328.90/BTC, for a gain of +15,441% in the past 6 years. Someone who put their $5,500 IRA contribution into BTC in 2015 should probably consider diversifying the $849,252 worth of BTC they're holding.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on November 04, 2021, 10:05:15 AM

@Juan Ponce de León , are there conditions under which you'd sell some Bitcoin to lock in those gains?

Yeah absolutely.  If we get a parabolic move up I'll be looking to de-risk some but mainly from my alt coin positions which I have way too much of.  I also cash out some of my defi yield every week but mainly I use it to buy more crypto.

Sorry if I missed this earlier. If you don't mind my asking, @Juan Ponce de León, what % of your portfolio is in crypto vs conventional financial assets?

Is % the way you allocate to the non-crypto portion, or do you have other criteria instead (5 years' conventional assets, paid off house but the rest is crypto, etc)?

Are you seeking a FIRE target in some conventional way (eg, 25x annual spending) or using other goals for your accumulation strategies?

It's about 60/40 crypto vs stocks.  That was never the plan it's just the way it's worked out.  I don't put any new money into crypto and I try not to pull too much out, I'm basically playing with house money now so I'm happy to let it ride.  I'm not getting ahead of myself in regards to FIRE targets or anything like that.  If it happens, it happens.  If it all crashes to zero I'll diversify into tulip bulbs.

I'm curious about your allocation amongst your cypto assets, do you mind sharing? Here's mine:

VTSAX = 50%
Crypto = 50%

Of the Crypto, here's the current breakdown(it changes daily, because as you know, the price of all these things is terrifically volatile):
Ethereum = 56%
Bitcoin = 34.3%
alt coins = 9.3%

Of the 9.3% that I have in alt coins, here's the ones I have a small position in:
Cardano
Solana
Uniswap
Chainlink
Litecoin
Bitcoin Cash
Enjin
Polkadot
Avalanche
Aave
VeChain

Why do I own these alt coins:
Reason #1: In their own way, they each seem to be solving problems in a unique way that I think gives them value and lots of growth potential.
Reason #2: When I have a little skin in the game, I pay much closer attention to things.  If one or more of these coins becomes more important, I'll feel more comfortable taking a bigger position if I've been following the work being done on each project. 

What am I currently digging into that might change my strategy:
Now that I am investing in the cyrpto space, I want to start actually becoming a participant in the crypto space.  I think it's likely that in the next 10 years, people are going to transition to gaming on blockchain technology.  Axie Infinity is the biggest crypto game right now, and it's growing because you can earn money while playing in a variety of ways.  Axie Infinity is like Pokemon, except instead of one pokemon battling another pokemon, it's 3 axies battling against another person's 3 axies. 

You can make money in Axie Infinity in a few ways:
1.  When you win battles, you get money (in the form of the two cryptocurrency tokens created by the game...AXS and SLP tokens)
2.  You have to buy axies to battle.  But as those axies win battles and acquire more tokens, you can either cash those tokens out and convert to dollars (or whatever currency you want), or you can spend the tokens to breed your axies and create new axies
3.  When new axies are created, you can either sell them (usually for about $300 each right now), or create a new team of 3 axies with them and you can start battling with them to earn more tokens. 
4.  If you don't want to spend all of your time doing axie battles, you can allow others to battle for you.  If you play the game for a few hours each day, you can make about $300/month worth of SLP and AXS.  That works about to about $10/day.  For us, that's nothing, but for a person in a 3rd world country making $6 per day working their job in a factory, if they can go home and make an extra $10 playing a game for 3 hours, their life has changed.  When you allow someone to play for you, it's called a sponsorship. 

Right now I'm considering buying a bunch of axies and sponsoring other people to play for me.  So I won't actually play the game, I'll just breed axies my sponsors have won enough battles for me to breed them, then I'll sell the new axies...or form other sponsorship teams to grow my portfolio of axies.  Seems like a great way for me to learn more about the crypto space, and make some money while I do it. 

To do that, I'll probably sell 10-20k of my alt coins listed above to buy axies.  I hope to become educated enough on how to purchase/breed/sponsor to start by January of 2021, and my goal is to grow the 10-20k up to 100k+ by the end of 2022.  But who knows, maybe it sucks and I'll bail on it:)  Either way, the education I'll get from putting in the work will be worth a ton in its own right. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: index on November 04, 2021, 10:33:15 AM
What am I currently digging into that might change my strategy:
Now that I am investing in the cyrpto space, I want to start actually becoming a participant in the crypto space.  I think it's likely that in the next 10 years, people are going to transition to gaming on blockchain technology.  Axie Infinity is the biggest crypto game right now, and it's growing because you can earn money while playing in a variety of ways.  Axie Infinity is like Pokemon, except instead of one pokemon battling another pokemon, it's 3 axies battling against another person's 3 axies. 

You can make money in Axie Infinity in a few ways:
1.  When you win battles, you get money (in the form of the two cryptocurrency tokens created by the game...AXS and SLP tokens)
2.  You have to buy axies to battle.  But as those axies win battles and acquire more tokens, you can either cash those tokens out and convert to dollars (or whatever currency you want), or you can spend the tokens to breed your axies and create new axies
3.  When new axies are created, you can either sell them (usually for about $300 each right now), or create a new team of 3 axies with them and you can start battling with them to earn more tokens. 
4.  If you don't want to spend all of your time doing axie battles, you can allow others to battle for you.  If you play the game for a few hours each day, you can make about $300/month worth of SLP and AXS.  That works about to about $10/day.  For us, that's nothing, but for a person in a 3rd world country making $6 per day working their job in a factory, if they can go home and make an extra $10 playing a game for 3 hours, their life has changed.  When you allow someone to play for you, it's called a sponsorship. 

Right now I'm considering buying a bunch of axies and sponsoring other people to play for me.  So I won't actually play the game, I'll just breed axies my sponsors have won enough battles for me to breed them, then I'll sell the new axies...or form other sponsorship teams to grow my portfolio of axies.  Seems like a great way for me to learn more about the crypto space, and make some money while I do it. 

To do that, I'll probably sell 10-20k of my alt coins listed above to buy axies.  I hope to become educated enough on how to purchase/breed/sponsor to start by January of 2021, and my goal is to grow the 10-20k up to 100k+ by the end of 2022.  But who knows, maybe it sucks and I'll bail on it:)  Either way, the education I'll get from putting in the work will be worth a ton in its own right.

We may be closer to the crypto peak than I thought...
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on November 04, 2021, 11:18:42 AM
What am I currently digging into that might change my strategy:
Now that I am investing in the cyrpto space, I want to start actually becoming a participant in the crypto space.  I think it's likely that in the next 10 years, people are going to transition to gaming on blockchain technology.  Axie Infinity is the biggest crypto game right now, and it's growing because you can earn money while playing in a variety of ways.  Axie Infinity is like Pokemon, except instead of one pokemon battling another pokemon, it's 3 axies battling against another person's 3 axies. 

You can make money in Axie Infinity in a few ways:
1.  When you win battles, you get money (in the form of the two cryptocurrency tokens created by the game...AXS and SLP tokens)
2.  You have to buy axies to battle.  But as those axies win battles and acquire more tokens, you can either cash those tokens out and convert to dollars (or whatever currency you want), or you can spend the tokens to breed your axies and create new axies
3.  When new axies are created, you can either sell them (usually for about $300 each right now), or create a new team of 3 axies with them and you can start battling with them to earn more tokens. 
4.  If you don't want to spend all of your time doing axie battles, you can allow others to battle for you.  If you play the game for a few hours each day, you can make about $300/month worth of SLP and AXS.  That works about to about $10/day.  For us, that's nothing, but for a person in a 3rd world country making $6 per day working their job in a factory, if they can go home and make an extra $10 playing a game for 3 hours, their life has changed.  When you allow someone to play for you, it's called a sponsorship. 

Right now I'm considering buying a bunch of axies and sponsoring other people to play for me.  So I won't actually play the game, I'll just breed axies my sponsors have won enough battles for me to breed them, then I'll sell the new axies...or form other sponsorship teams to grow my portfolio of axies.  Seems like a great way for me to learn more about the crypto space, and make some money while I do it. 

To do that, I'll probably sell 10-20k of my alt coins listed above to buy axies.  I hope to become educated enough on how to purchase/breed/sponsor to start by January of 2021, and my goal is to grow the 10-20k up to 100k+ by the end of 2022.  But who knows, maybe it sucks and I'll bail on it:)  Either way, the education I'll get from putting in the work will be worth a ton in its own right.

We may be closer to the crypto peak than I thought...

Haha, I guess I can't deny how weird it all sounds:) 

Title: Re: What do you think of adding a low% of crypto allocation
Post by: forgerator on November 04, 2021, 11:26:17 AM
What am I currently digging into that might change my strategy:
Now that I am investing in the cyrpto space, I want to start actually becoming a participant in the crypto space.  I think it's likely that in the next 10 years, people are going to transition to gaming on blockchain technology.  Axie Infinity is the biggest crypto game right now, and it's growing because you can earn money while playing in a variety of ways.  Axie Infinity is like Pokemon, except instead of one pokemon battling another pokemon, it's 3 axies battling against another person's 3 axies. 

You can make money in Axie Infinity in a few ways:
1.  When you win battles, you get money (in the form of the two cryptocurrency tokens created by the game...AXS and SLP tokens)
2.  You have to buy axies to battle.  But as those axies win battles and acquire more tokens, you can either cash those tokens out and convert to dollars (or whatever currency you want), or you can spend the tokens to breed your axies and create new axies
3.  When new axies are created, you can either sell them (usually for about $300 each right now), or create a new team of 3 axies with them and you can start battling with them to earn more tokens. 
4.  If you don't want to spend all of your time doing axie battles, you can allow others to battle for you.  If you play the game for a few hours each day, you can make about $300/month worth of SLP and AXS.  That works about to about $10/day.  For us, that's nothing, but for a person in a 3rd world country making $6 per day working their job in a factory, if they can go home and make an extra $10 playing a game for 3 hours, their life has changed.  When you allow someone to play for you, it's called a sponsorship. 

Right now I'm considering buying a bunch of axies and sponsoring other people to play for me.  So I won't actually play the game, I'll just breed axies my sponsors have won enough battles for me to breed them, then I'll sell the new axies...or form other sponsorship teams to grow my portfolio of axies.  Seems like a great way for me to learn more about the crypto space, and make some money while I do it. 

To do that, I'll probably sell 10-20k of my alt coins listed above to buy axies.  I hope to become educated enough on how to purchase/breed/sponsor to start by January of 2021, and my goal is to grow the 10-20k up to 100k+ by the end of 2022.  But who knows, maybe it sucks and I'll bail on it:)  Either way, the education I'll get from putting in the work will be worth a ton in its own right.

We may be closer to the crypto peak than I thought...

Haha, I guess I can't deny how weird it all sounds:)

To be honest, 90% of the jargon we speak today in 2021 (e.g. Smart Phone, Internet, Tablet, App Store, VR etc.) would seem alien to anyone in the 80s. Maybe after 10-15 yrs it may not sound that alien at all !
btw I am just now getting into this metaverse / gaming / nft stuff and will go with a small allocation (not Axie infinity though as it has already pumped up a lot). Majority of my crypto is still in big caps. BTC, ETH, DOT, ADA, AVAX etc.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on November 04, 2021, 11:48:23 AM

To be honest, 90% of the jargon we speak today in 2021 (e.g. Smart Phone, Internet, Tablet, App Store, VR etc.) would seem alien to anyone in the 80s. Maybe after 10-15 yrs it may not sound that alien at all !
btw I am just now getting into this metaverse / gaming / nft stuff and will go with a small allocation (not Axie infinity though as it has already pumped up a lot). Majority of my crypto is still in big caps. BTC, ETH, DOT, ADA, AVAX etc.

I like where you are allocated. 

And totally agree on the jargon.  In 10 years, saying you are going to "buy an NFT" will be as common as saying "let's get an Uber" today. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on November 04, 2021, 12:37:16 PM
And totally agree on the jargon.  In 10 years, saying you are going to "buy an NFT" will be as common as saying "let's get an Uber" today.

'An Uber' is a direct replacement for 'a Taxi'.  It's a thing that exists, that serves a real need.  An NFT is not a thing, doesn't exist, and serves no need that anyone has ever been able to explain to me.

Cryptocurrency is an interesting but inherently flawed idea . . . NFTs are straight up lobotomized stupidity.  I have a bridge NFT to sell you.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 04, 2021, 12:44:37 PM
And totally agree on the jargon.  In 10 years, saying you are going to "buy an NFT" will be as common as saying "let's get an Uber" today.

'An Uber' is a direct replacement for 'a Taxi'.  It's a thing that exists, that serves a real need.  An NFT is not a thing, doesn't exist, and serves no need that anyone has ever been able to explain to me.

Cryptocurrency is an interesting but inherently flawed idea . . . NFTs are straight up lobotomized stupidity.  I have a bridge NFT to sell you.

i think NFTs are actually a practical implementation of Blockchain technology.  It replaces trading cards and physical art with a digital ownership of whatever a person considers art.  Some art is worth millions of dollars some is not.  While I don't own physical investor grade art or digital art i do think its a practical application for ownership tracing of digital art or collectibles.  Kids watch other kids play video games the way older generations watched other people play sports.  to be able to sell "an epic dunk" and be the person who owns that piece of digital media solely could be valuable to some maybe even profitable if its used in commercials or other types of ads.  The mona lisa is worth nothing to me but alot of people value it.  This doesn't give credence to the value of BTC IMO but it is a practical application of the technology.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on November 04, 2021, 01:11:02 PM
I "get" NFT's but I don't get the interest in most of them.  I think most will be valueless.  However, I can see trading cards / sports cards / multimedia NFT ownership being a thriving industry.  As a lawyer, I find its copyright use interesting.  Also the idea of digitizing proof of ownership of hard assets on chain has always been interesting.

Personally, my crypto allocation is 55% Ethereum, 30% Bitcoin, 10% Cardano, 5% Polkadot.  I haven't bought anything in about a year and don't plan on buying anything until the next big correction (atlesst 60% from where it's at now).  I think it's coming soon but I am never right on these things so take my thoughts with a grain of salt.  Anyways, the 60% drops suck when they are happening but thats really when you make money in crypto.  When the alts are down 98% that's when you pick the ones you think will survive and drop a little into them; not now.  I personally think it's a bad idea to buy anything not named Bitcoin or Ethereun right now and I wouldn't buy that right now either. That's the only thing the cynics got right in this thread: now is a bad time to expand into any crypto.  It isn't going anywhere so you might as well take profits now and buy when the cynics say it's dead again.  I don't care what others do with their money but I think that would be the wisest move even for Boarder69, Gastrapod and GuitarSteve.  I doubt they will but I think history will show this is the right message.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: JohnnyZ on November 04, 2021, 01:11:14 PM
And totally agree on the jargon.  In 10 years, saying you are going to "buy an NFT" will be as common as saying "let's get an Uber" today.

Dear god I hope not...


'An Uber' is a direct replacement for 'a Taxi'.  It's a thing that exists, that serves a real need.  An NFT is not a thing, doesn't exist, and serves no need that anyone has ever been able to explain to me.

Cryptocurrency is an interesting but inherently flawed idea . . . NFTs are straight up lobotomized stupidity.  I have a bridge NFT to sell you.

i think NFTs are actually a practical implementation of Blockchain technology.  It replaces trading cards and physical art with a digital ownership of whatever a person considers art.  Some art is worth millions of dollars some is not.  While I don't own physical investor grade art or digital art i do think its a practical application for ownership tracing of digital art or collectibles.  Kids watch other kids play video games the way older generations watched other people play sports.  to be able to sell "an epic dunk" and be the person who owns that piece of digital media solely could be valuable to some maybe even profitable if its used in commercials or other types of ads.  The mona lisa is worth nothing to me but alot of people value it.  This doesn't give credence to the value of BTC IMO but it is a practical application of the technology.

Well that's the thing though, with NFTs you don't actually own anything. Buying an NFT of a JPEG doesn't give you more right over the image than any one of the billions of people in the world. No one is prevented to sell 10 NFTs of the same thing. Buying an NFT of a NBA hot shot doesn't prevent other people from enjoying the video, doesn't allow you to use it commercially because the NBA still owns the video. It is the pinnacle of marketing and consumerism: they finally managed to sell literally nothing. I agree with Guitarstv, it's staight-up stupidity (from those who buy - those who sell are geniuses, though).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on November 04, 2021, 01:16:04 PM
And totally agree on the jargon.  In 10 years, saying you are going to "buy an NFT" will be as common as saying "let's get an Uber" today.

Dear god I hope not...


'An Uber' is a direct replacement for 'a Taxi'.  It's a thing that exists, that serves a real need.  An NFT is not a thing, doesn't exist, and serves no need that anyone has ever been able to explain to me.

Cryptocurrency is an interesting but inherently flawed idea . . . NFTs are straight up lobotomized stupidity.  I have a bridge NFT to sell you.

i think NFTs are actually a practical implementation of Blockchain technology.  It replaces trading cards and physical art with a digital ownership of whatever a person considers art.  Some art is worth millions of dollars some is not.  While I don't own physical investor grade art or digital art i do think its a practical application for ownership tracing of digital art or collectibles.  Kids watch other kids play video games the way older generations watched other people play sports.  to be able to sell "an epic dunk" and be the person who owns that piece of digital media solely could be valuable to some maybe even profitable if its used in commercials or other types of ads.  The mona lisa is worth nothing to me but alot of people value it.  This doesn't give credence to the value of BTC IMO but it is a practical application of the technology.

Well that's the thing though, with NFTs you don't actually own anything, though. Buying an NFT of a JPEG doesn't give you more right over the image than any one of the billions of people in the world. No one is prevented to sell 10 NFTs of the same thing. Buying an NFT of a NBA hot shot doesn't prevent other people from enjoying the video, doesn't allow you to use it commercially because the NBA still owns the video. It is the pinnacle of marketing and consumerism: they finally managed to sell literally nothing. I agree with Guitarstv, it's staight-up stupidity (from those who buy - those who sell are geniuses, though).

Yep.  There seems to be no ownership of anything.  Would you like to tell your friends that you paid money for something that's free?  That appears to be the use case for NFTs.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 04, 2021, 01:41:55 PM
I really enjoyed watching this user on Twitter have a conniption after his NFT apes were stolen (https://twitter.com/calvinbecerra/status/1454500282595901442). You can read through the progression, and see he (and probably any other crypto enthusiast) doesn't actually believe a single thing they say.

He says things like "Not changing my profile picture, it's still my ape!" https://twitter.com/calvinbecerra/status/1454500282595901442 In other words, he admits the blockchain entry does not, in any way, construe ownership. How do you think that one would hold up in a court battle over copyright law, onecoolcat? Does the blockchain do anything here? Obviously not.

He went to the FBI to ask them to help recover them. He asked OpenSea (centralized) to block the sale of them. And they did! So much for censorship-resistance, eh?

Funny how quickly the talking points evaporate after you fall victim to the very system you've been an acolyte to help build up.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on November 04, 2021, 01:54:46 PM
I really enjoyed watching this user on Twitter have a conniption after his NFT apes were stolen (https://twitter.com/calvinbecerra/status/1454500282595901442). You can read through the progression, and see he (and probably any other crypto enthusiast) doesn't actually believe a single thing they say.

He says things like "Not changing my profile picture, it's still my ape!" https://twitter.com/calvinbecerra/status/1454500282595901442 In other words, he admits the blockchain entry does not, in any way, construe ownership. How do you think that one would hold up in a court battle over copyright law, onecoolcat? Does the blockchain do anything here? Obviously not.

He went to the FBI to ask them to help recover them. He asked OpenSea (centralized) to block the sale of them. And they did! So much for censorship-resistance, eh?

Funny how quickly the talking points evaporate after you fall victim to the very system you've been an acolyte to help build up.

I think it says alot about you unfortunately that you take pleasure in people having a really bad day.  I hope you can find something positive in your life.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 04, 2021, 02:10:00 PM
And totally agree on the jargon.  In 10 years, saying you are going to "buy an NFT" will be as common as saying "let's get an Uber" today.

Dear god I hope not...


'An Uber' is a direct replacement for 'a Taxi'.  It's a thing that exists, that serves a real need.  An NFT is not a thing, doesn't exist, and serves no need that anyone has ever been able to explain to me.

Cryptocurrency is an interesting but inherently flawed idea . . . NFTs are straight up lobotomized stupidity.  I have a bridge NFT to sell you.

i think NFTs are actually a practical implementation of Blockchain technology.  It replaces trading cards and physical art with a digital ownership of whatever a person considers art.  Some art is worth millions of dollars some is not.  While I don't own physical investor grade art or digital art i do think its a practical application for ownership tracing of digital art or collectibles.  Kids watch other kids play video games the way older generations watched other people play sports.  to be able to sell "an epic dunk" and be the person who owns that piece of digital media solely could be valuable to some maybe even profitable if its used in commercials or other types of ads.  The mona lisa is worth nothing to me but alot of people value it.  This doesn't give credence to the value of BTC IMO but it is a practical application of the technology.

Well that's the thing though, with NFTs you don't actually own anything, though. Buying an NFT of a JPEG doesn't give you more right over the image than any one of the billions of people in the world. No one is prevented to sell 10 NFTs of the same thing. Buying an NFT of a NBA hot shot doesn't prevent other people from enjoying the video, doesn't allow you to use it commercially because the NBA still owns the video. It is the pinnacle of marketing and consumerism: they finally managed to sell literally nothing. I agree with Guitarstv, it's staight-up stupidity (from those who buy - those who sell are geniuses, though).

Yep.  There seems to be no ownership of anything.  Would you like to tell your friends that you paid money for something that's free?  That appears to be the use case for NFTs.

if there is no contractual ownership of a finite piece of art or collectible then yes it falls into the same camp as everything else but one could see how smart contracts could provide a copyright in this space even if not being done today.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 04, 2021, 02:20:18 PM
if there is no contractual ownership of a finite piece of art or collectible then yes it falls into the same camp as everything else but one could see how smart contracts could provide a copyright in this space even if not being done today.

Let's think this through. At the end of the day, law is enforced by laws, courts, and—well—law enforcement. Take the example I posted above—where an NFT was stolen. Presumably that's still illegal, and would need to be reversed, right? If there's to be any value in this thing, it should reflect reality, so it would need to be updated to do so (e.g., ownership restored to the legal owner). Therefore, a backdoor for the authority who decides the actual source of truth with respect to ownership must be able to modify the blockchain "record book" on its own, rendering the whole setup pretty silly and redundant.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on November 04, 2021, 02:48:51 PM
if there is no contractual ownership of a finite piece of art or collectible then yes it falls into the same camp as everything else but one could see how smart contracts could provide a copyright in this space even if not being done today.

Let's think this through. At the end of the day, law is enforced by laws, courts, and—well—law enforcement. Take the example I posted above—where an NFT was stolen. Presumably that's still illegal, and would need to be reversed, right? If there's to be any value in this thing, it should reflect reality, so it would need to be updated to do so (e.g., ownership restored to the legal owner). Therefore, a backdoor for the authority who decides the actual source of truth with respect to ownership must be able to modify the blockchain "record book" on its own, rendering the whole setup pretty silly and redundant.
There's also the "transfer it back or go to jail" option assuming whoever stole the thing can be identified. Pretty sure "gun to head" is how they must have recovered that BTC from the pipeline thing, the alternative being this stuff is not really as secure as advertised.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on November 04, 2021, 02:57:08 PM
if there is no contractual ownership of a finite piece of art or collectible then yes it falls into the same camp as everything else but one could see how smart contracts could provide a copyright in this space even if not being done today.

Let's think this through. At the end of the day, law is enforced by laws, courts, and—well—law enforcement. Take the example I posted above—where an NFT was stolen. Presumably that's still illegal, and would need to be reversed, right? If there's to be any value in this thing, it should reflect reality, so it would need to be updated to do so (e.g., ownership restored to the legal owner). Therefore, a backdoor for the authority who decides the actual source of truth with respect to ownership must be able to modify the blockchain "record book" on its own, rendering the whole setup pretty silly and redundant.

As a commercial litigation lawyer that frequently deals with misappropriated goods, I think you are being fanciful if you think stolen goods are returned in court.  Generally we get a judgment and then attempt to pry assets from the other sides cold dead hands.  It never ends with a Final Judgment.  If they don't have the good any longer the odds of collecting on the judgment diminish significantly.  That's reality. 

There is nothing stopping Mr. Ape NFT guy from suing the owner of the wallet that stole his asset.  Whether he will manage to identify the new owner or even collect on a judgment is another matter.  Frankly, there are qualities of the blockchain that make that easier and there are qualities that make it harder.  The fact that the owner, even if he/she is idenfied, probably lives overseas probably makes collection near impossible unless they are dumb enough to send the ownership rights to an exchange that is subject to US Laws (like the Colonial Pipeline dingbats).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on November 04, 2021, 02:58:44 PM
if there is no contractual ownership of a finite piece of art or collectible then yes it falls into the same camp as everything else but one could see how smart contracts could provide a copyright in this space even if not being done today.

Let's think this through. At the end of the day, law is enforced by laws, courts, and—well—law enforcement. Take the example I posted above—where an NFT was stolen. Presumably that's still illegal, and would need to be reversed, right? If there's to be any value in this thing, it should reflect reality, so it would need to be updated to do so (e.g., ownership restored to the legal owner). Therefore, a backdoor for the authority who decides the actual source of truth with respect to ownership must be able to modify the blockchain "record book" on its own, rendering the whole setup pretty silly and redundant.
There's also the "transfer it back or go to jail" option assuming whoever stole the thing can be identified. Pretty sure "gun to head" is how they must have recovered that BTC from the pipeline thing, the alternative being this stuff is not really as secure as advertised.

I think the colonial pipeline thing was recovered because they transfered the coins to an exchange that was ordered to turn it over to the US government. 

I could be assuming this though.  That was always what the most logical explanation was.  It's one of the ways the blockchain makes it easier to collect on judgments.  As I said, there are definitely ways the blockchain makes it harder too.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on November 04, 2021, 04:21:03 PM
And totally agree on the jargon.  In 10 years, saying you are going to "buy an NFT" will be as common as saying "let's get an Uber" today.

'An Uber' is a direct replacement for 'a Taxi'.  It's a thing that exists, that serves a real need.  An NFT is not a thing, doesn't exist, and serves no need that anyone has ever been able to explain to me.

Cryptocurrency is an interesting but inherently flawed idea . . . NFTs are straight up lobotomized stupidity.  I have a bridge NFT to sell you.

NFT's can do a wide variety of things.  My guess is that in ten years, no one will go through ticketmaster to buy a concert or sporting event ticket.  Instead, you would buy an NFT as a virtual ticket directly from the venue you want to attend, which will be SUPER easy to do.  At the gate, you will show proof of your NFT at the gate, which will get you entry.  Or, if you can't attend, you would sell the NFT to someone else, and they get your seat.  Middleman fees to ticketmaster = eliminated.  Credit card fees for the seller = eliminated.

I've already done this.  A week ago, there was paid content I wanted access to on the internet.  Instead of entering my credit card information into their website to purchase it, they sold me an NFT as a ticket.  Now, any time I want paid access to that content, I just have to go to the site and demonstrate that I have the NFT.  It's just a better way to accomplish the same thing.

This is one example, but there are many ways NFT's are useful.  If you want to know more, learn.  If you want to call it lobotomized stupidity, that's also an option.  I think the former option will serve you better.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on November 04, 2021, 04:42:21 PM
And totally agree on the jargon.  In 10 years, saying you are going to "buy an NFT" will be as common as saying "let's get an Uber" today.

'An Uber' is a direct replacement for 'a Taxi'.  It's a thing that exists, that serves a real need.  An NFT is not a thing, doesn't exist, and serves no need that anyone has ever been able to explain to me.

Cryptocurrency is an interesting but inherently flawed idea . . . NFTs are straight up lobotomized stupidity.  I have a bridge NFT to sell you.

NFT's can do a wide variety of things.  My guess is that in ten years, no one will go through ticketmaster to buy a concert or sporting event ticket.  Instead, you would buy an NFT as a virtual ticket directly from the venue you want to attend, which will be SUPER easy to do.  At the gate, you will show proof of your NFT at the gate, which will get you entry.  Or, if you can't attend, you would sell the NFT to someone else, and they get your seat.  Middleman fees to ticketmaster = eliminated.  Credit card fees for the seller = eliminated.

I've already done this.  A week ago, there was paid content I wanted access to on the internet.  Instead of entering my credit card information into their website to purchase it, they sold me an NFT as a ticket.  Now, any time I want paid access to that content, I just have to go to the site and demonstrate that I have the NFT.  It's just a better way to accomplish the same thing.

This is one example, but there are many ways NFT's are useful.  If you want to know more, learn.  If you want to call it lobotomized stupidity, that's also an option.  I think the former option will serve you better.

I can see problems with NFTs as tickets.  For one, one of the most pervasive problems of concert tickets are scalpers.  Tokenizing tickets will only encourage scalping because it makes tickets more easily transferred.  I feel that many artists will be resistant to it for that reason.

On the other hand, artist and promoters could be incentives to NFT tickets because they can sell direct to consumers and the tickets could become a valuable token(lol)/souvenir (much as it is today but perhaps even more so because they are alot of cool things you can do digitally that you can't do in print like special gifs or thanks from the artist). 

I started this post to critique you but I kind of feel that you sold me on it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: effigy98 on November 04, 2021, 06:08:42 PM
Probably better to listen to MMM and stay out and have lower overall portfolio returns.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 04, 2021, 06:15:58 PM
Probably better to listen to MMM and stay out and have lower overall portfolio returns.

LMAO.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 04, 2021, 07:20:02 PM

@Juan Ponce de León , are there conditions under which you'd sell some Bitcoin to lock in those gains?

Yeah absolutely.  If we get a parabolic move up I'll be looking to de-risk some but mainly from my alt coin positions which I have way too much of.  I also cash out some of my defi yield every week but mainly I use it to buy more crypto.

Sorry if I missed this earlier. If you don't mind my asking, @Juan Ponce de León, what % of your portfolio is in crypto vs conventional financial assets?

Is % the way you allocate to the non-crypto portion, or do you have other criteria instead (5 years' conventional assets, paid off house but the rest is crypto, etc)?

Are you seeking a FIRE target in some conventional way (eg, 25x annual spending) or using other goals for your accumulation strategies?

It's about 60/40 crypto vs stocks.  That was never the plan it's just the way it's worked out.  I don't put any new money into crypto and I try not to pull too much out, I'm basically playing with house money now so I'm happy to let it ride.  I'm not getting ahead of myself in regards to FIRE targets or anything like that.  If it happens, it happens.  If it all crashes to zero I'll diversify into tulip bulbs.

I'm curious about your allocation amongst your cypto assets, do you mind sharing? Here's mine:

VTSAX = 50%
Crypto = 50%

Of the Crypto, here's the current breakdown(it changes daily, because as you know, the price of all these things is terrifically volatile):
Ethereum = 56%
Bitcoin = 34.3%
alt coins = 9.3%

Of the 9.3% that I have in alt coins, here's the ones I have a small position in:
Cardano
Solana
Uniswap
Chainlink
Litecoin
Bitcoin Cash
Enjin
Polkadot
Avalanche
Aave
VeChain

My pf is very defi oriented and honestly not ideal, a lot of my coins are paired in liquidity pool tokens and paying daily yield, which I guess I'm kind of addicted to since that's how I got going in crypto and had my first big wins.  Anyway I've looked at a pf tracker and added a few other things in and I believe my pf exposure is very roughly

BNB ~33%
AVAX ~17%
ETH ~15%
BTC ~15%
CAKE ~10%
SOL ~ 5%

Over represented in BNB due to all the yield farming on Binance Smart chain, CAKE-BNB, ETH-BNB etc.  Looking to fix it in the coming months if we get an ALT season blow up of prices so I can break up and offload some of these farms and get back to a more basic bitcoin/eth dominant pf.  I'll also cashout a chunk of lifestyle tickets if things go well.  Whether I achieve it or not before the market pulls the rug again I don't know haha.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 04, 2021, 07:45:49 PM
Probably better to listen to MMM and stay out and have lower overall portfolio returns.

LMAO.

In the not too distant future when this is worth next to nothing y'all will be claiming you got out before that happened and are living like kings. Rather than posting percentages of ownership stakes why not start journals and document your actual transactions.  What do you have to lose?  Someone may read 8t and buy more unicorn farts and drive up the value.  Hell it may even become a unicorn poop.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 04, 2021, 08:29:21 PM
Probably better to listen to MMM and stay out and have lower overall portfolio returns.

LMAO.

In the not too distant future when this is worth next to nothing y'all will be claiming you got out before that happened and are living like kings. Rather than posting percentages of ownership stakes why not start journals and document your actual transactions.  What do you have to lose?  Someone may read 8t and buy more unicorn farts and drive up the value.  Hell it may even become a unicorn poop.

What?  Start your own journal m8.  I was answering a direct question.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on November 04, 2021, 08:38:01 PM

My pf is very defi oriented and honestly not ideal, a lot of my coins are paired in liquidity pool tokens and paying daily yield, which I guess I'm kind of addicted to since that's how I got going in crypto and had my first big wins.  Anyway I've looked at a pf tracker and added a few other things in and I believe my pf exposure is very roughly

BNB ~33%
AVAX ~17%
ETH ~15%
BTC ~15%
CAKE ~10%
SOL ~ 5%

Over represented in BNB due to all the yield farming on Binance Smart chain, CAKE-BNB, ETH-BNB etc.  Looking to fix it in the coming months if we get an ALT season blow up of prices so I can break up and offload some of these farms and get back to a more basic bitcoin/eth dominant pf.  I'll also cashout a chunk of lifestyle tickets if things go well.  Whether I achieve it or not before the market pulls the rug again I don't know haha.

Thanks for posting. Good luck on the right season, getting the rebalancing you want, and beating the rug pulls to the punch.


In the not too distant future when this is worth next to nothing y'all will be claiming you got out before that happened and are living like kings. Rather than posting percentages of ownership stakes why not start journals and document your actual transactions.  What do you have to lose?  Someone may read 8t and buy more unicorn farts and drive up the value.  Hell it may even become a unicorn poop.

I don't think Juan Ponce de Leon, for example, is any less likely to post accurate followups than anyone else on the forum who chooses to give partial information - which is most of us. I don't post complete transactions because I figure that even an "anonymous" forum can be hacked and I'd rather make it one step harder for my accounts to be socially engineered. I'd be be delighted to hear followup reports in either the case of a continued successful boom play, or a new plunge in crypto. % plus description of actions taken, reasoning and general results is still a helpful picture. The biggest data gap is from ghosting so any decent followup is helpful, especially if illustrating a new or non-standard  path.

That said, I greatly appreciate the thoughtful fraction who do give complete or otherwise detailed accounts. Obviously they add meat to the forum that it would otherwise lack, and are uniquely respectworthy contributors.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on November 04, 2021, 09:16:38 PM

@Juan Ponce de León , are there conditions under which you'd sell some Bitcoin to lock in those gains?

Yeah absolutely.  If we get a parabolic move up I'll be looking to de-risk some but mainly from my alt coin positions which I have way too much of.  I also cash out some of my defi yield every week but mainly I use it to buy more crypto.

Sorry if I missed this earlier. If you don't mind my asking, @Juan Ponce de León, what % of your portfolio is in crypto vs conventional financial assets?

Is % the way you allocate to the non-crypto portion, or do you have other criteria instead (5 years' conventional assets, paid off house but the rest is crypto, etc)?

Are you seeking a FIRE target in some conventional way (eg, 25x annual spending) or using other goals for your accumulation strategies?

It's about 60/40 crypto vs stocks.  That was never the plan it's just the way it's worked out.  I don't put any new money into crypto and I try not to pull too much out, I'm basically playing with house money now so I'm happy to let it ride.  I'm not getting ahead of myself in regards to FIRE targets or anything like that.  If it happens, it happens.  If it all crashes to zero I'll diversify into tulip bulbs.

I'm curious about your allocation amongst your cypto assets, do you mind sharing? Here's mine:

VTSAX = 50%
Crypto = 50%

Of the Crypto, here's the current breakdown(it changes daily, because as you know, the price of all these things is terrifically volatile):
Ethereum = 56%
Bitcoin = 34.3%
alt coins = 9.3%

Of the 9.3% that I have in alt coins, here's the ones I have a small position in:
Cardano
Solana
Uniswap
Chainlink
Litecoin
Bitcoin Cash
Enjin
Polkadot
Avalanche
Aave
VeChain

My pf is very defi oriented and honestly not ideal, a lot of my coins are paired in liquidity pool tokens and paying daily yield, which I guess I'm kind of addicted to since that's how I got going in crypto and had my first big wins.  Anyway I've looked at a pf tracker and added a few other things in and I believe my pf exposure is very roughly

BNB ~33%
AVAX ~17%
ETH ~15%
BTC ~15%
CAKE ~10%
SOL ~ 5%

Over represented in BNB due to all the yield farming on Binance Smart chain, CAKE-BNB, ETH-BNB etc.  Looking to fix it in the coming months if we get an ALT season blow up of prices so I can break up and offload some of these farms and get back to a more basic bitcoin/eth dominant pf.  I'll also cashout a chunk of lifestyle tickets if things go well.  Whether I achieve it or not before the market pulls the rug again I don't know haha.

I'll be frank, I kind of agree with Boarder420.  You'll probably get yourself rekt'd if you are not lucky enough to get your timing down right.  You could end up with 90% losses overall with such large bags full of shitcoins.  I mean that with all due respect.  How confident are you that BNB/CAKE/SOL/AVAX will rebound after the next crash?  Don't get me wrong, all of them could.  But they could very well be the next Neo, NEM, QTUM, ect.  Not all crypto bounces back after a bear market and we will most likely have another bear market in the near future.  Now is the time to sell the shitcoins and take profits and/or get into Bitcoin/Ethereum.  At least you have a good basis to think Bitcoin/Ethereum will rebound after the next crash.

I don't know if you were around before 2018 but a lot of the top shitcoins from 2017 never recovered.  For every ADA there are three EOS'.  I am not saying there is not place in your bags for shitcoins -- I got my own shitcoins -- but lets be real here; they are only good for getting more Bitcoin/Ethereum.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 04, 2021, 10:29:08 PM

@Juan Ponce de León , are there conditions under which you'd sell some Bitcoin to lock in those gains?

Yeah absolutely.  If we get a parabolic move up I'll be looking to de-risk some but mainly from my alt coin positions which I have way too much of.  I also cash out some of my defi yield every week but mainly I use it to buy more crypto.

Sorry if I missed this earlier. If you don't mind my asking, @Juan Ponce de León, what % of your portfolio is in crypto vs conventional financial assets?

Is % the way you allocate to the non-crypto portion, or do you have other criteria instead (5 years' conventional assets, paid off house but the rest is crypto, etc)?

Are you seeking a FIRE target in some conventional way (eg, 25x annual spending) or using other goals for your accumulation strategies?

It's about 60/40 crypto vs stocks.  That was never the plan it's just the way it's worked out.  I don't put any new money into crypto and I try not to pull too much out, I'm basically playing with house money now so I'm happy to let it ride.  I'm not getting ahead of myself in regards to FIRE targets or anything like that.  If it happens, it happens.  If it all crashes to zero I'll diversify into tulip bulbs.

I'm curious about your allocation amongst your cypto assets, do you mind sharing? Here's mine:

VTSAX = 50%
Crypto = 50%

Of the Crypto, here's the current breakdown(it changes daily, because as you know, the price of all these things is terrifically volatile):
Ethereum = 56%
Bitcoin = 34.3%
alt coins = 9.3%

Of the 9.3% that I have in alt coins, here's the ones I have a small position in:
Cardano
Solana
Uniswap
Chainlink
Litecoin
Bitcoin Cash
Enjin
Polkadot
Avalanche
Aave
VeChain

My pf is very defi oriented and honestly not ideal, a lot of my coins are paired in liquidity pool tokens and paying daily yield, which I guess I'm kind of addicted to since that's how I got going in crypto and had my first big wins.  Anyway I've looked at a pf tracker and added a few other things in and I believe my pf exposure is very roughly

BNB ~33%
AVAX ~17%
ETH ~15%
BTC ~15%
CAKE ~10%
SOL ~ 5%

Over represented in BNB due to all the yield farming on Binance Smart chain, CAKE-BNB, ETH-BNB etc.  Looking to fix it in the coming months if we get an ALT season blow up of prices so I can break up and offload some of these farms and get back to a more basic bitcoin/eth dominant pf.  I'll also cashout a chunk of lifestyle tickets if things go well.  Whether I achieve it or not before the market pulls the rug again I don't know haha.

I'll be frank, I kind of agree with Boarder420.  You'll probably get yourself rekt'd if you are not lucky enough to get your timing down right.  You could end up with 90% losses overall with such large bags full of shitcoins.  I mean that with all due respect.  How confident are you that BNB/CAKE/SOL/AVAX will rebound after the next crash?  Don't get me wrong, all of them could.  But they could very well be the next Neo, NEM, QTUM, ect.  Not all crypto bounces back after a bear market and we will most likely have another bear market in the near future.  Now is the time to sell the shitcoins and take profits and/or get into Bitcoin/Ethereum.  At least you have a good basis to think Bitcoin/Ethereum will rebound after the next crash.

I don't know if you were around before 2018 but a lot of the top shitcoins from 2017 never recovered.  For every ADA there are three EOS'.  I am not saying there is not place in your bags for shitcoins -- I got my own shitcoins -- but lets be real here; they are only good for getting more Bitcoin/Ethereum.

It depends on your definition of rekt I guess.  I never said my strategy was without risk, but without those risks I wouldn't even have the PF I have now.  In January I had ~US$8k in crypto and now it's in the hundreds of thousands.  I've also been paying my CC in full with it each month for awhile now so I'm firmly in freeroll territory with this money.  Yet if you asked Boarder42 he'd probably tell you I'm some kind of crazy idiot sniffing unicorn farts?  I'm not sure what he was really on about.

Also I think your definition of shitcoin is quite a bit loser than mine.  BNB is #3 coin by market cap and native coin of the largest exchange, it's sitting at $100B by market cap.  Sol is #4, AVAX is #11.  You have to weight up the risk vs the reward.  CAKE I guess I just have some kind of misguided loyalty to the project.  First bought CAKE in Feb for $2 and BNB for $44, i think cake-bnb was paying 200% APR at the time, recompounded the yield and built a PF out of CAKE.  In that first run cake went to $45 and BNB went to nearly $700.  I sell CAKE every day, morning and night if I remember.  I've sold more cake than a cake shop LMAO.   It's still paying a decent yield.

One thing I will say about the defi yield is that it makes me sleep better at night knowing I have a few hundred dollars a day coming in that I can sell and not feel like I'm selling a dip or about to miss a pump etc.  For me it's guilt-free selling that is income and doesn't equal a capital gains event.  I can pay off my CC or buy some more bitcoin/eth/stock ETFs or some other crypto project.  For me the yield was a gamechanger, just owning a set amount of coins that doesn't change seems stagnant in comparison, like owning stocks.  Having said that, I learned some lessons in May when we had the large correction and if alt coins blow off again like that I am going to try and derisk some to the best of my judgement.  We don't seem to be there yet though.  Good luck with your own holdings.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on November 05, 2021, 12:08:12 AM

@Juan Ponce de León , are there conditions under which you'd sell some Bitcoin to lock in those gains?

Yeah absolutely.  If we get a parabolic move up I'll be looking to de-risk some but mainly from my alt coin positions which I have way too much of.  I also cash out some of my defi yield every week but mainly I use it to buy more crypto.

Sorry if I missed this earlier. If you don't mind my asking, @Juan Ponce de León, what % of your portfolio is in crypto vs conventional financial assets?

Is % the way you allocate to the non-crypto portion, or do you have other criteria instead (5 years' conventional assets, paid off house but the rest is crypto, etc)?

Are you seeking a FIRE target in some conventional way (eg, 25x annual spending) or using other goals for your accumulation strategies?

It's about 60/40 crypto vs stocks.  That was never the plan it's just the way it's worked out.  I don't put any new money into crypto and I try not to pull too much out, I'm basically playing with house money now so I'm happy to let it ride.  I'm not getting ahead of myself in regards to FIRE targets or anything like that.  If it happens, it happens.  If it all crashes to zero I'll diversify into tulip bulbs.

I'm curious about your allocation amongst your cypto assets, do you mind sharing? Here's mine:

VTSAX = 50%
Crypto = 50%

Of the Crypto, here's the current breakdown(it changes daily, because as you know, the price of all these things is terrifically volatile):
Ethereum = 56%
Bitcoin = 34.3%
alt coins = 9.3%

Of the 9.3% that I have in alt coins, here's the ones I have a small position in:
Cardano
Solana
Uniswap
Chainlink
Litecoin
Bitcoin Cash
Enjin
Polkadot
Avalanche
Aave
VeChain

My pf is very defi oriented and honestly not ideal, a lot of my coins are paired in liquidity pool tokens and paying daily yield, which I guess I'm kind of addicted to since that's how I got going in crypto and had my first big wins.  Anyway I've looked at a pf tracker and added a few other things in and I believe my pf exposure is very roughly

BNB ~33%
AVAX ~17%
ETH ~15%
BTC ~15%
CAKE ~10%
SOL ~ 5%

Over represented in BNB due to all the yield farming on Binance Smart chain, CAKE-BNB, ETH-BNB etc.  Looking to fix it in the coming months if we get an ALT season blow up of prices so I can break up and offload some of these farms and get back to a more basic bitcoin/eth dominant pf.  I'll also cashout a chunk of lifestyle tickets if things go well.  Whether I achieve it or not before the market pulls the rug again I don't know haha.

I'll be frank, I kind of agree with Boarder420.  You'll probably get yourself rekt'd if you are not lucky enough to get your timing down right.  You could end up with 90% losses overall with such large bags full of shitcoins.  I mean that with all due respect.  How confident are you that BNB/CAKE/SOL/AVAX will rebound after the next crash?  Don't get me wrong, all of them could.  But they could very well be the next Neo, NEM, QTUM, ect.  Not all crypto bounces back after a bear market and we will most likely have another bear market in the near future.  Now is the time to sell the shitcoins and take profits and/or get into Bitcoin/Ethereum.  At least you have a good basis to think Bitcoin/Ethereum will rebound after the next crash.

I don't know if you were around before 2018 but a lot of the top shitcoins from 2017 never recovered.  For every ADA there are three EOS'.  I am not saying there is not place in your bags for shitcoins -- I got my own shitcoins -- but lets be real here; they are only good for getting more Bitcoin/Ethereum.

It depends on your definition of rekt I guess.  I never said my strategy was without risk, but without those risks I wouldn't even have the PF I have now.  In January I had ~US$8k in crypto and now it's in the hundreds of thousands.  I've also been paying my CC in full with it each month for awhile now so I'm firmly in freeroll territory with this money.  Yet if you asked Boarder42 he'd probably tell you I'm some kind of crazy idiot sniffing unicorn farts?  I'm not sure what he was really on about.

Also I think your definition of shitcoin is quite a bit loser than mine.  BNB is #3 coin by market cap and native coin of the largest exchange, it's sitting at $100B by market cap.  Sol is #4, AVAX is #11.  You have to weight up the risk vs the reward.  CAKE I guess I just have some kind of misguided loyalty to the project.  First bought CAKE in Feb for $2 and BNB for $44, i think cake-bnb was paying 200% APR at the time, recompounded the yield and built a PF out of CAKE.  In that first run cake went to $45 and BNB went to nearly $700.  I sell CAKE every day, morning and night if I remember.  I've sold more cake than a cake shop LMAO.   It's still paying a decent yield.

One thing I will say about the defi yield is that it makes me sleep better at night knowing I have a few hundred dollars a day coming in that I can sell and not feel like I'm selling a dip or about to miss a pump etc.  For me it's guilt-free selling that is income and doesn't equal a capital gains event.  I can pay off my CC or buy some more bitcoin/eth/stock ETFs or some other crypto project.  For me the yield was a gamechanger, just owning a set amount of coins that doesn't change seems stagnant in comparison, like owning stocks.  Having said that, I learned some lessons in May when we had the large correction and if alt coins blow off again like that I am going to try and derisk some to the best of my judgement.  We don't seem to be there yet though.  Good luck with your own holdings.

I jokingly call everything that isn't Bitcoin or Ethereum is a shitcoin.  That includes ADA which is 10% of my crypto portfolio, lol.

The May correction was nothing.  All these alts, including BNB and ADA, will dump 80-99% from wherever their high is. 

However, I am particularly bearish on BNB because its just a centralized Ethereum clone.  It's propped up by two things: (1) Binance support and (2) high ethereum gas fees.  If either of those conditions change (one is inevitable sometime in the future) then I think all the appeal about BNB fades. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 05, 2021, 12:17:54 AM

@Juan Ponce de León , are there conditions under which you'd sell some Bitcoin to lock in those gains?

Yeah absolutely.  If we get a parabolic move up I'll be looking to de-risk some but mainly from my alt coin positions which I have way too much of.  I also cash out some of my defi yield every week but mainly I use it to buy more crypto.

Sorry if I missed this earlier. If you don't mind my asking, @Juan Ponce de León, what % of your portfolio is in crypto vs conventional financial assets?

Is % the way you allocate to the non-crypto portion, or do you have other criteria instead (5 years' conventional assets, paid off house but the rest is crypto, etc)?

Are you seeking a FIRE target in some conventional way (eg, 25x annual spending) or using other goals for your accumulation strategies?

It's about 60/40 crypto vs stocks.  That was never the plan it's just the way it's worked out.  I don't put any new money into crypto and I try not to pull too much out, I'm basically playing with house money now so I'm happy to let it ride.  I'm not getting ahead of myself in regards to FIRE targets or anything like that.  If it happens, it happens.  If it all crashes to zero I'll diversify into tulip bulbs.

I'm curious about your allocation amongst your cypto assets, do you mind sharing? Here's mine:

VTSAX = 50%
Crypto = 50%

Of the Crypto, here's the current breakdown(it changes daily, because as you know, the price of all these things is terrifically volatile):
Ethereum = 56%
Bitcoin = 34.3%
alt coins = 9.3%

Of the 9.3% that I have in alt coins, here's the ones I have a small position in:
Cardano
Solana
Uniswap
Chainlink
Litecoin
Bitcoin Cash
Enjin
Polkadot
Avalanche
Aave
VeChain

My pf is very defi oriented and honestly not ideal, a lot of my coins are paired in liquidity pool tokens and paying daily yield, which I guess I'm kind of addicted to since that's how I got going in crypto and had my first big wins.  Anyway I've looked at a pf tracker and added a few other things in and I believe my pf exposure is very roughly

BNB ~33%
AVAX ~17%
ETH ~15%
BTC ~15%
CAKE ~10%
SOL ~ 5%

Over represented in BNB due to all the yield farming on Binance Smart chain, CAKE-BNB, ETH-BNB etc.  Looking to fix it in the coming months if we get an ALT season blow up of prices so I can break up and offload some of these farms and get back to a more basic bitcoin/eth dominant pf.  I'll also cashout a chunk of lifestyle tickets if things go well.  Whether I achieve it or not before the market pulls the rug again I don't know haha.

I'll be frank, I kind of agree with Boarder420.  You'll probably get yourself rekt'd if you are not lucky enough to get your timing down right.  You could end up with 90% losses overall with such large bags full of shitcoins.  I mean that with all due respect.  How confident are you that BNB/CAKE/SOL/AVAX will rebound after the next crash?  Don't get me wrong, all of them could.  But they could very well be the next Neo, NEM, QTUM, ect.  Not all crypto bounces back after a bear market and we will most likely have another bear market in the near future.  Now is the time to sell the shitcoins and take profits and/or get into Bitcoin/Ethereum.  At least you have a good basis to think Bitcoin/Ethereum will rebound after the next crash.

I don't know if you were around before 2018 but a lot of the top shitcoins from 2017 never recovered.  For every ADA there are three EOS'.  I am not saying there is not place in your bags for shitcoins -- I got my own shitcoins -- but lets be real here; they are only good for getting more Bitcoin/Ethereum.

It depends on your definition of rekt I guess.  I never said my strategy was without risk, but without those risks I wouldn't even have the PF I have now.  In January I had ~US$8k in crypto and now it's in the hundreds of thousands.  I've also been paying my CC in full with it each month for awhile now so I'm firmly in freeroll territory with this money.  Yet if you asked Boarder42 he'd probably tell you I'm some kind of crazy idiot sniffing unicorn farts?  I'm not sure what he was really on about.

Also I think your definition of shitcoin is quite a bit loser than mine.  BNB is #3 coin by market cap and native coin of the largest exchange, it's sitting at $100B by market cap.  Sol is #4, AVAX is #11.  You have to weight up the risk vs the reward.  CAKE I guess I just have some kind of misguided loyalty to the project.  First bought CAKE in Feb for $2 and BNB for $44, i think cake-bnb was paying 200% APR at the time, recompounded the yield and built a PF out of CAKE.  In that first run cake went to $45 and BNB went to nearly $700.  I sell CAKE every day, morning and night if I remember.  I've sold more cake than a cake shop LMAO.   It's still paying a decent yield.

One thing I will say about the defi yield is that it makes me sleep better at night knowing I have a few hundred dollars a day coming in that I can sell and not feel like I'm selling a dip or about to miss a pump etc.  For me it's guilt-free selling that is income and doesn't equal a capital gains event.  I can pay off my CC or buy some more bitcoin/eth/stock ETFs or some other crypto project.  For me the yield was a gamechanger, just owning a set amount of coins that doesn't change seems stagnant in comparison, like owning stocks.  Having said that, I learned some lessons in May when we had the large correction and if alt coins blow off again like that I am going to try and derisk some to the best of my judgement.  We don't seem to be there yet though.  Good luck with your own holdings.

Everything that isn't Bitcoin or Ethereum is a shitcoin.  That includes ADA which is 10% of my crypto portfolio, lol.

The May correction was nothing.  All these alts, including BNB and ADA, will dump 80-99% from wherever their high is.  May was what, 50%?

Yeah I think BNB was ~70%, I have no doubt you're right.  BTC itself dumps ~80-85% in the bear market.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on November 05, 2021, 12:36:08 AM

@Juan Ponce de León , are there conditions under which you'd sell some Bitcoin to lock in those gains?

Yeah absolutely.  If we get a parabolic move up I'll be looking to de-risk some but mainly from my alt coin positions which I have way too much of.  I also cash out some of my defi yield every week but mainly I use it to buy more crypto.

Sorry if I missed this earlier. If you don't mind my asking, @Juan Ponce de León, what % of your portfolio is in crypto vs conventional financial assets?

Is % the way you allocate to the non-crypto portion, or do you have other criteria instead (5 years' conventional assets, paid off house but the rest is crypto, etc)?

Are you seeking a FIRE target in some conventional way (eg, 25x annual spending) or using other goals for your accumulation strategies?

It's about 60/40 crypto vs stocks.  That was never the plan it's just the way it's worked out.  I don't put any new money into crypto and I try not to pull too much out, I'm basically playing with house money now so I'm happy to let it ride.  I'm not getting ahead of myself in regards to FIRE targets or anything like that.  If it happens, it happens.  If it all crashes to zero I'll diversify into tulip bulbs.

I'm curious about your allocation amongst your cypto assets, do you mind sharing? Here's mine:

VTSAX = 50%
Crypto = 50%

Of the Crypto, here's the current breakdown(it changes daily, because as you know, the price of all these things is terrifically volatile):
Ethereum = 56%
Bitcoin = 34.3%
alt coins = 9.3%

Of the 9.3% that I have in alt coins, here's the ones I have a small position in:
Cardano
Solana
Uniswap
Chainlink
Litecoin
Bitcoin Cash
Enjin
Polkadot
Avalanche
Aave
VeChain

My pf is very defi oriented and honestly not ideal, a lot of my coins are paired in liquidity pool tokens and paying daily yield, which I guess I'm kind of addicted to since that's how I got going in crypto and had my first big wins.  Anyway I've looked at a pf tracker and added a few other things in and I believe my pf exposure is very roughly

BNB ~33%
AVAX ~17%
ETH ~15%
BTC ~15%
CAKE ~10%
SOL ~ 5%

Over represented in BNB due to all the yield farming on Binance Smart chain, CAKE-BNB, ETH-BNB etc.  Looking to fix it in the coming months if we get an ALT season blow up of prices so I can break up and offload some of these farms and get back to a more basic bitcoin/eth dominant pf.  I'll also cashout a chunk of lifestyle tickets if things go well.  Whether I achieve it or not before the market pulls the rug again I don't know haha.

I'll be frank, I kind of agree with Boarder420.  You'll probably get yourself rekt'd if you are not lucky enough to get your timing down right.  You could end up with 90% losses overall with such large bags full of shitcoins.  I mean that with all due respect.  How confident are you that BNB/CAKE/SOL/AVAX will rebound after the next crash?  Don't get me wrong, all of them could.  But they could very well be the next Neo, NEM, QTUM, ect.  Not all crypto bounces back after a bear market and we will most likely have another bear market in the near future.  Now is the time to sell the shitcoins and take profits and/or get into Bitcoin/Ethereum.  At least you have a good basis to think Bitcoin/Ethereum will rebound after the next crash.

I don't know if you were around before 2018 but a lot of the top shitcoins from 2017 never recovered.  For every ADA there are three EOS'.  I am not saying there is not place in your bags for shitcoins -- I got my own shitcoins -- but lets be real here; they are only good for getting more Bitcoin/Ethereum.

It depends on your definition of rekt I guess.  I never said my strategy was without risk, but without those risks I wouldn't even have the PF I have now.  In January I had ~US$8k in crypto and now it's in the hundreds of thousands.  I've also been paying my CC in full with it each month for awhile now so I'm firmly in freeroll territory with this money.  Yet if you asked Boarder42 he'd probably tell you I'm some kind of crazy idiot sniffing unicorn farts?  I'm not sure what he was really on about.

Also I think your definition of shitcoin is quite a bit loser than mine.  BNB is #3 coin by market cap and native coin of the largest exchange, it's sitting at $100B by market cap.  Sol is #4, AVAX is #11.  You have to weight up the risk vs the reward.  CAKE I guess I just have some kind of misguided loyalty to the project.  First bought CAKE in Feb for $2 and BNB for $44, i think cake-bnb was paying 200% APR at the time, recompounded the yield and built a PF out of CAKE.  In that first run cake went to $45 and BNB went to nearly $700.  I sell CAKE every day, morning and night if I remember.  I've sold more cake than a cake shop LMAO.   It's still paying a decent yield.

One thing I will say about the defi yield is that it makes me sleep better at night knowing I have a few hundred dollars a day coming in that I can sell and not feel like I'm selling a dip or about to miss a pump etc.  For me it's guilt-free selling that is income and doesn't equal a capital gains event.  I can pay off my CC or buy some more bitcoin/eth/stock ETFs or some other crypto project.  For me the yield was a gamechanger, just owning a set amount of coins that doesn't change seems stagnant in comparison, like owning stocks.  Having said that, I learned some lessons in May when we had the large correction and if alt coins blow off again like that I am going to try and derisk some to the best of my judgement.  We don't seem to be there yet though.  Good luck with your own holdings.

Everything that isn't Bitcoin or Ethereum is a shitcoin.  That includes ADA which is 10% of my crypto portfolio, lol.

The May correction was nothing.  All these alts, including BNB and ADA, will dump 80-99% from wherever their high is.  May was what, 50%?

Yeah I think BNB was ~70%, I have no doubt you're right.  BTC itself dumps ~80-85% in the bear market.

I edited my comment above.

Is your money tied up in "liquidity pools"?  Isn't it fairly common for these things to get hacked or or drained by insiders who then disappear?  It seems they have a significant amount of additional risk but I guess that's why the rewards are so -- well -- rewarding.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 05, 2021, 12:48:06 AM

@Juan Ponce de León , are there conditions under which you'd sell some Bitcoin to lock in those gains?

Yeah absolutely.  If we get a parabolic move up I'll be looking to de-risk some but mainly from my alt coin positions which I have way too much of.  I also cash out some of my defi yield every week but mainly I use it to buy more crypto.

Sorry if I missed this earlier. If you don't mind my asking, @Juan Ponce de León, what % of your portfolio is in crypto vs conventional financial assets?

Is % the way you allocate to the non-crypto portion, or do you have other criteria instead (5 years' conventional assets, paid off house but the rest is crypto, etc)?

Are you seeking a FIRE target in some conventional way (eg, 25x annual spending) or using other goals for your accumulation strategies?

It's about 60/40 crypto vs stocks.  That was never the plan it's just the way it's worked out.  I don't put any new money into crypto and I try not to pull too much out, I'm basically playing with house money now so I'm happy to let it ride.  I'm not getting ahead of myself in regards to FIRE targets or anything like that.  If it happens, it happens.  If it all crashes to zero I'll diversify into tulip bulbs.

I'm curious about your allocation amongst your cypto assets, do you mind sharing? Here's mine:

VTSAX = 50%
Crypto = 50%

Of the Crypto, here's the current breakdown(it changes daily, because as you know, the price of all these things is terrifically volatile):
Ethereum = 56%
Bitcoin = 34.3%
alt coins = 9.3%

Of the 9.3% that I have in alt coins, here's the ones I have a small position in:
Cardano
Solana
Uniswap
Chainlink
Litecoin
Bitcoin Cash
Enjin
Polkadot
Avalanche
Aave
VeChain

My pf is very defi oriented and honestly not ideal, a lot of my coins are paired in liquidity pool tokens and paying daily yield, which I guess I'm kind of addicted to since that's how I got going in crypto and had my first big wins.  Anyway I've looked at a pf tracker and added a few other things in and I believe my pf exposure is very roughly

BNB ~33%
AVAX ~17%
ETH ~15%
BTC ~15%
CAKE ~10%
SOL ~ 5%

Over represented in BNB due to all the yield farming on Binance Smart chain, CAKE-BNB, ETH-BNB etc.  Looking to fix it in the coming months if we get an ALT season blow up of prices so I can break up and offload some of these farms and get back to a more basic bitcoin/eth dominant pf.  I'll also cashout a chunk of lifestyle tickets if things go well.  Whether I achieve it or not before the market pulls the rug again I don't know haha.

I'll be frank, I kind of agree with Boarder420.  You'll probably get yourself rekt'd if you are not lucky enough to get your timing down right.  You could end up with 90% losses overall with such large bags full of shitcoins.  I mean that with all due respect.  How confident are you that BNB/CAKE/SOL/AVAX will rebound after the next crash?  Don't get me wrong, all of them could.  But they could very well be the next Neo, NEM, QTUM, ect.  Not all crypto bounces back after a bear market and we will most likely have another bear market in the near future.  Now is the time to sell the shitcoins and take profits and/or get into Bitcoin/Ethereum.  At least you have a good basis to think Bitcoin/Ethereum will rebound after the next crash.

I don't know if you were around before 2018 but a lot of the top shitcoins from 2017 never recovered.  For every ADA there are three EOS'.  I am not saying there is not place in your bags for shitcoins -- I got my own shitcoins -- but lets be real here; they are only good for getting more Bitcoin/Ethereum.

It depends on your definition of rekt I guess.  I never said my strategy was without risk, but without those risks I wouldn't even have the PF I have now.  In January I had ~US$8k in crypto and now it's in the hundreds of thousands.  I've also been paying my CC in full with it each month for awhile now so I'm firmly in freeroll territory with this money.  Yet if you asked Boarder42 he'd probably tell you I'm some kind of crazy idiot sniffing unicorn farts?  I'm not sure what he was really on about.

Also I think your definition of shitcoin is quite a bit loser than mine.  BNB is #3 coin by market cap and native coin of the largest exchange, it's sitting at $100B by market cap.  Sol is #4, AVAX is #11.  You have to weight up the risk vs the reward.  CAKE I guess I just have some kind of misguided loyalty to the project.  First bought CAKE in Feb for $2 and BNB for $44, i think cake-bnb was paying 200% APR at the time, recompounded the yield and built a PF out of CAKE.  In that first run cake went to $45 and BNB went to nearly $700.  I sell CAKE every day, morning and night if I remember.  I've sold more cake than a cake shop LMAO.   It's still paying a decent yield.

One thing I will say about the defi yield is that it makes me sleep better at night knowing I have a few hundred dollars a day coming in that I can sell and not feel like I'm selling a dip or about to miss a pump etc.  For me it's guilt-free selling that is income and doesn't equal a capital gains event.  I can pay off my CC or buy some more bitcoin/eth/stock ETFs or some other crypto project.  For me the yield was a gamechanger, just owning a set amount of coins that doesn't change seems stagnant in comparison, like owning stocks.  Having said that, I learned some lessons in May when we had the large correction and if alt coins blow off again like that I am going to try and derisk some to the best of my judgement.  We don't seem to be there yet though.  Good luck with your own holdings.

Everything that isn't Bitcoin or Ethereum is a shitcoin.  That includes ADA which is 10% of my crypto portfolio, lol.

The May correction was nothing.  All these alts, including BNB and ADA, will dump 80-99% from wherever their high is.  May was what, 50%?

Yeah I think BNB was ~70%, I have no doubt you're right.  BTC itself dumps ~80-85% in the bear market.

I edited my comment above.

Is your money tied up in "liquidity pools"?  Isn't it fairly common for these things to get hacked or or drained by insiders who then disappear?  It seems they have a significant amount of additional risk but I guess that's why the rewards are so -- well -- rewarding.

Yeah it's not without risk that's for sure.  Fortunately none of the projects I've ever been involved with have been affected.  I guess the longer they've been running the less likely there is an exploit in the contracts waiting to be exploited.  Pancakeswap has over 13 billion$ staked on it.  If anyone hacks or rugs it, good for them honestly, that will be the heist of the century.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on November 05, 2021, 05:43:58 AM


BNB ~33%
AVAX ~17%
ETH ~15%
BTC ~15%
CAKE ~10%
SOL ~ 5%

Over represented in BNB due to all the yield farming on Binance Smart chain, CAKE-BNB, ETH-BNB etc.  Looking to fix it in the coming months if we get an ALT season blow up of prices so I can break up and offload some of these farms and get back to a more basic bitcoin/eth dominant pf.  I'll also cashout a chunk of lifestyle tickets if things go well.  Whether I achieve it or not before the market pulls the rug again I don't know haha.

Cool.  Your portfolio has more upside than mine for sure.  And I'd feel confident that Avax, Eth, Sol, and BTC are all on solid ground enough to survive a down cycle.  I don't know enough about Cake and BNB to comment.  Good luck to you. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on November 05, 2021, 06:15:39 AM
Probably better to listen to MMM and stay out and have lower overall portfolio returns.

LMAO.

In the not too distant future when this is worth next to nothing y'all will be claiming you got out before that happened and are living like kings. Rather than posting percentages of ownership stakes why not start journals and document your actual transactions.  What do you have to lose?  Someone may read 8t and buy more unicorn farts and drive up the value.  Hell it may even become a unicorn poop.

Alright then. Not going to start a new thread at the moment, but I may soon.  Here's the numbers breakdown beyond just my current percentages:

Notes/Dislaimers: 

August Details:
[/li]
[/list]

August Month End Totals:
      Stache Total: 731k
      Crypto total: 159k
      VTSAX total: 572k

September Month End Totals: No new trades.
      Stache Total: 714k
      Crypto total: 147k
      VTSAX total: 567k

October Details:
[li]Additionally, I transferred 180k more from VTSAX into ETHE and GDLC[/li]
[li]Finally, I transferred unneeded cash from checking and bought 3k each of the following: Enjin, Polkadot, Avalanche, Aave, Chainlink, VeChain, as well as 3k of Ethereum[/li][/list]

October Month End Totals:
     Stache Total: 770k plus 20k in non-retirement account
      Crypto total: 395k
      VTSAX total: 395k

      Breakdown:
           ETHE - 155k
           GDLC - 217k
           Enjin - 3k
           Polkadot 3k
           Avalanche 3k
           Aave 3k
           Chainlink 3k
           VeChain 3k
           Ethereum 3k
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on November 05, 2021, 08:08:45 AM
And totally agree on the jargon.  In 10 years, saying you are going to "buy an NFT" will be as common as saying "let's get an Uber" today.

'An Uber' is a direct replacement for 'a Taxi'.  It's a thing that exists, that serves a real need.  An NFT is not a thing, doesn't exist, and serves no need that anyone has ever been able to explain to me.

Cryptocurrency is an interesting but inherently flawed idea . . . NFTs are straight up lobotomized stupidity.  I have a bridge NFT to sell you.

NFT's can do a wide variety of things.  My guess is that in ten years, no one will go through ticketmaster to buy a concert or sporting event ticket.  Instead, you would buy an NFT as a virtual ticket directly from the venue you want to attend, which will be SUPER easy to do.  At the gate, you will show proof of your NFT at the gate, which will get you entry.  Or, if you can't attend, you would sell the NFT to someone else, and they get your seat.  Middleman fees to ticketmaster = eliminated.  Credit card fees for the seller = eliminated.

I've already done this.  A week ago, there was paid content I wanted access to on the internet.  Instead of entering my credit card information into their website to purchase it, they sold me an NFT as a ticket.  Now, any time I want paid access to that content, I just have to go to the site and demonstrate that I have the NFT.  It's just a better way to accomplish the same thing.

This is one example, but there are many ways NFT's are useful.  If you want to know more, learn.  If you want to call it lobotomized stupidity, that's also an option.  I think the former option will serve you better.

Okay, but this example seems pretty flawed to me because services like Ticketmaster don't charge fees because there's a need for that because of the currency system. They charge fees because they can. This is a basic middle-man business model.

It's not like venues can't already just sell tickets directly.
Almost every venue in my city has an option to buy tickets directly from the venue for no additional processing fee.

Or am I missing something?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 05, 2021, 08:15:31 AM
According to coin market cap, the top 3 cryptos are BTC, ETH and BNB.
https://finance.yahoo.com/quote/BNB-USD/

I'm missing something about Bitcoin Cash (BNB)... you pay transaction fees with it?  And so it's gone from $42 to $600 this year because of that?  I'm missing something.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 05, 2021, 09:18:21 AM
Okay, but this example seems pretty flawed to me because services like Ticketmaster don't charge fees because there's a need for that because of the currency system. They charge fees because they can. This is a basic middle-man business model.

It's not like venues can't already just sell tickets directly.
Almost every venue in my city has an option to buy tickets directly from the venue for no additional processing fee.

Or am I missing something?

Eeeeexactly. This is standard crypto solutionism. The proponents are as ignorant as they are confident about the problems they proclaim crypto solves. Ticketing isn't a particularly complicated technological problem area. A handful of barcode scanners, and a Microsoft Access Database running on a 1997 Compaq Presario inside is plenty sophistication to manage ticketing. Crypto adds nothing.

The reason Ticketmaster is so "expensive" is because it's by design. Musical acts, for example, have fans they want to keep in their good graces. By having cheap-ish face-value ticket costs, and lots of silly-looking fees by the ticket-provider (e.g., Ticketmaster), fans remain happy with the musical performers, and annoyed by bad ol' Ticketmaster. Reality, the musical performers receive a large chunk of this fee revenue, to subsidize otherwise "cheap" face-values of tickets. Promoters, tour groups, and the venue also receive chunks of these fees. Ticketmaster, too, does take a small portion, and perhaps most importantly, takes the brunt of negativity from customer paying such silly fees.

Moving to an NFT is exclusively worse for all of the parties involved and it solves precisely nothing.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on November 05, 2021, 10:46:07 AM

The proponents are as ignorant as they are confident about the problems they proclaim crypto solves.

My understanding is that a rule of this site is that you can call out ideas, but not attack peoples character. 

Regardless of what you think of me and people who share my views, we are all human beings, and your statement is a character attack.  Do better. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on November 05, 2021, 11:16:45 AM
So I started a crypto currency purchase journal over in the journal section. I list my positions in six coins, market value totaling about $3,500. As I make trades, I'll post them there as well.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on November 05, 2021, 11:26:04 AM

The proponents are as ignorant as they are confident about the problems they proclaim crypto solves.

My understanding is that a rule of this site is that you can call out ideas, but not attack peoples character. 

Regardless of what you think of me and people who share my views, we are all human beings, and your statement is a character attack.  Do better.
This doesn't break the rules - is attacking an idea (crypto solves a problem!) and definitely not a person, particularly in context of the entire post. And pot meet kettle - you cut all but one sentence of a well-written post specifically to attack an individual forum member with your post. Do Better.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on November 05, 2021, 11:41:43 AM

The proponents are as ignorant as they are confident about the problems they proclaim crypto solves.

My understanding is that a rule of this site is that you can call out ideas, but not attack peoples character. 

Regardless of what you think of me and people who share my views, we are all human beings, and your statement is a character attack.  Do better.
This doesn't break the rules - is attacking an idea (crypto solves a problem!) and definitely not a person, particularly in context of the entire post. And pot meet kettle - you cut all but one sentence of a well-written post specifically to attack an individual forum member with your post. Do Better.

Gastropod has been attacking people throughout these forums for a long time and it's not limited to this crypto thread.  He is very rigid in his beliefs and unwilling to engage like an adult.  Look at his post history from everything involving a vegan diet, crypto, covid, the environment, politics, ect -- it's all him attacking people.  Alot of it comes off as insecurities as well because he constantly talks down "macho personalities" of folks he doesn't like but he's always dehumanizing people.  I appreciate a little jab to the ribs here and there, it's all in good nature, but gastropod's slights come from a really negative place.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on November 05, 2021, 12:22:11 PM

@Juan Ponce de León , are there conditions under which you'd sell some Bitcoin to lock in those gains?

Yeah absolutely.  If we get a parabolic move up I'll be looking to de-risk some but mainly from my alt coin positions which I have way too much of.  I also cash out some of my defi yield every week but mainly I use it to buy more crypto.

Sorry if I missed this earlier. If you don't mind my asking, @Juan Ponce de León, what % of your portfolio is in crypto vs conventional financial assets?

Is % the way you allocate to the non-crypto portion, or do you have other criteria instead (5 years' conventional assets, paid off house but the rest is crypto, etc)?

Are you seeking a FIRE target in some conventional way (eg, 25x annual spending) or using other goals for your accumulation strategies?

It's about 60/40 crypto vs stocks.  That was never the plan it's just the way it's worked out.  I don't put any new money into crypto and I try not to pull too much out, I'm basically playing with house money now so I'm happy to let it ride.  I'm not getting ahead of myself in regards to FIRE targets or anything like that.  If it happens, it happens.  If it all crashes to zero I'll diversify into tulip bulbs.

I'm curious about your allocation amongst your cypto assets, do you mind sharing? Here's mine:

VTSAX = 50%
Crypto = 50%

Of the Crypto, here's the current breakdown(it changes daily, because as you know, the price of all these things is terrifically volatile):
Ethereum = 56%
Bitcoin = 34.3%
alt coins = 9.3%

Of the 9.3% that I have in alt coins, here's the ones I have a small position in:
Cardano
Solana
Uniswap
Chainlink
Litecoin
Bitcoin Cash
Enjin
Polkadot
Avalanche
Aave
VeChain

My pf is very defi oriented and honestly not ideal, a lot of my coins are paired in liquidity pool tokens and paying daily yield, which I guess I'm kind of addicted to since that's how I got going in crypto and had my first big wins.  Anyway I've looked at a pf tracker and added a few other things in and I believe my pf exposure is very roughly

BNB ~33%
AVAX ~17%
ETH ~15%
BTC ~15%
CAKE ~10%
SOL ~ 5%

Over represented in BNB due to all the yield farming on Binance Smart chain, CAKE-BNB, ETH-BNB etc.  Looking to fix it in the coming months if we get an ALT season blow up of prices so I can break up and offload some of these farms and get back to a more basic bitcoin/eth dominant pf.  I'll also cashout a chunk of lifestyle tickets if things go well.  Whether I achieve it or not before the market pulls the rug again I don't know haha.

I'll be frank, I kind of agree with Boarder420.  You'll probably get yourself rekt'd if you are not lucky enough to get your timing down right.  You could end up with 90% losses overall with such large bags full of shitcoins.  I mean that with all due respect.  How confident are you that BNB/CAKE/SOL/AVAX will rebound after the next crash?  Don't get me wrong, all of them could.  But they could very well be the next Neo, NEM, QTUM, ect.  Not all crypto bounces back after a bear market and we will most likely have another bear market in the near future.  Now is the time to sell the shitcoins and take profits and/or get into Bitcoin/Ethereum.  At least you have a good basis to think Bitcoin/Ethereum will rebound after the next crash.

I don't know if you were around before 2018 but a lot of the top shitcoins from 2017 never recovered.  For every ADA there are three EOS'.  I am not saying there is not place in your bags for shitcoins -- I got my own shitcoins -- but lets be real here; they are only good for getting more Bitcoin/Ethereum.

It depends on your definition of rekt I guess.  I never said my strategy was without risk, but without those risks I wouldn't even have the PF I have now.  In January I had ~US$8k in crypto and now it's in the hundreds of thousands.  I've also been paying my CC in full with it each month for awhile now so I'm firmly in freeroll territory with this money.  Yet if you asked Boarder42 he'd probably tell you I'm some kind of crazy idiot sniffing unicorn farts?  I'm not sure what he was really on about.

Also I think your definition of shitcoin is quite a bit loser than mine.  BNB is #3 coin by market cap and native coin of the largest exchange, it's sitting at $100B by market cap.  Sol is #4, AVAX is #11.  You have to weight up the risk vs the reward.  CAKE I guess I just have some kind of misguided loyalty to the project.  First bought CAKE in Feb for $2 and BNB for $44, i think cake-bnb was paying 200% APR at the time, recompounded the yield and built a PF out of CAKE.  In that first run cake went to $45 and BNB went to nearly $700.  I sell CAKE every day, morning and night if I remember.  I've sold more cake than a cake shop LMAO.   It's still paying a decent yield.

One thing I will say about the defi yield is that it makes me sleep better at night knowing I have a few hundred dollars a day coming in that I can sell and not feel like I'm selling a dip or about to miss a pump etc.  For me it's guilt-free selling that is income and doesn't equal a capital gains event.  I can pay off my CC or buy some more bitcoin/eth/stock ETFs or some other crypto project.  For me the yield was a gamechanger, just owning a set amount of coins that doesn't change seems stagnant in comparison, like owning stocks.  Having said that, I learned some lessons in May when we had the large correction and if alt coins blow off again like that I am going to try and derisk some to the best of my judgement.  We don't seem to be there yet though.  Good luck with your own holdings.

Everything that isn't Bitcoin or Ethereum is a shitcoin.  That includes ADA which is 10% of my crypto portfolio, lol.

The May correction was nothing.  All these alts, including BNB and ADA, will dump 80-99% from wherever their high is.  May was what, 50%?

Yeah I think BNB was ~70%, I have no doubt you're right.  BTC itself dumps ~80-85% in the bear market.

I edited my comment above.

Is your money tied up in "liquidity pools"?  Isn't it fairly common for these things to get hacked or or drained by insiders who then disappear?  It seems they have a significant amount of additional risk but I guess that's why the rewards are so -- well -- rewarding.

Yeah it's not without risk that's for sure.  Fortunately none of the projects I've ever been involved with have been affected.  I guess the longer they've been running the less likely there is an exploit in the contracts waiting to be exploited.  Pancakeswap has over 13 billion$ staked on it.  If anyone hacks or rugs it, good for them honestly, that will be the heist of the century.

My holdings are 75% BTC, 20% ETH, only 5% altcoins - FTM-LINK-MATIC - I know, super conservative except for FTM but it is my first rodeo (4yr cycle), so I'm hanging back mostly observing and still learning. Basically, I've got a HODL portfolio. It turns out I am more risk-averse than I thought.
It is a great start.

I'm not convinced that we will have an 85% crash on bitcoin, more like 65% given the institutional presence. I will not panic sell:). Whenever the bear market returns I plan to slowly acquire another 0.50 bitcoin for a total of two whole bitcoins. BTC and six ETH will remain in my long-term portfolio.
Apparently, many of the altcoins do crash 85% except for the so-called blue chips that hold their value better.
 
BOA just announced they might offer loans against crypto assets. This is exactly what I expected to happen. In the future, people will use bitcoin as collateral instead of selling it.
You don't give up generational wealth - just sayin'.   
 
SOL-DOT-AR-RUNE-RAY-ADA-LUNA-SANDBOX are all on my watch and potentially buy the dip list - long term, along with three gaming coins - short term. I'm building a small Degen portfolio and will set up a couple of limit orders. It's all so frothy right now, all that FOMO and the Fear and Greed Index - ugh.
Not rushing to buy, if at all.

I do love the altcoins. Business is business - the alts are just tech start-ups. My background is in risk analysis (global underwriting) so I get great satisfaction from looking into the tokenomics (no rug pull potential), the experience of the developers, the quality of the VC they attract and whether they re-invest in the next round, the utility of the project, past successes and evidence of network building, whether they meet their upgrade deadlines, the business connections and the people....
It is endlessly entertaining - imagine approx. 12000 coins - but only 1% will be successful.

I do think the in-game play to earn and other games will be wildly profitable, but it is a niche, so those will be my occasional super risky play along with never more than one microcap. Except for Axie I don't plan on holding any gaming coins long term.
Other than that, I will leave the intriguing Metaverse and baffling NFTs to the crypto pros.   

FTM-Fantom is my only speculative altcoin pick so far. Looks promising and has a good chance to survive and thrive in the next cycle. That's what I want - blue-chip alts - a portfolio of ten coins tops, monitored consistently. We'll see.

Once all this hype is over and things settle down maybe by Dec-Jan or so I'll get serious about DeFi passive income. I have a new plan but somehow I've let myself become intimidated by all the steps and wallets in defi.
My area has several different crypto meet-ups incl a massive contingent in Orlando and of course Miami. Maybe I'll even meet Alex Machinsky in person one day since Celsius opened a new office in Tampa. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on November 05, 2021, 12:30:08 PM

@Juan Ponce de León , are there conditions under which you'd sell some Bitcoin to lock in those gains?

Yeah absolutely.  If we get a parabolic move up I'll be looking to de-risk some but mainly from my alt coin positions which I have way too much of.  I also cash out some of my defi yield every week but mainly I use it to buy more crypto.

Sorry if I missed this earlier. If you don't mind my asking, @Juan Ponce de León, what % of your portfolio is in crypto vs conventional financial assets?

Is % the way you allocate to the non-crypto portion, or do you have other criteria instead (5 years' conventional assets, paid off house but the rest is crypto, etc)?

Are you seeking a FIRE target in some conventional way (eg, 25x annual spending) or using other goals for your accumulation strategies?

It's about 60/40 crypto vs stocks.  That was never the plan it's just the way it's worked out.  I don't put any new money into crypto and I try not to pull too much out, I'm basically playing with house money now so I'm happy to let it ride.  I'm not getting ahead of myself in regards to FIRE targets or anything like that.  If it happens, it happens.  If it all crashes to zero I'll diversify into tulip bulbs.

I'm curious about your allocation amongst your cypto assets, do you mind sharing? Here's mine:

VTSAX = 50%
Crypto = 50%

Of the Crypto, here's the current breakdown(it changes daily, because as you know, the price of all these things is terrifically volatile):
Ethereum = 56%
Bitcoin = 34.3%
alt coins = 9.3%

Of the 9.3% that I have in alt coins, here's the ones I have a small position in:
Cardano
Solana
Uniswap
Chainlink
Litecoin
Bitcoin Cash
Enjin
Polkadot
Avalanche
Aave
VeChain

My pf is very defi oriented and honestly not ideal, a lot of my coins are paired in liquidity pool tokens and paying daily yield, which I guess I'm kind of addicted to since that's how I got going in crypto and had my first big wins.  Anyway I've looked at a pf tracker and added a few other things in and I believe my pf exposure is very roughly

BNB ~33%
AVAX ~17%
ETH ~15%
BTC ~15%
CAKE ~10%
SOL ~ 5%

Over represented in BNB due to all the yield farming on Binance Smart chain, CAKE-BNB, ETH-BNB etc.  Looking to fix it in the coming months if we get an ALT season blow up of prices so I can break up and offload some of these farms and get back to a more basic bitcoin/eth dominant pf.  I'll also cashout a chunk of lifestyle tickets if things go well.  Whether I achieve it or not before the market pulls the rug again I don't know haha.

I'll be frank, I kind of agree with Boarder420.  You'll probably get yourself rekt'd if you are not lucky enough to get your timing down right.  You could end up with 90% losses overall with such large bags full of shitcoins.  I mean that with all due respect.  How confident are you that BNB/CAKE/SOL/AVAX will rebound after the next crash?  Don't get me wrong, all of them could.  But they could very well be the next Neo, NEM, QTUM, ect.  Not all crypto bounces back after a bear market and we will most likely have another bear market in the near future.  Now is the time to sell the shitcoins and take profits and/or get into Bitcoin/Ethereum.  At least you have a good basis to think Bitcoin/Ethereum will rebound after the next crash.

I don't know if you were around before 2018 but a lot of the top shitcoins from 2017 never recovered.  For every ADA there are three EOS'.  I am not saying there is not place in your bags for shitcoins -- I got my own shitcoins -- but lets be real here; they are only good for getting more Bitcoin/Ethereum.

It depends on your definition of rekt I guess.  I never said my strategy was without risk, but without those risks I wouldn't even have the PF I have now.  In January I had ~US$8k in crypto and now it's in the hundreds of thousands.  I've also been paying my CC in full with it each month for awhile now so I'm firmly in freeroll territory with this money.  Yet if you asked Boarder42 he'd probably tell you I'm some kind of crazy idiot sniffing unicorn farts?  I'm not sure what he was really on about.

Also I think your definition of shitcoin is quite a bit loser than mine.  BNB is #3 coin by market cap and native coin of the largest exchange, it's sitting at $100B by market cap.  Sol is #4, AVAX is #11.  You have to weight up the risk vs the reward.  CAKE I guess I just have some kind of misguided loyalty to the project.  First bought CAKE in Feb for $2 and BNB for $44, i think cake-bnb was paying 200% APR at the time, recompounded the yield and built a PF out of CAKE.  In that first run cake went to $45 and BNB went to nearly $700.  I sell CAKE every day, morning and night if I remember.  I've sold more cake than a cake shop LMAO.   It's still paying a decent yield.

One thing I will say about the defi yield is that it makes me sleep better at night knowing I have a few hundred dollars a day coming in that I can sell and not feel like I'm selling a dip or about to miss a pump etc.  For me it's guilt-free selling that is income and doesn't equal a capital gains event.  I can pay off my CC or buy some more bitcoin/eth/stock ETFs or some other crypto project.  For me the yield was a gamechanger, just owning a set amount of coins that doesn't change seems stagnant in comparison, like owning stocks.  Having said that, I learned some lessons in May when we had the large correction and if alt coins blow off again like that I am going to try and derisk some to the best of my judgement.  We don't seem to be there yet though.  Good luck with your own holdings.

Everything that isn't Bitcoin or Ethereum is a shitcoin.  That includes ADA which is 10% of my crypto portfolio, lol.

The May correction was nothing.  All these alts, including BNB and ADA, will dump 80-99% from wherever their high is.  May was what, 50%?

Yeah I think BNB was ~70%, I have no doubt you're right.  BTC itself dumps ~80-85% in the bear market.

I edited my comment above.

Is your money tied up in "liquidity pools"?  Isn't it fairly common for these things to get hacked or or drained by insiders who then disappear?  It seems they have a significant amount of additional risk but I guess that's why the rewards are so -- well -- rewarding.

Yeah it's not without risk that's for sure.  Fortunately none of the projects I've ever been involved with have been affected.  I guess the longer they've been running the less likely there is an exploit in the contracts waiting to be exploited.  Pancakeswap has over 13 billion$ staked on it.  If anyone hacks or rugs it, good for them honestly, that will be the heist of the century.

My holdings are 75% BTC, 20% ETH, only 5% altcoins - FTM-LINK-MATIC - I know, super conservative except for FTM but it is my first rodeo (4yr cycle), so I'm hanging back mostly observing and still learning. Basically, I've got a HODL portfolio. It turns out I am more risk-averse than I thought.
It is a great start.

I'm not convinced that we will have an 85% crash on bitcoin, more like 65% given the institutional presence. I will not panic sell:). Whenever the bear market returns I plan to slowly acquire another 0.50 bitcoin for a total of two whole bitcoins. BTC and six ETH will remain in my long-term portfolio.
Apparently, many of the altcoins do crash 85% except for the so-called blue chips that hold their value better.
 
BOA just announced they might offer loans against crypto assets. This is exactly what I expected to happen. In the future, people will use bitcoin as collateral instead of selling it.
You don't give up generational wealth - just sayin'.   
 
SOL-DOT-AR-RUNE-RAY-ADA-LUNA-SANDBOX are all on my watch and potentially buy the dip list - long term, along with three gaming coins - short term. I'm building a small Degen portfolio and will set up a couple of limit orders. It's all so frothy right now, all that FOMO and the Fear and Greed Index - ugh.
Not rushing to buy, if at all.

I do love the altcoins. Business is business - the alts are just tech start-ups. My background is in risk analysis (global underwriting) so I get great satisfaction from looking into the tokenomics (no rug pull potential), the experience of the developers, the quality of the VC they attract and whether they re-invest in the next round, the utility of the project, past successes and evidence of network building, whether they meet their upgrade deadlines, the business connections and the people....
It is endlessly entertaining - imagine approx. 12000 coins - but only 1% will be successful.

I do think the in-game play to earn and other games will be wildly profitable, but it is a niche, so those will be my occasional super risky play along with never more than one microcap. Except for Axie I don't plan on holding any gaming coins long term.
Other than that, I will leave the intriguing Metaverse and baffling NFTs to the crypto pros.   

FTM-Fantom is my only speculative altcoin pick so far. Looks promising and has a good chance to survive and thrive in the next cycle. That's what I want - blue-chip alts - a portfolio of ten coins tops, monitored consistently. We'll see.

Once all this hype is over and things settle down maybe by Dec-Jan or so I'll get serious about DeFi passive income. I have a new plan but somehow I've let myself become intimidated by all the steps and wallets in defi.
My area has several different crypto meet-ups incl a massive contingent in Orlando and of course Miami. Maybe I'll even meet Alex Machinsky in person one day since Celsius opened a new office in Tampa.

I wouldn't be surprised if bitcoin drops only 65% in the next bear run.  I would be surprised if the coins ranked 3 and below do not drop atleast 85% in the bear cycle.  ADA was very hyped in 2017 and 2018 and it kept alotnof hype through the entire bear cycle and it still dumped like 98%. 

I like your portfolio.  You will hate the bear cycle but you will always have the confidence of something good to look forward to.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on November 05, 2021, 01:19:36 PM
According to coin market cap, the top 3 cryptos are BTC, ETH and BNB.
https://finance.yahoo.com/quote/BNB-USD/

I'm missing something about Bitcoin Cash (BNB)... you pay transaction fees with it?  And so it's gone from $42 to $600 this year because of that?  I'm missing something.

These are two different coins.
Bitcoin Cash (BCH) is popular for payments around the world. It was a fork that split off the original Bitcoin.
Not to be confused with bitcoin.

The BNB Binance Coin was created by the Binance exchange.  https://www.investopedia.com/terms/b/binance-coin-bnb.asp
It is similar to the FTX coin issued by the FTX exchange.

Basically, you get a credit on your transaction fees, and if you use defi - in their own network like CAKE,
it is easier to swap coins on their defi dex incl bitcoin.
An important feature is that the defi dex CAKE has coins you can't get on the big exchanges because they are not yet listed there.

I read somewhere the BNB offered a couple of other perks, you can probably google that.
Binance is by far the largest exchange worldwide and continues to build its own network.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: forgerator on November 05, 2021, 01:47:02 PM
Since we're talking about existing allocations and the gains due to crypto , here's mine since Jan 2020.

Roth IRA - went up from $85k to $410k - Converted everything to GBTC back in July 2020 yolo style !. Later sold GBTC and got ETHE at the beginning of summer. Both Grayscale products.
401K - went up from $280 to 515k - Same as above except I did my conversion in Feb 2021 since I first had to convert to Rollover IRA.
Actual crypto - started with a $30k allocation back in Dec 2017 which then tanked to $5k but I kept DCAing, and now sitting at $280k. Out of this I have roughly $30k in blue-chip DeFi LPs generating approx $80 / day which I harvest and transfer to crypto debit card on a daily basis.
Robinhood crypto - static $5k trading portfolio where I keep taking profits every now and then, and transfer to bank. This is a 'for fun' account which I use to try out various TA / charting techniques.

Goal - Early retirement in about a couple of years with the assumption that this bull market will end 2017 with a blow-off top but not before a 4-5x on BTC and ETH. Hey I can dream right?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on November 05, 2021, 02:03:21 PM
Since we're talking about existing allocations and the gains due to crypto , here's mine since Jan 2020.

Roth IRA - went up from $85k to $410k - Converted everything to GBTC back in July 2020 yolo style !. Later sold GBTC and got ETHE at the beginning of summer. Both Grayscale products.
401K - went up from $280 to 515k - Same as above except I did my conversion in Feb 2021 since I first had to convert to Rollover IRA.
Actual crypto - started with a $30k allocation back in Dec 2017 which then tanked to $5k but I kept DCAing, and now sitting at $280k. Out of this I have roughly $30k in blue-chip DeFi LPs generating approx $80 / day which I harvest and transfer to crypto debit card on a daily basis.
Robinhood crypto - static $5k trading portfolio where I keep taking profits every now and then, and transfer to bank. This is a 'for fun' account which I use to try out various TA / charting techniques.

Goal - Early retirement in about a couple of years with the assumption that this bull market will end 2017 with a blow-off top but not before a 4-5x on BTC and ETH. Hey I can dream right?

That is amazing.  You are a crypto millionaire.  So happy for you!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 05, 2021, 03:48:30 PM
Since we're talking about existing allocations and the gains due to crypto , here's mine since Jan 2020.

Roth IRA - went up from $85k to $410k - Converted everything to GBTC back in July 2020 yolo style !. Later sold GBTC and got ETHE at the beginning of summer. Both Grayscale products.
401K - went up from $280 to 515k - Same as above except I did my conversion in Feb 2021 since I first had to convert to Rollover IRA.
Actual crypto - started with a $30k allocation back in Dec 2017 which then tanked to $5k but I kept DCAing, and now sitting at $280k. Out of this I have roughly $30k in blue-chip DeFi LPs generating approx $80 / day which I harvest and transfer to crypto debit card on a daily basis.
Robinhood crypto - static $5k trading portfolio where I keep taking profits every now and then, and transfer to bank. This is a 'for fun' account which I use to try out various TA / charting techniques.

Goal - Early retirement in about a couple of years with the assumption that this bull market will end 2017 with a blow-off top but not before a 4-5x on BTC and ETH. Hey I can dream right?

Great work, this is the way it's done LMAO.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on November 05, 2021, 03:49:17 PM

The proponents are as ignorant as they are confident about the problems they proclaim crypto solves.

My understanding is that a rule of this site is that you can call out ideas, but not attack peoples character. 

Regardless of what you think of me and people who share my views, we are all human beings, and your statement is a character attack.  Do better.
This doesn't break the rules - is attacking an idea (crypto solves a problem!) and definitely not a person, particularly in context of the entire post. And pot meet kettle - you cut all but one sentence of a well-written post specifically to attack an individual forum member with your post. Do Better.

He said “proponents are as ignorant as they are confident”. A cryptocurrency is not a proponent.  A person is a proponent. He was attacking people.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 05, 2021, 04:04:37 PM
BTW I haven't been following the NFT discussion all that closely as NFTs aren't really an interest of mine, I tend to actively avoid them.  But my understanding of using the NFTs for ticketing is they can hardwire in a transaction fee for change of ownership using smart contracts, so for example if a scalper was to onsell a concert ticket for $100, it would actually cost say $120 with the smart contract sending $20 back to the concert promoter each time the ticket changes hands.  This obviously does solve a problem where scalpers make a heap of money reselling tickets and the concert promoters don't really get a fair cut of that inflated price.  Businesses are obviously going to use blockchain technology to try and make more revenue, not less.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 05, 2021, 04:40:50 PM
BTW I haven't been following the NFT discussion all that closely as NFTs aren't really an interest of mine, I tend to actively avoid them.  But my understanding of using the NFTs for ticketing is they can hardwire in a transaction fee for change of ownership using smart contracts, so for example if a scalper was to onsell a concert ticket for $100, it would actually cost say $120 with the smart contract sending $20 back to the concert promoter each time the ticket changes hands.  This obviously does solve a problem where scalpers make a heap of money reselling tickets and the concert promoters don't really get a fair cut of that inflated price.  Businesses are obviously going to use blockchain technology to try and make more revenue, not less.

That is an interesting scheme. But couldn’t, e.g., Ticketmaster do the same thing in a centralized fashion significantly more simply using a standard database? What value does the decentralized aspect bring, when ultimately you’re depending on the concert venue to recognize this ticket?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 05, 2021, 04:52:47 PM
BTW I haven't been following the NFT discussion all that closely as NFTs aren't really an interest of mine, I tend to actively avoid them.  But my understanding of using the NFTs for ticketing is they can hardwire in a transaction fee for change of ownership using smart contracts, so for example if a scalper was to onsell a concert ticket for $100, it would actually cost say $120 with the smart contract sending $20 back to the concert promoter each time the ticket changes hands.  This obviously does solve a problem where scalpers make a heap of money reselling tickets and the concert promoters don't really get a fair cut of that inflated price.  Businesses are obviously going to use blockchain technology to try and make more revenue, not less.

That is an interesting scheme. But couldn’t, e.g., Ticketmaster do the same thing in a centralized fashion significantly more simply using a standard database? What value does the decentralized aspect bring, when ultimately you’re depending on the concert venue to recognize this ticket?

So I've just demonstrated a way that blockchain technology solves a problem for ticket promoters and your question is, can't they think of some other way that doesn't involve blockchain technology because you don't like blockchain technology solving a problem?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: forgerator on November 05, 2021, 04:57:06 PM
That is an interesting scheme. But couldn’t, e.g., Ticketmaster do the same thing in a centralized fashion significantly more simply using a standard database? What value does the decentralized aspect bring, when ultimately you’re depending on the concert venue to recognize this ticket?

I think based on same decentralization value proposition i.e. cut out the middle-man. The cut that TicketMaster would otherwise take, would be distributed to the miners / validators participating in the blockchain.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 05, 2021, 05:12:34 PM
BTW I haven't been following the NFT discussion all that closely as NFTs aren't really an interest of mine, I tend to actively avoid them.  But my understanding of using the NFTs for ticketing is they can hardwire in a transaction fee for change of ownership using smart contracts, so for example if a scalper was to onsell a concert ticket for $100, it would actually cost say $120 with the smart contract sending $20 back to the concert promoter each time the ticket changes hands.  This obviously does solve a problem where scalpers make a heap of money reselling tickets and the concert promoters don't really get a fair cut of that inflated price.  Businesses are obviously going to use blockchain technology to try and make more revenue, not less.

That is an interesting scheme. But couldn’t, e.g., Ticketmaster do the same thing in a centralized fashion significantly more simply using a standard database? What value does the decentralized aspect bring, when ultimately you’re depending on the concert venue to recognize this ticket?

So I've just demonstrated a way that blockchain technology solves a problem for ticket promoters and your question is, can't they think of some other way that doesn't involve blockchain technology because you don't like blockchain technology solving a problem?

I don’t think that categorization is accurate. If someone suggested that someone might create foot bridges out of running combustion lawnmower engines, and you said “well, you could. But.. you could also use wood or stone or steel”, that wouldn’t mean you don’t like combustion engines solving problems. It’s just that that problem—bridge building—isn’t solved more effectively by using combustion engines as a construction material than by other widely-used existing options.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 05, 2021, 05:14:16 PM
That is an interesting scheme. But couldn’t, e.g., Ticketmaster do the same thing in a centralized fashion significantly more simply using a standard database? What value does the decentralized aspect bring, when ultimately you’re depending on the concert venue to recognize this ticket?

I think based on same decentralization value proposition i.e. cut out the middle-man. The cut that TicketMaster would otherwise take, would be distributed to the miners / validators participating in the blockchain.

Ticketmaster don't want to cut out the middleman, they ARE the middelman.  They want to cut in the middleman where previously scalpers were cutting them out.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on November 05, 2021, 05:23:45 PM
Ticketmaster don't want to cut out the middleman, they ARE the middelman.  They want to cut in the middleman where previously scalpers were cutting them out.

I'd guess individual venues would be happy to cut out Ticketmaster if they could find an easy way to do so without losing attendees.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: forgerator on November 05, 2021, 06:06:24 PM
That is an interesting scheme. But couldn’t, e.g., Ticketmaster do the same thing in a centralized fashion significantly more simply using a standard database? What value does the decentralized aspect bring, when ultimately you’re depending on the concert venue to recognize this ticket?

I think based on same decentralization value proposition i.e. cut out the middle-man. The cut that TicketMaster would otherwise take, would be distributed to the miners / validators participating in the blockchain.

Ticketmaster don't want to cut out the middleman, they ARE the middelman.  They want to cut in the middleman where previously scalpers were cutting them out.
Yes that's what I meant, that a decentralized blockchain based solution will cut out Ticketmaster which acts as the middleman.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on November 05, 2021, 06:57:48 PM
That is an interesting scheme. But couldn’t, e.g., Ticketmaster do the same thing in a centralized fashion significantly more simply using a standard database? What value does the decentralized aspect bring, when ultimately you’re depending on the concert venue to recognize this ticket?

I think based on same decentralization value proposition i.e. cut out the middle-man. The cut that TicketMaster would otherwise take, would be distributed to the miners / validators participating in the blockchain.

Ticketmaster don't want to cut out the middleman, they ARE the middelman.  They want to cut in the middleman where previously scalpers were cutting them out.

You're acting like Ticketmaster doesn't like scalping.  I mean, Ticketmaster has been working with scalpers to make sure that they get the tickets they want for events for a long time - https://liveforlivemusic.com/news/ticketmaster-tradedesk-scalp/ (https://liveforlivemusic.com/news/ticketmaster-tradedesk-scalp/).

Scalpers and Ticketmaster are close and friendly business partners.  Not sure why they would jeopardize that relationship that they've spent so much time and effort to build for NFTs.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on November 05, 2021, 07:52:48 PM
Ticketmaster don't want to cut out the middleman, they ARE the middelman.  They want to cut in the middleman where previously scalpers were cutting them out.

I'd guess individual venues would be happy to cut out Ticketmaster if they could find an easy way to do so without losing attendees.

Ticketmaster pays robust fees to venues to be the sole ticket provider. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on November 05, 2021, 08:28:00 PM
That is an interesting scheme. But couldn’t, e.g., Ticketmaster do the same thing in a centralized fashion significantly more simply using a standard database? What value does the decentralized aspect bring, when ultimately you’re depending on the concert venue to recognize this ticket?

I think based on same decentralization value proposition i.e. cut out the middle-man. The cut that TicketMaster would otherwise take, would be distributed to the miners / validators participating in the blockchain.

The venues accept kick-backs from Ticketmaster.  In your scenario, the vig goes to the miners/validators instead of to Ticketmaster and the venues.  Why would they willingly give that up?

Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 05, 2021, 08:35:00 PM
That is an interesting scheme. But couldn’t, e.g., Ticketmaster do the same thing in a centralized fashion significantly more simply using a standard database? What value does the decentralized aspect bring, when ultimately you’re depending on the concert venue to recognize this ticket?

I think based on same decentralization value proposition i.e. cut out the middle-man. The cut that TicketMaster would otherwise take, would be distributed to the miners / validators participating in the blockchain.

The venues accept kick-backs from Ticketmaster.  In your scenario, the vig goes to the miners/validators instead of to Ticketmaster and the venues.  Why would they willingly give that up?

Uhm this isn't really a thing, the miners get transaction fees but you'd be talking fractions of a cent when applied to a small purchase like a concert ticket.  You wouldn't do it on a crypto network with high transaction fees you would use one of the low cost chains.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on November 05, 2021, 08:37:14 PM
Ticketmaster don't want to cut out the middleman, they ARE the middelman.  They want to cut in the middleman where previously scalpers were cutting them out.

I'd guess individual venues would be happy to cut out Ticketmaster if they could find an easy way to do so without losing attendees.

Ticketmaster pays robust fees to venues to be the sole ticket provider.

Ah, right you are! It sounds like ticketmaster's big innovation was charging fans rather than venues which drove all the venues to adopt it (https://www.wired.com/2010/11/mf-ticketmaster/). I hadn't read up on their business model before. 

Quote
It took more than smart code, however, to turn Ticketmaster into one of the world's most powerful entertainment companies. It took the arrival in 1982 of a new leader—Fred Rosen, a fast-talking lawyer and amateur comedian who had a profound realization: Ticketing isn't about the bands or the fans. It's about the venues.

Shortly after he was hired, Rosen systematically contacted the biggest concert halls and arenas in the country and made them all the same spectacular offer: Where Ticketron charged venues for its service (adding a minimal fee for customers—$1 per ticket), Rosen offered to actually pay the venues. He would increase service fees and split the money with whoever housed a concert or sporting event. Everybody signed up

So I guess in this business model the people whose ox is being gored are the acts and the fans. The venue mandates that act has to use ticketmaster. Ticketmaster tacks on a lot of fees the fans have to pay (which ticketmaster splits with the venue). The acts aren't able to charge as much for tickets to their shows because they know their fans are paying 20-35% in fees on top of the ticket price to the ticket reseller the venues force the acts to work with.

It should would be nice to cut out this particular middleman but yeah I don't know that a more distributed way to exchange and retrade tickets would be enough to take this particular failure of the free market down.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 05, 2021, 08:39:29 PM
That is an interesting scheme. But couldn’t, e.g., Ticketmaster do the same thing in a centralized fashion significantly more simply using a standard database? What value does the decentralized aspect bring, when ultimately you’re depending on the concert venue to recognize this ticket?

I think based on same decentralization value proposition i.e. cut out the middle-man. The cut that TicketMaster would otherwise take, would be distributed to the miners / validators participating in the blockchain.

Ticketmaster don't want to cut out the middleman, they ARE the middelman.  They want to cut in the middleman where previously scalpers were cutting them out.

You're acting like Ticketmaster doesn't like scalping.  I mean, Ticketmaster has been working with scalpers to make sure that they get the tickets they want for events for a long time - https://liveforlivemusic.com/news/ticketmaster-tradedesk-scalp/ (https://liveforlivemusic.com/news/ticketmaster-tradedesk-scalp/).

Scalpers and Ticketmaster are close and friendly business partners.  Not sure why they would jeopardize that relationship that they've spent so much time and effort to build for NFTs.

You're right they don't want to stop the scalpers, but I do think they'd like to make sure they get their cut when tickets change hands.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 05, 2021, 08:42:42 PM
Ticketmaster don't want to cut out the middleman, they ARE the middelman.  They want to cut in the middleman where previously scalpers were cutting them out.

I'd guess individual venues would be happy to cut out Ticketmaster if they could find an easy way to do so without losing attendees.

Ticketmaster pays robust fees to venues to be the sole ticket provider.

Ah, right you are! It sounds like ticketmaster's big innovation was charging fans rather than venues which drove all the venues to adopt it (https://www.wired.com/2010/11/mf-ticketmaster/). I hadn't read up on their business model before. 

Quote
It took more than smart code, however, to turn Ticketmaster into one of the world's most powerful entertainment companies. It took the arrival in 1982 of a new leader—Fred Rosen, a fast-talking lawyer and amateur comedian who had a profound realization: Ticketing isn't about the bands or the fans. It's about the venues.

Shortly after he was hired, Rosen systematically contacted the biggest concert halls and arenas in the country and made them all the same spectacular offer: Where Ticketron charged venues for its service (adding a minimal fee for customers—$1 per ticket), Rosen offered to actually pay the venues. He would increase service fees and split the money with whoever housed a concert or sporting event. Everybody signed up

So I guess in this business model the people whose ox is being gored are the acts and the fans. The venue mandates that act has to use ticketmaster. Ticketmaster tacks on a lot of fees the fans have to pay (which ticketmaster splits with the venue). The acts aren't able to charge as much for tickets to their shows because they know their fans are paying 20-35% in fees on top of the ticket price to the ticket reseller the venues force the acts to work with.

It should would be nice to cut out this particular middleman but yeah I don't know that a more distributed way to exchange and retrade tickets would be enough to take this particular failure of the free market down.

Wouldn't ticketmaster also be responsible for marketing and promoting the event?  It's not just a blind cash grab they are providing a specialised service I would imagine.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on November 05, 2021, 10:30:39 PM
You're right they don't want to stop the scalpers, but I do think they'd like to make sure they get their cut when tickets change hands.

They already do:

https://www.ticketmaster.com/verified

Edit:  See also

https://www.npr.org/2018/09/20/649666928/ticketmaster-has-its-own-secret-scalping-program-canadian-journalists-report

Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 05, 2021, 11:03:57 PM
According to coin market cap, the top 3 cryptos are BTC, ETH and BNB.
https://finance.yahoo.com/quote/BNB-USD/

I'm missing something about Bitcoin Cash (BNB)... you pay transaction fees with it?  And so it's gone from $42 to $600 this year because of that?  I'm missing something.

These are two different coins.
Bitcoin Cash (BCH) is popular for payments around the world. It was a fork that split off the original Bitcoin.
Not to be confused with bitcoin.

The BNB Binance Coin was created by the Binance exchange.  https://www.investopedia.com/terms/b/binance-coin-bnb.asp
It is similar to the FTX coin issued by the FTX exchange.

Basically, you get a credit on your transaction fees, and if you use defi - in their own network like CAKE,
it is easier to swap coins on their defi dex incl bitcoin.
An important feature is that the defi dex CAKE has coins you can't get on the big exchanges because they are not yet listed there.

I read somewhere the BNB offered a couple of other perks, you can probably google that.
Binance is by far the largest exchange worldwide and continues to build its own network.
Oops, I have no idea why I typed Bitcoin cash, when I meant Binance Coin (BNB).  I mentioned transaction fees because I thought I was discussing the sole benefit of BNB.  But your link mentions travel and other purchases, as well as smart contracts running on Binance chain.

Binance has been pouring 1/5th of it's quarterly profits into buying and destroying (burning) BNB every quarter.  Seems like the world's largest crypto exchange is pushing for BNB to replace ETH or BTC.  They already do more transactions than ETH, and has the ingredients to push usage more broadly.

I think I should consider how much to diversify my BTC + ETH into buying BNB.  If BNB displaces the other two, their value could drop while BNB continues climbing.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 05, 2021, 11:23:05 PM
You're right they don't want to stop the scalpers, but I do think they'd like to make sure they get their cut when tickets change hands.

They already do:

https://www.ticketmaster.com/verified

Edit:  See also

https://www.npr.org/2018/09/20/649666928/ticketmaster-has-its-own-secret-scalping-program-canadian-journalists-report

Yeah fair enough!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 05, 2021, 11:29:39 PM
According to coin market cap, the top 3 cryptos are BTC, ETH and BNB.
https://finance.yahoo.com/quote/BNB-USD/

I'm missing something about Bitcoin Cash (BNB)... you pay transaction fees with it?  And so it's gone from $42 to $600 this year because of that?  I'm missing something.

These are two different coins.
Bitcoin Cash (BCH) is popular for payments around the world. It was a fork that split off the original Bitcoin.
Not to be confused with bitcoin.

The BNB Binance Coin was created by the Binance exchange.  https://www.investopedia.com/terms/b/binance-coin-bnb.asp
It is similar to the FTX coin issued by the FTX exchange.

Basically, you get a credit on your transaction fees, and if you use defi - in their own network like CAKE,
it is easier to swap coins on their defi dex incl bitcoin.
An important feature is that the defi dex CAKE has coins you can't get on the big exchanges because they are not yet listed there.

I read somewhere the BNB offered a couple of other perks, you can probably google that.
Binance is by far the largest exchange worldwide and continues to build its own network.
Oops, I have no idea why I typed Bitcoin cash, when I meant Binance Coin (BNB).  I mentioned transaction fees because I thought I was discussing the sole benefit of BNB.  But your link mentions travel and other purchases, as well as smart contracts running on Binance chain.

Binance has been pouring 1/5th of it's quarterly profits into buying and destroying (burning) BNB every quarter.  Seems like the world's largest crypto exchange is pushing for BNB to replace ETH or BTC.  They already do more transactions than ETH, and has the ingredients to push usage more broadly.

I think I should consider how much to diversify my BTC + ETH into buying BNB.  If BNB displaces the other two, their value could drop while BNB continues climbing.

The advantage of BNB over ETH has been a faster network with far cheaper gas fees, that drove huge growth on the BSC network earlier this year and great gains for holding coins like BNB and CAKE.  The disadvantage (to some) is that BSC is a far more centralized network and that Binance themselves have a lot of control over the direction of BNB.  I don't mind, Binance have demonstrated that they can and will step in to support the BNB price and pump money into the BSC network to grow it.

However now there are other low cost networks maturing like SOL and AVAX and also I think ETH v2 is supposed to fix the gas fees on ETH, eventually, one day, maybe.  While I think it's undervalued, the easy and rapid growth days for BNB might be already done.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 06, 2021, 04:14:50 AM
In U.S. stock markets, the meme stocks don't break the top 500.  But in crypto currencies, the #4 coin by 24h volume is "Shiba Inu" (SHIB), started as a joke.  It has 80% of the volume of ETH, one of the two major crypto currencies.  It's goal is to displace another joke coin, DOGE, which if you rank by 24h volume comes in at #19.  Neither of these coins have a use, so they at least show speculation is reaching the top ranks.  Maybe it's like the dot-com era, where a few stocks survived (like Apple, Amazon) while most didn't have any long term value and collapsed.

Back to BNB, SOL and AVAX - is there any website that tracks transaction volume?  Not just people buying/selling the coins themselves, but merchant transactions of crypto coins.  Like when someone pays for travel with BNB.  I would find that kind of information really valuable.  That, to me, shows usage that doesn't include things like DOGE and SHIB.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 06, 2021, 04:31:41 AM
Back to BNB, SOL and AVAX - is there any website that tracks transaction volume?  Not just people buying/selling the coins themselves, but merchant transactions of crypto coins. 

The 3 aren't just coins, they are networks.  Like ETH, they are the native currency of their network.  For example on Binance Smart Chain, you can't do anything on the network without BNB in your wallet.  Everything you do on BSC is done with BNB.  Most transactions on BSC would be movements of coins between wallets and dapps and swaps between BNB and other tokens on a Dex like pancakeswap.  Every transaction costs a small gas fee which is paid in BNB.

I pay my CC with BNB, so I guess that counts.  Honestly Doge is a great cryptocurrency that is accepted by many online stores.  If I want to spend some crypto to buy giftcards or something similar and they don't take BNB (and most don't) I would usually use something like doge or litecoin as they are cheaper and faster to use than the bitcoin network which I've actually never used.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on November 06, 2021, 06:27:29 AM
Ticketmaster don't want to cut out the middleman, they ARE the middelman.  They want to cut in the middleman where previously scalpers were cutting them out.

I'd guess individual venues would be happy to cut out Ticketmaster if they could find an easy way to do so without losing attendees.

Ticketmaster pays robust fees to venues to be the sole ticket provider.

Ah, right you are! It sounds like ticketmaster's big innovation was charging fans rather than venues which drove all the venues to adopt it (https://www.wired.com/2010/11/mf-ticketmaster/). I hadn't read up on their business model before. 

Quote
It took more than smart code, however, to turn Ticketmaster into one of the world's most powerful entertainment companies. It took the arrival in 1982 of a new leader—Fred Rosen, a fast-talking lawyer and amateur comedian who had a profound realization: Ticketing isn't about the bands or the fans. It's about the venues.

Shortly after he was hired, Rosen systematically contacted the biggest concert halls and arenas in the country and made them all the same spectacular offer: Where Ticketron charged venues for its service (adding a minimal fee for customers—$1 per ticket), Rosen offered to actually pay the venues. He would increase service fees and split the money with whoever housed a concert or sporting event. Everybody signed up

So I guess in this business model the people whose ox is being gored are the acts and the fans. The venue mandates that act has to use ticketmaster. Ticketmaster tacks on a lot of fees the fans have to pay (which ticketmaster splits with the venue). The acts aren't able to charge as much for tickets to their shows because they know their fans are paying 20-35% in fees on top of the ticket price to the ticket reseller the venues force the acts to work with.

It should would be nice to cut out this particular middleman but yeah I don't know that a more distributed way to exchange and retrade tickets would be enough to take this particular failure of the free market down.

This was EXACTLY my much earlier point.

Ticketmaster doesn't actually exist to fill a *customer* need. It's a pure middle man operation that is entirely unnecessary from the perspective of providing a service to the consumer.

Venues have always had the ability to sell tickets directly to consumers. I just bought tickets a few weeks ago directly from the venue instead of a ticket broker.

Ticketmaster basically *is* a scalper who gives kickbacks to venues.

Why would Ticketmaster or venues give up this lucrative arrangement? It doesn't exist because of a currency issue, so how would a new currency solve anything?

I'm all for hearing about uses of blockchain, but this was never a currency issue to begin with so how on earth does blockchain solve a problem that never even existed?

Middle men muscle into all major industries, it's a business model as old as time. I don't see how blockchain is going to magically eliminate that.

Middle men exist because of the flow of business, not the details of the exchange of money. Ive just spent the last month debating with a startup that I have a minority stake in about whether our business model will include working with a middle man or not. There are pros and cons to both, but none of the considerations have anything to do with the actual exchange of money. That's just a non issue.

The existence or absence of blockchain would have no impact on whether ot not we do business through a middle man. This is why I struggle to understand.

People always give examples where blockchain would be better for the consumer, but businesses don't design their functions to be better for the consumer. So where I get kind of lost is seeing why I, a person developing a business would prioritize doing transactions through blockchain.

What are the pressures that would make me, a product developer need to utilize blockchain if I choose to sell to a middle man? And what would motivate that middle man to use blockchain in their distribution? And what would motivate the next entity in the distribution to use block chain? And then what would motivate the use of blockchain to sell directly to consumers?

What problem gets solved?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on November 06, 2021, 01:03:24 PM
Back to BNB, SOL and AVAX - is there any website that tracks transaction volume?  Not just people buying/selling the coins themselves, but merchant transactions of crypto coins. 

The 3 aren't just coins, they are networks.  Like ETH, they are the native currency of their network.  For example on Binance Smart Chain, you can't do anything on the network without BNB in your wallet.  Everything you do on BSC is done with BNB.  Most transactions on BSC would be movements of coins between wallets and dapps and swaps between BNB and other tokens on a Dex like pancakeswap.  Every transaction costs a small gas fee which is paid in BNB.

I pay my CC with BNB, so I guess that counts.  Honestly Doge is a great cryptocurrency that is accepted by many online stores.  If I want to spend some crypto to buy giftcards or something similar and they don't take BNB (and most don't) I would usually use something like doge or litecoin as they are cheaper and faster to use than the bitcoin network which I've actually never used.

1. SOL - AVAX - ETH - BNB - ADA - DOT - KSM - LUNA - FTM...
A well-established network is crucial and is a huge factor in determining the price of a coin like ETH.
There are thousands of projects built on ETH with real-life use and new projects continue to be built on ETH.
ETH averted an attempt at a 51% attack about a month ago. ETH is huge, it is a behemoth, a decentralized chain in the process of changing from POW to POS.

Think of the networks as Apple vs Android - they each have their own products - fierce competition - dedicated users:). In the case of crypto, there are long-term communities of people who stake their coins and want to see their project succeed.
Most projects within a network also have their own coin and instead of buying say SOL you can buy a coin/project in their network like say Raydium. 
 
SOL is new, barely on the Mainnet, and has had smart contract capability for only a couple of months. It stumbled a bit out of the gate but it is fast and efficient and it uses neither Proof of Work nor Proof of Stake. It is built on Proof of History unique to SOL.

It has strong, repeat VC's in its favor and the advantage of avoiding all the problems ETH had in the past. It has support from Alameda Research (Sam Friedman) FTX exchange - easy wallet and staking with bridges enhancing interoperability and instant transactions with FTX.
If you make it easy to use a coin, network, wallet, people will use it - interoperability is key.

Competition is fierce, there are projects moving from ETH to SOL and in an unbelievably short time, SOL has over a thousand projects built on it in various stages of implementation, growing exponentially. SOL is impressive and the developers and people behind it are experienced and dedicated, the best in the business.
   
2. I get your approach about looking at the top coins. I did that too, in the beginning, to determine what makes them a success and whether they fit my investment goals.
Why not just buy the top ten and be done with it? Crypto is more complicated than that.

3. I have no interest in messing with a sh$t coin, meme coin which have no function whatsoever. If I were a gambling trader who had money coming out of my ears - maybe, but even then it makes no sense to me. I'd rather support a real project and see it grow like a mini VC:).
Sh$t coins are a detriment and damage the public view and understanding of crypto - they do nothing but harm.

I have to side with Juan, Doge is the exception. It still has serious supporters and has gained new VCs and developers to improve the payment platform. It was built on ETH and has actual functionality with new projects in the wings. So in my totally unqualified opinion, this doggie may live to fight another day. But hey, I could be wrong.:)

Besides, crypto is coming of age, there are blue-chip coins, that are not ever talked about in the news but keep everything running and connected in the background or serve a unique function. I want those in my portfolio to balance out the more volatile coins.

3. BNB or CAKE will never be part of my portfolio for many reasons but I can understand why both work great for Juan. He's a pro and has more experience with defi, but the point is you need the right coins to operate within the network. He understands the ins and outs of navigating the network(s). I do not feel comfortable with defi yet, but once I choose my defi passive income source(s) I'll experiment a bit. 

To your question about transactions, yes there are stats on how many transactions per day.   https://ycharts.com/indicators/ethereum_transactions_per_day
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 06, 2021, 01:22:45 PM
https://www.cnbc.com/2021/11/06/autograph-ceo-dillon-rosenblatt-why-you-spend-so-much-money-on-nfts.html

So this is what I was talking about with nfts having some function in society. 

Now I don't think the path to riches lies thru a collectible. But it doesnt mean it's not a use case for Blockchain. Society has collected all sorts of shit that isn't a proven path to riches for the length of time that historic stock market returns have a track record for. And most of these collections are fad phases.

Doesn't mean nft isn't a use case for Blockchain that could store the lineage of digital assets forever and just bc it's not a proven path to riches doesn't mean it couldn't exist for a long time.

It just doesn't really have a place in a portfolio built for predictable wealth accumulation and withdrawals.

There will be fad's that come and go throughout your entire existence. I mean why isnt there a current thread about sneaker trading. Bc that shit is blowing up and man it's crazy.

The other major issue I personally take with alot here is they appear to constantly be using terms used to convince people the stock market isn't a big risk. Like hold thru the crash it will come back it's proven it can. Yeah for less than 8 years. This information clutters the already ridiculously cluttered personal finance space. Stop comparing your shit coins to the same almost infinitely long term return expectations of the stock market. Sweet i hit 100k 6 years ahead of plan with crypto. Going to keep holding they the multi annual crashes like always bc it goes up. It goes up doesn't apply to this collectible the same way it applies to companies in the stock market. Further the returns of any given index or sector of stocks is driven by about 4% of that. Then add to that the stocks that lead it the last 10 years don't typically lead that performance in the future.

So here we've got people using the term blue chip for crypto. Bc they're so desperate for it to fit into this mold of predictable long term growth the markets have provided for decades. While this tech has existed for about 1 decade. Further all of your current " diversification". Isn't close to large enough to capture enough of winners should these things turn into reputable long-term investments. In fact most are heavily invested in the top 2 or 3 cryptos today per their comments here. Amongst an almost infinitely large space that is crypto.

I mean it's like the anti thesis for investing.  Most got into it bc it was surfing and didn't want to miss the boat. And it has to just keep doing this.

Not only do I think BTC will be worth almost nothing compared to it's current valuation I think it's going to lead to a large market crash.   No one here has articulated any exit plan from a lottery ticket your bought and haven't realized gains in infact most have indicated the exact opposite. To hold til the very end. Or after it's next hyperbolic runup I'm cashing in.  What if it never comes history doesn't tell us it will come.

Back to nfts of course athletes love this market I can create 1billion digitally signed objects in seconds. Actually signing then takes longer. The value of 1billion signed things is low. But if I say one of them is unique and includes a feature none of the rest do I and this feature will only be revealed once all signatures have been purchased.  Now I've created a market with mass speculation and want. Effectively a lottery. Then apply this pass down logic of the MLM model y'all are touting with tickets where I can repeat a cut of every resale. Nfts are a real thing humans will consume for decades to come. And it will just funnel money back up to the already rich people at the top through all these channels you claim can solve tickets.

Really would just like to see a functionally productive case for Blockchain deployed that uses infinitely less energy than is consumed today to collect something. Bc that's all y'all are doing with BTC as admitted multiple times here. A store of value is a collectible.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 06, 2021, 04:28:55 PM
Not only do I think BTC will be worth almost nothing compared to it's current valuation

Not only are you wrong, you're just completely guessing, more like hoping honestly.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 06, 2021, 05:57:47 PM
Not only do I think BTC will be worth almost nothing compared to it's current valuation

Not only are you wrong, you're just completely guessing, more like hoping honestly.

Yep I'm wrong.

You're not guessing/hoping at all

Thing is if I'm wrong I'm still a multi millionaire. If you're wrong you may be worth nothing
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 06, 2021, 06:15:54 PM
Not only do I think BTC will be worth almost nothing compared to it's current valuation

Not only are you wrong, you're just completely guessing, more like hoping honestly.

Yep I'm wrong.

You're not guessing/hoping at all

Thing is if I'm wrong I'm still a multi millionaire. If you're wrong you may be worth nothing

This is where I don't understand you.  You're rich, but you sound really upset and bitter that maybe some others are making gains and catching up.

Let's look at the reality, the here and now.  There is a fake internet coin currently worth $61,400.  It's 'worth nothing' but it costs $61,400 and is traded all day every day in massive volume.  It has over $1Trillion market cap and the total crypto market cap is approaching $3Trillion.  There are people/entities with billions of dollars invested, I was just looking at a $1Billion wallet the other day which was invested in many of the same projects as I am.  Obviously just looking to throw it all away and be 'worth nothing', that's right, this massive industry that is now built around crypto and everyone invested in it is just going to pack up and go home.  It'll all crash to zero, put a fork in it, it's done!  LMAO.  We'll all just forget about Bitcoin and Ethereum and decentralized finance and the Binance exchange will just pack up shop and start selling Beanie Babies and Tulip Bulbs.

Meanwhile I've made a few hundred k this year, paid all my bills, cashed out my initial investment so I'm free-carried yet I'm somehow the dumb one and you're a genius?  In January my crypto PF was 8K.  LMAO.  Why are you so emotional about this?  I'm not and I've got 50% of everything riding on it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 06, 2021, 06:23:16 PM
Not only do I think BTC will be worth almost nothing compared to it's current valuation

Not only are you wrong, you're just completely guessing, more like hoping honestly.

Yep I'm wrong.

You're not guessing/hoping at all

Thing is if I'm wrong I'm still a multi millionaire. If you're wrong you may be worth nothing

This is where I don't understand you.  You're rich, but you sound really upset and bitter that maybe some others are making gains and catching up.

Let's look at the reality, the here and now.  There is a fake internet coin currently worth $61,400.  It's 'worth nothing' but it costs $61,400 and is traded all day every day in massive volume.  It has over $1Trillion market cap and the total crypto market cap is approaching $3Trillion.  There are people/entities with billions of dollars invested, I was just looking at a $1Billion wallet the other day which was invested in many of the same projects as I am.  Obviously just looking to throw it all away and be 'worth nothing', that's right, this massive industry that is now built around crypto and everyone invested in it is just going to pack up and go home.  It'll all crash to zero, put a fork in it, it's done!  LMAO.  We'll all just forget about Bitcoin and Ethereum and decentralized finance and the Binance exchange will just pack up shop and start selling Beanie Babies and Tulip Bulbs.

Meanwhile I've made a few hundred k this year, paid all my bills, cashed out my initial investment so I'm free-carried yet I'm somehow the dumb one and you're a genius?  In January my crypto PF was 8K.  LMAO.  Why are you so emotional about this?  I'm not and I've got 50% of everything riding on it.

Glad you agree it's beanie babies and tulip bulbs. They're all but forgotten as far as money is concerned.

So now we can add too big to fail to fomo and it only goes up got it.



Not sure what emotion you think is in this. Is that like a personal crutch you lean on without a better response. You keep citing emotion being a factor.   

Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 06, 2021, 06:27:57 PM
Your whole argument appears to be that the current reality isn't real, because you don't like it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 06, 2021, 06:32:51 PM
Current reality?  Pretty sure Tesla made more in the last few weeks than BTC did. Curious as to why you haven't moved to that reality?  What's your timetable for this reality you are living in? 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on November 06, 2021, 07:39:07 PM
Not only do I think BTC will be worth almost nothing compared to it's current valuation

Not only are you wrong, you're just completely guessing, more like hoping honestly.

Yep I'm wrong.

You're not guessing/hoping at all

Thing is if I'm wrong I'm still a multi millionaire. If you're wrong you may be worth nothing

This is where I don't understand you.  You're rich, but you sound really upset and bitter that maybe some others are making gains and catching up.

Lol, I'm sorry, but it's always kind of entertaining to watch people get riled up arguing with B42. If you aren't familiar with him, then I can see why you think there's bitterness of personal feelings, but those who have known him for years know that's just his style.

I doubt he has anything even close to a personal feeling about other people making money in crypto. He's not arguing with you so aggressively because he has aggressive feelings about crypto, he's arguing with you aggressively because...well...he argues aggressively.

If an argument doesn't make sense to him, this is how he reacts. He's not upset, he's just tenacious and rigorous in his arguments.

He'll chew this bone as long as you try to pull it from him, and then he'll go merrily along his way totally unaffected by it. He's not bitter or angry, he's just fucking tenacious. And he's not going to let it go unless and until your arguments make sense to him.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 06, 2021, 07:52:57 PM
^^ LMAO okay.  I think i'll leave it there in that case.  It's pointless arguing about it honestly, noone is going to change their minds.  The best thing about these crypto deniers is they will never be wrong, no matter what happens they can always say "It'll go to zero, any day now".

BTC 1k = bitcoin is not backed by anything, worthless and going to zero
BTC 10k = bitcoin is not backed by anything, worthless and going to zero
BTC 30k = bitcoin is not backed by anything, worthless and going to zero
BTC 60k = bitcoin is not backed by anything, worthless and going to zero
BTC 100k = bitcoin is not backed by anything, worthless and going to zero
BTC 1000k = bitcoin is not backed by anything, worthless and going to zero

There's just no winning that argument is there..
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on November 06, 2021, 08:22:49 PM
^^ LMAO okay.  I think i'll leave it there in that case.  It's pointless arguing about it honestly, noone is going to change their minds.  The best thing about these crypto deniers is they will never be wrong, no matter what happens they can always say "It'll go to zero, any day now".

BTC 1k = bitcoin is not backed by anything, worthless and going to zero
BTC 10k = bitcoin is not backed by anything, worthless and going to zero
BTC 30k = bitcoin is not backed by anything, worthless and going to zero
BTC 60k = bitcoin is not backed by anything, worthless and going to zero
BTC 100k = bitcoin is not backed by anything, worthless and going to zero
BTC 1000k = bitcoin is not backed by anything, worthless and going to zero

There's just no winning that argument is there..

I don't see this as an argument against anything he's said.

I'm not saying his predictions are right, but I have yet to see anyone truly dismantle the basis of his position.

As I've said many times, I'm looking to be convinced, but so far, that hasn't happened, and B42 is making a lot of sense to me even if I don't necessarily buy his predictions. His arguments can be right, but his predictions wrong.

Meanwhile, I have yet to see a solid crypto argument that fully makes sense to me other than the fact that there's potential to make a lot of money. That can also be true along side most things B42 argues being correct.

This is what's so frustrating about the debate.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on November 07, 2021, 06:03:33 AM
Thing is if I'm wrong I'm still a multi millionaire.

Someone who both brags about being a multi millionaire, and yet qualifies for medicaid children's insurance.

Need to explore CHIP now and understand how that works and what limitations are if anyone knows or has data that'd be great.
"Eligible within the state’s CHIP income range, based on family income, and any other state specified rules in the CHIP state plan."
https://www.medicaid.gov/chip/eligibility/index.html

How is this relevant to crypto??
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on November 07, 2021, 07:54:03 AM
I'm a FIRED multimillionaire and keeping your kids off of CHIP is actually quite difficult, as it's entirely income based. It's one of the reasons I still do a little bit of work. When our kids ended up on CHIP it was a big problem as there were no providers nearby, so I can see how Boarder42 would be interested in the topic.

If you're not a young(ish) FIRE person with kids, it might sound like B42 is being a weird hypocrite cheapskate or something, but this is actually a common issue for some of us simply because your income level, regardless of assets, determines your CHIP status. Furthermore there is *nothing you can do* to get off of CHIP and buy your own insurance if your income is too low.

And of course it has zero to do with crypto; I assume you were just trying to mock B42 for some reason.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 07, 2021, 08:46:01 AM
I'm a FIRED multimillionaire and keeping your kids off of CHIP is actually quite difficult, as it's entirely income based. It's one of the reasons I still do a little bit of work. When our kids ended up on CHIP it was a big problem as there were no providers nearby, so I can see how Boarder42 would be interested in the topic.

If you're not a young(ish) FIRE person with kids, it might sound like B42 is being a weird hypocrite cheapskate or something, but this is actually a common issue for some of us simply because your income level, regardless of assets, determines your CHIP status. Furthermore there is *nothing you can do* to get off of CHIP and buy your own insurance if your income is too low.

And of course it has zero to do with crypto; I assume you were just trying to mock B42 for some reason.

-W

Thanks for that info. Proximity of care is important and something that would help us determine what we should do with our income level since in RE it's in our control. 

Great to detail a thread about something that's not related to fire with something that's very valuable to people on the path to fire.

I can figure out all the monetary costs and advantages myself which including childcare start to get extremely beneficial to early retirees with young care. My original plan was to keep them off chip. But I'm not 100% sure now as again the money works out as a hedge against early sorr since most social programs and tax credits are income based so we can obtain significantly lower cash out flows early.

You can debate the morality of such things til you're blue in the face but in reality we're likely going to contribute way more long term due to RMDs. The optimal thing if we could assume we'll have no large drop in the first 6 years would be to convert to the max of the 12% which kills most of these services. But the short term risk is cash outflows to combat sorr and that's much more important to an early firee.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 07, 2021, 09:37:03 AM
Man crypto is such a hit it's pulling in some valuable new forum members with alot to say.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Jeferson on November 07, 2021, 10:20:23 AM
I think it's not a bad idea, I am not saying to put all your money in crypto as I don't do that either. But a small portion of my funds is located in crypto. In the past, I focused primarily on stacking BTC and ADA, but recently I focus on SOL which is predicted (https://cryptopredictions.com/solana/) to perform very well in the upcoming years. It's basically like a better version of Cardano, with more potential.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 07, 2021, 11:39:43 AM
Bitcoin doesn't go up in value because it may one day be used in businesses to buy goods and services.  It goes up in value because it is a scarce asset  that people want to hold and don't want to sell.  There's only 21 million bitcoins and that's all there will ever be.  The network is still in its growth phase with millions of new users coming in and we're all just fighting for a piece of that pie.  The amount traded on exchanges which sets the price is actually very low, the vast majority of bitcoin is stored away in offline wallets for the long term, no one is looking to spend it in shops, noone spends gold bullion or apple shares in shops either, it's a long term investment.

So bitcoin isn't a currency. It's an asset?

It's literally called a cryptocurrency.

It's quite obviously an asset, it has a current market cap of nearly $1.2Trillion.  You can call it whatever you want and by this stage it doesn't matter what the original intentions of some supposed Japanese guy in a basement were when he created Bitcoin, bitcoin is now it's own beast and all that matters now is how bitcoin is being used and valued and adopted globally and where it is headed into the future.  Bitcoin and crypto in general is here to stay, I honestly would not want to be one of the people who knew all about bitcoin in these early days, argued about it on the internet all day until they were blue in the face but never owned any and completely missed the bus. 

Soon Bitcoins market cap value will flip silver and after that there is only Amazon, Google, Saudi Aramco, Apple and Microsoft to go on the way to flipping Gold which is about a 10x away for BTC.  For reference BTC has done roughly a 238x since 2015.  It has been said that Bitcoin is a monetary black hole that will suck up and dominate all other asset classes.  I'm yet to see anything to suggest that it is not progressively doing exactly that.

so its only gone up since 2015 so based on that information i've decided it can only go up and dominate the world.  Good luck 6 years is an infinitely small time in the money game.

and FOMO sorry i missed that part of your post in the middle there. 

so there we have it folks the reason to hold BTC is FOMO and it always goes up.  If you don't have FOMO over this and don't believe 6 years of it always goes up makes it "a long term investment" there is no reason to be in it.

You sound very upset, please try not to get emotional over this.  I'll stick to my opinion and you stick to yours.  My opinion has made me a lot of money this year so I'm fairly happy with it for now.  Let's see what the future brings.  So exciting isn't it.

@Juan Ponce de León , are there conditions under which you'd sell some Bitcoin to lock in those gains?
Hello

Sent from my CPH2217 using Tapatalk

I did already answer that question LMAO. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FLBiker on November 08, 2021, 07:53:05 AM
As I've said many times, I'm looking to be convinced, but so far, that hasn't happened, and B42 is making a lot of sense to me even if I don't necessarily buy his predictions. His arguments can be right, but his predictions wrong.

Meanwhile, I have yet to see a solid crypto argument that fully makes sense to me other than the fact that there's potential to make a lot of money. That can also be true along side most things B42 argues being correct.

This is what's so frustrating about the debate.

I think one of the problems with this thread is that we're really comparing apples and oranges.  I don't think it really makes sense to compare crypto to index fund investing.  I think it would make more sense to compare it to day trading or forex.  I don't mean this as a knock -- plenty of people do this, and some of them make a lot more money than I'll ever have.  For me, though, a big appeal of the investment strategy that I've followed (index funds) is that it is reliable, and requires no luck, special knowledge, or timing.  I don't need to do a lot of research or pay attention to prices.  It's simple.  For these same reasons, I don't day trade or use options or margin.  For me, having a strategy that is simple, proven over time, and reproducible (meaning anyone can do it and expect to get similar results) is what makes this stuff a real source of freedom.

I have a 6 year old.  When she starts working (say in 10-15 years) and is making her first investment choices, I suspect she would still be able to do what I did and get a similar result.  I started investing seriously at 30 and have a portfolio of $1.3 million 15 years later.  Crypto could be very popular (in terms of being used as a payment platform) by that time, but I think it will look very different as an investment (either because it will have stabilized or crashed).  The alternative would be that the prices continue to increase dramatically forever, but I don't think that anyone believes that.

It's undeniable that Bitcoin has outgained the stock market over the last 10 years.  But it's also undeniable that the stock market has a much longer track record of delivering returns that have consistently out performed inflation, bonds, etc.  So, ultimately, I think it comes down to what you're looking for.  Do you want to find the current strategy for beating the market, or are you interested in a much longer-used strategy for reaching financial independence?  With the former (whether it's crypto or something else) you could make tons of money but it will take a lot more work and engagement, and the risk of going bust is higher.  The latter, on the other hand, is much more simple and reliable, but it isn't necessarily the fastest.  I'm in the latter camp, but I recognize that this is a matter of personal preference (much like risk tolerance).

I have enjoyed the back and forth of this thread, though, as it has helped me to clarify my own ideas.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 08, 2021, 09:29:54 AM
Economist Mohamed A. El-Erian said the stock and bond markets are split right now.  Stocks are relatively calm, while the bond market's volatility reflects uncertainty over what central banks will do.  Surprisingly, he suggested the situation could get more money moving into crypto.  There's fears of inflation, but uncertainty in bonds, which gives crypto an opportunity.

(Warning: Video and audio will play - not a text article)
https://www.cnbc.com/video/2021/11/08/bond-and-equity-markets-are-showing-a-big-split-right-now-mohamed-el-erian.html
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on November 08, 2021, 09:31:03 AM
As I've said many times, I'm looking to be convinced, but so far, that hasn't happened, and B42 is making a lot of sense to me even if I don't necessarily buy his predictions. His arguments can be right, but his predictions wrong.

Meanwhile, I have yet to see a solid crypto argument that fully makes sense to me other than the fact that there's potential to make a lot of money. That can also be true along side most things B42 argues being correct.

This is what's so frustrating about the debate.

I think one of the problems with this thread is that we're really comparing apples and oranges.  I don't think it really makes sense to compare crypto to index fund investing.  I think it would make more sense to compare it to day trading or forex.  I don't mean this as a knock -- plenty of people do this, and some of them make a lot more money than I'll ever have.  For me, though, a big appeal of the investment strategy that I've followed (index funds) is that it is reliable, and requires no luck, special knowledge, or timing.  I don't need to do a lot of research or pay attention to prices.  It's simple.  For these same reasons, I don't day trade or use options or margin.  For me, having a strategy that is simple, proven over time, and reproducible (meaning anyone can do it and expect to get similar results) is what makes this stuff a real source of freedom.

I have a 6 year old.  When she starts working (say in 10-15 years) and is making her first investment choices, I suspect she would still be able to do what I did and get a similar result.  I started investing seriously at 30 and have a portfolio of $1.3 million 15 years later.  Crypto could be very popular (in terms of being used as a payment platform) by that time, but I think it will look very different as an investment (either because it will have stabilized or crashed).  The alternative would be that the prices continue to increase dramatically forever, but I don't think that anyone believes that.

It's undeniable that Bitcoin has outgained the stock market over the last 10 years.  But it's also undeniable that the stock market has a much longer track record of delivering returns that have consistently out performed inflation, bonds, etc.  So, ultimately, I think it comes down to what you're looking for.  Do you want to find the current strategy for beating the market, or are you interested in a much longer-used strategy for reaching financial independence?  With the former (whether it's crypto or something else) you could make tons of money but it will take a lot more work and engagement, and the risk of going bust is higher.  The latter, on the other hand, is much more simple and reliable, but it isn't necessarily the fastest.  I'm in the latter camp, but I recognize that this is a matter of personal preference (much like risk tolerance).

I have enjoyed the back and forth of this thread, though, as it has helped me to clarify my own ideas.

To be fair, when I say I'm looking to be convinced, I don't mean that I'm looking to be convinced to buy individual crypto coins.

It's already been established by people on both sides of the debate that in my particular case, because I'm perfectly happy with my level of wealth and returns that there's no argument to buy coins at this point except as speculation.

That was my first question: is there any argument to be made that I will miss out on anything except gains by not buying these coins now? As if they becomes integrated more into the regular economy, they'll just become part of the financial ecosystem and be captured by index funds and pension funds eventually. I'll just miss out on possible outsized gains that I don't care about.

Okay cool. That was established. No need for me to bother thinking about buying one of these individual coins. That provided me A LOT of clarity through the noise from both sides.

Now, when I say I'm looking to still be convinced, what I mean is that I'm still looking to be convinced about the utility and predictions around crypto.

I *get* that an enormous amount of people delve into understanding crypto and then become overwhelmingly convinced about how AMAZING and REVOLUTIONARY it is. And when I talk to actual crypto experts and read endless articles, I don't experience the same reaction. I see a lot of potential, but no clear path forward in terms of utility, and every example I'm given, like the Ticketmaster, example, seems to be offering a solution to a problem that doesn't exist because of a currency issue and wouldn't be solved by a new currency either.

That said, I'm am definitely starting to wrap my mind around NFTs. It kind of baffles me, because I contrary to my high level of activity here, I am NOT a child of the internet. You see me here all the time because this is basically the only social media I use. So NFTs sounds absurd to me personally, but as someone who has dated A LOT of software dudes who went fucking gaga for Sims and Second Life back in the day, I can grasp the mentality of the population that sees value in NFTs.

Coins though? In their current form?
My brain just refuses to grasp the hype, and the moment I find myself resistant to something new, the moment I have a reaction of the old man sitting on his porch ranting about "Young kids these days with their internet dog money! Back in my day you wrapped your bills in a rubber band and that was good enough for me!" I immediately start seeking out information to disprove my intuitive position.

And I will either become convinced of the value of current individual coins, or it will take so long that history happens in the meantime and I get my answer.

What I've been looking at are top coins that aren't sky rocketing in value, that aren't projected to sky rocket in value, and trying to understand why they are still touted as big players.

An example is EOS. It's worth about $5 a coin and sky high projections put it at hitting a whopping $22 in 2022. It was called the "Etherium killer" and has had some struggles, but many sources are still really bullish on it. It also apparently runs some of the highest number of actual transactions, which means it's actually used more than the most valuable coins.

I've read at least 100 articles about why this is, and I still can't put my finger on *exactly* why it seems to be immune to explosive value compared to other, similar coins.

As I said, I understand its issues and drawbacks, but the other coins have equally huge or bigger drawbacks, especially in terms of energy consumption, and everything else noted in this thread, particularly about Bitcoin.

So if someone can give me a common sense explanation as to why certain coins blow up to such extreme levels and others, which are hyped just as much done, I would appreciate that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on November 08, 2021, 09:35:55 AM
As I've said many times, I'm looking to be convinced, but so far, that hasn't happened, and B42 is making a lot of sense to me even if I don't necessarily buy his predictions. His arguments can be right, but his predictions wrong.

Meanwhile, I have yet to see a solid crypto argument that fully makes sense to me other than the fact that there's potential to make a lot of money. That can also be true along side most things B42 argues being correct.

This is what's so frustrating about the debate.

I think one of the problems with this thread is that we're really comparing apples and oranges.  I don't think it really makes sense to compare crypto to index fund investing.  I think it would make more sense to compare it to day trading or forex.  I don't mean this as a knock -- plenty of people do this, and some of them make a lot more money than I'll ever have.  For me, though, a big appeal of the investment strategy that I've followed (index funds) is that it is reliable, and requires no luck, special knowledge, or timing.  I don't need to do a lot of research or pay attention to prices.  It's simple.  For these same reasons, I don't day trade or use options or margin.  For me, having a strategy that is simple, proven over time, and reproducible (meaning anyone can do it and expect to get similar results) is what makes this stuff a real source of freedom.

I have a 6 year old.  When she starts working (say in 10-15 years) and is making her first investment choices, I suspect she would still be able to do what I did and get a similar result.  I started investing seriously at 30 and have a portfolio of $1.3 million 15 years later.  Crypto could be very popular (in terms of being used as a payment platform) by that time, but I think it will look very different as an investment (either because it will have stabilized or crashed).  The alternative would be that the prices continue to increase dramatically forever, but I don't think that anyone believes that.

It's undeniable that Bitcoin has outgained the stock market over the last 10 years.  But it's also undeniable that the stock market has a much longer track record of delivering returns that have consistently out performed inflation, bonds, etc.  So, ultimately, I think it comes down to what you're looking for.  Do you want to find the current strategy for beating the market, or are you interested in a much longer-used strategy for reaching financial independence?  With the former (whether it's crypto or something else) you could make tons of money but it will take a lot more work and engagement, and the risk of going bust is higher.  The latter, on the other hand, is much more simple and reliable, but it isn't necessarily the fastest.  I'm in the latter camp, but I recognize that this is a matter of personal preference (much like risk tolerance).

I have enjoyed the back and forth of this thread, though, as it has helped me to clarify my own ideas.

I can relate @FLBiker. I feel a bit of gratitude every time I think about how lucky I am to live in an era when I can click a button and invest in the outcomes of thousands of companies - which is essentially the growth of the overall economy as occurs as more and more people worldwide increase their productivity and seek out ways to create more value as humanity continues its march from subsistence activities to industrial work. Compare this world to my prospects had I been born in 1900, or 1800, or 1100. Back then, either there were no markets whereby a person could retire or they were generally unavailable to regular folks. Back then I would have had to farm for any meager wealth I had, with the strength of my body being the upper limit on my productivity and earnings potential, and having lots of children would have been the only "social security" imaginable for when I could no longer work. "Retirement" was not a concept except for the political elites.

In this awesome generation, though, I can ponder whether I want to spend 30 years of my life in a state of leisure, or 40, and the only tradeoffs to consider are NOT buying a bunch of crap that was not available to or needed by people a few generations ago! Never has humanity been offered such a bargain. It's mine for the taking. It's proven to work, and this is not a gamble or a long shot, because the plan involves owning the means of production. 

To look at this wild opportunity and say "that's not enough, I want to YOLO everything I own on speculative collectibles as a long shot bid to get rich quick, mostly because they went up in the past" seems like passing up on an outstanding opportunity to retire after only 10-15 years of work in order to chase the dream of retiring after only 5-6 years of work. It also sounds like the setup to every investment bubble story.

Sure, time is valuable, but so is risk. At some point, the risks involved with attempts to shave off time to retirement become so high, only a fraction of people taking such risks succeed. We won't hear about the failed cases, just like we didn't hear much about the people who worked another 20 years because they put it all in Pets.com, Beanie Babies, silver futures, or any one of dozens of hedge funds that had a great few years followed by collapse, but they were real people. Even if one gambles with only a portion of one's assets, why take such gambles when one's alternative is about as good an outcome as any human can reasonably expect? And if one is going to gamble in zero-sum markets for things with no utility, why not pick any other gamble? Forex, commodity contracts, options YOLOs, or day trading at least involve things with utility? Betting on both black and red in roulette yields steady returns until it doesn't. Why must everyone gamble on the same one particular thing being talked about incessantly by financial media?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 08, 2021, 09:40:08 AM
Juan Ponce de León - That's helpful, thanks.  I'm trying to view crypto as a speculation on what might be used in the future.  Established networks seem to fit that approach.  It's still hard to figure out how much is people buying and holding, and how much is transactions.

Malcat - I prefer Google as middle man over the phone book.  Crypto could replace an existing middle man.  As to my post you wondered about, the other poster claimed they would still be a multi-millionaire if crypto crashed, which seems to me like a bullying tactic.  I'm surprised all my ELI5 explanations got nothing from you, but this caught your attention.

Rosy - The number of transactions would include both speculators and people conducting business, wouldn't it?  Meaning, if I sell my ETH to someone who pays me USD, that's speculation.  If I sell my ETH to buy a product from a store, that's closer to a payment network.  Right now, I don't have a good way to separate speculation from payment network usage.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 08, 2021, 10:02:01 AM
As I've said many times, I'm looking to be convinced, but so far, that hasn't happened, and B42 is making a lot of sense to me even if I don't necessarily buy his predictions. His arguments can be right, but his predictions wrong.

Meanwhile, I have yet to see a solid crypto argument that fully makes sense to me other than the fact that there's potential to make a lot of money. That can also be true along side most things B42 argues being correct.

This is what's so frustrating about the debate.

I think one of the problems with this thread is that we're really comparing apples and oranges.  I don't think it really makes sense to compare crypto to index fund investing.  I think it would make more sense to compare it to day trading or forex.  I don't mean this as a knock -- plenty of people do this, and some of them make a lot more money than I'll ever have.  For me, though, a big appeal of the investment strategy that I've followed (index funds) is that it is reliable, and requires no luck, special knowledge, or timing.  I don't need to do a lot of research or pay attention to prices.  It's simple.  For these same reasons, I don't day trade or use options or margin.  For me, having a strategy that is simple, proven over time, and reproducible (meaning anyone can do it and expect to get similar results) is what makes this stuff a real source of freedom.

I have a 6 year old.  When she starts working (say in 10-15 years) and is making her first investment choices, I suspect she would still be able to do what I did and get a similar result.  I started investing seriously at 30 and have a portfolio of $1.3 million 15 years later.  Crypto could be very popular (in terms of being used as a payment platform) by that time, but I think it will look very different as an investment (either because it will have stabilized or crashed).  The alternative would be that the prices continue to increase dramatically forever, but I don't think that anyone believes that.

It's undeniable that Bitcoin has outgained the stock market over the last 10 years.  But it's also undeniable that the stock market has a much longer track record of delivering returns that have consistently out performed inflation, bonds, etc.  So, ultimately, I think it comes down to what you're looking for.  Do you want to find the current strategy for beating the market, or are you interested in a much longer-used strategy for reaching financial independence?  With the former (whether it's crypto or something else) you could make tons of money but it will take a lot more work and engagement, and the risk of going bust is higher.  The latter, on the other hand, is much more simple and reliable, but it isn't necessarily the fastest.  I'm in the latter camp, but I recognize that this is a matter of personal preference (much like risk tolerance).

I have enjoyed the back and forth of this thread, though, as it has helped me to clarify my own ideas.

I can relate @FLBiker. I feel a bit of gratitude every time I think about how lucky I am to live in an era when I can click a button and invest in the outcomes of thousands of companies - which is essentially the growth of the overall economy as occurs as more and more people worldwide increase their productivity and seek out ways to create more value as humanity continues its march from subsistence activities to industrial work. Compare this world to my prospects had I been born in 1900, or 1800, or 1100. Back then, either there were no markets whereby a person could retire or they were generally unavailable to regular folks. Back then I would have had to farm for any meager wealth I had, with the strength of my body being the upper limit on my productivity and earnings potential, and having lots of children would have been the only "social security" imaginable for when I could no longer work. "Retirement" was not a concept except for the political elites.

In this awesome generation, though, I can ponder whether I want to spend 30 years of my life in a state of leisure, or 40, and the only tradeoffs to consider are NOT buying a bunch of crap that was not available to or needed by people a few generations ago! Never has humanity been offered such a bargain. It's mine for the taking. It's proven to work, and this is not a gamble or a long shot, because the plan involves owning the means of production. 

To look at this wild opportunity and say "that's not enough, I want to YOLO everything I own on speculative collectibles as a long shot bid to get rich quick, mostly because they went up in the past" seems like passing up on an outstanding opportunity to retire after only 10-15 years of work in order to chase the dream of retiring after only 5-6 years of work. It also sounds like the setup to every investment bubble story.

Sure, time is valuable, but so is risk. At some point, the risks involved with attempts to shave off time to retirement become so high, only a fraction of people taking such risks succeed. We won't hear about the failed cases, just like we didn't hear much about the people who worked another 20 years because they put it all in Pets.com, Beanie Babies, silver futures, or any one of dozens of hedge funds that had a great few years followed by collapse, but they were real people. Even if one gambles with only a portion of one's assets, why take such gambles when one's alternative is about as good an outcome as any human can reasonably expect? And if one is going to gamble in zero-sum markets for things with no utility, why not pick any other gamble? Forex, commodity contracts, options YOLOs, or day trading at least involve things with utility? Betting on both black and red in roulette yields steady returns until it doesn't. Why must everyone gamble on the same one particular thing being talked about incessantly by financial media?

This is how i view it.  I took very quickly to the thought of index investing upon finding this in 2014.  I think my history of trading stocks actively since I was 10 until finding this at 27 plays into my opinion on speculative investing like this. I "tried" to get rich faster for 17 years albeit with considerably smaller amounts of money but losing half your money at 11 years old in the dot com bubble still hurts b/c its relative.  So when i see stuff like this come up here i'm just like cool some new flashy thing that some people will get rich on and some people will get poor on.  And in this particular case the entire planet gets hurt b/c of it. 

The shockingly simple math and the double edged sword of cutting expenses combined with predictable long term index investing is already the cheat code to life.  And now we're seeing people be like maybe i can get there in half the time and trade none of my lifestyle.  Maybe you can but its not a predictable bet its a pure gamble at this point. 

There will always be some hot new thing and this is the same as daytrading etc which is why so many are vocally against it.  What are the risks that come up every time someone mentions allocating a certain portion of their investment to individual stock picking or daytrading or options etc.  Well the biggest risk is you do really well and win big and think you've got it all figured out and then you FIRE on your 6% SWR that your strategy supports only to find out it doesn't work long term you got lucky for a little bit.  Maybe you even get out at the right time. What happens when the next crypto like craze hits and you go more into it this time maybe all in and it turns out to be tulips and beanie babies. (which this still could be regardless of what personal opinion is - Overwhelming BTC has been deemed a "store of value" by supporters of it in this thread which means its a collectible)

So what do i think of adding a low % of crypto - I still think its a fundamentally bad play for the avg investor in the world which is what most people are.  But people like to gamble and win so its likely better than playing black jack or buying a lottery ticket if you can completely compartmentalize the money you have there and not increase your stake based on emotions.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on November 08, 2021, 10:13:24 AM
Malcat - I prefer Google as middle man over the phone book.  Crypto could replace an existing middle man.  As to my post you wondered about, the other poster claimed they would still be a multi-millionaire if crypto crashed, which seems to me like a bullying tactic.  I'm surprised all my ELI5 explanations got nothing from you, but this caught your attention.

Because I don't need crypto explained to me like I'm 5.

But when I see a specific use case presented that doesn't make sense to me, I ask my clarifying questions.

I understand how Google displaces Yellopages. I can't grasp how crypto would displace Ticketmaster. I'm not saying it won't, but I am failing to perceive the market forces that would cause it to be displaced, since every argument I've seen is how crypto would benefit the consumer and Ticketmaster has never benefited the consumer in the first place, and yet still exists. So if their lack of utility to the consumer was a market force that would make them disappear, they would have disappeared ages ago.

Unfortunately, "being beneficial to the consumer" is not the driving force behind, well, the vast overwhelming majority of businesses. Sometimes utility is what's used to gain market share, that's what people are sold on as the benefit of capitalism, but that's not actually how it works, it's only part of the picture.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: forgerator on November 08, 2021, 04:10:02 PM
To be honest, everyone is entitled to their opinion. I have the exact opposite experience where I lost a ton in the stock market but gained orders of magnitude back through crypto. Yet we cannot say one or the other is the right investment for anyone.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Roland of Gilead on November 08, 2021, 05:32:10 PM
So on these meme coins which have gone up a million percent or more, who is on the losing side of this?  Everyone who is cashing out, someone is going to be left holding a bag.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on November 08, 2021, 05:49:25 PM
So on these meme coins which have gone up a million percent or more, who is on the losing side of this?  Everyone who is cashing out, someone is going to be left holding a bag.

I haven't checked this thread in a couple days but as far as I know none is advocating for meme coins here.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 08, 2021, 06:06:23 PM
To be honest, everyone is entitled to their opinion. I have the exact opposite experience where I lost a ton in the stock market but gained orders of magnitude back through crypto. Yet we cannot say one or the other is the right investment for anyone.

You might be the only person in this entire thread claiming to not invest in the stock market bc it's a losing battle. If you lost in the stock market you were clearly not following the basic investing advice given here. Now with some short term speculation in a current fad you made some money.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FLBiker on November 09, 2021, 06:11:46 AM
To be honest, everyone is entitled to their opinion. I have the exact opposite experience where I lost a ton in the stock market but gained orders of magnitude back through crypto. Yet we cannot say one or the other is the right investment for anyone.

Yes and no.  Perhaps comes down to the question that we're trying to answer.

For me, the question has been something like "What is the best way for me to almost certainly reach financial independence in a reasonable amount of time?"  For others, the question appears to be something like "What is the best way for me to potentially reach financial independence as quickly as possible?"  The question may be a matter of personal opinion.  Once you know the target, though, I do think there are objectively better and worse ways of reaching it.

If, like me, your primary financial question is the former, it's objectively true that you're better off investing in broad-based, low-fee index funds than trying to pick individual stocks or crypto coins.  This isn't necessarily the answer to the second question, though, which is why I think folks are sometimes talking past each other on this thread.

At the same time, there is a part of me that thinks that the first question is objectively better.  If the goal is financial independence, surely certainty / reliability / reproducibility has to be part of it, no?  Otherwise, by definition, the approach will work for some, fail for more, and thus isn't (as I understand it) a true source of independence.  I'm willing to concede, though, that this may not be objectively true -- it might just be that I hold my opinion very strongly.

Or perhaps I'm articulating the second question incorrectly.  It isn't mine, after all.  Maybe it's more accurate to express it as "What is the best way for me to potentially make a lot of money as quickly as possible?" and it isn't explicitly about a desire for financial independence.  If that's the case, taking chances makes more sense.  Again, though, that isn't a mindset I can really relate to, so I could still be stating it incorrectly.  Regardless, I've definitely found this thread to be helpful in clarifying some fundamental aspects of my investing philosophy.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 09, 2021, 06:24:10 AM
To be honest, everyone is entitled to their opinion. I have the exact opposite experience where I lost a ton in the stock market but gained orders of magnitude back through crypto. Yet we cannot say one or the other is the right investment for anyone.

Yes and no.  Perhaps comes down to the question that we're trying to answer.

For me, the question has been something like "What is the best way for me to almost certainly reach financial independence in a reasonable amount of time?"  For others, the question appears to be something like "What is the best way for me to potentially reach financial independence as quickly as possible?"  The question may be a matter of personal opinion.  Once you know the target, though, I do think there are objectively better and worse ways of reaching it.

If, like me, your primary financial question is the former, it's objectively true that you're better off investing in broad-based, low-fee index funds than trying to pick individual stocks or crypto coins.  This isn't necessarily the answer to the second question, though, which is why I think folks are sometimes talking past each other on this thread.

At the same time, there is a part of me that thinks that the first question is objectively better.  If the goal is financial independence, surely certainty / reliability / reproducibility has to be part of it, no?  Otherwise, by definition, the approach will work for some, fail for more, and thus isn't (as I understand it) a true source of independence.  I'm willing to concede, though, that this may not be objectively true -- it might just be that I hold my opinion very strongly.

Or perhaps I'm articulating the second question incorrectly.  It isn't mine, after all.  Maybe it's more accurate to express it as "What is the best way for me to potentially make a lot of money as quickly as possible?" and it isn't explicitly about a desire for financial independence.  If that's the case, taking chances makes more sense.  Again, though, that isn't a mindset I can really relate to, so I could still be stating it incorrectly.  Regardless, I've definitely found this thread to be helpful in clarifying some fundamental aspects of my investing philosophy.

I'd say both of your 2nd two questions are not what this forum is actually about and what the blog was founded upon.  there are plenty of sites and forums like reddit wall street bets for people following that 2nd path. 

The question posed here could be posed about litterally any asset that isnt a broad based index

what do you think of adding a low percent of corn futures
what do you think of adding a low percent of tsla
what do you think of adding a low percent of forex
what do you think of adding a low percent of blackjack bets
what do you think of adding a low percent of air jordans
what do you think of adding a low percent of teletubbies - (you guys just don't get it, its coming back and these things going to be the next shiba inu!)

I mean the answer to most of these is probably shouldn't mess with it.  but many here do have a small percentage of money they allocate to play around with b/c I'd wager most never really got the chance to play around much with money in the stock market and gambling releases biological responses that humans crave.  Being cognizant of this and knowing it could affect your larger pile of money in the future when say the sp500 makes 0% for 10 years and your play money makes you crypto gains like the last 10 years - you may start to question your foundational structure you built your FI plans on.  This is the biggest risk to any amount of alternative play money IMO.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 09, 2021, 06:30:12 AM
Malcat - I prefer Google as middle man over the phone book.  Crypto could replace an existing middle man.  As to my post you wondered about, the other poster claimed they would still be a multi-millionaire if crypto crashed, which seems to me like a bullying tactic.  I'm surprised all my ELI5 explanations got nothing from you, but this caught your attention.
I understand how Google displaces Yellopages. I can't grasp how crypto would displace Ticketmaster. I'm not saying it won't, but I am failing to perceive the market forces that would cause it to be displaced, since every argument I've seen is how crypto would benefit the consumer and Ticketmaster has never benefited the consumer in the first place, and yet still exists. So if their lack of utility to the consumer was a market force that would make them disappear, they would have disappeared ages ago.

Unfortunately, "being beneficial to the consumer" is not the driving force behind, well, the vast overwhelming majority of businesses. Sometimes utility is what's used to gain market share, that's what people are sold on as the benefit of capitalism, but that's not actually how it works, it's only part of the picture.
Who are you quoting after the word "Unfortunately"?  It's not me.  It looks like you're creating a strawman argument with your quote, and then disagreeing with the quote you made up.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on November 09, 2021, 06:45:51 AM
Malcat - I prefer Google as middle man over the phone book.  Crypto could replace an existing middle man.  As to my post you wondered about, the other poster claimed they would still be a multi-millionaire if crypto crashed, which seems to me like a bullying tactic.  I'm surprised all my ELI5 explanations got nothing from you, but this caught your attention.
I understand how Google displaces Yellopages. I can't grasp how crypto would displace Ticketmaster. I'm not saying it won't, but I am failing to perceive the market forces that would cause it to be displaced, since every argument I've seen is how crypto would benefit the consumer and Ticketmaster has never benefited the consumer in the first place, and yet still exists. So if their lack of utility to the consumer was a market force that would make them disappear, they would have disappeared ages ago.

Unfortunately, "being beneficial to the consumer" is not the driving force behind, well, the vast overwhelming majority of businesses. Sometimes utility is what's used to gain market share, that's what people are sold on as the benefit of capitalism, but that's not actually how it works, it's only part of the picture.
Who are you quoting after the word "Unfortunately"?  It's not me.  It looks like you're creating a strawman argument with your quote, and then disagreeing with the quote you made up.

Sorry, no, I'm not quoting you, I'm quoting a number of crypto proponents who have made use arguments for crypto currencies that hinge on being beneficial to the consumer, and it doesn't make sense to me.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on November 09, 2021, 07:10:47 AM
To be honest, everyone is entitled to their opinion. I have the exact opposite experience where I lost a ton in the stock market but gained orders of magnitude back through crypto. Yet we cannot say one or the other is the right investment for anyone.

Yes and no.  Perhaps comes down to the question that we're trying to answer.

For me, the question has been something like "What is the best way for me to almost certainly reach financial independence in a reasonable amount of time?"  For others, the question appears to be something like "What is the best way for me to potentially reach financial independence as quickly as possible?"  The question may be a matter of personal opinion.  Once you know the target, though, I do think there are objectively better and worse ways of reaching it.

If, like me, your primary financial question is the former, it's objectively true that you're better off investing in broad-based, low-fee index funds than trying to pick individual stocks or crypto coins.  This isn't necessarily the answer to the second question, though, which is why I think folks are sometimes talking past each other on this thread.

At the same time, there is a part of me that thinks that the first question is objectively better.  If the goal is financial independence, surely certainty / reliability / reproducibility has to be part of it, no?  Otherwise, by definition, the approach will work for some, fail for more, and thus isn't (as I understand it) a true source of independence.  I'm willing to concede, though, that this may not be objectively true -- it might just be that I hold my opinion very strongly.

Or perhaps I'm articulating the second question incorrectly.  It isn't mine, after all.  Maybe it's more accurate to express it as "What is the best way for me to potentially make a lot of money as quickly as possible?" and it isn't explicitly about a desire for financial independence.  If that's the case, taking chances makes more sense.  Again, though, that isn't a mindset I can really relate to, so I could still be stating it incorrectly.  Regardless, I've definitely found this thread to be helpful in clarifying some fundamental aspects of my investing philosophy.

This reminds me of Walter White's dilemma in Breaking Bad; he must get rich within a short timeframe or fail, so he is driven to an extreme strategy with extreme risks. I think you're right that MMM/Bogleheads/standard financial advice is constantly in tension with perspectives that require getting rich within a low single digit number of years, if not months. WallStreetBets, social media, and lotteries cater to (or victimize?) those who have imposed speed requirements upon themselves.*

When a MMM cultist says they have a strategy to get rich and retire in 12 years with index funds, and someone else on the internet says "bro, those are boomer returns, you could have made 5,000% on Nonamecoin and GME next-day-expiration call options last week" what's missing from the conversation is a discussion of risk. If 2,000 people try the strategy across the next two decades, how many end up rich and how many end up broke? If the number is 2 rich and 1,998 broke, the lesson to be learned about the internet is the story of the 2 rich ones will be replicated everywhere until it looks like the obvious outcome.

Also, if a strategy promoted on the speculative sites starts cranking out failures, the focus will seamlessly shift to the next thing as if all those people who lost their nest eggs and added a decade to their working careers never existed. The old fad becomes an Obviously Dumb Thing To Do compared to the new fad, which is full of potential. This is in contrast to, for example, EarlyRetirementNow.com, which obsesses about portfolio failures that occurred a century or more ago! You might find some snarky comments about past bubbles or investment fads in the abstract, but never the compelling "it changed my life" or "I made $xxx,xxx in three weeks" personal stories like you get when people are winning. 

You see the same dynamic with weight loss. Legitimate nutritionists, trainers, and coaches will develop multi-year plans for obese people, but magic pills advertised on the internet promise results within weeks. Some victims might rationalize that they could try a dozen of these pills in half the time the legitimate professionals say their strategies will require, and at a fraction of the cost. We know how the story ends. More importantly, we know why there is a market for magic weight loss pills - because the promise of faster is irresistible.

Walter White himself got rich quick, but it wouldn't have been much of a series if he had been murdered a few episodes in. That's why the plot didn't go that direction. The plot couldn't go that more likely direction, because then there wouldn't be a show. There's a lesson buried in there.

*Many of the people who impose speed requirements on retirement feel compelled to do so because they're strivers with life-sucking, high-stress, long-hours jobs. In this way, high-pressure jobs corral people into high-stakes gambles, a likelihood of eventual failure, and increased odds of being stuck in such a job even longer. Desperation is never a position of strength, and the popularity of crypto or meme stocks is a measure of desperation in our world.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: index on November 09, 2021, 07:36:18 AM
The thing that bothers me about crypto is all the justification people are using to make it a stupid high % of their asset allocation. There are plenty of small cap stocks and even some large cap stocks that have great 5 and 10 year returns. If you asked if I thought there was a problem adding a low % allocation to TSLA on the forum, people would ask what a small % allocation is exactly and advise you to keep your fun money to under 5-10%. People here are trying to justify their 50% crypto positions as safe because it's "currency" and a "store of value" and everyone is "adopting it" etc. All of the same arguments could be made for holding a stupid high % of Tesla. 

If you want to hold a high % of crypto then fine, but don't expect a different response than the person who starts a thread defending a 50% allocation to a single stock.

What bothers me is crypto now has a market cap over 1T (i've seen 3T thrown around here as well). We saw what happened to the overall economy when $2-3T of housing value was destroyed in 2008. What happens to the overall economy when/if there is a major hack or government crackdown on crypto and 1-3T of value is destroyed?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 09, 2021, 07:51:09 AM
The thing that bothers me about crypto is all the justification people are using to make it a stupid high % of their asset allocation. There are plenty of small cap stocks and even some large cap stocks that have great 5 and 10 year returns. If you asked if I thought there was a problem adding a low % allocation to TSLA on the forum, people would ask what a small % allocation is exactly and advise you to keep your fun money to under 5-10%. People here are trying to justify their 50% crypto positions as safe because it's "currency" and a "store of value" and everyone is "adopting it" etc. All of the same arguments could be made for holding a stupid high % of Tesla. 

If you want to hold a high % of crypto then fine, but don't expect a different response than the person who starts a thread defending a 50% allocation to a single stock.

What bothers me is crypto now has a market cap over 1T (i've seen 3T thrown around here as well). We saw what happened to the overall economy when $2-3T of housing value was destroyed in 2008. What happens to the overall economy when/if there is a major hack or government crackdown on crypto and 1-3T of value is destroyed?

this is another argument as to why it won't fail which i do not understand.  It's too big to fail doesn't make sense to me. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on November 09, 2021, 08:01:37 AM
The thing that bothers me about crypto is all the justification people are using to make it a stupid high % of their asset allocation. There are plenty of small cap stocks and even some large cap stocks that have great 5 and 10 year returns. If you asked if I thought there was a problem adding a low % allocation to TSLA on the forum, people would ask what a small % allocation is exactly and advise you to keep your fun money to under 5-10%. People here are trying to justify their 50% crypto positions as safe because it's "currency" and a "store of value" and everyone is "adopting it" etc. All of the same arguments could be made for holding a stupid high % of Tesla. 

If you want to hold a high % of crypto then fine, but don't expect a different response than the person who starts a thread defending a 50% allocation to a single stock.

What bothers me is crypto now has a market cap over 1T (i've seen 3T thrown around here as well). We saw what happened to the overall economy when $2-3T of housing value was destroyed in 2008. What happens to the overall economy when/if there is a major hack or government crackdown on crypto and 1-3T of value is destroyed?

this is another argument as to why it won't fail which i do not understand.  It's too big to fail doesn't make sense to me.
That's because crypto itself cannot be too big to fail - it is not an institution that our governments rely heavily on. The big banks might get too intertwined with crypto, and they might be deemed too big to fail. How that plays out for some average schmuck who is just holding crypto likely won't be nearly as good as it works out for the huge banks.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on November 09, 2021, 09:01:47 AM
I noticed the anti-crypto folks here constantly claim the pro-crypto folks say XYZ but in reality it's the opposite.  The post always start with something like, "I keep reading the pro-crypto folks say XYZ but..."  Why I this so common on one side and why don't they rebut the actual arguments raised?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 09, 2021, 09:05:00 AM
I noticed the anti-crypto folks here constantly claim the pro-crypto folks say XYZ but in reality it's the opposite.  The post always start with something like, "I keep reading the pro-crypto folks say XYZ but..."  Why I this so common on one side and why don't they rebut the actual arguments raised?

please go re read the entire thread there are many comments that have been made by pro crypto folks about the size of crypto and how that means it will stick around. i'm not going to go pull all the direct quotes from everyone every time someone questions when they said something b/c honestly i dont care.  crypto will not make me rich b/c i dont own any but its highly likely to make alot of people poor who are over tilted either here or in the world.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on November 09, 2021, 09:09:54 AM
The thing that bothers me about crypto is all the justification people are using to make it a stupid high % of their asset allocation. There are plenty of small cap stocks and even some large cap stocks that have great 5 and 10 year returns. If you asked if I thought there was a problem adding a low % allocation to TSLA on the forum, people would ask what a small % allocation is exactly and advise you to keep your fun money to under 5-10%. People here are trying to justify their 50% crypto positions as safe because it's "currency" and a "store of value" and everyone is "adopting it" etc. All of the same arguments could be made for holding a stupid high % of Tesla. 

If you want to hold a high % of crypto then fine, but don't expect a different response than the person who starts a thread defending a 50% allocation to a single stock.

What bothers me is crypto now has a market cap over 1T (i've seen 3T thrown around here as well). We saw what happened to the overall economy when $2-3T of housing value was destroyed in 2008. What happens to the overall economy when/if there is a major hack or government crackdown on crypto and 1-3T of value is destroyed?

this is another argument as to why it won't fail which i do not understand.  It's too big to fail doesn't make sense to me.
That's because crypto itself cannot be too big to fail - it is not an institution that our governments rely heavily on. The big banks might get too intertwined with crypto, and they might be deemed too big to fail. How that plays out for some average schmuck who is just holding crypto likely won't be nearly as good as it works out for the huge banks.
"Too big to fail" was a phrase applied to banks which had to be bailed out by the US government, using established mechanisms such as the FDIC and overnight lending markets. In the event of a crypto-burst, there will be no government bailout because there are no legal mechanisms or existing bureaucracies to make crypto holders whole. Additionally, there would be too much political heat to invent such mechanisms on the fly. It would be more like 2000 than 2008.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on November 09, 2021, 09:17:11 AM
The thing that bothers me about crypto is all the justification people are using to make it a stupid high % of their asset allocation. There are plenty of small cap stocks and even some large cap stocks that have great 5 and 10 year returns. If you asked if I thought there was a problem adding a low % allocation to TSLA on the forum, people would ask what a small % allocation is exactly and advise you to keep your fun money to under 5-10%. People here are trying to justify their 50% crypto positions as safe because it's "currency" and a "store of value" and everyone is "adopting it" etc. All of the same arguments could be made for holding a stupid high % of Tesla. 

If you want to hold a high % of crypto then fine, but don't expect a different response than the person who starts a thread defending a 50% allocation to a single stock.

What bothers me is crypto now has a market cap over 1T (i've seen 3T thrown around here as well). We saw what happened to the overall economy when $2-3T of housing value was destroyed in 2008. What happens to the overall economy when/if there is a major hack or government crackdown on crypto and 1-3T of value is destroyed?

this is another argument as to why it won't fail which i do not understand.  It's too big to fail doesn't make sense to me.
That's because crypto itself cannot be too big to fail - it is not an institution that our governments rely heavily on. The big banks might get too intertwined with crypto, and they might be deemed too big to fail. How that plays out for some average schmuck who is just holding crypto likely won't be nearly as good as it works out for the huge banks.
"Too big to fail" was a phrase applied to banks which had to be bailed out by the US government, using established mechanisms such as the FDIC and overnight lending markets. In the event of a crypto-burst, there will be no government bailout because there are no legal mechanisms or existing bureaucracies to make crypto holders whole. Additionally, there would be too much political heat to invent such mechanisms on the fly. It would be more like 2000 than 2008.

Agreed that there won't be a bailout for people who own crypto.  But there wasn't a bailout for the people who took out loans on houses that they couldn't afford either.  That's a big part of why 2008 was a serious problem.  Reckless investors and banks who didn't give a shit about buying/trading garbage for lots of money seems pretty similar though.  Getting rich on crypto has a disturbingly similar feel to buying houses subprime mortgages.

How many times did you hear "But housing only goes up!"?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on November 09, 2021, 09:30:41 AM
The thing that bothers me about crypto is all the justification people are using to make it a stupid high % of their asset allocation. There are plenty of small cap stocks and even some large cap stocks that have great 5 and 10 year returns. If you asked if I thought there was a problem adding a low % allocation to TSLA on the forum, people would ask what a small % allocation is exactly and advise you to keep your fun money to under 5-10%. People here are trying to justify their 50% crypto positions as safe because it's "currency" and a "store of value" and everyone is "adopting it" etc. All of the same arguments could be made for holding a stupid high % of Tesla. 

If you want to hold a high % of crypto then fine, but don't expect a different response than the person who starts a thread defending a 50% allocation to a single stock.

What bothers me is crypto now has a market cap over 1T (i've seen 3T thrown around here as well). We saw what happened to the overall economy when $2-3T of housing value was destroyed in 2008. What happens to the overall economy when/if there is a major hack or government crackdown on crypto and 1-3T of value is destroyed?

this is another argument as to why it won't fail which i do not understand.  It's too big to fail doesn't make sense to me.
That's because crypto itself cannot be too big to fail - it is not an institution that our governments rely heavily on. The big banks might get too intertwined with crypto, and they might be deemed too big to fail. How that plays out for some average schmuck who is just holding crypto likely won't be nearly as good as it works out for the huge banks.
"Too big to fail" was a phrase applied to banks which had to be bailed out by the US government, using established mechanisms such as the FDIC and overnight lending markets. In the event of a crypto-burst, there will be no government bailout because there are no legal mechanisms or existing bureaucracies to make crypto holders whole. Additionally, there would be too much political heat to invent such mechanisms on the fly. It would be more like 2000 than 2008.

Agreed that there won't be a bailout for people who own crypto.  But there wasn't a bailout for the people who took out loans on houses that they couldn't afford either.  That's a big part of why 2008 was a serious problem.  Reckless investors and banks who didn't give a shit about buying/trading garbage for lots of money seems pretty similar though.  Getting rich on crypto has a disturbingly similar feel to buying houses subprime mortgages.

How many times did you hear "But housing only goes up!"?

It's a good point that the people who were actually foreclosed, held mortgage assets or derivatives, or who bought Lehman / AIG stock were not made whole, or really helped in any way. Bailouts benefitted areas adjacent to the central crater, such as propping up the value of homes which had not yet been foreclosed, propping up banks which had not yet failed, and propping up the markets for stocks and bonds that had not already gone bankrupt. This was where the political will was located, not in the already bankrupt and powerless. Plus, there was a moralistic narrative that the responsible should not pay for the losses of the gamblers.

A sudden crypto collapse would definitely affect the stock market in a big way, and government fire lines might be set up very far behind one's own positions or after massive losses had already occurred.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 09, 2021, 09:36:50 AM
The thing that bothers me about crypto is all the justification people are using to make it a stupid high % of their asset allocation. There are plenty of small cap stocks and even some large cap stocks that have great 5 and 10 year returns. If you asked if I thought there was a problem adding a low % allocation to TSLA on the forum, people would ask what a small % allocation is exactly and advise you to keep your fun money to under 5-10%. People here are trying to justify their 50% crypto positions as safe because it's "currency" and a "store of value" and everyone is "adopting it" etc. All of the same arguments could be made for holding a stupid high % of Tesla. 

If you want to hold a high % of crypto then fine, but don't expect a different response than the person who starts a thread defending a 50% allocation to a single stock.

What bothers me is crypto now has a market cap over 1T (i've seen 3T thrown around here as well). We saw what happened to the overall economy when $2-3T of housing value was destroyed in 2008. What happens to the overall economy when/if there is a major hack or government crackdown on crypto and 1-3T of value is destroyed?

this is another argument as to why it won't fail which i do not understand.  It's too big to fail doesn't make sense to me.
That's because crypto itself cannot be too big to fail - it is not an institution that our governments rely heavily on. The big banks might get too intertwined with crypto, and they might be deemed too big to fail. How that plays out for some average schmuck who is just holding crypto likely won't be nearly as good as it works out for the huge banks.
"Too big to fail" was a phrase applied to banks which had to be bailed out by the US government, using established mechanisms such as the FDIC and overnight lending markets. In the event of a crypto-burst, there will be no government bailout because there are no legal mechanisms or existing bureaucracies to make crypto holders whole. Additionally, there would be too much political heat to invent such mechanisms on the fly. It would be more like 2000 than 2008.

Agreed that there won't be a bailout for people who own crypto.  But there wasn't a bailout for the people who took out loans on houses that they couldn't afford either.  That's a big part of why 2008 was a serious problem.  Reckless investors and banks who didn't give a shit about buying/trading garbage for lots of money seems pretty similar though.  Getting rich on crypto has a disturbingly similar feel to buying houses subprime mortgages.

How many times did you hear "But housing only goes up!"?

It's a good point that the people who were actually foreclosed, held mortgage assets or derivatives, or who bought Lehman / AIG stock were not made whole, or really helped in any way. Bailouts benefitted areas adjacent to the central crater, such as propping up the value of homes which had not yet been foreclosed, propping up banks which had not yet failed, and propping up the markets for stocks and bonds that had not already gone bankrupt. This was where the political will was located, not in the already bankrupt and powerless. Plus, there was a moralistic narrative that the responsible should not pay for the losses of the gamblers.

A sudden crypto collapse would definitely affect the stock market in a big way, and government fire lines might be set up very far behind one's own positions or after massive losses had already occurred.

but didnt we see a huge pivot in the crash surrounding covid to not bail out big business and instead bailout the individual and in turn let them spend money to bailout big business.  Obviously this wouldn't be targetted to crypto holders but could help keep them on their feet when it crashes.  Just like the stimulus packages werent 100% targetted at job loss and trickled pretty far up the food chain of AGI.  Maybe i'm overly hopeful the politicians learned alot from that crash and the speed of recovery thru putting money in at the middle/bottom and letting the top work itself out.

But just like the other thread i personally believe the next bubble collapse will be caused by crypto.  There is nothing there to support it if it crashes hard and causes people to start to pull their margin.  at least when markets collapse the companies there typically have some underlying value and assets to lean on and its easy to be quite diversified in the space with index funds.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: index on November 09, 2021, 09:56:08 AM
The thing that bothers me about crypto is all the justification people are using to make it a stupid high % of their asset allocation. There are plenty of small cap stocks and even some large cap stocks that have great 5 and 10 year returns. If you asked if I thought there was a problem adding a low % allocation to TSLA on the forum, people would ask what a small % allocation is exactly and advise you to keep your fun money to under 5-10%. People here are trying to justify their 50% crypto positions as safe because it's "currency" and a "store of value" and everyone is "adopting it" etc. All of the same arguments could be made for holding a stupid high % of Tesla. 

If you want to hold a high % of crypto then fine, but don't expect a different response than the person who starts a thread defending a 50% allocation to a single stock.

What bothers me is crypto now has a market cap over 1T (i've seen 3T thrown around here as well). We saw what happened to the overall economy when $2-3T of housing value was destroyed in 2008. What happens to the overall economy when/if there is a major hack or government crackdown on crypto and 1-3T of value is destroyed?

this is another argument as to why it won't fail which i do not understand.  It's too big to fail doesn't make sense to me.
That's because crypto itself cannot be too big to fail - it is not an institution that our governments rely heavily on. The big banks might get too intertwined with crypto, and they might be deemed too big to fail. How that plays out for some average schmuck who is just holding crypto likely won't be nearly as good as it works out for the huge banks.
"Too big to fail" was a phrase applied to banks which had to be bailed out by the US government, using established mechanisms such as the FDIC and overnight lending markets. In the event of a crypto-burst, there will be no government bailout because there are no legal mechanisms or existing bureaucracies to make crypto holders whole. Additionally, there would be too much political heat to invent such mechanisms on the fly. It would be more like 2000 than 2008.

Agreed that there won't be a bailout for people who own crypto.  But there wasn't a bailout for the people who took out loans on houses that they couldn't afford either.  That's a big part of why 2008 was a serious problem.  Reckless investors and banks who didn't give a shit about buying/trading garbage for lots of money seems pretty similar though.  Getting rich on crypto has a disturbingly similar feel to buying houses subprime mortgages.

How many times did you hear "But housing only goes up!"?

There won't be a bail out for crypto, but that doesn't mean the bubble bursting won't affect investors who have nothing to do with crypto. Berkshire was down 35% after the tech bubble burst despite Buffet actively steering clear of anything related to tech.

At best, crypto should be considered in the "alternatives" portion of portfolio allocation and the general advice is 10 to no more than 20% should be allocated to alternatives. The OP asked about a low% crypto allocation and turned out to be 20% allocated to crypto! The posters here seem to be viewing crypto as a currency akin to the USD or EUR and seem to use the terms currency, coin, crypto bank, store of value to justify a high asset allocation. This is the "investment advice" forum. Several of the posters here are not anti-crypto, but my advice at least is watch your asset allocation.

Maybe BTC is the next big thing, maybe Tesla replaces all cars, or Netflix all cable and satellite, but that doesn't mean I would invest 20%, 30%, 50% in Tesla or Netflix.

You can make all the same crypto arguments for Tesla and electric vehicles. Blockchain and EVs are the way of the future; therefore, I buy 50% TSLA. I'm not going to argue blockchain and EVs are going to have a huge impact on our lives in the future, but I would argue investing 20% in Tesla is a really bad idea. Blockchain will be used in the future, but that doesn't mean any of the current coins are a good investment so size accordingly.     
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 09, 2021, 03:52:30 PM
(https://i.imgur.com/20QbkV0.jpg)

I like the pretty patterns
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on November 09, 2021, 05:15:09 PM
I noticed the anti-crypto folks here constantly claim the pro-crypto folks say XYZ but in reality it's the opposite.  The post always start with something like, "I keep reading the pro-crypto folks say XYZ but..."  Why I this so common on one side and why don't they rebut the actual arguments raised?
please go re read the entire thread there are many comments that have been made by pro crypto folks about the size of crypto and how that means it will stick around.

i'm not going to go pull all the direct quotes from everyone every time someone questions when they said something b/c honestly i dont care.  crypto will not make me rich b/c i dont own any but its highly likely to make alot of people poor who are over tilted either here or in the world.

Zero pro-crypto posters have made any claims about "too big to fail" in this topic. The only prior mention was from, you guessed it, boarder42.

Several pro-crypto posters have emphasised how big the crypto market is, but only to counter ravings about it all being worthless and just like beanie babies, etc. That's not the same thing.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 09, 2021, 05:27:04 PM
I noticed the anti-crypto folks here constantly claim the pro-crypto folks say XYZ but in reality it's the opposite.  The post always start with something like, "I keep reading the pro-crypto folks say XYZ but..."  Why I this so common on one side and why don't they rebut the actual arguments raised?
please go re read the entire thread there are many comments that have been made by pro crypto folks about the size of crypto and how that means it will stick around.

i'm not going to go pull all the direct quotes from everyone every time someone questions when they said something b/c honestly i dont care.  crypto will not make me rich b/c i dont own any but its highly likely to make alot of people poor who are over tilted either here or in the world.

Zero pro-crypto posters have made any claims about "too big to fail" in this topic. The only prior mention was from, you guessed it, boarder42.

Several pro-crypto posters have emphasised how big the crypto market is, but only to counter ravings about it all being worthless and just like beanie babies, etc. That's not the same thing.

Sweet so we can all agree then that the size of the crypto market has absolutely no value as to whether it will succeed long term. So we can stop referring to the market cap of crypto as indication of it's success or lack there of.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on November 09, 2021, 06:10:32 PM
I noticed the anti-crypto folks here constantly claim the pro-crypto folks say XYZ but in reality it's the opposite.  The post always start with something like, "I keep reading the pro-crypto folks say XYZ but..."  Why I this so common on one side and why don't they rebut the actual arguments raised?
please go re read the entire thread there are many comments that have been made by pro crypto folks about the size of crypto and how that means it will stick around.

i'm not going to go pull all the direct quotes from everyone every time someone questions when they said something b/c honestly i dont care.  crypto will not make me rich b/c i dont own any but its highly likely to make alot of people poor who are over tilted either here or in the world.

Zero pro-crypto posters have made any claims about "too big to fail" in this topic. The only prior mention was from, you guessed it, boarder42.

Several pro-crypto posters have emphasised how big the crypto market is, but only to counter ravings about it all being worthless and just like beanie babies, etc. That's not the same thing.

Sweet so we can all agree then that the size of the crypto market has absolutely no value as to whether it will succeed long term. So we can stop referring to the market cap of crypto as indication of it's success or lack there of.

FFS - yet another straw-man response in a discussion about persistent straw-manning ! The irony would be hilarious if it wasn't such a tedious waste of time.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 09, 2021, 06:12:50 PM
I noticed the anti-crypto folks here constantly claim the pro-crypto folks say XYZ but in reality it's the opposite.  The post always start with something like, "I keep reading the pro-crypto folks say XYZ but..."  Why I this so common on one side and why don't they rebut the actual arguments raised?
please go re read the entire thread there are many comments that have been made by pro crypto folks about the size of crypto and how that means it will stick around.

i'm not going to go pull all the direct quotes from everyone every time someone questions when they said something b/c honestly i dont care.  crypto will not make me rich b/c i dont own any but its highly likely to make alot of people poor who are over tilted either here or in the world.

Zero pro-crypto posters have made any claims about "too big to fail" in this topic. The only prior mention was from, you guessed it, boarder42.

Several pro-crypto posters have emphasised how big the crypto market is, but only to counter ravings about it all being worthless and just like beanie babies, etc. That's not the same thing.

Sweet so we can all agree then that the size of the crypto market has absolutely no value as to whether it will succeed long term. So we can stop referring to the market cap of crypto as indication of it's success or lack there of.

FFS - yet another straw-man response in a discussion about persistent straw-manning ! The irony would be hilarious if it wasn't such a tedious waste of time.

Kinda like joining a fire forum to talk about crypto?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on November 09, 2021, 06:25:08 PM
I noticed the anti-crypto folks here constantly claim the pro-crypto folks say XYZ but in reality it's the opposite.  The post always start with something like, "I keep reading the pro-crypto folks say XYZ but..."  Why I this so common on one side and why don't they rebut the actual arguments raised?
please go re read the entire thread there are many comments that have been made by pro crypto folks about the size of crypto and how that means it will stick around.

i'm not going to go pull all the direct quotes from everyone every time someone questions when they said something b/c honestly i dont care.  crypto will not make me rich b/c i dont own any but its highly likely to make alot of people poor who are over tilted either here or in the world.

Zero pro-crypto posters have made any claims about "too big to fail" in this topic. The only prior mention was from, you guessed it, boarder42.

Several pro-crypto posters have emphasised how big the crypto market is, but only to counter ravings about it all being worthless and just like beanie babies, etc. That's not the same thing.

Sweet so we can all agree then that the size of the crypto market has absolutely no value as to whether it will succeed long term. So we can stop referring to the market cap of crypto as indication of it's success or lack there of.

I can't think of a sector where the market cap size WOULDN'T be an indication of the current state of the sector.  If the market cap for automotives worldwide was 500 Billion, and the next year was 450B, then 400B, then 350B, I think that would be an indicator.  I think every CEO for every automotive company would be crapping their pants, and it would be talked about (for good reason) by every pundit on TV.

Is it possible that I'm missing something important in this conversation that happened earlier?  But it seems like crypto's quickly growing market cap is a REALLY good indication that it is having some success.  Whereas if coders were pouring tons of hours into projects, and no one was putting any money behind them year after year, that'd be a real indication of a problem to me.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on November 09, 2021, 06:54:05 PM
What was the market cap for subprime mortgages in 2007 again?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: effigy98 on November 09, 2021, 07:07:58 PM
What was the market cap for subprime mortgages in 2007 again?

Probably looks something like the CAPE.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on November 09, 2021, 07:30:47 PM
I noticed the anti-crypto folks here constantly claim the pro-crypto folks say XYZ but in reality it's the opposite.  The post always start with something like, "I keep reading the pro-crypto folks say XYZ but..."  Why I this so common on one side and why don't they rebut the actual arguments raised?
please go re read the entire thread there are many comments that have been made by pro crypto folks about the size of crypto and how that means it will stick around.

i'm not going to go pull all the direct quotes from everyone every time someone questions when they said something b/c honestly i dont care.  crypto will not make me rich b/c i dont own any but its highly likely to make alot of people poor who are over tilted either here or in the world.

Zero pro-crypto posters have made any claims about "too big to fail" in this topic. The only prior mention was from, you guessed it, boarder42.

Several pro-crypto posters have emphasised how big the crypto market is, but only to counter ravings about it all being worthless and just like beanie babies, etc. That's not the same thing.

Sweet so we can all agree then that the size of the crypto market has absolutely no value as to whether it will succeed long term. So we can stop referring to the market cap of crypto as indication of it's success or lack there of.

FFS - yet another straw-man response in a discussion about persistent straw-manning ! The irony would be hilarious if it wasn't such a tedious waste of time.

Kinda like joining a fire forum to talk about crypto?

Who joined a FIRE forum to talk about crypto ? Not me. I joined long ago to learn about FIRE.

I understand that crypto is not mainstream MMM and I would expect the majority here to be against putting money into crypto. I don't understand why that should mean that crypto can't be discussed in a rational / logical manner. Maybe it can't but it's quite puzzling . . .
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Radagast on November 09, 2021, 07:54:52 PM
Let me start  by saying I don't see anything wrong with a 5-10% crypto allocation. Even if you start just now, and the entire crypto market goes on to lose >99% sometime in the next 20 years, it could still be useful depending on the timing, circumstances, and how you structure your rebalance bands. Now to my main point.

(https://i.imgur.com/20QbkV0.jpg)

I like the pretty patterns
Exciting isn't it? It only has to go up like another factor of 15X before it exceeds the value of all dollar debt, and another 100X before it exceeds the value of outstanding debt in all currencies. I should buy popcorn now before it is all sold out! This is history in the making.

Congress, please don't do anything about this.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on November 10, 2021, 07:55:08 AM
If an asset were to experience a drawdown of 99%, that would be a deal-breaker for me. I tolerate the stock market despite its 50%-ish drawdowns that happened three times in my lifetime because I think I have the discipline to hold stocks through those drawdowns.

If--starting from equal weights--stocks drop 50%, and crypto drops 80%--suddenly it's a portfolio that's 84% stocks, and I couldn't imagine rebalancing to 50-50 at that point, I'd probably wonder what I was doing with so much crypto to start with.

Also, I've started posting my crypto trades over in a journal, check them out!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 10, 2021, 08:29:57 AM
If an asset were to experience a drawdown of 99%, that would be a deal-breaker for me. I tolerate the stock market despite its 50%-ish drawdowns that happened three times in my lifetime because I think I have the discipline to hold stocks through those drawdowns.

If--starting from equal weights--stocks drop 50%, and crypto drops 80%--suddenly it's a portfolio that's 84% stocks, and I couldn't imagine rebalancing to 50-50 at that point, I'd probably wonder what I was doing with so much crypto to start with.

Also, I've started posting my crypto trades over in a journal, check them out!
The Mt Gox hack caused a 99% drop in Bitcoin's value in 2011.  There was an 84% drop that ended just 3 years ago.  Is that within your comfort zone?
https://finance.yahoo.com/news/7-biggest-bitcoin-crashes-history-180038282.html
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 10, 2021, 08:38:49 AM
I noticed the anti-crypto folks here constantly claim the pro-crypto folks say XYZ but in reality it's the opposite.  The post always start with something like, "I keep reading the pro-crypto folks say XYZ but..."  Why I this so common on one side and why don't they rebut the actual arguments raised?
please go re read the entire thread there are many comments that have been made by pro crypto folks about the size of crypto and how that means it will stick around.

i'm not going to go pull all the direct quotes from everyone every time someone questions when they said something b/c honestly i dont care.  crypto will not make me rich b/c i dont own any but its highly likely to make alot of people poor who are over tilted either here or in the world.

Zero pro-crypto posters have made any claims about "too big to fail" in this topic. The only prior mention was from, you guessed it, boarder42.

Several pro-crypto posters have emphasised how big the crypto market is, but only to counter ravings about it all being worthless and just like beanie babies, etc. That's not the same thing.
Sweet so we can all agree then that the size of the crypto market has absolutely no value as to whether it will succeed long term. So we can stop referring to the market cap of crypto as indication of it's success or lack there of.
You're caught making strawman arguments, and you respond by making wild exaggerations that nobody else has made?  Someone has shown you're debating a point only you raised, and then you go ahead and make some more exaggerations that nobody else has raised.  Are you going to quote anyone accurately?

If you actually cared about quoting people accurately, you would make fewer comments like that, and like this:

what do you think of adding a low percent of blackjack bets
what do you think of adding a low percent of air jordans
what do you think of adding a low percent of teletubbies - (you guys just don't get it, its coming back and these things going to be the next shiba inu!)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on November 10, 2021, 08:48:05 AM
If an asset were to experience a drawdown of 99%, that would be a deal-breaker for me. I tolerate the stock market despite its 50%-ish drawdowns that happened three times in my lifetime because I think I have the discipline to hold stocks through those drawdowns.

If--starting from equal weights--stocks drop 50%, and crypto drops 80%--suddenly it's a portfolio that's 84% stocks, and I couldn't imagine rebalancing to 50-50 at that point, I'd probably wonder what I was doing with so much crypto to start with.

Also, I've started posting my crypto trades over in a journal, check them out!
The Mt Gox hack caused a 99% drop in Bitcoin's value in 2011.  There was an 84% drop that ended just 3 years ago.  Is that within your comfort zone?
https://finance.yahoo.com/news/7-biggest-bitcoin-crashes-history-180038282.html

Excellent question.

I was aware of the Mt. Gox hack when it happened (Back when Bitcoin was so new and exciting), but I had zero position, and I wasn't tracking the day-to-day movements.

The 2018 drawdown caught me. I only had a few hundred dollars' worth, but I sold it and took the loss in the middle of it.

I need to rethink my risk tolerance. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on November 10, 2021, 09:23:17 AM
@MustacheAndaHalf - you yourself on the first page of this thread brought up the "total value of all BTC" and how it is larger than the market caps of Visa and Mastercard. There are no strawmen from anti-crypto, just pro-crypto forgetting what they posted.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 10, 2021, 09:30:07 AM
@MustacheAndaHalf - you yourself on the first page of this thread brought up the "total value of all BTC" and how it is larger than the market caps of Visa and Mastercard. There are no strawmen from anti-crypto, just pro-crypto forgetting what they posted.

He'll now argue he didn't specifically call it too big to fail. And we'll discuss the semantics of what that means for the next 15 posts.  Also what you just wrote isn't word for word what he said so please waste time putting exact quotes in from 11 pages ago.

So I'll ask this again how is the market cap relevant at all?  If you're not arguing it's so big it will stick around.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on November 10, 2021, 09:35:41 AM
On the other hand, that post was actually on-topic about an actual low % of crypto being stated, nothing like the late-comers with 50% of all their money in this stuff.

On a third hand, that sentence about BTC total value vs. Visa and Mastercard market caps illustrates a fundamental gap in understanding that has come up time and again in this thread - you don't own anything other than the BTC. It isn't ownership of a company like you would have in shares of Visa or Mastercard. Perhaps you understand the difference, but many subsequent pro-crypto posters clearly do not.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on November 10, 2021, 09:41:56 AM
@MustacheAndaHalf - you yourself on the first page of this thread brought up the "total value of all BTC" and how it is larger than the market caps of Visa and Mastercard. There are no strawmen from anti-crypto, just pro-crypto forgetting what they posted.

He'll now argue he didn't specifically call it too big to fail. And we'll discuss the semantics of what that means for the next 15 posts.  Also what you just wrote isn't word for word what he said so please waste time putting exact quotes in from 11 pages ago.

So I'll ask this again how is the market cap relevant at all?  If you're not arguing it's so big it will stick around.
Need to wrap my head around SCV. Last time I finally took your advice on something important (others were saying it too, but you were adamant about it to the point I actually listened eventually), got me on a "make an extra $500K or more path with no effort" path after I had made the largest financial mistake you can make when you own your home. Made that error twice in my case before finally relenting - I'd have done even better had I listened / fixed it earlier than I did. I think a lot of people forget just how much money you've made members of this forum. So - thanks!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 10, 2021, 09:46:55 AM
@MustacheAndaHalf - you yourself on the first page of this thread brought up the "total value of all BTC" and how it is larger than the market caps of Visa and Mastercard. There are no strawmen from anti-crypto, just pro-crypto forgetting what they posted.

He'll now argue he didn't specifically call it too big to fail. And we'll discuss the semantics of what that means for the next 15 posts.  Also what you just wrote isn't word for word what he said so please waste time putting exact quotes in from 11 pages ago.

So I'll ask this again how is the market cap relevant at all?  If you're not arguing it's so big it will stick around.
Need to wrap my head around SCV. Last time I finally took your advice on something important (others were saying it too, but you were adamant about it to the point I actually listened eventually), got me on a "make an extra $500K or more path with no effort" path after I had made the largest financial mistake you can make when you own your home. Made that error twice in my case before finally relenting - I'd have done even better had I listened / fixed it earlier than I did. I think a lot of people forget just how much money you've made members of this forum. So - thanks!

Glad I made it thru I'd say I've approached it less aggressively than my previous huge free money making change.  I'd start with Paul's data. That's where I started and it was just too good to not proceed. If you understand and buy into VTSAX and forget it then I think it's pretty simple to pivot an asset allocation to 8nclude more of a different market sector. I believe the jlcollins mantra that you own the whole market so why bother but the small value you hold in VTSAX is so small bc of market cap it's statically insignificant.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on November 10, 2021, 09:47:42 AM
What was the market cap for subprime mortgages in 2007 again?

Too high, and a fair point.  Market cap as a stand alone factor is an unwise way to judge something.  However, to not make market cap a consideration seems equally unwise. 

I think the correct statement would be: Don't make any one metric your complete guide for what to invest in.  Instead, look at a variety of factors to make an investment decision, one of which should be market cap. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 10, 2021, 09:51:53 AM
What was the market cap for subprime mortgages in 2007 again?

Too high, and a fair point.  Market cap as a stand alone factor is an unwise way to judge something.  However, to not make market cap a consideration seems equally unwise. 

I think the correct statement would be: Don't make any one metric your complete guide for what to invest in.  Instead, look at a variety of factors to make an investment decision, one of which should be market cap.

At this given point the size can be argued to be a positive and a negative.  And due to the given history the case would be it's so big now in relation to it's long term avg why wouldn't it fall back to earth. And the positive case is what exactly. It's so big now it has to keep getting bigger? Remain just as big?
Size of this particular collectible is a risk a huge risk in its current state and the pro crypto crowd seems to apply the idea that we apply to 100 years of market returns. It goes up. It's normally at an all time high. I don't think this logic applies.

What's the actual positive argument for the size from the pro crypto crowd. Bc again you didn't answer the question. You just said it should be considered.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on November 10, 2021, 10:40:50 AM
What was the market cap for subprime mortgages in 2007 again?

Too high, and a fair point.  Market cap as a stand alone factor is an unwise way to judge something.  However, to not make market cap a consideration seems equally unwise. 

I think the correct statement would be: Don't make any one metric your complete guide for what to invest in.  Instead, look at a variety of factors to make an investment decision, one of which should be market cap.

At this given point the size can be argued to be a positive and a negative.  And due to the given history the case would be it's so big now in relation to it's long term avg why wouldn't it fall back to earth. And the positive case is what exactly. It's so big now it has to keep getting bigger? Remain just as big?
Size of this particular collectible is a risk a huge risk in its current state and the pro crypto crowd seems to apply the idea that we apply to 100 years of market returns. It goes up. It's normally at an all time high. I don't think this logic applies.

What's the actual positive argument for the size from the pro crypto crowd. Bc again you didn't answer the question. You just said it should be considered.

The positive argument would be Metcalf's Law: the value of a communications network is proportional to the square of the number of its users.  When there are more users of something, there is inherent value and stability in the increased nodes.  The increased market cap of crypto is mostly a function of all the new wallets that have entered the space. 

Again, I'm not saying that this is proof that crypto will continue going up.  I'm merely suggesting that it's not something to completely ignore, nothing more, nothing less.  I'm looking for common ground with you and others who have a different overall sentiment on crypto, and I hope this can be a point of common ground:) 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 10, 2021, 11:16:30 AM
Too high, and a fair point.  Market cap as a stand alone factor is an unwise way to judge something.  However, to not make market cap a consideration seems equally unwise. 

I think the correct statement would be: Don't make any one metric your complete guide for what to invest in.  Instead, look at a variety of factors to make an investment decision, one of which should be market cap.

But market cap in the world of crypto means very little, if anything. I gave this example before, but I'll give it again. You can create a cryptocurrency today with a $1T market cap. How? Create a cryptocurrency. Create 1,000,000,000,000 coins. Sell one for $1 (you can even just buy it yourself). Tada, brand new $1T market cap crypto coin on the scene!

It means nothing. There is no transparency about how much leverage is in the system, there is virtually no transparency into stable coins and their backing. Naively multiplying today's price by the number of coins that've ever been mined across all cryptocurrencies is... overly simplistic. It makes for good headlines, I guess, but that's about it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on November 10, 2021, 12:06:27 PM
Too high, and a fair point.  Market cap as a stand alone factor is an unwise way to judge something.  However, to not make market cap a consideration seems equally unwise. 

I think the correct statement would be: Don't make any one metric your complete guide for what to invest in.  Instead, look at a variety of factors to make an investment decision, one of which should be market cap.

But market cap in the world of crypto means very little, if anything. I gave this example before, but I'll give it again. You can create a cryptocurrency today with a $1T market cap. How? Create a cryptocurrency. Create 1,000,000,000,000 coins. Sell one for $1 (you can even just buy it yourself). Tada, brand new $1T market cap crypto coin on the scene!

It means nothing. There is no transparency about how much leverage is in the system, there is virtually no transparency into stable coins and their backing. Naively multiplying today's price by the number of coins that've ever been mined across all cryptocurrencies is... overly simplistic. It makes for good headlines, I guess, but that's about it.

That's not how it works gastropod.  In the scenario you created, the market cap of your coin is $1.  Until someone actually buys the 999,999,999,999 other coins for $1 each, they add no value to the market cap of the stock. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on November 10, 2021, 12:12:25 PM


It means nothing. There is no transparency about how much leverage is in the system, there is virtually no transparency into stable coins and their backing.

It actually means plenty, and it works mostly like stocks do...
A stock's market cap is the number of shares x the price for each share. 
A crypto's market cap is the number of coins x the price for each coin. 

And yes, it is transparent.  Here is a listing of some of the most common coins, so you can see examples of what I mean:  https://coinmarketcap.com/ (https://coinmarketcap.com/)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on November 10, 2021, 12:21:42 PM
Too high, and a fair point.  Market cap as a stand alone factor is an unwise way to judge something.  However, to not make market cap a consideration seems equally unwise. 

I think the correct statement would be: Don't make any one metric your complete guide for what to invest in.  Instead, look at a variety of factors to make an investment decision, one of which should be market cap.

But market cap in the world of crypto means very little, if anything. I gave this example before, but I'll give it again. You can create a cryptocurrency today with a $1T market cap. How? Create a cryptocurrency. Create 1,000,000,000,000 coins. Sell one for $1 (you can even just buy it yourself). Tada, brand new $1T market cap crypto coin on the scene!

It means nothing. There is no transparency about how much leverage is in the system, there is virtually no transparency into stable coins and their backing. Naively multiplying today's price by the number of coins that've ever been mined across all cryptocurrencies is... overly simplistic. It makes for good headlines, I guess, but that's about it.

That's not how it works gastropod.  In the scenario you created, the market cap of your coin is $1.  Until someone actually buys the 999,999,999,999 other coins for $1 each, they add no value to the market cap of the stock.

Both examples are incorrect.

You could sell 999,999,999,999 for 1 cent (altogether).  Then if you sell one more coin at 1$ it magically transforms the valuation of all the coins out there to be a trillion dollars - based on the present traded price of the crypto. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: index on November 10, 2021, 12:25:11 PM


It means nothing. There is no transparency about how much leverage is in the system, there is virtually no transparency into stable coins and their backing.

It actually means plenty, and it works mostly like stocks do...
A stock's market cap is the number of shares x the price for each share. 
A crypto's market cap is the number of coins x the price for each coin. 

And yes, it is transparent.  Here is a listing of some of the most common coins, so you can see examples of what I mean:  https://coinmarketcap.com/ (https://coinmarketcap.com/)

That is exactly what was said. A shitcoin can be created out of thin air. I can create 1B shitcoins and hold all of them, but put 1M out on the open market listed for a penny. Idiots chasing shitcoins trade the 1M shitcoins back and forth and bid it up to a dollar.  My 999M shitcoins are now worth $999M in market cap. Now that doesn't mean i can sell them for $999M. I need to drum up enough excitement for my new shitcoin to build demand so i can dump more shitcoin and not tank the price.

Stocks operate the exact same way. Warren Buffet may have 100B worth of Berkshire stock, but he would have to sell it slowly and demand has to be there. Berkshire has some fundamentals of earning dollars. Shitcoin's fundamentals are hopefully someone else wants your shitcoin more than you and will pay more for it. Maybe drum up some excitement about it and talk about mass adoption, store of value, a developing country no one here has ever been to is using it, and talk about how block chain will change everything and shitcoin = blockchain.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on November 10, 2021, 01:10:52 PM
@MustacheAndaHalf - you yourself on the first page of this thread brought up the "total value of all BTC" and how it is larger than the market caps of Visa and Mastercard. There are no strawmen from anti-crypto, just pro-crypto forgetting what they posted.

He'll now argue he didn't specifically call it too big to fail. And we'll discuss the semantics of what that means for the next 15 posts.  Also what you just wrote isn't word for word what he said so please waste time putting exact quotes in from 11 pages ago.

So I'll ask this again how is the market cap relevant at all?  If you're not arguing it's so big it will stick around.
Need to wrap my head around SCV. Last time I finally took your advice on something important (others were saying it too, but you were adamant about it to the point I actually listened eventually), got me on a "make an extra $500K or more path with no effort" path after I had made the largest financial mistake you can make when you own your home. Made that error twice in my case before finally relenting - I'd have done even better had I listened / fixed it earlier than I did. I think a lot of people forget just how much money you've made members of this forum. So - thanks!

Glad I made it thru I'd say I've approached it less aggressively than my previous huge free money making change.  I'd start with Paul's data. That's where I started and it was just too good to not proceed. If you understand and buy into VTSAX and forget it then I think it's pretty simple to pivot an asset allocation to 8nclude more of a different market sector. I believe the jlcollins mantra that you own the whole market so why bother but the small value you hold in VTSAX is so small bc of market cap it's statically insignificant.

@dandarc , would you like to create a separate discussion topic for those of us with Small-Cap value insights?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on November 10, 2021, 01:25:49 PM
Pretty sure B42 already did that - find it and follow it if you're inclined. Sorry for interrupting this gambling thread with actual investment talk though - I hope to see an actual strategy emerge from your journal, because there sure as hell hasn't been one articulated here in this thread.

ETA: there's actually lots of threads here over many years if you want to get deeper into it. Most recent one is MustacheAndAHalf not making any arguments one way or the other about SCV - just taking aim at B42. But there are many, many other threads on this forum about SCV.

I do think it is at least tangentially relevant here - the merits of allocating any percentage of your portfolio to crypto begs the question "what alternatives are out there". If you want to increase returns beyond the standard advice, SCV tilt is one way to do it, and it is much more proven, and frankly easier, than anything involving crypto could hope to be.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 10, 2021, 01:36:25 PM
That's not how it works gastropod.  In the scenario you created, the market cap of your coin is $1.  Until someone actually buys the 999,999,999,999 other coins for $1 each, they add no value to the market cap of the stock.

Sorry, but that is precisely how it works. For instance, the 1M bitcoins Satoshi mined himself are absolutely counted towards Bitcoin's market cap. No money needs to have traded hands. You can mine 1T coins, sell 1, and the market cap will be 1T x the selling price. In practice, you'd probably sell more than just one, as Index explained. Mine 1T, sell 1M, and enjoy your sky high new net worth!

Both examples are incorrect.

You could sell 999,999,999,999 for 1 cent (altogether).  Then if you sell one more coin at 1$ it magically transforms the valuation of all the coins out there to be a trillion dollars - based on the present traded price of the crypto. 

This is not true. I think this is very important to understand. You do not have to sell all the tokens. This is significantly different from an IPO, where a set number of shares will all be up for sale (and the market cap only references the number of shares offered). With a cryptocurrency, you can mine an arbitrary number of tokens, sell an arbitrary number, and have a colossal (and, clearly, ridiculous) market cap. Shiba Inu and countless other "shitcoins" have exploited this fact, to fleece unsophisticated crypto "investors".

It actually means plenty, and it works mostly like stocks do...
A stock's market cap is the number of shares x the price for each share. 
A crypto's market cap is the number of coins x the price for each coin. 

And yes, it is transparent.  Here is a listing of some of the most common coins, so you can see examples of what I mean:  https://coinmarketcap.com/ (https://coinmarketcap.com/)

Sorry, I probably wasn't clear enough. Market cap works similarly to stocks. But a business's market cap is a bit more realistic. There's a reason we don't refer to the market cap of the USD—it doesn't really make any sense. The market cap of a business is the market's best estimate of the value of a company. It's rather common for businesses to purchase other businesses at the full value of the market cap. Add to this fact that stocks are regulated and have a lot more actual transparency due to these regulations. Because of them, we have a much better grasp of actual trade volume, wash trading is illegal, margin is transparent, and market cap is denominated by shares in circulation—which can be readily measured.

The transparency I'm referring to isn't with respect to the market cap of these things. It's referring to: how much leverage is there? How much actual volume is there? How much is wash traded? Much of the volume is in the form of stable coins (USDT, USDC, etc.) What backs these? Publicly traded companies have accounting regulations, and banks have audits. Crypto has none. There's this widespread claim that it's all transparent, public to see on the blockchain!, but that's a rather unimportant aspect in the grand scheme of things. What's actually happening on the exchanges, between USD and these cryptocurrencies is very much a question mark.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on November 10, 2021, 01:58:32 PM
Both examples are incorrect.

You could sell 999,999,999,999 for 1 cent (altogether).  Then if you sell one more coin at 1$ it magically transforms the valuation of all the coins out there to be a trillion dollars - based on the present traded price of the crypto. 

This is not true. I think this is very important to understand. You do not have to sell all the tokens. This is significantly different from an IPO, where a set number of shares will all be up for sale (and the market cap only references the number of shares offered). With a cryptocurrency, you can mine an arbitrary number of tokens, sell an arbitrary number, and have a colossal (and, clearly, ridiculous) market cap. Shiba Inu and countless other "shitcoins" have exploited this fact, to fleece unsophisticated crypto "investors".

Thinking about it further, I do believe that you're right.  The coins don't need to be sold, just mined.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on November 10, 2021, 02:02:00 PM
Both examples are incorrect.

You could sell 999,999,999,999 for 1 cent (altogether).  Then if you sell one more coin at 1$ it magically transforms the valuation of all the coins out there to be a trillion dollars - based on the present traded price of the crypto. 

This is not true. I think this is very important to understand. You do not have to sell all the tokens. This is significantly different from an IPO, where a set number of shares will all be up for sale (and the market cap only references the number of shares offered). With a cryptocurrency, you can mine an arbitrary number of tokens, sell an arbitrary number, and have a colossal (and, clearly, ridiculous) market cap. Shiba Inu and countless other "shitcoins" have exploited this fact, to fleece unsophisticated crypto "investors".

Thinking about it further, I do believe that you're right.  The coins don't need to be sold, just mined.
Kind of like the share's the founders retain after an IPO - included in market cap computations whether or not they are ever sold. Of course when we're talking about real companies, insiders with large numbers of shares have regulatory requirements to meet when they want to sell. And now we're back to crypto is a stupid investment - the lack of regulation is a bug and not a feature.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on November 10, 2021, 05:17:59 PM
What was the market cap for subprime mortgages in 2007 again?

Too high, and a fair point.  Market cap as a stand alone factor is an unwise way to judge something.  However, to not make market cap a consideration seems equally unwise. 

I think the correct statement would be: Don't make any one metric your complete guide for what to invest in.  Instead, look at a variety of factors to make an investment decision, one of which should be market cap.

I've never made an investing decision regarding a single stock based on market cap, ever.   Simply because market cap says nothing about the value of the underlying asset.  I suppose you could say market cap is related to the share price, so that plays into metrics like P/E or P/E.  But market cap by itself tells you nothing.  I don't know the market cap of any of the stocks I own, unless I happen to see it in a headline or something. 

With stocks, the share price is ultimately tied to the expectation of future profits.  With Bitcoin, the price is tied to supply and demand.  If more people want to buy it, the price will go up and vice versa.  So there's not even a tangential connection to Bitcoin price and market cap.   If we look at gold prices, there was a big run-up in the 1970s as the US went off the gold standard and people started buying gold as an inflation hedge.   The price went up 10x or something over the decade.  But as inflation cooled, so the gold market.  And if I'm not mistaken gold has never returned to its inflation-adjusted peak price. 

If anyone is interested in speculating on Bitcoin, they should ask themselves if the think more people will want to own it in the future than own it right now.  The answer may be "yes."  But keep in mind there is a finite limit on the number of people who want to own Bitcoin.   That means there is a finite limit on the price as well.   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on November 10, 2021, 05:50:10 PM
The positive argument would be Metcalf's Law: the value of a communications network is proportional to the square of the number of its users.  When there are more users of something, there is inherent value and stability in the increased nodes.  The increased market cap of crypto is mostly a function of all the new wallets that have entered the space. 

Again, I'm not saying that this is proof that crypto will continue going up.  I'm merely suggesting that it's not something to completely ignore, nothing more, nothing less.  I'm looking for common ground with you and others who have a different overall sentiment on crypto, and I hope this can be a point of common ground:)

But are they users of crypto or owners of crypto?   I think we're kind of saying that same thing: more owners, the higher the price.  But I don't think Metcalf plays into it because most people don't use crypto for anything.   For example, this thread is about holding crypto as part of an investment portfolio.   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on November 10, 2021, 06:07:11 PM
The Mt Gox hack caused a 99% drop in Bitcoin's value in 2011.  There was an 84% drop that ended just 3 years ago.  Is that within your comfort zone?
https://finance.yahoo.com/news/7-biggest-bitcoin-crashes-history-180038282.html

The 99% drop of the quoted price of bitcoin at MtGox lasted all of a few minutes when somebody tried to game the withdrawal limits (at the time people could withdraw maximum of $1,000 worth of bitcoin a day) by zeroing out the price with stolen bitcoin. They sold enough of someone else's coins to use up all the liquidity in the market. It turned out MtGox also had a less advertised 2,000 bitcoin/day withdrawal limit so this was only a modest success for the person trying to abscond with their ill gotten gains. Way more than you ever wanted to know about the June of 2011 MtGox flash crash: https://blog.bitmex.com/the-june-2011-flash-crash-to-0-01/

In any case, I don't think it's relevant when asking people about their comfort zones because it was over before almost anyone had time to see the low price and react.

The much scarier bit from a bitcoin-as-an-investment perspective than a short term flast crash was that afterwards MtGox was shut for several weeks which essentially ended USD:BTC price discovery until they reopened. Since 2014, there is no single exchange that has the power to end price discovery between US dollars and bitcoin the way MtGox did a decade ago.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Radagast on November 10, 2021, 06:26:31 PM
If an asset were to experience a drawdown of 99%, that would be a deal-breaker for me. I tolerate the stock market despite its 50%-ish drawdowns that happened three times in my lifetime because I think I have the discipline to hold stocks through those drawdowns.

If--starting from equal weights--stocks drop 50%, and crypto drops 80%--suddenly it's a portfolio that's 84% stocks, and I couldn't imagine rebalancing to 50-50 at that point, I'd probably wonder what I was doing with so much crypto to start with.

Also, I've started posting my crypto trades over in a journal, check them out!
The Mt Gox hack caused a 99% drop in Bitcoin's value in 2011.  There was an 84% drop that ended just 3 years ago.  Is that within your comfort zone?
https://finance.yahoo.com/news/7-biggest-bitcoin-crashes-history-180038282.html

The 99% drop of the quoted price of bitcoin at MtGox lasted all of a few minutes when somebody tried to game the withdrawal limits (at the time people could withdraw maximum of $1,000 worth of bitcoin a day) by zeroing out the price with stolen bitcoin. They sold enough of someone else's coins to use up all the liquidity in the market. It turned out MtGox also had a less advertised 2,000 bitcoin/day withdrawal limit so this was only a modest success for the person trying to abscond with their ill gotten gains. Way more than you ever wanted to know about the June of 2011 MtGox flash crash: https://blog.bitmex.com/the-june-2011-flash-crash-to-0-01/

In any case, I don't think it's relevant when asking people about their comfort zones because it was over before almost anyone had time to see the low price and react.

The much scarier bit from a bitcoin-as-an-investment perspective than a short term flast crash was that afterwards MtGox was shut for several weeks which essentially ended USD:BTC price discovery until they reopened. Since 2014, there is no single exchange that has the power to end price discovery between US dollars and bitcoin the way MtGox did a decade ago.
Ok, but does anyone seriously expect the crypto market to not lose 99%? The total US stock market lost 87% in the Great Depression. Amazon lost 95% in the .com crash. Any country's stock market that has been around a bit has lost 90+%. Do you think crypto has more fundamental support than any of those?

I think not, and it will crash 99.9%. The question is whether it will 100X first.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on November 10, 2021, 06:41:58 PM
Ok, but does anyone seriously expect the crypto market to not lose 99%? The total US stock market lost 87% in the Great Depression. Amazon lost 95% in the .com crash. Any country's stock market that has been around a bit has lost 90+%. Do you think crypto has more fundamental support than any of those?

I think not, and it will crash 99.9%. The question is whether it will 100X first.

I'm just adding context to a statement about the history of the price volatility of bitcoin that was otherwise misleading. What the future holds I don't know, but I do know we've got a better chance at guessing what the future holds if we're at least as accurately informed about what the past holds as possible.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Radagast on November 10, 2021, 07:16:00 PM
If I wanted to make a guess about the future of the crypto, I'd ignore everything it's price has done so far and read:
Mandelbrot: The Misbehaviour of Markets
Taleb: Fooled by Randomness, The Black Swan, Antifragile
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 10, 2021, 07:40:39 PM
@MustacheAndaHalf - you yourself on the first page of this thread brought up the "total value of all BTC" and how it is larger than the market caps of Visa and Mastercard. There are no strawmen from anti-crypto, just pro-crypto forgetting what they posted.

Naturally you didn't quote the topic under discussion, which was too big to fail:

Zero pro-crypto posters have made any claims about "too big to fail" in this topic. The only prior mention was from, you guessed it, boarder42.

Several pro-crypto posters have emphasised how big the crypto market is, but only to counter ravings about it all being worthless and just like beanie babies, etc. That's not the same thing.

To pretend the topic is something else is disingenuous coming from someone who clearly knew what was being discussed:

That's because crypto itself cannot be too big to fail - it is not an institution that our governments rely heavily on. The big banks might get too intertwined with crypto, and they might be deemed too big to fail. How that plays out for some average schmuck who is just holding crypto likely won't be nearly as good as it works out for the huge banks.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 10, 2021, 08:00:47 PM
The Mt Gox hack caused a 99% drop in Bitcoin's value in 2011.  There was an 84% drop that ended just 3 years ago.  Is that within your comfort zone?
https://finance.yahoo.com/news/7-biggest-bitcoin-crashes-history-180038282.html

The 99% drop of the quoted price of bitcoin at MtGox lasted all of a few minutes when somebody tried to game the withdrawal limits (at the time people could withdraw maximum of $1,000 worth of bitcoin a day) by zeroing out the price with stolen bitcoin. They sold enough of someone else's coins to use up all the liquidity in the market. It turned out MtGox also had a less advertised 2,000 bitcoin/day withdrawal limit so this was only a modest success for the person trying to abscond with their ill gotten gains. Way more than you ever wanted to know about the June of 2011 MtGox flash crash: https://blog.bitmex.com/the-june-2011-flash-crash-to-0-01/

In any case, I don't think it's relevant when asking people about their comfort zones because it was over before almost anyone had time to see the low price and react.

The much scarier bit from a bitcoin-as-an-investment perspective than a short term flast crash was that afterwards MtGox was shut for several weeks which essentially ended USD:BTC price discovery until they reopened. Since 2014, there is no single exchange that has the power to end price discovery between US dollars and bitcoin the way MtGox did a decade ago.
That's interesting, maybe Yahoo Finance has it wrong.  The article from Bitmex describes a 99.94% drop ($17.50 -> $0.01) that lasted a few minutes:
"... large sell orders on the exchange and the price crashed from around $17.50 to $0.01 and trading continued at this level for several minutes before recovering"

I assume "recovering" means from $0.01, which doesn't say how far it recovered.  If that was the only drop, it does seem unfair to label it as a 99% crash (or 99.94% crash?).  The article mentions "a peak of $32", so if BTC-USD dropped near $0.32 for several days, I'd agree with Yahoo Finance calling it a 99% crash.  But if the only event was the $0.01 price for a few minutes, I'd agree with your take on it.

What I don't have is 2011 BTC-USD price data to confirm or deny it.  I can't find BTC-USD prices for the summer of 2011 online.  That would show how may days the price traded near $0.32, if any.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on November 11, 2021, 05:45:33 AM
This is a video of someone watching the crash live. At the start of the video, bitcoin is selling at $5/coin and the narrator mentions watching it decline from $17/dollar. Hits 0.123 cents/bitcoin about three minutes into the video.

https://youtu.be/T1X6qQt9ONg?t=363

It appears to show the price recovering to $13/bitcoin just after 6 minutes in the video (three minutes after the price approaches 0.00123/bitcoin), shortly before MtGox is taken offline to address the hack. As I posted above, the gap when MtGox was shutdown and there was no widely accepted USD:BTC exchange rate would have been a much bigger problem for people holding bitcoin at the time than the flash crash itself.

Unfortunately this may be all the information that remains at this point. The bitcoin community was really small back in 2011, a lot of the websites in heavy use back then have dried up and blown away, and basically nobody was thinking there would be historical interest in what they were doing. Just like there were US stock markets setting prices for stocks since 1790 (Philadelphia, NYSE was two years later) almost a century before 1871, but everyone always uses 1871-present data because that's as far back as Shiller's been able to reconstruct the time series.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 11, 2021, 07:27:39 AM
This is a video of someone watching the crash live. At the start of the video, bitcoin is selling at $5/coin and the narrator mentions watching it decline from $17/dollar. Hits 0.123 cents/bitcoin about three minutes into the video.

https://youtu.be/T1X6qQt9ONg?t=363

It appears to show the price recovering to $13/bitcoin just after 6 minutes in the video (three minutes after the price approaches 0.00123/bitcoin), shortly before MtGox is taken offline to address the hack. As I posted above, the gap when MtGox was shutdown and there was no widely accepted USD:BTC exchange rate would have been a much bigger problem for people holding bitcoin at the time than the flash crash itself.

Unfortunately this may be all the information that remains at this point. The bitcoin community was really small back in 2011, a lot of the websites in heavy use back then have dried up and blown away, and basically nobody was thinking there would be historical interest in what they were doing. Just like there were US stock markets setting prices for stocks since 1790 (Philadelphia, NYSE was two years later) almost a century before 1871, but everyone always uses 1871-present data because that's as far back as Shiller's been able to reconstruct the time series.
The guy talking about Bitcoin says he has ~6 BTC at MtGox, or about $100 worth.  Seems like a hobby back then.  At the end of that video, he says BTC is back up to $15.  So at best maybe a 50% crash when viewed across days, instead of minutes.  Certainly not a 99% crash that leaves investors wondering what to do next.  Your account makes more sense than the freelance journalist who wrote the Yahoo article.

Looking at the other claim, I'd say technically there might have been a peak to trough drop of 84%.  People tend to talk about the peak prices, so maybe it had more significance than just a short spike.  When I instead look at rough averages over a few months, the Dec 2017 to Dec 2018 crash is closer to 75%.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on November 11, 2021, 08:07:07 AM
I agree. 75-85% drops in the price of bitcoin are well supported based on historical data*. Obviously there could be much larger drops (or a permanent drop to zero) in the future.

*Feels strange to say that when "historical data" is less than a decade, but I'm not sure what other term to use.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on November 11, 2021, 08:55:49 AM
What was the market cap for subprime mortgages in 2007 again?

Too high, and a fair point.  Market cap as a stand alone factor is an unwise way to judge something.  However, to not make market cap a consideration seems equally unwise. 

I think the correct statement would be: Don't make any one metric your complete guide for what to invest in.  Instead, look at a variety of factors to make an investment decision, one of which should be market cap.

I've never made an investing decision regarding a single stock based on market cap, ever.   Simply because market cap says nothing about the value of the underlying asset.  I suppose you could say market cap is related to the share price, so that plays into metrics like P/E or P/E.  But market cap by itself tells you nothing.  I don't know the market cap of any of the stocks I own, unless I happen to see it in a headline or something. 

With stocks, the share price is ultimately tied to the expectation of future profits.  With Bitcoin, the price is tied to supply and demand.  If more people want to buy it, the price will go up and vice versa.  So there's not even a tangential connection to Bitcoin price and market cap.   If we look at gold prices, there was a big run-up in the 1970s as the US went off the gold standard and people started buying gold as an inflation hedge.   The price went up 10x or something over the decade.  But as inflation cooled, so the gold market.  And if I'm not mistaken gold has never returned to its inflation-adjusted peak price.

There's some off-topic chat among the anti-cryptos a few posts back about strategies specific to small cap stocks. Doesn't that clearly indicate that market cap is being considered in investment decisions ? Market cap might not be part of the final analysis, but "small cap" is a qualifying requirement - it's clearly something that matters.

I don't understand your "not even a tangential connection" point ?

The market cap of Bitcoin doesn't indicate much more to me than the fact that it's a substantial beast, ie. $1.2trillion among 70-80 million parties. It's an indication of mass and substance - and things with mass and substance tend to have resilience and staying power. No guarantees of course, but it's an indicator of substance nonetheless.

If anyone is interested in speculating on Bitcoin, they should ask themselves if the think more people will want to own it in the future than own it right now.  The answer may be "yes."  But keep in mind there is a finite limit on the number of people who want to own Bitcoin.   That means there is a finite limit on the price as well.

Yeah, I agree that's the fundamental question. I'm not so sure about the price cap theory though - at least, not while it's priced in (devaluing) fiat.

We're currently at 70-80 million Bitcoin users from a potential market of 5 billion* = 1.6%. We can't gauge their interest of course, but there seems to be plenty of room for further growth.

* a wild guess at global adult population
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on November 11, 2021, 02:45:51 PM
If I wanted to make a guess about the future of the crypto, I'd ignore everything it's price has done so far and read:
Mandelbrot: The Misbehaviour of Markets
Taleb: Fooled by Randomness, The Black Swan, Antifragile

I borrowed and read the Taleb series (also Skin in the Game), and I came away from it a bitcoin-skeptic. I've mellowed since then, mainly because I think I've made other parts of my life more durable, so I can withstand the losses that crypto- not working out would inflict on me.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 12, 2021, 05:50:57 AM
If anyone is interested in speculating on Bitcoin, they should ask themselves if the think more people will want to own it in the future than own it right now.  The answer may be "yes."  But keep in mind there is a finite limit on the number of people who want to own Bitcoin.   That means there is a finite limit on the price as well.
Even with a finite number of people, won't they earn money throughout their lives?  And with new money, be able to make new purchases of Bitcoin?

Part of Bitcoin's price is driven by that feedback loop.  People like it, buy more, and that drives the price up.  For a long time I've complained nobody can invest on Bitcoin dropping (without visiting lawless websites located in offshore havens).  But that changed last month, after ETF "ProShares Bitcoin Strategy ETF" (BITO) was created.

BITO has an options market in put and call options, with durations out to Jan 2024.  If someone felt strongly that Bitcoin's price will crash to zero before the end of 2022, they could buy $32 strike BITO puts expiring Jan 2023.  It's risky, because BITO has to fall 42% to break even.  But if BTC crashes, the futures crash with it, and in that case the puts triple your investment.  Going for at the money puts cost 35.5%, representing how volatile Bitcoin futures can be.  Hopefully that doesn't prevent Bitcoin bears from investing against BTC using BITO puts.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on November 12, 2021, 06:20:59 AM
If you wanted to invest based on the prediction of bitcoin dropping before there were bitcoin ETFs approved for sale in the USA*, you could sell cash settled bitcoin futures which were traded on the Chicago Mercantile Exchange and accessible through lots of regular retail investment brokers like TDAmeritrade.

Chicago's not my favorite city in the world, but hardly a offshore haven, nor would I describe CME as a lawless website.

*Folks in Canada, had access to bitcoin ETFs long before we did here in the states.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on November 12, 2021, 01:02:30 PM
Despite my earlier criticisms, I'm thinking about adding a low% of crypto exposure to my portfolio. :)

BITO has underperformed GBTC by an astounding 5.4% just since 10/22 despite being for the same asset and leverage. In fact, BITO has done worse each individual week of its short lifetime. This is strange, because the bitcoin futures market is in contango, so one would expect the futures fund (GBTC) to do worse than the fund holding the underlying asset. Somehow, BITO is doing worse, perhaps due to the high costs involved in securing a portfolio of bitcoins? I don't know what it is but something BITO is doing, but it's destroying value compared to GBTC, and BITO has an options market.

The plan would be to buy GBTC, and sell a bear spread on BITO, so as to engineer a bitcoin-up, I win or bitcoin-down-a-little I win arbitrage.

Buy:

100 GBTC (-$5090 total)

Sell:

10 BITO Dec 10, 2021 bear call spread at 41 and 44 strikes for a $1.07/share credit (+$1070 total). Because the combined delta of these short and long call options is about 0.10, I'm buying 10x as many of these as I'm offsetting with GBTC. 

Obviously, I lose between zero and (5090-1070=) $4020 if GBTC falls by more than (1070/5090=) 13.2%. The maximum loss would require GBTC to go to zero in the next 28 days, so my realistic potential losses are much lower. There's no theoretical cap on the upside though. Best of all, if the BITO price doesn't move, I keep the $1070 for a 21% profit on the funds employed, in less than a month.

TLDR: Poorly managed funds can be something to get excited about.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on November 12, 2021, 01:58:35 PM
I'm curios if aceyou and coolhand can give us a reasonable definition of contango without looking it up.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on November 12, 2021, 07:18:12 PM
Despite my earlier criticisms, I'm thinking about adding a low% of crypto exposure to my portfolio. :)

BITO has underperformed GBTC by an astounding 5.4% just since 10/22 despite being for the same asset and leverage. In fact, BITO has done worse each individual week of its short lifetime. This is strange, because the bitcoin futures market is in contango, so one would expect the futures fund (GBTC) to do worse than the fund holding the underlying asset. Somehow, BITO is doing worse, perhaps due to the high costs involved in securing a portfolio of bitcoins? I don't know what it is but something BITO is doing, but it's destroying value compared to GBTC, and BITO has an options market.

The plan would be to buy GBTC, and sell a bear spread on BITO, so as to engineer a bitcoin-up, I win or bitcoin-down-a-little I win arbitrage.

Buy:

100 GBTC (-$5090 total)

Sell:

10 BITO Dec 10, 2021 bear call spread at 41 and 44 strikes for a $1.07/share credit (+$1070 total). Because the combined delta of these short and long call options is about 0.10, I'm buying 10x as many of these as I'm offsetting with GBTC. 

Obviously, I lose between zero and (5090-1070=) $4020 if GBTC falls by more than (1070/5090=) 13.2%. The maximum loss would require GBTC to go to zero in the next 28 days, so my realistic potential losses are much lower. There's no theoretical cap on the upside though. Best of all, if the BITO price doesn't move, I keep the $1070 for a 21% profit on the funds employed, in less than a month.

TLDR: Poorly managed funds can be something to get excited about.

That just makes my head spin - wicked. Interesting observation though about BITO being a loser.
I suddenly feel quite safe with my own small crypto portfolio. Especially after seeing the effect that 10%-15% bitcoin allocation can have on an index fund portfolio. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on November 12, 2021, 07:43:34 PM
BITO has underperformed GBTC by an astounding 5.4% just since 10/22 despite being for the same asset and leverage. In fact, BITO has done worse each individual week of its short lifetime. This is strange, because the bitcoin futures market is in contango, so one would expect the futures fund (GBTC) to do worse than the fund holding the underlying asset. Somehow, BITO is doing worse, perhaps due to the high costs involved in securing a portfolio of bitcoins? I don't know what it is but something BITO is doing, but it's destroying value compared to GBTC, and BITO has an options market.

I think this might be backwards. I believe GBTC owns the underlying asset (bitcoin) and charges a crazy expense ratio for doing so while BITO is the one constructed to theoretically follow the price of bitcoin using rolling futures contracts without actually owning any bitcoin.

If so, it sounds like the relative performance of the two bitcoin tracking investments is exactly what you'd expect given their different approaches.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 12, 2021, 09:13:41 PM
If you wanted to invest based on the prediction of bitcoin dropping before there were bitcoin ETFs approved for sale in the USA*, you could sell cash settled bitcoin futures which were traded on the Chicago Mercantile Exchange and accessible through lots of regular retail investment brokers like TDAmeritrade.

Chicago's not my favorite city in the world, but hardly a offshore haven, nor would I describe CME as a lawless website.

*Folks in Canada, had access to bitcoin ETFs long before we did here in the states.
How could I forget about the Bitcoin futures market?  My bad.  Bitcoin futures have been available since Dec 2017.

I'm scared of the futures market and didn't consider investing in it.  So maybe I'm altogether wrong in my point, because investing against Bitcoin has been available for almost 4 years.

As an aside, a surprising number of U.S. states (Delaware, Nevada) are heavily used by one of the big offshore companies owing to their relaxed laws, according to the Panama Papers.  But my comment about offshore was intended to head off people claiming bitcoin derivatives are available on random websites headquartered in the Seychelles, which I saw another poster claim ages ago.

But your joke about Chicago at my expense was well done, and deserved.  I liked it!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 12, 2021, 09:58:23 PM
BITO launched on Oct 19, so I'll compare BTC-USD, BITO and GBTC using prices from the opening of Oct 20 and close of Nov 12 (no dividends to worry about!).
BTC-USD : 64,284.59 -> 63,749.39 = -0.83%
BITO : 42.22 -> 41.12 = -2.61%
GBTC : 49.02 -> 51.47 = -4.76%

BITO is beating GBTC so far.  I expected lower costs and tracking error with BITO.
I've seen graphs showing huge gaps between GBTC and BTC-USD, so I thought I'd calculate it myself by taking prices each year on Nov 12.

--- assets ------ 2018 ------ 2019 ------ 2020 ---2021
BTC-USD6411.768,759.7515,701.3063749.39
perform %n/a+37%+79%+306%
------------
GBTC7.2410.6117.8951.47
perform %n/a+47%+69%+188%
(all data from Yahoo Finance)

In the past 12 months, GBTC trailed BTC-USD by 118%.  There's problems with GBTC tracking Bitcoin, be it costs or tracking error.  I expect BITO to be more efficient using the Bitcoin futures market... but not forever.  As BITO and other futures ETFs proliferate, JP Morgan claims it could distort the futures market (and they would know futures markets better than me).
https://finance.yahoo.com/news/jpmorgan-warns-boom-bitcoin-futures-120123876.html
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on November 13, 2021, 03:10:02 PM
What was the market cap for subprime mortgages in 2007 again?

Too high, and a fair point.  Market cap as a stand alone factor is an unwise way to judge something.  However, to not make market cap a consideration seems equally unwise. 

I think the correct statement would be: Don't make any one metric your complete guide for what to invest in.  Instead, look at a variety of factors to make an investment decision, one of which should be market cap.

I've never made an investing decision regarding a single stock based on market cap, ever.   Simply because market cap says nothing about the value of the underlying asset.  I suppose you could say market cap is related to the share price, so that plays into metrics like P/E or P/E.  But market cap by itself tells you nothing.  I don't know the market cap of any of the stocks I own, unless I happen to see it in a headline or something. 

With stocks, the share price is ultimately tied to the expectation of future profits.  With Bitcoin, the price is tied to supply and demand.  If more people want to buy it, the price will go up and vice versa.  So there's not even a tangential connection to Bitcoin price and market cap.   If we look at gold prices, there was a big run-up in the 1970s as the US went off the gold standard and people started buying gold as an inflation hedge.   The price went up 10x or something over the decade.  But as inflation cooled, so the gold market.  And if I'm not mistaken gold has never returned to its inflation-adjusted peak price.

There's some off-topic chat among the anti-cryptos a few posts back about strategies specific to small cap stocks. Doesn't that clearly indicate that market cap is being considered in investment decisions ? Market cap might not be part of the final analysis, but "small cap" is a qualifying requirement - it's clearly something that matters.


Gotcha.  That's why I was careful to say "regarding a single stock."  That might have been better phrased as "regarding an individual stock." 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on November 15, 2021, 06:38:59 AM
I entered a new set of trades over in my crypto currency trading journal.

https://forum.mrmoneymustache.com/journals/tall-texan's-crypto-trading-journal/ (https://forum.mrmoneymustache.com/journals/tall-texan's-crypto-trading-journal/)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on November 15, 2021, 08:22:55 AM
BITO has underperformed GBTC by an astounding 5.4% just since 10/22 despite being for the same asset and leverage. In fact, BITO has done worse each individual week of its short lifetime. This is strange, because the bitcoin futures market is in contango, so one would expect the futures fund (GBTC) to do worse than the fund holding the underlying asset. Somehow, BITO is doing worse, perhaps due to the high costs involved in securing a portfolio of bitcoins? I don't know what it is but something BITO is doing, but it's destroying value compared to GBTC, and BITO has an options market.

I think this might be backwards. I believe GBTC owns the underlying asset (bitcoin) and charges a crazy expense ratio for doing so while BITO is the one constructed to theoretically follow the price of bitcoin using rolling futures contracts without actually owning any bitcoin.

If so, it sounds like the relative performance of the two bitcoin tracking investments is exactly what you'd expect given their different approaches.

You're right, I got them mixed up in my head! Contango probably explains most of the underperformance of BITO. Now it makes sense... sort of like how UVXY consistently destroys its own value trading VIX futures.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on November 17, 2021, 06:15:53 AM
I'm curios if aceyou and coolhand can give us a reasonable definition of contango without looking it up.

I wasn't able to give a good definition until I looked it up. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 17, 2021, 06:51:09 AM
BITO has underperformed GBTC by an astounding 5.4% just since 10/22 despite being for the same asset and leverage. In fact, BITO has done worse each individual week of its short lifetime.

Where did you get your data?  I compared Oct 20 - Nov 12 using historical prices on Yahoo Finance, by which measure GBTC is behind by 2%.

BITO launched on Oct 19, so I'll compare BTC-USD, BITO and GBTC using prices from the opening of Oct 20 and close of Nov 12 (no dividends to worry about!).
BTC-USD : 64,284.59 -> 63,749.39 = -0.83%
BITO : 42.22 -> 41.12 = -2.61%
GBTC : 49.02 -> 51.47 = -4.76%
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 17, 2021, 08:52:17 PM
Most of my portfolio is passive, but I'm allocating some active picks.  I realized given Bitcoin's volatility, often upwards, I should give it a larger allocation than other active picks.

Some of my crypto allocation is now in BITO call options.  The time value wasn't cheap, at 13%, but for 2.2 years it seemed reasonable.  As an aside, I can buy leveraged Bitcoin in my Vanguard account... but if I try to buy a share of UPRO (3x S&P 500 ETF), Vanguard doesn't allow it.  I think their policy has some inconsistencies in it ...
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 18, 2021, 05:04:03 AM
I just stumbled across this Cornell study from August https://arxiv.org/abs/2108.10984v1

Quote
We introduce systematic tests exploiting robust statistical and behavioral patterns in trading to detect fake transactions on 29 cryptocurrency exchanges. Regulated exchanges feature patterns consistently observed in financial markets and nature; abnormal first-significant-digit distributions, size rounding, and transaction tail distributions on unregulated exchanges reveal rampant manipulations unlikely driven by strategy or exchange heterogeneity. We quantify the wash trading on each unregulated exchange, which averaged over 70% of the reported volume. We further document how these fabricated volumes (trillions of dollars annually) improve exchange ranking, temporarily distort prices, and relate to exchange characteristics (e.g., age and userbase), market conditions, and regulation.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on November 18, 2021, 06:58:30 AM
I just stumbled across this Cornell study from August https://arxiv.org/abs/2108.10984v1

Quote
We introduce systematic tests exploiting robust statistical and behavioral patterns in trading to detect fake transactions on 29 cryptocurrency exchanges. Regulated exchanges feature patterns consistently observed in financial markets and nature; abnormal first-significant-digit distributions, size rounding, and transaction tail distributions on unregulated exchanges reveal rampant manipulations unlikely driven by strategy or exchange heterogeneity. We quantify the wash trading on each unregulated exchange, which averaged over 70% of the reported volume. We further document how these fabricated volumes (trillions of dollars annually) improve exchange ranking, temporarily distort prices, and relate to exchange characteristics (e.g., age and userbase), market conditions, and regulation.

So this in an interesting preprint.

First, a really important disclaimer: arXiv is a preprint server that is hosted at Cornell. As arXiv themselves put it:

Quote
Material is not peer-reviewed by arXiv - the contents of arXiv submissions are wholly the responsibility of the submitter and are presented “as is” without any warranty or guarantee. By hosting works and other materials on this site, arXiv, Cornell University, and their agents do not in any way convey implied approval of the assumptions, methods, results, or conclusions of the work.

Secondly, if a preprint goes too long without coming out in a peer reviewed journal starts to be a red flag that maybe it cannot pass peer review. But even then there are still other potential explanations, like a key author graduated or found another job and isn't interested in continuing with the large amount of work to revise and resubmit one or multiple times to get it published in a peer reviewed journal. This one is about two years old and the first version came out in 2019, so if this were in biology or engineering I'd start to see that as a red flag. But my understanding is that 1-2 year review times are frequent in fields like economics or statistics, so this should probably still be considered a "new" preprint and may still come out in a peer reviewed journal someday. So what does it actually say?

The study uses a three metrics that are indicative of things not right in financial data to evaluate transactions at cryptocurrency exchanges.

1) Uneven distribution of first digits eg. bedford's law. People trying to make up random numbers will typically have an even distribution of first digits. Data in many other cases tend to have 1 as the most frequent digit much more often than 2 and so on.

2) Human selected data also displays clustering around round numbers. You can see this yourself looking at the volume for option chains on public stock exchanges. The open interest on SPY options at 200 or 300 is far higher than at the intervening values.

3) Fat tails/power law distribution.

All three of these metrics are used to detect data that isn't want it is supposed to be. I'm most familiar with the use of Bedford's law to catch examples fabricated research data or financial records. The authors detect significant deviations from expectation for these metrics for some but not all crypocurrency exchanges and conclude that this is evidence of wash trading. They go on to show that greater violation of these metrics are associated with various exchange properties.

Assuming the proprietary data sources the authors use is solid, their reasoning that this indicates a lot of volume on these exchanges indicates a lot of volume is not being generated by human traders. It was less clear to me that transactions not generated by humans necessarily means wash trading or how the authors rule out other ways non-human generated numbers could end up in the data: computer driven high frequency trading, market manipulation other than wash trading, or non-existent trades inserted into the dataset either by the exchanges or the company providing the proprietary dataset. On page 13 they even bring up at algorithmic trading of any sort (not just wash trading) has been known for years to violate their second criteria.

If I were doing peer review on this paper (I'm not in the field so no one is going to ask me) I'd say they've demonstrated evidence of something fishy going on in the data from a subset of cryptocurrency exchanges, but don't have strong evidence that the fishiness they've found at those exchanges is clearly the subset of fishiness we'd call "wash trading". Obviously the authors disagree and think they have conclusively shown it is wash trading and you can read their argument for why they think it is wash trading on page 21 of the preprint for yourself and decide whether or not it seems convincing to you.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on November 18, 2021, 11:50:26 AM
BITO has underperformed GBTC by an astounding 5.4% just since 10/22 despite being for the same asset and leverage. In fact, BITO has done worse each individual week of its short lifetime. This is strange, because the bitcoin futures market is in contango, so one would expect the futures fund (GBTC) to do worse than the fund holding the underlying asset. Somehow, BITO is doing worse, perhaps due to the high costs involved in securing a portfolio of bitcoins? I don't know what it is but something BITO is doing, but it's destroying value compared to GBTC, and BITO has an options market.

I think this might be backwards. I believe GBTC owns the underlying asset (bitcoin) and charges a crazy expense ratio for doing so while BITO is the one constructed to theoretically follow the price of bitcoin using rolling futures contracts without actually owning any bitcoin.

If so, it sounds like the relative performance of the two bitcoin tracking investments is exactly what you'd expect given their different approaches.

You're right, I got them mixed up in my head! Contango probably explains most of the underperformance of BITO. Now it makes sense... sort of like how UVXY consistently destroys its own value trading VIX futures.

The Contango effect is real. It is a good reason for investors, pension funds and institutions to stay away from investing in (BITO) or other ETF Futures.
 
According to Bloomberg GBTC holds around 3.4% of the world's supply of bitcoin.
I bet they will be the first BTC spot ETF to be approved by the SEC, their ETF conversion Grayscale BTC Trust is scheduled for SEC approval Jul 6, 2022.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on November 18, 2021, 11:51:36 AM
@MustacheAndaHalf and @aceyou - you might find this video interesting

Bitcoin - speculation about the impact of Mt Gox upcoming release of funds and Hedge Fund investing - Futures - on the price of bitcoin
   https://www.youtube.com/watch?v=CVSbZxEmr1w
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Radagast on November 18, 2021, 11:10:23 PM
If I wanted to make a guess about the future of the crypto, I'd ignore everything it's price has done so far and read:
Mandelbrot: The Misbehaviour of Markets
Taleb: Fooled by Randomness, The Black Swan, Antifragile

I borrowed and read the Taleb series (also Skin in the Game), and I came away from it a bitcoin-skeptic. I've mellowed since then, mainly because I think I've made other parts of my life more durable, so I can withstand the losses that crypto- not working out would inflict on me.
I don't think they say anything one way or the other. But I think they imply that if the past ten years of crypto are normal for crypto, then just think what happens when it has ten wild years by crypto standards.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on November 19, 2021, 05:32:08 AM
If I wanted to make a guess about the future of the crypto, I'd ignore everything it's price has done so far and read:
Mandelbrot: The Misbehaviour of Markets
Taleb: Fooled by Randomness, The Black Swan, Antifragile

I borrowed and read the Taleb series (also Skin in the Game), and I came away from it a bitcoin-skeptic. I've mellowed since then, mainly because I think I've made other parts of my life more durable, so I can withstand the losses that crypto- not working out would inflict on me.
I don't think they say anything one way or the other. But I think they imply that if the past ten years of crypto are normal for crypto, then just think what happens when it has ten wild years by crypto standards.

There are also two totally different concepts when it comes to crypto.

The speculative gains and the actual future use. The actual gains of specific coins are largely based on hype, not on actual use. It still remains to be seen which coins will have utility in the future and what use they will perform.

I for one, despite not being impressed with ANY use cases I've seen presented in this thread, am actually quite interested in future uses of crypto, and happen to currently be running a non profit with a very, very prominent player in the crypto world.

He's really opened my eyes to the difference between utility and the current unhinged value of high priced coins.

I've read every word Taleb has written at least 3 times. I totally agree that individual crypto coins as an investment right now are kind of insane, because it's a gamble as to who in the end will end up the most utilized once actual use is shaken out.

Whomever compared crypto to the internet early on really had an excellent example. It's one thing to know a technology will be major in the future, it's another to effectively invest in the exact right avenue and not get wiped out along the way.

Is it smart to just by Bitcoin? I don't know, it's value is so insane right now and it's coin has so many drawbacks compared to some newer coins, not the least of which is the environmental concern in a time where world governments are all starting to turn their creaky old machines towards sustainability.

Then what about Etherium? Sure, okay, good coin, but also very expensive and there are other coins that are basically identical.

Well what about EOS? The "Etherium killer" that Block.one totally dropped the ball on? It's selling for a measly $3-4/coin, and yet is still considered a "top 10 coin" and can actually handle high volume transactions, and currently does, although most of those current transactions are totally worthless.

If we go back to the example of the internet, none of the early players survived except for Yahoo, which was the first big dog and substantially better than the other garbage services, but it did eventually die after being so bad for so long and making the dumbfuck decision of not selling.

So is Bitcoin the crypto Yahoo? The biggest of the first gen with serious staying potential as long as it adapts to the rapidly changing ecosystem? Can it adapt as needed?

So then who ends up being Google? Who ends up the one coin to rule them all? Is EOS the sleeping giant that will finally overcome its leadership in-fighting and keep working in the background until it can forge a path forward, or will the bickering between Block.one and the community drag it down in the mud until it drowns?

Or will we all end up buying our cars and houses with Dog Money at the end of the day?

There is a TON of randomness in the crypto world right now, and Taleb is right, it's virtually impossible to know what the smart play is, just like it was impossible to know exactly which business was the right bet at the beginning of the internet.

It's one thing to see the vague shape of technology coming, it's another to know exactly where to invest your dollars.

If I were to buy coins, my bet would probably be EOS, because I wouldn't buy individual coins unless I was willing to lose my money and hoping for a moonshot. Just because it's cheap and still feasibly could take off if they can get past their initial faceplant. I would consider a top coin ETF though.

FTR, I was just away for vacation visiting DH's family, some of whom are working class O&G folks and very anti-establishment but with no real rationale, and who have been crypto-crazy, and I am bloody exhausted from total fucking clueless crypto-pushers. It's these pushy conversations that make even talking about crypto so tedious sometimes.

I've also had a good laugh at a whole new type of crypto article that I'm seeing, which is basically explaining the basics of crypto risk to idiots. The concept of meme coins, how speculation works, why some coin investments might be risky. Basically, explaining Shit-coins to the kind of people who call every crypto coin a "Bitcoin"

When you see the fucking idiocy that is propping up some of these values, it's entertaining, but also so very tiresome.

One cousin paid for a coffee with his phone and used that as evidence that crypto is the future. "See, with technology, we don't even need banks. See! I don't even need a bank card! That's the future, that's crypto!" The dude was using his bank card...on his phone.

I said "there was a dude years ago who put an RFID chip in his arm to pay for things, well before crypto" trying to point out that RFID tech has nothing to do with crypto and that the tech in his bank card is the EXACT same thing, and the guy enthusiastically responded "yeah! The future! Crypto!"

*Facepalm*

Fooled by randomness indeed.

Anyway, idiots and even idealists aside, I'm still avidly paying attention to how this will all play out. As someone who was dating the founder of a tech startup in the early 2000s, was very much part of that world, and saw far more individual investors lose money than make money, this is feeling very familiar, and I'm rather interested to see how it plays out.

The hype, the idealism, the idiocy, the floods of money not really having clear direction as to where to go, it feels the same. We'll see if the absolute gruesome carnage of that time plays out in a similar fashion or not.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 19, 2021, 08:42:21 AM
Well what about EOS? The "Etherium killer" that Block.one totally dropped the ball on? It's selling for a measly $3-4/coin, and yet is still considered a "top 10 coin" and can actually handle high volume transactions, and currently does, although most of those current transactions are totally worthless.
Maybe it's popularity peaked earlier this year?  While it was above $10 earlier, it's now just inside the top 50 on Coin Market Cap.  Even on 24h volume it doesn't seem to be in the top 10 anymore.
https://coinmarketcap.com/


If we go back to the example of the internet, none of the early players survived except for Yahoo, which was the first big dog and substantially better than the other garbage services, but it did eventually die after being so bad for so long and making the dumbfuck decision of not selling.
That's close to the metaphor I used, which was the dot-com bubble and crash.  The survivors of the dot-com crash include Apple and Amazon, which grew to be two of the top 5 public companies in the U.S.  I compared them to Bitcoin and Ethereum, which may have a first mover advantage that leaves other coins behind.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on November 19, 2021, 10:42:59 AM
Well what about EOS? The "Etherium killer" that Block.one totally dropped the ball on? It's selling for a measly $3-4/coin, and yet is still considered a "top 10 coin" and can actually handle high volume transactions, and currently does, although most of those current transactions are totally worthless.
Maybe it's popularity peaked earlier this year?  While it was above $10 earlier, it's now just inside the top 50 on Coin Market Cap.  Even on 24h volume it doesn't seem to be in the top 10 anymore.
https://coinmarketcap.com/

Their hype died out years ago shortly after their ICO, there's a lot of drama around it. It's a *very* interesting case study. (Bolded added by Malcat)

If we go back to the example of the internet, none of the early players survived except for Yahoo, which was the first big dog and substantially better than the other garbage services, but it did eventually die after being so bad for so long and making the dumbfuck decision of not selling.
That's close to the metaphor I used, which was the dot-com bubble and crash.  The survivors of the dot-com crash include Apple and Amazon, which grew to be two of the top 5 public companies in the U.S.  I compared them to Bitcoin and Ethereum, which may have a first mover advantage that leaves other coins behind.

Maybe, but maybe not. Neither Amazon nor Apple were the behemoths early in the dot com era. The early big players are all gone. So my perception of it is actually the opposite of yours.

My memories of the dot com era and lesson learned were that the big players at the beginning often don't end up being the big players at the end of the day.

It's not a perfect model obviously, it's very difficult to predict how it's all going to play out.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on November 19, 2021, 11:32:09 AM
You raised valid questions, Malcat, some have answers others require a crystal ball.

PRICING
YES, the pricing in the entire crypto market at this moment in time is beyond frothy and has very little to do with the actual value of an individual coin or rather the projects or network behind it.
NO, the current crypto bubble is not comparable to the tech bubble that caused the infamous crash. This particular bubble is caused every four years by the halving of bitcoin. The usual media hype whenever the price of bitcoin goes crazy and in this cycle the inflation concerns are whipping up more froth.

There is no price mystery at all.
BITCOIN has a well-documented four-year cycle at the end of which there is a halving, which means going forward the amount of bitcoin mined is now cut in half. Afterward the price rises each time. This cycle had a few months delay while the 60% of the world's bitcoin mining operations in China was redistributed to the rest of the world. 
When the price is frothy enough FOMO happens and the market cap explodes.
Once bitcoin reaches its new ATH it totally crashes and goes into a decline for the next three years and the four-year cycle begins again with the next halving.
The bitcoin code also raises the difficulty of mining bitcoin at each halving - both the halving and increasing the difficulty of mining bitcoin is by design and cannot be changed. Price is a function of supply and demand.
We seem to be following the pattern of 2017 in this cycle but who knows until this cycle is truly over.

THE CRASH
Bitcoin - around 85% or so.
Possibly it will bounce right back in the 30's or even the high fourties - if you believe JPMorgan's CEO $30K to under $50K is a realistic price for bitcoin.
Altcoins always crash near 90% although ETH holds up better and there will be an eventual rise to a price that reflects the true value.

BUT THIS TIME IT WILL BE DIFFERENT
There are always rumors that it might do something different in "this" cycle but so far it has repeated this pattern since inception.
Of course, I am hoping that with the changes in 2021 at least bitcoin might fare better this time around.
The longest credible projections for an extended supercycle are for March 2022 before it all collapses until the next round or maybe this time for the first time it will be different:).  ​

PERMANENCE and STABILITY
Of note here is that both the price of bitcoin and the crypto market cap has indeed increased over time. In my book that is a positive. Bitcoin has a well-deserved reputation of extreme volatility, but if you look at the trends and the charts you can easily see that bitcoin is slowing down.
There certainly are no 100Xs any longer, no one even expects a 3X or 5X except for the moon boys. Perhaps the institutional investments will have an effect on price stability...

SPECULATION
I'll be radical here and say that bitcoin is now for boomers and retirement portfolios, balance sheets of corporations that plan way into the future.
Whether it will be relevant in the future other than as a digital asset or legacy wealth is too soon to tell.

Bitcoin has had only two major changes in development in seven years - both changes went live this year, 2021.
The Lightning Network and as of one week ago Taproot. It will take at least six months to see the effect of Taproot - security and privacy are two of the new features. For the first time in years, there are all sorts of new projects being built on bitcoin, including bridges.
Bitcoin is still in the game and for now, I still deem it a wild success:).
The Scarcity Aspect
Foreign Government demands or Pension Funds in Europe might trigger the scarcity factor of bitcoin sooner than we think and owning one whole bitcoin might be the smartest thing you ever did.

THERE IS NOTHING NEW OR DIFFERENT ABOUT THIS CRYPTO BUBBLE
It happens every four years.
In my opinion, it is time to take your profits if that is your goal and bring on the popcorn to watch the show, maybe bitcoin will surprise us and the bull run will extend into 2022 and then slowly fizzle but who knows.
There is no valid reason to think that bitcoin and crypto et al will perform differently this time - we are very near the end of this cycle. There may still be a parabolic rise to $100K for bitcoin or not.
It means all the altcoins would have one last blast off - even the dead ones like EOS. A rising sea elevates all ships.

The key concept here is the four-year cycle and the strength and dominance of bitcoin to move the price including the price of all the altcoins including eth.
None of them not even ETH is strong enough to move on their own - yet.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 19, 2021, 12:22:51 PM
Oh sweet we've got a 4 year cycle on something that's only been thru that what 3x

You talk about this like it's been around for decades. And you continue to use terms and comparisons typically used for equity markets that have established history.

There's plenty of valid reason to think it will be different every single day bc it doesn't have enough history to say it will do anything predictable long term.

Further you sound like a chart reader talking about when to buy and sell and time stuff saying things like this. Which most people avoid when trying to invest for wealth and maintain it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 19, 2021, 02:40:30 PM
Whomever compared crypto to the internet early on really had an excellent example. It's one thing to know a technology will be major in the future, it's another to effectively invest in the exact right avenue and not get wiped out along the way.

But... will it be major in the future? Every bank and financial institution has tried and failed to come up with some problem cryptocurrencies could solve. They've had 12 years to do this, and still the only use-cases are speculation, regulatory arbitrage, ransomware, and criminality. Is it not possible that—like the Segway—crypto is a really amazing solution to almost nothing worthwhile?

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand. As far as I can tell, there is no evidence crypto is innovative in the sense that the internet was. There is substantial evidence that it is actively harmful to society at large: it allows for bypassing regulation (laws, like... AML, KYC, etc.), it allows its user to evade taxes, it enables extortion and scams, to say nothing of the environmental disaster it exacerbates. If cryptocurrencies suddenly vanished tomorrow, the world would be a slightly better place.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on November 19, 2021, 02:53:43 PM
Whomever compared crypto to the internet early on really had an excellent example. It's one thing to know a technology will be major in the future, it's another to effectively invest in the exact right avenue and not get wiped out along the way.

But... will it be major in the future? Every bank and financial institution has tried and failed to come up with some problem cryptocurrencies could solve. They've had 12 years to do this, and still the only use-cases are speculation, regulatory arbitrage, ransomware, and criminality. Is it not possible that—like the Segway—crypto is a really amazing solution to almost nothing worthwhile?

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand. As far as I can tell, there is no evidence crypto is innovative in the sense that the internet was. There is substantial evidence that it is actively harmful to society at large: it allows for bypassing regulation (laws, like... AML, KYC, etc.), it allows its user to evade taxes, it enables extortion and scams, to say nothing of the environmental disaster it exacerbates. If cryptocurrencies suddenly vanished tomorrow, the world would be a slightly better place.

I'm not at all convinced of crypto's use as a currency, but I have now spent enough time with very smart people who are currently advising my government on possible uses for the technology, not just as a currency, and this is where I think some unexpected potential might start turning up.

However, I am in no way an expert and in no way equipped to make those arguments. But much more tech savvy people than myself who are not patient enough or don't owe me enough to take the time and explain things to me like I'm 5, have made it clear that they don't see crypto primarily as an anti establishment currency toppler like a lot of the idealists do.

I wish I understood the workings of crypto better enough to understand what the fuck they're talking about, but I know enough to recognize when someone isn't 1000% full of idealistic shit.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 19, 2021, 07:09:31 PM
There certainly are no 100Xs any longer, no one even expects a 3X or 5X except for the moon boys. Perhaps the institutional investments will have an effect on price stability...
It hurts your case that Bitcoin tripled in the last 12 months.  Nobody expects what happened now to happen again?  Historical data doesn't support your claim.
https://finance.yahoo.com/quote/BTC-USD/

In case BTC changes price soon, note that GBTC quadrupled last year, in 2020:
https://www.morningstar.com/etfs/pinx/gbtc/performance


THERE IS NOTHING NEW OR DIFFERENT ABOUT THIS CRYPTO BUBBLE
It happens every four years.
In my opinion, it is time to take your profits if that is your goal and bring on the popcorn to watch the show, maybe bitcoin will surprise us and the bull run will extend into 2022 and then slowly fizzle but who knows.
There is no valid reason to think that bitcoin and crypto et al will perform differently this time - we are very near the end of this cycle. There may still be a parabolic rise to $100K for bitcoin or not.
"Bitcoin's most recent halving occurred on May 11, 2020."
https://www.investopedia.com/bitcoin-halving-4843769

On May 11, Bitcoin lost 10% compared to May 8.  It fully recovered a week later, on May 18.  Is that the "crash" you were talking about, driven by Bitcoin cutting the block reward in half?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 19, 2021, 07:41:18 PM
"The VanEck Bitcoin Strategy ETF (ticker XBTF) launched Tuesday" (Nov 16).
"While the ProShares fund absorbed $1.1 billion in just two days -- the quickest an ETF has ever done so -- that pace of growth has cooled considerably. Assets have lingered between $1.3 billion and $1.4 billion for the past several weeks, according to data compiled by Bloomberg."
https://www.bloomberg.com/news/articles/2021-11-16/bitcoin-futures-etf-frenzy-is-fading-fast-as-another-fund-debuts

I'm guessing two ETFs investing in the same underlying futures will have very similar performance.  I'll probably leave some in BITO, but I plan on chasing the lower expense ratio (0.65%) of XBTF.

As a bonus, I like the name better.  Bitcoin used to be "XBTC", like it was a currency.  While it's not looking like a suitable currency anytime soon, I like that VanEck researched and used an older name.  But that's just a bonus - I'm chasing (and rewarding) lower expense ratios with my investment dollars.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on November 19, 2021, 09:05:33 PM
If I wanted to make a guess about the future of the crypto, I'd ignore everything it's price has done so far and read:
Mandelbrot: The Misbehaviour of Markets
Taleb: Fooled by Randomness, The Black Swan, Antifragile

I borrowed and read the Taleb series (also Skin in the Game), and I came away from it a bitcoin-skeptic. I've mellowed since then, mainly because I think I've made other parts of my life more durable, so I can withstand the losses that crypto- not working out would inflict on me.
I don't think they say anything one way or the other. But I think they imply that if the past ten years of crypto are normal for crypto, then just think what happens when it has ten wild years by crypto standards.

There are also two totally different concepts when it comes to crypto.

The speculative gains and the actual future use. The actual gains of specific coins are largely based on hype, not on actual use. It still remains to be seen which coins will have utility in the future and what use they will perform.

I for one, despite not being impressed with ANY use cases I've seen presented in this thread, am actually quite interested in future uses of crypto, and happen to currently be running a non profit with a very, very prominent player in the crypto world.

He's really opened my eyes to the difference between utility and the current unhinged value of high priced coins.

I've read every word Taleb has written at least 3 times. I totally agree that individual crypto coins as an investment right now are kind of insane, because it's a gamble as to who in the end will end up the most utilized once actual use is shaken out.

Whomever compared crypto to the internet early on really had an excellent example. It's one thing to know a technology will be major in the future, it's another to effectively invest in the exact right avenue and not get wiped out along the way.

Is it smart to just by Bitcoin? I don't know, it's value is so insane right now and it's coin has so many drawbacks compared to some newer coins, not the least of which is the environmental concern in a time where world governments are all starting to turn their creaky old machines towards sustainability.

Then what about Etherium? Sure, okay, good coin, but also very expensive and there are other coins that are basically identical.

Well what about EOS? The "Etherium killer" that Block.one totally dropped the ball on? It's selling for a measly $3-4/coin, and yet is still considered a "top 10 coin" and can actually handle high volume transactions, and currently does, although most of those current transactions are totally worthless.

If we go back to the example of the internet, none of the early players survived except for Yahoo, which was the first big dog and substantially better than the other garbage services, but it did eventually die after being so bad for so long and making the dumbfuck decision of not selling.

So is Bitcoin the crypto Yahoo? The biggest of the first gen with serious staying potential as long as it adapts to the rapidly changing ecosystem? Can it adapt as needed?

So then who ends up being Google? Who ends up the one coin to rule them all? Is EOS the sleeping giant that will finally overcome its leadership in-fighting and keep working in the background until it can forge a path forward, or will the bickering between Block.one and the community drag it down in the mud until it drowns?

Or will we all end up buying our cars and houses with Dog Money at the end of the day?

There is a TON of randomness in the crypto world right now, and Taleb is right, it's virtually impossible to know what the smart play is, just like it was impossible to know exactly which business was the right bet at the beginning of the internet.

It's one thing to see the vague shape of technology coming, it's another to know exactly where to invest your dollars.

If I were to buy coins, my bet would probably be EOS, because I wouldn't buy individual coins unless I was willing to lose my money and hoping for a moonshot. Just because it's cheap and still feasibly could take off if they can get past their initial faceplant. I would consider a top coin ETF though.

FTR, I was just away for vacation visiting DH's family, some of whom are working class O&G folks and very anti-establishment but with no real rationale, and who have been crypto-crazy, and I am bloody exhausted from total fucking clueless crypto-pushers. It's these pushy conversations that make even talking about crypto so tedious sometimes.

I've also had a good laugh at a whole new type of crypto article that I'm seeing, which is basically explaining the basics of crypto risk to idiots. The concept of meme coins, how speculation works, why some coin investments might be risky. Basically, explaining Shit-coins to the kind of people who call every crypto coin a "Bitcoin"

When you see the fucking idiocy that is propping up some of these values, it's entertaining, but also so very tiresome.

One cousin paid for a coffee with his phone and used that as evidence that crypto is the future. "See, with technology, we don't even need banks. See! I don't even need a bank card! That's the future, that's crypto!" The dude was using his bank card...on his phone.

I said "there was a dude years ago who put an RFID chip in his arm to pay for things, well before crypto" trying to point out that RFID tech has nothing to do with crypto and that the tech in his bank card is the EXACT same thing, and the guy enthusiastically responded "yeah! The future! Crypto!"

*Facepalm*

Fooled by randomness indeed.

Anyway, idiots and even idealists aside, I'm still avidly paying attention to how this will all play out. As someone who was dating the founder of a tech startup in the early 2000s, was very much part of that world, and saw far more individual investors lose money than make money, this is feeling very familiar, and I'm rather interested to see how it plays out.

The hype, the idealism, the idiocy, the floods of money not really having clear direction as to where to go, it feels the same. We'll see if the absolute gruesome carnage of that time plays out in a similar fashion or not.

@Malcat, thanks for posting these thoughts. Combining the experience, the people, and your own evaluation makes them a valuable report from my viewpoint.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on November 19, 2021, 09:10:53 PM
Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand. As far as I can tell, there is no evidence crypto is innovative in the sense that the internet was.

I'd like to expand on that a little bit.  In the early days of the Internet-especially after the web became available to the the public, it was clear the Internet was going to be huge, and it was also clear that there was vastly more out there than anyone was imaging at the time.  No one was really sure, but everyone knew it would be big.   Remember, in say, 1995 most people probably didn't have email.    There was profusion of all these ideas about what the Internet could be come.     Most of them didn't pan out but some of them did, and a select few panned out in a incredible ways. 

Which brings us to cryptocurrency.   The upsides of cryptocurrency are:

1) There is no need for a trusted third-party
2) Currency cannot be manipulated by a central bank
3) Easy cross-border transactions

And maybe one or two other small advantages, but that's about it.  3) seems attractive in some cases, but I haven't needed it.  There are also some non-trivial downsides to 1) and 2).   In the meantime, I go to the grocery store and the credit card works fine.   I don't see any problem in my life that crypto would solve or make easier. 

In all of these crypto threads we've had, literally the only reason people say you should buy crypto is "it goes up a lot."  That's not a bad reason by itself, but it raises the question, "why does it go up a lot?"

The reason isn't because "people use it to buy stuff."  The reason is that there is a belief that more people will want to own it in the future than own it right now.   





Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on November 19, 2021, 10:09:14 PM

There certainly are no 100Xs any longer, no one even expects a 3X or 5X except for the moon boys. Perhaps the institutional investments will have an effect on price stability...
It hurts your case that Bitcoin tripled in the last 12 months.  Nobody expects what happened now to happen again?  Historical data doesn't support your claim.
https://finance.yahoo.com/quote/BTC-USD/ (https://finance.yahoo.com/quote/BTC-USD/)

In case BTC changes price soon, note that GBTC quadrupled last year, in 2020:
https://www.morningstar.com/etfs/pinx/gbtc/performance (https://www.morningstar.com/etfs/pinx/gbtc/performance)


THERE IS NOTHING NEW OR DIFFERENT ABOUT THIS CRYPTO BUBBLE
It happens every four years.
In my opinion, it is time to take your profits if that is your goal and bring on the popcorn to watch the show, maybe bitcoin will surprise us and the bull run will extend into 2022 and then slowly fizzle but who knows.
There is no valid reason to think that bitcoin and crypto et al will perform differently this time - we are very near the end of this cycle. There may still be a parabolic rise to $100K for bitcoin or not.
"Bitcoin's most recent halving occurred on May 11, 2020."
https://www.investopedia.com/bitcoin-halving-4843769 (https://www.investopedia.com/bitcoin-halving-4843769)

On May 11, Bitcoin lost 10% compared to May 8.  It fully recovered a week later, on May 18.  Is that the "crash" you were talking about, driven by Bitcoin cutting the block reward in half?


1. Sorry, I wasn't clear - the 100X referred to the past and the part about the 3X or 5X is meant to refer to the present as in going forward from right now.
As in from today to the end of this cycle.


2. No - not at all. The crash to end this cycle hasn't happened yet. This is an up-to-date take with solid data:
  https://cointelegraph.com/news/next-bitcoin-price-crash-will-be-shallower-than-80-says-pantera-capital-ceo



3.  The four-year bitcoin market cycle  - 2012, 2016, and 2020 halving events.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 20, 2021, 05:49:19 AM
Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.
Are you you saying that just to troll people?  You're the expert that can decide who understands which problem?  Because you understand them all, and nobody else does?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 20, 2021, 05:59:36 AM

There certainly are no 100Xs any longer, no one even expects a 3X or 5X except for the moon boys. Perhaps the institutional investments will have an effect on price stability...
It hurts your case that Bitcoin tripled in the last 12 months.  Nobody expects what happened now to happen again?  Historical data doesn't support your claim.
https://finance.yahoo.com/quote/BTC-USD/ (https://finance.yahoo.com/quote/BTC-USD/)

In case BTC changes price soon, note that GBTC quadrupled last year, in 2020:
1. Sorry, I wasn't clear - the 100X referred to the past and the part about the 3X or 5X is meant to refer to the present as in going forward from right now.
As in from today to the end of this cycle.
Based on what data?  You claim nobody "expects a 3X or 5X except for the moon boys".  Is that insult supposed to prove your point without data?

In the past 12 months, Bitcoin tripled.  I provided evidence.  I think it's reasonable to assume it could triple in the future.  Right now, the data is on my side, not yours.  Feel free to add data to support your view... a viewpoint without data strikes me as weaker than a point backed by data.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on November 20, 2021, 06:12:11 AM
Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand. As far as I can tell, there is no evidence crypto is innovative in the sense that the internet was.

I'd like to expand on that a little bit.  In the early days of the Internet-especially after the web became available to the the public, it was clear the Internet was going to be huge, and it was also clear that there was vastly more out there than anyone was imaging at the time.  No one was really sure, but everyone knew it would be big.   Remember, in say, 1995 most people probably didn't have email.    There was profusion of all these ideas about what the Internet could be come.     Most of them didn't pan out but some of them did, and a select few panned out in a incredible ways. 

Which brings us to cryptocurrency.   The upsides of cryptocurrency are:

1) There is no need for a trusted third-party
2) Currency cannot be manipulated by a central bank
3) Easy cross-border transactions

And maybe one or two other small advantages, but that's about it.  3) seems attractive in some cases, but I haven't needed it.  There are also some non-trivial downsides to 1) and 2).   In the meantime, I go to the grocery store and the credit card works fine.   I don't see any problem in my life that crypto would solve or make easier. 

In all of these crypto threads we've had, literally the only reason people say you should buy crypto is "it goes up a lot."  That's not a bad reason by itself, but it raises the question, "why does it go up a lot?"

The reason isn't because "people use it to buy stuff."  The reason is that there is a belief that more people will want to own it in the future than own it right now.

The two crypto experts I've been talking to don't invest in coins because they don't see toppling existing currencies as the future use of blockchain technology. They see it like the internet, something which will eventually create its own uses.

This is where I get lost and don't understand it. But when I know that that someone is making significant sums advising governments on how the tech works and how it *might* be used, I sit up a little straighter and pay attention.

It doesn't mean I'll make any speculative investments, because if the use is unpredictable, then it's virtually impossible to predict who of the current players will survive.

And as I said about the dot com era, everyone likes to remember the money that was made, but let's not forget about the MASSIVE number of people who lost money.

When I think back to 2004, living with a bunch of tech guys who had lost everything. The boom of the internet at that time was seen by a lot in tech as gruesome loss with the field of companies littered with dead bodies.

VCs were throwing gobs of money at anything "internet", individual investors were frothing at the mouth to give their money to the new tech investments because everyone was making money hand over fist for awhile. Idiot cousins were rambling on about "the internet" and "the future" and pushing their relatives to invest in tech start-ups.

I personally don't think back on the dot com era with a sense that it all worked out and people made a lot of money. What I primarily remember is people losing money, and then some shiny giants rising from the ashes of everyone else's losses.

It's that experience that makes me such a cautious investor when I see tech hype. Especially when I see tech hype that the people hyping can't seem to explain very well.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 20, 2021, 04:03:36 PM
Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.
Are you you saying that just to troll people?  You're the expert that can decide who understands which problem?  Because you understand them all, and nobody else does?

Huh? No?! I think many of us are still very interested in hearing a single coherent use-case for blockchain that: 1. Isn’t to drive pure speculation, 2. Isn’t criminal, 3. Actually benefits from the properties of blockchain (i.e., would not be better solved with a sql database)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: effigy98 on November 20, 2021, 07:56:43 PM
MSTR is a better BTC play if you need to use the stock market (retirement account).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Gatzbie on November 21, 2021, 12:25:36 AM
Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.
Are you you saying that just to troll people?  You're the expert that can decide who understands which problem?  Because you understand them all, and nobody else does?

Huh? No?! I think many of us are still very interested in hearing a single coherent use-case for blockchain that: 1. Isn’t to drive pure speculation, 2. Isn’t criminal, 3. Actually benefits from the properties of blockchain (i.e., would not be better solved with a sql database)

Crypto world still appears to be in its infancy (even for the current top coins) with no real-world use cases for people living in first-world countries. Right now - try to send $100 worth of any ERC-20 token on Ethereum - you will have to pay $800 in fees. What does Bitcoin do? Well it just goes up. Many people have agreed on the idea that it's a store of value & have collectively put in $1.1T dollars on this idea. Bitcoin's only value is if its market cap can keep going up. Holders sometimes referred to as "shillers' must keep convincing new money to keep coming into this idea so it can remain a store of value so they can take profits. Bitcoin will only lose value when new money quits coming in for X reason.

 Many alt-coins *ahem* *cough* shit-coins ride on the tail-winds of Bitcoin going up only exist to be pumped & dumped to ride on peoples hopes to get rich fast with 21,000% returns. I know people who have tried to get me involved on these. Would I be up a lot if I bought Saitama wolfpack coin for $0.00000025 & joined the wolfpack? Yes, I would be up 1,000% compared to my S&P 500 if I joined the wolfpack that night. People out there are making huge gains on this.

For the good projects out there, will keep improving to where someday can have real-world use cases. The nonsense silly projects will die. Which ones will hang in there? The ones that are the fastest to solve real-world problems, offer a convenient way for the masses to use, & execute on pulling users to their project. Bitcoin & Ethereum etc. had first-mover advantage & coins that offer better scalability already are being developed & catching up or are finding & developing their own niche uses.

Good projects out there still trying to improving on themselves to become better & better. Maybe some day will be able to apply themselves & have real world use cases.

As of November 2021: I am seeing a coin out to replace Ethereum that offers better scalability, 9% stablecoin interest on CEFI or 20% fixed rate stable interest accounts on DEFI with additional options to pursue "delta neutral strategy" on "synthetic stocks" aka you don't own Tesla stock but you buy something that tracks its price in the crypto world to get a "conservative" & "reliable" 40% gain on average, & places to buy untraceable Chili's gift cards with crypto to help evade taxes on your gains while at the same time having a nice family dinner with unlimited salsa.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 21, 2021, 01:06:27 AM
Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.
Are you you saying that just to troll people?  You're the expert that can decide who understands which problem?  Because you understand them all, and nobody else does?
Huh? No?! I think many of us are still very interested in hearing a single coherent use-case for blockchain that: 1. Isn’t to drive pure speculation, 2. Isn’t criminal, 3. Actually benefits from the properties of blockchain (i.e., would not be better solved with a sql database)
Read the quote again - that's not what you said.  You said of this thread, "solve non-existent problems they didn't understand".  That's an insult, not curiousity.  You claim others "didn't understand", implying you do?  And you said "non-existent problems" covering every post in this thread?  That comes off as arrogant and trolling.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 21, 2021, 01:10:58 AM
Right now - try to send $100 worth of any ERC-20 token on Ethereum - you will have to pay $800 in fees.
What source claims Ethereum gas fees are $800?

"ERC20 Transfer   $20.11"
https://etherscan.io/gastracker

Graph showing a fee under $40.
https://bitinfocharts.com/comparison/ethereum-transactionfees.html#3m
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Gatzbie on November 21, 2021, 01:18:15 AM
A bit of an exaggeration to get a point across. I based on posts i've seen on places like reddit.. Some people trying to send $50 worth of stablecoins paying $80 of transaction fees. The fees are so high they cannot move their stablecoins in current environment so must HODL. Apparently they are trying to make upgrades to help solve this as part of Ethereum 2.0 upgrades. Many are being encouraged to use L2 now instead of L1 which whales or institutional inventors can continue using with high fees.

I can send you an example trasnaction hash I saw - look at it on etherscan:
0xf5a93bf4985b16d9af580b7f8617f67da32ca5c32764894149fbd5d0c2e566fa

$85.42 to send $50 but I believe this ether price fluctuates from when it was originally sent - originally was still over $50 though.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on November 21, 2021, 02:59:13 AM
Why worry about ETH fees, if you're not a whale just don't use the ETH network.  BSC fees are 30 cents, AVAX fees are 50-70cents.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 21, 2021, 03:16:49 AM
Read the quote again - that's not what you said.  You said of this thread, "solve non-existent problems they didn't understand".  That's an insult, not curiousity.  You claim others "didn't understand", implying you do?  And you said "non-existent problems" covering every post in this thread?  That comes off as arrogant and trolling.

Perhaps your definition troll differs from mine. I feel like I’m being gaslit here.

Reread the thread. There are examples of: Ticketmaster replacements, supply chain tracking, etc. And they all fall into the “the poster did not understand the problem at hand. And blockchain is also an non-solution”. I do not believe you are debating in good faith. I won’t recognize any further bad-faith responses from you.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 21, 2021, 07:03:42 AM
Read the quote again - that's not what you said.  You said of this thread, "solve non-existent problems they didn't understand".  That's an insult, not curiousity.  You claim others "didn't understand", implying you do?  And you said "non-existent problems" covering every post in this thread?  That comes off as arrogant and trolling.

Perhaps your definition troll differs from mine. I feel like I’m being gaslit here.

Reread the thread. There are examples of: Ticketmaster replacements, supply chain tracking, etc. And they all fall into the “the poster did not understand the problem at hand. And blockchain is also an non-solution”. I do not believe you are debating in good faith. I won’t recognize any further bad-faith responses from you.

It's all he does welcome to the debate about words because the real debate can't be debated. 

Ive decided this poster is toxic to actual conversations so I've quit talking to them. All they do is claim personal attack and then debate the words that were said and what was meant and do not actually have productive conversations about what's going on. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on November 21, 2021, 07:11:15 AM

There certainly are no 100Xs any longer, no one even expects a 3X or 5X except for the moon boys. Perhaps the institutional investments will have an effect on price stability...
It hurts your case that Bitcoin tripled in the last 12 months.  Nobody expects what happened now to happen again?  Historical data doesn't support your claim.
https://finance.yahoo.com/quote/BTC-USD/ (https://finance.yahoo.com/quote/BTC-USD/)

In case BTC changes price soon, note that GBTC quadrupled last year, in 2020:
1. Sorry, I wasn't clear - the 100X referred to the past and the part about the 3X or 5X is meant to refer to the present as in going forward from right now.
As in from today to the end of this cycle.
Based on what data?  You claim nobody "expects a 3X or 5X except for the moon boys".  Is that insult supposed to prove your point without data?

In the past 12 months, Bitcoin tripled.  I provided evidence.  I think it's reasonable to assume it could triple in the future.  Right now, the data is on my side, not yours.  Feel free to add data to support your view... a viewpoint without data strikes me as weaker than a point backed by data.

No insult intended here and certainly not to you. My statement reflects my opinion which was originally a response to Malcat's post.
Of course, I've seen the same data you have - there is no disagreement about that either. 

My viewpoint is more conservative because I see the data only as a starting point. There will be no more 100X going forward surely you agree on that.
No, I do not think it is reasonable to assume bitcoin could triple again 'in this cycle' - in the future, absolutely.
There are plenty of predictions and charts wherever you look, 3X is popular but I am not convinced. 

I don't see the point in arguing about which projection is more reasonable.
Past data did not include the effect of institutional adoption and the approval of BITO Futures ETF has on the current bitcoin market since neither one existed. If it does 3X great, I'd love that but I think it is more reasonable to assume it will do $98K to around $135K in this cycle.
Nobody knows what bitcoin will do until it happens.
Just my two cents.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 21, 2021, 09:33:24 AM

There certainly are no 100Xs any longer, no one even expects a 3X or 5X except for the moon boys. Perhaps the institutional investments will have an effect on price stability...
It hurts your case that Bitcoin tripled in the last 12 months.  Nobody expects what happened now to happen again?  Historical data doesn't support your claim.
https://finance.yahoo.com/quote/BTC-USD/ (https://finance.yahoo.com/quote/BTC-USD/)

In case BTC changes price soon, note that GBTC quadrupled last year, in 2020:
1. Sorry, I wasn't clear - the 100X referred to the past and the part about the 3X or 5X is meant to refer to the present as in going forward from right now.
As in from today to the end of this cycle.
Based on what data?  You claim nobody "expects a 3X or 5X except for the moon boys".  Is that insult supposed to prove your point without data?

In the past 12 months, Bitcoin tripled.  I provided evidence.  I think it's reasonable to assume it could triple in the future.  Right now, the data is on my side, not yours.  Feel free to add data to support your view... a viewpoint without data strikes me as weaker than a point backed by data.

No insult intended here and certainly not to you. My statement reflects my opinion which was originally a response to Malcat's post.
Of course, I've seen the same data you have - there is no disagreement about that either. 

My viewpoint is more conservative because I see the data only as a starting point. There will be no more 100X going forward surely you agree on that.
No, I do not think it is reasonable to assume bitcoin could triple again 'in this cycle' - in the future, absolutely.
There are plenty of predictions and charts wherever you look, 3X is popular but I am not convinced. 

I don't see the point in arguing about which projection is more reasonable.
Past data did not include the effect of institutional adoption and the approval of BITO Futures ETF has on the current bitcoin market since neither one existed. If it does 3X great, I'd love that but I think it is more reasonable to assume it will do $98K to around $135K in this cycle.
Nobody knows what bitcoin will do until it happens.
Just my two cents.
I expect many people expect Bitcoin to go 3X or more, which is why I got argumentative over the term you used.  But with that out of the way, I'm open to being corrected if my 3X or greater estimate (based on past data) is unrealistic.  If I was 100% certain Bitcoin is growing at just 2x in the next 4 years, I'd sell my holdings.  That would only be a 19% rate of return for something that could lose almost all it's value.

While I would also worry about institutional adoption, I don't think it's happened yet.  Take the new BITO ETF with $1.4 billion and GBTC with $8 billion.  Compare that to the 24h volume of Bitcoin, which is $25 billion.  Even if that number is inflated, BITO's assets are nothing compared to a month of BTC trad volume.  And GBTC has been around for years, so the comparison is even more stark there.  If you have a different source of institutional Bitcoin investing, I could be wrong - and that I'd like to know.  Institutional billions is a danger sign for me.

Last year Bitcoin dropped about twice as much as the stock market, and several years ago it fell by about 80%.  Bitcoin recovered both times, as it has in the past, and made new highs later.  Why?  Well, that's speculation for you.  But the past high returns were also accompanied by steep drops, suggesting Bitcoin might still have price gains to make.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on November 21, 2021, 12:40:58 PM
Read the quote again - that's not what you said.  You said of this thread, "solve non-existent problems they didn't understand".  That's an insult, not curiousity.  You claim others "didn't understand", implying you do?  And you said "non-existent problems" covering every post in this thread?  That comes off as arrogant and trolling.

Perhaps your definition troll differs from mine. I feel like I’m being gaslit here.

Reread the thread. There are examples of: Ticketmaster replacements, supply chain tracking, etc. And they all fall into the “the poster did not understand the problem at hand. And blockchain is also an non-solution”. I do not believe you are debating in good faith. I won’t recognize any further bad-faith responses from you.

It's all he does welcome to the debate about words because the real debate can't be debated. 

Ive decided this poster is toxic to actual conversations so I've quit talking to them. All they do is claim personal attack and then debate the words that were said and what was meant and do not actually have productive conversations about what's going on.

I come to a different conclusion fwiw. The same person you're talking about has repeatedly tried to apply precise terms and reasoning not just to crypto but to other investing questions, such as:

1) whether to hedge stock index investments or even speculate using defensive SPY options (puts?) in Feb 2020 due to COVID (he did it, explained his actions and reasons in real time; made a few bucks, narrowly missed a huge win, timed the trough within days in his first timing exercise);
2) whether continued analysis of COVID growth could generate continued useful investing theses;
3) whether investments based on the theory that we would bounce back from COVID could be profitably done (see his Experiment series, where he detailed 200%+ gains in real time over numerous posts using 3 example picks of individual stocks);
4) in this thread, I have seen him respond with precision, misunderstand others' words, and apologize after clarification was made.

Finding precise definitions of terms and then reasoning from them is just how he thinks, as far as I can tell. Sometimes very productively.

Overall, it appears to me that he:
5) argues in good faith, but sounds so vehement that some people who look at individual examples suppose he's a troll when he really isn't;
6) is exactly the same as several other posters on this thread, in that several posters meet the description in 5 - I think you are one of them, and I probably am too sometimes;
7) has a lot to say, as do you and several others;
8) adds to the discussion by his questions, just as you do by yours.

Fwiw, this thread has gone to greater depth than many others by continuing discussion instead of assuming bad faith on others' part. I hope the assumption is something that fades and that the discussion, the most informative I've seen so far, continues.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 23, 2021, 01:21:28 AM
Read the quote again - that's not what you said.  You said of this thread, "solve non-existent problems they didn't understand".  That's an insult, not curiousity.  You claim others "didn't understand", implying you do?  And you said "non-existent problems" covering every post in this thread?  That comes off as arrogant and trolling.

Perhaps your definition troll differs from mine. I feel like I’m being gaslit here.

Reread the thread. There are examples of: Ticketmaster replacements, supply chain tracking, etc. And they all fall into the “the poster did not understand the problem at hand. And blockchain is also an non-solution”. I do not believe you are debating in good faith. I won’t recognize any further bad-faith responses from you.

It's all he does welcome to the debate about words because the real debate can't be debated. 

Ive decided this poster is toxic to actual conversations so I've quit talking to them. All they do is claim personal attack and then debate the words that were said and what was meant and do not actually have productive conversations about what's going on.
Yet you can't stop attacking me, can you?  I started a thread to debate factor investing with you, and what did you do?  Attack me for discussing GME options, which wasn't being discussed.  Attacked me for posting about crypto, which also wasn't being discussed.  You can play the victim and deny it - after you deleted the evidence - but it's still quoted in my replies.
https://forum.mrmoneymustache.com/investor-alley/factor-investing-(small-value-momentum-quality-investibilty-)/msg2925111/#msg2925111

Yes, I quote people's words when they say the wrong thing - like you just did.  Where in this thread did I "claim personal attack"?  Like I said before, quote me - don't misinterpret what I said.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 23, 2021, 11:55:37 AM
I wasn't the only one who thought you were attacking me, @boarder42.  To refresh your memory, this is the moderator warning you got less than 4 weeks ago:

...
...
You're arguing with someone who is citing the last 10-15 years as reasons for investing strategy in multiple threads on here. Also someone trading gme options I'm not sure it's worth the effort.

MOD NOTE: Attack an argument, not a person, please.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 27, 2021, 07:11:42 AM
Read the quote again - that's not what you said.  You said of this thread, "solve non-existent problems they didn't understand".  That's an insult, not curiousity.  You claim others "didn't understand", implying you do?  And you said "non-existent problems" covering every post in this thread?  That comes off as arrogant and trolling.

Perhaps your definition troll differs from mine. I feel like I’m being gaslit here.

Reread the thread. There are examples of: Ticketmaster replacements, supply chain tracking, etc. And they all fall into the “the poster did not understand the problem at hand. And blockchain is also an non-solution”. I do not believe you are debating in good faith. I won’t recognize any further bad-faith responses from you.
My quoting you is gaslighting?  I think the distinction you're missing is that something can both be true and be offensive.  Someone calling their boss a jerk may be true, but they can still get fired for offending their boss.  Your original quote, which I keep going back to, was offensive.

Now to take what you're bringing up, it's also not true.  There are actual problems Bitcoin aims to solve.  The thread has numerous posts about how Lightning Network, which can scale up beyond what Visa already processes.  There's mentions of people sending cross-border payments without Western Union taking a 6% fee.  There's various discussions of real problems that you ignore by calling everything in this thread a "non-problem".

1. I think the utility of crypto as a currency in 3rd world countries with unstable currencies is real.

This is the main reason that I am pro-crypto...it solves several problems that the world needs solved...
1.  It's a global currency in a world that is now global. 
2.  Even if picked a nation-state backed currency like the dollar, the Euro, or the yuan to be a universal currency, it would still  require us to trust that nation state to
      a) not debase it...which we know won't happen...all nation states are debasing their currency by printing money.
      b) not cease to exist.  History shows us that the rise and fall of empires is a given.  The people who live in the US may continue to thrive if the U.S. empire changed ownership, but it's currency would likely be replaced.  Crypto is not tied to a nation state, so as long as there's internet, bitcoin will still be there. 

i think we've seen a practical application of block chain thru the tracking of digital art and media that people are selling.

Bitcoin can handle 7 transactions per second that's it.
In comparison, Visa can handle 45,000+ transactions vs Lightning currently at 25Mil per second but with the potential to do hundreds of millions.
Lightning solved the scaleability issue in this instance but there are always new projects and improvements in the wings.

The history of vulnerabilities with cash and credit card is even less encouraging because, unlike cash and credit card vulnerability, Lightning Network fixed their issues well over a year ago.  Also, no one lost funds due to a lightning network vulnerability.  The same cannot be said about the alternative.

I really, really hate paying credit card transaction fees. Crypto has the promise to solve this and make humanity vastly better off, but because bitcoin is so terribly designed it is actually preventing that scenario from becoming a reality.

I don't expect Bitcoin to work miracles in El Salvador, but I can easily imagine that thousands of people are already seeing tangible benefits. Let's say my neighbor and I both receive $100/month remittance from a relative in the United States, which is a very common situation there. Every month we walk to the Western Union office where we collect $94 after fees. Only this month I've received $100 through the Chivo App with no fees and didn't have to leave my home. I'm already $6 ahead, which is the first real-world tangible benefit most El Salvadorans will notice.


Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 27, 2021, 07:26:10 AM
In a poll I created, I mentioned rounding my crypto allocation up to 1%.  In this thread I also mentioned 1%.  So I find it odd that people want to accuse me of chasing crypto, when it's clearly "adding a low% of crypto" as the thread title states. 

And I will report each of them to the mods for breaking the forum rule of "attack an argument, not a person".  Times past I might have argued back and forth, and brushed off the character assassination.  Now I view it as someone who needs to learn the forum rules, and isn't worth the back and forth.  So if you see me not respond to one of these character attacks, it's with this in mind.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on November 27, 2021, 03:37:38 PM
The thread has numerous posts about how Lightning Network, which can scale up beyond what Visa already processes.

The Lightning Network has serious security vulnerabilities and undermines the security and anonymity of Bitcoin's blockchain.  While it might be at some point in the future . . . to date it's not a safe or effective way to transact.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on November 27, 2021, 11:21:19 PM
The thread has numerous posts about how Lightning Network, which can scale up beyond what Visa already processes.

The Lightning Network has serious security vulnerabilities. . .

You should point them out then so you can collect on a large bug bounty.

The thread has numerous posts about how Lightning Network, which can scale up beyond what Visa already processes.
. . . undermines the security and anonymity of Bitcoin's blockchain. . .

This statement does not make any sense. 

The thread has numerous posts about how Lightning Network, which can scale up beyond what Visa already processes.

. . . While it might be at some point in the future . . . to date it's not a safe or effective way to transact.

Tell that to the tens-of-thousands of users that safely and effectively use the LN daily.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 28, 2021, 01:20:55 AM
The thread has numerous posts about how Lightning Network, which can scale up beyond what Visa already processes.

The Lightning Network has serious security vulnerabilities and undermines the security and anonymity of Bitcoin's blockchain.  While it might be at some point in the future . . . to date it's not a safe or effective way to transact.
And others answered your post about that, that Lightning Network has fixed theoretical vulnerabilities, while nobody has lost money.  Another poster compared that to credit cards, where the vulnerabilities persist.

But my point was to refute the_gastropod's claim that crypto deals with non-problems.  A cheaper payment system can compete with Visa and Mastercard, who charge vendors a fee.  Bitcoin allows cross-border transfers, which avoids Western Union's even higher fees (according to the poster I quoted above).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on November 28, 2021, 08:29:35 AM
The thread has numerous posts about how Lightning Network, which can scale up beyond what Visa already processes.

The Lightning Network has serious security vulnerabilities. . .

You should point them out then so you can collect on a large bug bounty.

I think that is a great idea:)! There are millions of dollars ready and waiting for you to collect - all you have to do is find proof.

We've already discussed this from every angle what happens on lightning does not affect the bitcoin blockchain. Lightning is a success and they are developing/building bridges to other chains and more...

I wonder what Visa and Mastercard will give you if you find a flaw in their system?
They've been around for decades and undeniably still have hacks.

Think about it,
worldwide payment systems whether using crypto or not - cannot afford known serious security vulnerabilities or they are dead in the water.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 28, 2021, 10:13:35 AM

But my point was to refute the_gastropod's claim that crypto deals with non-problems.  A cheaper payment system can compete with Visa and Mastercard, who charge vendors a fee.  Bitcoin allows cross-border transfers, which avoids Western Union's even higher fees (according to the poster I quoted above).

But you’re not refuting my point. Solving problems you’ve created for yourself is not solving a problem. If I invent a car that runs on hamburgers, but it’s wildly expensive to run, replacing 40% of the hamburgers with gasoline is not solving a problem the world has, it’s solving a problem I have created by inventing my burger-mobile.

I’ve conceded repeatedly that one of the few things cryptocurrencies currently can do is: regulatory arbitrage. In fact, I stated precisely this in the same post you’re allegedly trying to refute. I’ll include it below again for completeness:

and still the only use-cases are speculation, regulatory arbitrage, ransomware, and criminality. Is it not possible that—like the Segway—crypto is a really amazing solution to almost nothing worthwhile?

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

Do you see why it’s easy to believe you’re not arguing in good faith? I’ll try to keep an open mind. Please. Give me a use-case that doesn’t fit the above exceptions that I’ve repeatedly given.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 28, 2021, 01:05:13 PM

But my point was to refute the_gastropod's claim that crypto deals with non-problems.  A cheaper payment system can compete with Visa and Mastercard, who charge vendors a fee.  Bitcoin allows cross-border transfers, which avoids Western Union's even higher fees (according to the poster I quoted above).

But you’re not refuting my point. Solving problems you’ve created for yourself is not solving a problem. If I invent a car that runs on hamburgers, but it’s wildly expensive to run, replacing 40% of the hamburgers with gasoline is not solving a problem the world has, it’s solving a problem I have created by inventing my burger-mobile.

I’ve conceded repeatedly that one of the few things cryptocurrencies currently can do is: regulatory arbitrage. In fact, I stated precisely this in the same post you’re allegedly trying to refute. I’ll include it below again for completeness:

and still the only use-cases are speculation, regulatory arbitrage, ransomware, and criminality. Is it not possible that—like the Segway—crypto is a really amazing solution to almost nothing worthwhile?

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

Do you see why it’s easy to believe you’re not arguing in good faith? I’ll try to keep an open mind. Please. Give me a use-case that doesn’t fit the above exceptions that I’ve repeatedly given.
I said a "cheaper payment system", referring to the Lightning Network, and you call that "Solving problems you’ve created for yourself"?  Instead of talking about the "cheaper payment system", you make up a story about cars running on hamburgers.  Who was arguing in bad faith, again?

You refuse to talk about "cheaper payment systems" because it's a real problem, and you claimed this thread had none.  Lightning Network starts and ends with transactions on Bitcoin's Blockchain, and uses Bitcoin for payments.  It has been mentioned repeatedly in this thread.  I'll repeat two quotes from earlier:


Bitcoin can handle 7 transactions per second that's it.
In comparison, Visa can handle 45,000+ transactions vs Lightning currently at 25Mil per second but with the potential to do hundreds of millions.
Lightning solved the scaleability issue in this instance but there are always new projects and improvements in the wings.

The history of vulnerabilities with cash and credit card is even less encouraging because, unlike cash and credit card vulnerability, Lightning Network fixed their issues well over a year ago.  Also, no one lost funds due to a lightning network vulnerability.  The same cannot be said about the alternative.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on November 28, 2021, 01:21:44 PM
And others answered your post about that, that Lightning Network has fixed theoretical vulnerabilities, while nobody has lost money.  Another poster compared that to credit cards, where the vulnerabilities persist.

But my point was to refute the_gastropod's claim that crypto deals with non-problems.  A cheaper payment system can compete with Visa and Mastercard, who charge vendors a fee.  Bitcoin allows cross-border transfers, which avoids Western Union's even higher fees (according to the poster I quoted above).

All your benefits should be prefaced with "in theory."   First, lets talk about the payment system.  The grocery store, gas station, and mortgage company don't accept Bitcoin.  They only take dollars.  So in order to buy a latte'  a transaction looks like this: USD -> BTC --> transfer via Lightning --> USD.  So there is still a round trip on the blockchain before the merchant can spend it.  That guaranteed more expensive than a Visa transaction.   

And let's do a thought experiment.  Big retailers like Wal-Mart and Amazon have sales in the hundreds of billions per year.  If they could shave even half a percent off of transaction costs that would still result in billions of dollars in savings.  I guarantee a tech company like Amazon isn't going to leave billions of dollars on the table because they don't understand Bitcoin/Lightning tech.  They've looked at it and concluded it doesn't make sense. 

A problem is that at a minimum, the capital cost of the transaction must be locked up per channel.   But if the payment is not sent directly from payer to payee, but rather hops via other routing nodes, these nodes also need to lock up at least transaction cost.  For that reason, the Lightning transaction failure rate increases in proportion to the size of the transaction.   No merchant wants  a payment system that has a risk of failure for high value transactions.  And it is also a lot of capital being locked up for unproductive uses. 

Another problem is the liveness issue.  Both parties need to be online to complete the transaction.  There are work arounds for this like watchtowers, which increase costs.  Or use of a custodial wallet--using a trusted third party, in other words. 

Let that last part sink in:  Lightning is a centralized network that benefits from use of a trusted third party.  It is the antithesis of the entire raison d'etre of Bitcoin.   It represents everything Bitcoin was designed to eliminate. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 28, 2021, 01:37:54 PM
Perfectly stated, Telecaster. MustacheAndaHalf. I do not mean this as a slight. It is just self-evident that once again, you’re providing hypothetical solutions to problems you don’t understand that well. Blockchain literally cannot be cheaper than a centralized solution like Visa or Mastercard because it is by design less efficient for the sake of decentralization. Again: the only place it can be cheaper is by bypassing regulations (which is what I mean by “regulatory arbitrage”)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on November 28, 2021, 02:41:01 PM
But you’re not refuting my point. Solving problems you’ve created for yourself is not solving a problem. If I invent a car that runs on hamburgers, but it’s wildly expensive to run, replacing 40% of the hamburgers with gasoline is not solving a problem the world has, it’s solving a problem I have created by inventing my burger-mobile.

I’ve conceded repeatedly that one of the few things cryptocurrencies currently can do is: regulatory arbitrage. In fact, I stated precisely this in the same post you’re allegedly trying to refute. I’ll include it below again for completeness:

Do you see why it’s easy to believe you’re not arguing in good faith? I’ll try to keep an open mind. Please. Give me a use-case that doesn’t fit the above exceptions that I’ve repeatedly given.
I said a "cheaper payment system", referring to the Lightning Network, and you call that "Solving problems you’ve created for yourself"?  Instead of talking about the "cheaper payment system", you make up a story about cars running on hamburgers.  Who was arguing in bad faith, again?

I see that @the_gastropod already responded, but I did not believe his analogy was in bad faith.  Let me explain.  Many people like the idea of Bitcoin for a long list of reasons we are all familiar with.  But two of the problems with using Bitcoin are 1) scalability and 2) transaction cost.  Lightning fixes some of those problems, but creates new problems which also require new fixes on top of the original fix.   

For example, the first step to initiating a Lightning transaction is to open a node.  I guarantee that step alone just eliminated 95% of the potential user base.    And you can't open a node on mobile at all without use of a third party app.  The original Bitcoin paper is titled "A Peer-to-Peer Electronic Cash System."  Using a third-party app isn't peer-to-peer. 

Another problem is that users don't pay Visa fees.  The merchants do.  Merchants could eliminate Visa fees tomorrow by requiring cash, at least for in-person purchases.  But most of them don't because the convenience of  credit card purchases increases consumer spending, and that makes up for the higher costs.   Easy to pay = good, from the payee's perspective.

Getting set up to open a Lightning node is a lot harder than swiping the Visa you already have.  The fact it might be cheaper for the merchant (which I don't believe, as discussed in my previous post) but it doesn't help the consumer--which is the person you need to convince.   Now, the merchant could rebate a percentage of the purchase price in exchange for using Lightning.  But doesn't benefit the merchant.   Why wouldn't he just continue to use the existing system if the costs are the same?  For mobile consumers, which is most of them--using Lightning in any practical sense requires using a custodial wallet.  Which is nearly identical to using a bank, but without the regulatory protections of using a bank.

Point is, as you start adding fixes on top of fixes you also start eliminating reasons to own Bitcoin in the first place.   I laughed at @the_gastropod 's hamburger car analogy, but it made sense.  The more you start trying to make the hamburger car function as well as a real car, the more like a real car it becomes. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on November 28, 2021, 03:17:34 PM
But you’re not refuting my point. Solving problems you’ve created for yourself is not solving a problem. If I invent a car that runs on hamburgers, but it’s wildly expensive to run, replacing 40% of the hamburgers with gasoline is not solving a problem the world has, it’s solving a problem I have created by inventing my burger-mobile.

I’ve conceded repeatedly that one of the few things cryptocurrencies currently can do is: regulatory arbitrage. In fact, I stated precisely this in the same post you’re allegedly trying to refute. I’ll include it below again for completeness:

Do you see why it’s easy to believe you’re not arguing in good faith? I’ll try to keep an open mind. Please. Give me a use-case that doesn’t fit the above exceptions that I’ve repeatedly given.
I said a "cheaper payment system", referring to the Lightning Network, and you call that "Solving problems you’ve created for yourself"?  Instead of talking about the "cheaper payment system", you make up a story about cars running on hamburgers.  Who was arguing in bad faith, again?

I see that @the_gastropod already responded, but I did not believe his analogy was in bad faith.  Let me explain.  Many people like the idea of Bitcoin for a long list of reasons we are all familiar with.  But two of the problems with using Bitcoin are 1) scalability and 2) transaction cost.  Lightning fixes some of those problems, but creates new problems which also require new fixes on top of the original fix.   

For example, the first step to initiating a Lightning transaction is to open a node.  I guarantee that step alone just eliminated 95% of the potential user base.    And you can't open a node on mobile at all without use of a third party app.  The original Bitcoin paper is titled "A Peer-to-Peer Electronic Cash System."  Using a third-party app isn't peer-to-peer. 

Another problem is that users don't pay Visa fees.  The merchants do.  Merchants could eliminate Visa fees tomorrow by requiring cash, at least for in-person purchases.  But most of them don't because the convenience of  credit card purchases increases consumer spending, and that makes up for the higher costs.   Easy to pay = good, from the payee's perspective.

Getting set up to open a Lightning node is a lot harder than swiping the Visa you already have.  The fact it might be cheaper for the merchant (which I don't believe, as discussed in my previous post) but it doesn't help the consumer--which is the person you need to convince.   Now, the merchant could rebate a percentage of the purchase price in exchange for using Lightning.  But doesn't benefit the merchant.   Why wouldn't he just continue to use the existing system if the costs are the same?  For mobile consumers, which is most of them--using Lightning in any practical sense requires using a custodial wallet.  Which is nearly identical to using a bank, but without the regulatory protections of using a bank.

Point is, as you start adding fixes on top of fixes you also start eliminating reasons to own Bitcoin in the first place.   I laughed at @the_gastropod 's hamburger car analogy, but it made sense.  The more you start trying to make the hamburger car function as well as a real car, the more like a real car it becomes.

This is exactly the thing. There may be brilliant uses for crypto, but like with any revolutionary invention, the uses that people propose for them tend to be stupid as fuck. Instead, it's the uses that evolve to meet the existence of the revolutionary tech that are the game changers.

The internet existed for a very long time before it became all that useful to anyone, and the predictions of what it could be used for back then were generally idiotic and easily shot down.

The phrase is that "necessity is the mother of invention" but history has proven that again and again to be a load of horseshit. People invent things generally because they're fucking nuts and feel compelled to, then down the line someone sane and practical figures out a use for it.

Wasn't the first internal combustion engine absolutely massive and had no practical use whatsoever, or something like that?

If blockchain ends up revolutionary, like the internet, and like many technologies before it, it will be difficult for us pre-revolutionary people to predict what it will mean to the world.

The question as to whether or not it's revolutionary remains to be seen.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 29, 2021, 07:06:53 AM
Perfectly stated, Telecaster. MustacheAndaHalf. I do not mean this as a slight. It is just self-evident that once again, you’re providing hypothetical solutions to problems you don’t understand that well. Blockchain literally cannot be cheaper than a centralized solution like Visa or Mastercard because it is by design less efficient for the sake of decentralization. Again: the only place it can be cheaper is by bypassing regulations (which is what I mean by “regulatory arbitrage”)
You're trying to move the goalposts, when I've bought up your same quote over and over.  You did not talk about "hypothetical solutions", you said and I quote, "solve non-existent problems".

You were wrong to ignore the Lightning Network, which does not "solve non-existent problems".  This post of yours, which I've quoted repeatedly, shows you were wrong.  Now others can watch you refuse to admit it for the 3rd or 4th time.

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 29, 2021, 07:19:16 AM
And others answered your post about that, that Lightning Network has fixed theoretical vulnerabilities, while nobody has lost money.  Another poster compared that to credit cards, where the vulnerabilities persist.

But my point was to refute the_gastropod's claim that crypto deals with non-problems.  A cheaper payment system can compete with Visa and Mastercard, who charge vendors a fee.  Bitcoin allows cross-border transfers, which avoids Western Union's even higher fees (according to the poster I quoted above).

All your benefits should be prefaced with "in theory."   First, lets talk about the payment system.  The grocery store, gas station, and mortgage company don't accept Bitcoin.  They only take dollars.  So in order to buy a latte'  a transaction looks like this: USD -> BTC --> transfer via Lightning --> USD.  So there is still a round trip on the blockchain before the merchant can spend it.  That guaranteed more expensive than a Visa transaction.   

And let's do a thought experiment.  Big retailers like Wal-Mart and Amazon have sales in the hundreds of billions per year.  If they could shave even half a percent off of transaction costs that would still result in billions of dollars in savings.  I guarantee a tech company like Amazon isn't going to leave billions of dollars on the table because they don't understand Bitcoin/Lightning tech.  They've looked at it and concluded it doesn't make sense. 

A problem is that at a minimum, the capital cost of the transaction must be locked up per channel.   But if the payment is not sent directly from payer to payee, but rather hops via other routing nodes, these nodes also need to lock up at least transaction cost.  For that reason, the Lightning transaction failure rate increases in proportion to the size of the transaction.   No merchant wants  a payment system that has a risk of failure for high value transactions.  And it is also a lot of capital being locked up for unproductive uses. 

Another problem is the liveness issue.  Both parties need to be online to complete the transaction.  There are work arounds for this like watchtowers, which increase costs.  Or use of a custodial wallet--using a trusted third party, in other words. 

Let that last part sink in:  Lightning is a centralized network that benefits from use of a trusted third party.  It is the antithesis of the entire raison d'etre of Bitcoin.   It represents everything Bitcoin was designed to eliminate.
Since when does the Lightning Network does not require third-party custodial wallets?  Can you quote your source for that claim?

I don't think that's true at all.  Others more familiar with Lightning Network can do a better job refuting it.  What I read is that either party can finish the transaction by themselves - they can close the channel at any time.  If one party is trying to steal from the other, they can be caught up to a week later, and lose all the Bitcoin they put into the transaction.  None of which involves third-party trust or wallets, so you should give a source for that.

I don't know who you're quoting with "in theory", but I would agree Bitcoin and Lightning Network are speculative.  That's why there's controversy, because some people believe there will be more value than the current BTC price, and others argue less - or even worthless.

If a start-up creates a payment system, they face a similar problem.  How many brick and mortar stores accept PayPal?  Not as many as accept it online.  A payment system starts as an untested experiment that people fear will risk their money.  Early adopters need to prove it works before there's any hope of adoption by later waves of customers and vendors.  We're not there yet for Lightning Network - it's speculative, and early on.  So yes, we don't know how it will turn out, which is why there's such strong disagreement in this thread about crypto.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 29, 2021, 07:22:16 AM
By the way, for people who view my posts here and think I own lots of crypto, I don't.  I've created a thread to discuss that over in 'case studies' so threads here don't go off topic.  If you think I am personally being too risky and chasing crypto, well I disagree, but it can be discussed here:
https://forum.mrmoneymustache.com/case-studies/passive-investor-20-years-turned-partially-active-in-2019/
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on November 29, 2021, 07:36:44 AM
By the way, for people who view my posts here and think I own lots of crypto, I don't.  I've created a thread to discuss that over in 'case studies' so threads here don't go off topic.  If you think I am personally being too risky and chasing crypto, well I disagree, but it can be discussed here:
https://forum.mrmoneymustache.com/case-studies/passive-investor-20-years-turned-partially-active-in-2019/

Is that whole thread just you arguing with nobody about how awesome your investment sense is?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 29, 2021, 08:06:20 AM
By the way, for people who view my posts here and think I own lots of crypto, I don't.  I've created a thread to discuss that over in 'case studies' so threads here don't go off topic.  If you think I am personally being too risky and chasing crypto, well I disagree, but it can be discussed here:
https://forum.mrmoneymustache.com/case-studies/passive-investor-20-years-turned-partially-active-in-2019/
Is that whole thread just you arguing with nobody about how awesome your investment sense is?
Well played. :)
It's more of an invitation to discuss my personal performance and investment choices there, for people who have trouble with "attack an argument, not a person" in the forum rules.  I do not have an "awesome ... investment sense" now, because my experiment is over and I've sold my outperforming investments.  But I did beat the market - see "an experiment" from Mar 26 2020 to Nov 5, 2021.

If you lack the urge to tell me to stop chasing crypto, that "Case Studies" thread is probably not for you.  But others here take my posts and assume I chase crypto with a large allocation, and I'd rather their opinions find voice in one thread there, than derail threads in this forum.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 29, 2021, 08:19:39 AM
You're trying to move the goalposts, when I've bought up your same quote over and over.  You did not talk about "hypothetical solutions", you said and I quote, "solve non-existent problems".

You were wrong to ignore the Lightning Network, which does not "solve non-existent problems".  This post of yours, which I've quoted repeatedly, shows you were wrong.  Now others can watch you refuse to admit it for the 3rd or 4th time.

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

There is a massive misunderstanding going on. The problem Lightning Network solves is a problem Bitcoin created. This was what my hamburger car analogy was all about. Altering a hamburger car to use gasoline isn't really solving a problem—it's just making your hamburger car less hamburgery. It's solving a problem you created for yourself by making a car that runs on hamburgers.

If you want me to admit "Lightning Network solved a problem Bitcoin created". Sure. Centralization (Lightning Network) is necessarily more efficient than decentralization. In that sense, Lightning Network solves a problem that Bitcoin suffers from. But is that really what you're arguing? I'm really bending over backwards to assume you're not trolling, at this point, though.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 29, 2021, 08:46:36 AM
You're trying to move the goalposts, when I've bought up your same quote over and over.  You did not talk about "hypothetical solutions", you said and I quote, "solve non-existent problems".

You were wrong to ignore the Lightning Network, which does not "solve non-existent problems".  This post of yours, which I've quoted repeatedly, shows you were wrong.  Now others can watch you refuse to admit it for the 3rd or 4th time.

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

There is a massive misunderstanding going on. The problem Lightning Network solves is a problem Bitcoin created. This was what my hamburger car analogy was all about. Altering a hamburger car to use gasoline isn't really solving a problem—it's just making your hamburger car less hamburgery. It's solving a problem you created for yourself by making a car that runs on hamburgers.

If you want me to admit "Lightning Network solved a problem Bitcoin created". Sure. Centralization (Lightning Network) is necessarily more efficient than decentralization. In that sense, Lightning Network solves a problem that Bitcoin suffers from. But is that really what you're arguing? I'm really bending over backwards to assume you're not trolling, at this point, though.
You invented the part in quotes, rather than quote what I actually said.  Quote me.  I've given you plenty of examples where I quote you.

(1) gastropod said "solve non-problems" referring to this entire thread, including the cheaper payment system called the Lightning Network
(2) I provided evidence this cheaper payment system, the Lightning Network, was discussed earlier.
My conclusion is the Lighting Network aims to provide a cheaper payment system (2), which is not solving a non-problem (1), therefore the gastropod's earlier statement (1) was wrong.


(1)
Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

(2)
Bitcoin can handle 7 transactions per second that's it.
In comparison, Visa can handle 45,000+ transactions vs Lightning currently at 25Mil per second but with the potential to do hundreds of millions.
Lightning solved the scaleability issue in this instance but there are always new projects and improvements in the wings.

The history of vulnerabilities with cash and credit card is even less encouraging because, unlike cash and credit card vulnerability, Lightning Network fixed their issues well over a year ago.  Also, no one lost funds due to a lightning network vulnerability.  The same cannot be said about the alternative.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 29, 2021, 09:07:16 AM
You're trying to move the goalposts, when I've bought up your same quote over and over.  You did not talk about "hypothetical solutions", you said and I quote, "solve non-existent problems".

You were wrong to ignore the Lightning Network, which does not "solve non-existent problems".  This post of yours, which I've quoted repeatedly, shows you were wrong.  Now others can watch you refuse to admit it for the 3rd or 4th time.

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

There is a massive misunderstanding going on. The problem Lightning Network solves is a problem Bitcoin created. This was what my hamburger car analogy was all about. Altering a hamburger car to use gasoline isn't really solving a problem—it's just making your hamburger car less hamburgery. It's solving a problem you created for yourself by making a car that runs on hamburgers.

If you want me to admit "Lightning Network solved a problem Bitcoin created". Sure. Centralization (Lightning Network) is necessarily more efficient than decentralization. In that sense, Lightning Network solves a problem that Bitcoin suffers from. But is that really what you're arguing? I'm really bending over backwards to assume you're not trolling, at this point, though.
You invented the part in quotes, rather than quote what I actually said.  Quote me.  I've given you plenty of examples where I quote you.

Ok, this is apparently one part of confusion. Quotation marks don't always indicate a quotation. You quote titles in books, etc. My use of quotation marks here is grouping a thought / argument. I'm explicitly asking you if that is what you are arguing. Apparently it is not. But I am really struggling to understand your point.

(1) gastropod said "solve non-problems" referring to this entire thread, including the cheaper payment system called the Lightning Network
(2) I provided evidence this cheaper payment system, the Lightning Network, was discussed earlier.
My conclusion is the Lighting Network aims to provide a cheaper payment system (2), which is not solving a non-problem (1), therefore the gastropod's earlier statement (1) was wrong.

(1)
Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

(2)
Bitcoin can handle 7 transactions per second that's it.
In comparison, Visa can handle 45,000+ transactions vs Lightning currently at 25Mil per second but with the potential to do hundreds of millions.
Lightning solved the scaleability issue in this instance but there are always new projects and improvements in the wings.

...What in the world? I am so confused here. You're comparing Lightning's hypothetical upper-limit to Visa's actual transactions to assert that Lightning Network solves a real-world problem—that Visa users suffer from Visa's well-known transaction scalability issues? And that is also your argument to prove that I was wrong about solving non-problems? You've got to be kidding me.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on November 29, 2021, 09:09:35 AM

The history of vulnerabilities with cash and credit card is even less encouraging because, unlike cash and credit card vulnerability, Lightning Network fixed their issues well over a year ago.  Also, no one lost funds due to a lightning network vulnerability.  The same cannot be said about the alternative.

It's not correct to compare 'losses' due to credit card vulnerability with losses due to lightning network vulnerability.

With credit cards, the individual users are protected by the credit card company.  Any issue or problem that exists and causes a loss will not be borne by the credit card holders - and thus is inconsequential from a use perspective.  This is fundamentally different from problems in the Lightning network where the risk is entirely borne by users.

Also, the Lightning Network has not fixed their known issues - several still exist.  See Griefing attacks, Eclipsing attacks, Pinning attacks, and Flood & Loot attacks.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 29, 2021, 10:28:44 AM
You're trying to move the goalposts, when I've bought up your same quote over and over.  You did not talk about "hypothetical solutions", you said and I quote, "solve non-existent problems".

You were wrong to ignore the Lightning Network, which does not "solve non-existent problems".  This post of yours, which I've quoted repeatedly, shows you were wrong.  Now others can watch you refuse to admit it for the 3rd or 4th time.

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

There is a massive misunderstanding going on. The problem Lightning Network solves is a problem Bitcoin created. This was what my hamburger car analogy was all about. Altering a hamburger car to use gasoline isn't really solving a problem—it's just making your hamburger car less hamburgery. It's solving a problem you created for yourself by making a car that runs on hamburgers.

If you want me to admit "Lightning Network solved a problem Bitcoin created". Sure. Centralization (Lightning Network) is necessarily more efficient than decentralization. In that sense, Lightning Network solves a problem that Bitcoin suffers from. But is that really what you're arguing? I'm really bending over backwards to assume you're not trolling, at this point, though.
You invented the part in quotes, rather than quote what I actually said.  Quote me.  I've given you plenty of examples where I quote you.

Ok, this is apparently one part of confusion. Quotation marks don't always indicate a quotation. You quote titles in books, etc. My use of quotation marks here is grouping a thought / argument. I'm explicitly asking you if that is what you are arguing. Apparently it is not. But I am really struggling to understand your point.

(1) gastropod said "solve non-problems" referring to this entire thread, including the cheaper payment system called the Lightning Network
(2) I provided evidence this cheaper payment system, the Lightning Network, was discussed earlier.
My conclusion is the Lighting Network aims to provide a cheaper payment system (2), which is not solving a non-problem (1), therefore the gastropod's earlier statement (1) was wrong.

(1)
Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

(2)
Bitcoin can handle 7 transactions per second that's it.
In comparison, Visa can handle 45,000+ transactions vs Lightning currently at 25Mil per second but with the potential to do hundreds of millions.
Lightning solved the scaleability issue in this instance but there are always new projects and improvements in the wings.

...What in the world? I am so confused here. You're comparing Lightning's hypothetical upper-limit to Visa's actual transactions to assert that Lightning Network solves a real-world problem—that Visa users suffer from Visa's well-known transaction scalability issues? And that is also your argument to prove that I was wrong about solving non-problems? You've got to be kidding me.
I used "cheaper payment system" in every line of the middle of my post, and you still refuse to talk about "cheaper payment system".  You have literally ignored the key point of my post three times in a row, which is a cheaper payment system.  How many posts do I have to write "cheaper payment system" before you use that phrase even once?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 29, 2021, 10:30:40 AM
GuitarStv - Would you agree or disagree that Lightning Network was brought up earlier in this thread as a cheaper payment system?  I am pointing out, to no avail, that Lightning Network is a cheaper payment system, and therefore is not solving a non-problem.  I am still waiting, for the nth time in a row, for gastropod to use the phrase "cheaper payment system" when I repeat it in every sentence of my post.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 29, 2021, 11:09:02 AM
GuitarStv - Would you agree or disagree that Lightning Network was brought up earlier in this thread as a cheaper payment system?  I am pointing out, to no avail, that Lightning Network is a cheaper payment system, and therefore is not solving a non-problem.  I am still waiting, for the nth time in a row, for gastropod to use the phrase "cheaper payment system" when I repeat it in every sentence of my post.

That nobody seems to be understanding the crux of your argument may indicate that your argument isn't particularly clear...

But ok. "cheaper payment system". Cheaper than what? To who? And how? Let's see some evidence. Why isn't it being more broadly used? What problem do you think the creators of the Lightning Network set out to solve? Was it "cheaper payments"? Further, do you think it's reasonable to compare costs of systems with under 60k users with ones serving over 1 billion people? Do you think Visa's operating at-cost, or do they operate on a profit because the market can bear that much in fees? If LN helped them lower their operating costs, do you think they'd adopt LN?

What's extra funny about this is: LN is a de-decentralization scheme. It's a mechanism to try to strike a balance between centralization and decentralization, because decentralization is inherently slow. In response to my assertion that blockchain almost exclusively solves non-problems, you cite a bypassing of the blockchain that makes blockchain-based systems faster as evidence that blockchain solves problems. With all due respect, that's a weird take, friend.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on November 29, 2021, 11:10:11 AM
GuitarStv - Would you agree or disagree that Lightning Network was brought up earlier in this thread as a cheaper payment system?  I am pointing out, to no avail, that Lightning Network is a cheaper payment system, and therefore is not solving a non-problem.  I am still waiting, for the nth time in a row, for gastropod to use the phrase "cheaper payment system" when I repeat it in every sentence of my post.

Yep - cheaper payment system.  Cheaper than using bitcoin.

The whole point of the invention of the Lightning Network was to solve the problems caused by attempting to use a decentralized, anonymous, peer to peer method of trading a commodity as though it were a currency.  That's why it implemented a centralized, fully identified, third party dependent payment system.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: index on November 29, 2021, 11:48:26 AM
GuitarStv - Would you agree or disagree that Lightning Network was brought up earlier in this thread as a cheaper payment system?  I am pointing out, to no avail, that Lightning Network is a cheaper payment system, and therefore is not solving a non-problem.  I am still waiting, for the nth time in a row, for gastropod to use the phrase "cheaper payment system" when I repeat it in every sentence of my post.

That nobody seems to be understanding the crux of your argument may indicate that your argument isn't particularly clear...

But ok. "cheaper payment system". Cheaper than what? To who? And how? Let's see some evidence. Why isn't it being more broadly used? What problem do you think the creators of the Lightning Network set out to solve? Was it "cheaper payments"? Further, do you think it's reasonable to compare costs of systems with under 60k users with ones serving over 1 billion people? Do you think Visa's operating at-cost, or do they operate on a profit because the market can bear that much in fees? If LN helped them lower their operating costs, do you think they'd adopt LN?

What's extra funny about this is: LN is a de-decentralization scheme. It's a mechanism to try to strike a balance between centralization and decentralization, because decentralization is inherently slow. In response to my assertion that blockchain almost exclusively solves non-problems, you cite a bypassing of the blockchain that makes blockchain-based systems faster as evidence that blockchain solves problems. With all due respect, that's a weird take, friend.

Let's define the competition as well:

Credit cards - Visa charges 14 bps + 5 - 22c to facilitate the transaction. The majority of the headline 2-3% transaction cost is split between the issuing and receiving bank to facilitate the loan and provide consumer protections and benefits (rewards).

Debit cards - Visa charges 5 bps + 22c per transaction. The consumer protections are still better with a debit card than the non-guaranty provided by the lightening network, but at least compare the right product. The fees on a $100 debit transaction are 27c.
 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on November 29, 2021, 12:58:44 PM
GuitarStv - Would you agree or disagree that Lightning Network was brought up earlier in this thread as a cheaper payment system?  I am pointing out, to no avail, that Lightning Network is a cheaper payment system, and therefore is not solving a non-problem.  I am still waiting, for the nth time in a row, for gastropod to use the phrase "cheaper payment system" when I repeat it in every sentence of my post.

That nobody seems to be understanding the crux of your argument may indicate that your argument isn't particularly clear...

But ok. "cheaper payment system". Cheaper than what? To who? And how? Let's see some evidence. Why isn't it being more broadly used? What problem do you think the creators of the Lightning Network set out to solve? Was it "cheaper payments"? Further, do you think it's reasonable to compare costs of systems with under 60k users with ones serving over 1 billion people? Do you think Visa's operating at-cost, or do they operate on a profit because the market can bear that much in fees? If LN helped them lower their operating costs, do you think they'd adopt LN?

What's extra funny about this is: LN is a de-decentralization scheme. It's a mechanism to try to strike a balance between centralization and decentralization, because decentralization is inherently slow. In response to my assertion that blockchain almost exclusively solves non-problems, you cite a bypassing of the blockchain that makes blockchain-based systems faster as evidence that blockchain solves problems. With all due respect, that's a weird take, friend.

Let's define the competition as well:

Credit cards - Visa charges 14 bps + 5 - 22c to facilitate the transaction. The majority of the headline 2-3% transaction cost is split between the issuing and receiving bank to facilitate the loan and provide consumer protections and benefits (rewards).

Debit cards - Visa charges 5 bps + 22c per transaction. The consumer protections are still better with a debit card than the non-guaranty provided by the lightening network, but at least compare the right product. The fees on a $100 debit transaction are 27c.

Are we not discussing this from an actual human use case?

As a credit card end user, I have never paid a fee to use a credit card.  0$ per transaction.  For that 0$, I have protection from the issuing bank against fraudulent use of my credit, the ability to perform a chargeback should a problem with a transaction arise, a warranty on a variety of items, insurance, and a rewards program.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on November 29, 2021, 01:02:36 PM
Since when does the Lightning Network does not require third-party custodial wallets?  Can you quote your source for that claim?

I don't think that's true at all.  Others more familiar with Lightning Network can do a better job refuting it.  What I read is that either party can finish the transaction by themselves - they can close the channel at any time.  If one party is trying to steal from the other, they can be caught up to a week later, and lose all the Bitcoin they put into the transaction.  None of which involves third-party trust or wallets, so you should give a source for that.

I don't know who you're quoting with "in theory", but I would agree Bitcoin and Lightning Network are speculative.  That's why there's controversy, because some people believe there will be more value than the current BTC price, and others argue less - or even worthless.

If a start-up creates a payment system, they face a similar problem.  How many brick and mortar stores accept PayPal?  Not as many as accept it online.  A payment system starts as an untested experiment that people fear will risk their money.  Early adopters need to prove it works before there's any hope of adoption by later waves of customers and vendors.  We're not there yet for Lightning Network - it's speculative, and early on.  So yes, we don't know how it will turn out, which is why there's such strong disagreement in this thread about crypto.

According to the AP Stylebook, a correct use of quotation marks is to set off or delineate a word or phrase.  For example:

The words "accept" and "except" are frequently confused.

The words in quotation marks aren't quotes.  Quotes are used to set them apart from the rest of the sentence.    I truly hate pedantic posts--like this one.  Sincere apologies up front, for that.  I mention this only because that use of quotations mark as a signifier has caused a huge amount of confusion in this thread.   You thought I was quoting someone when I was instead setting apart a phase.  In order to reduce the miscommunication, I'll use italics instead for that purpose from now on in this thread.

That out of the way, I may have misunderstood you when you listed the benefits of Lightning.  I thought you were listing actual benefits when you seem to be listing potential benefits.  Is that correct?  I agree, the benefits seem to be potential, not actual.

To be clear, I didn't say Lightning requires a third party, I said it benefits from use of a third party.  The exception is mobile because you cannot open your own node on a phone, so you must use a third party to make mobile payments via Lightning.  This is a major design flaw in my view. 

This also creates a philosophical problem.  The promise and premise of Bitcoin is that allows for trustless, peer-to-peer payments on a decentralized system that is not controlled by any government or organization.  This concept is intriguing to me, and the reason why I got interested in Bitcoin in the first place.      But once you start using Lightning, you've tossed at least two, if not all four of those premises.  So if you are going to toss out the benefits of Bitcoin, why not just stick with Visa?  Serious question.

And is it not just philosophical.  To great fanfare, El Salvador declared Bitcoin as legal tender and rolled out a wallet (which you don't have to use) and its own Lightning app, called Chivo.  So instead of a decentralized payment, we have centralized system, designed and operated by the government--and a government with a very sketchy history at that.  A centralized, government designed and operated payment system is as far from the basic promise of Bitcoin as you can get.    Yet, many people, including some on this board, think having the El Salvador government controlling Bitcoin payments is a major step forward in the evolution of Bitcoin.  Seems to me to be a gigantic leap backward, no?

Re: Paypal.  Great example.  IIRC, eBay's public interface was rolled out in 2000 (could be off on the dates a bit but something like that).   At the time, I was a big user of Ebay (this is before you could buy anything on Amazon) and I remember when it happened.     A problem at the time was most people didn't take credit cards and so you had to physically mail a check.  Slow, required trust, and just a big pain.  There were some work arounds, but they were a pain too.   Paypal fixed all that, and it was adopted by a huge percentage of Ebay users in what seemed like overnight.  Just two years later Paypal was purchased by eBay, who had come up with their own payment system but it never took off. 

The Lightning whitepaper was written in 2015.  Six years later, where is the Lightning eBay?  Nowhere.  From a consumer aspect, Visa works fine.   From the merchant side, you've claimed Lightning is a cheaper payment system and it is, but only compared to native Bitcoin.   The payee still has to convert Bitcoin to dollars, which is very expensive.  And there are also the capitalization costs of opening a node.   Those costs alone, I suspect eliminate or nearly eliminate any cost savings over Visa.  As I mentioned previously, if big venders thought they could save money with Lightning, they would have done so already. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: index on November 29, 2021, 01:28:51 PM
GuitarStv - Would you agree or disagree that Lightning Network was brought up earlier in this thread as a cheaper payment system?  I am pointing out, to no avail, that Lightning Network is a cheaper payment system, and therefore is not solving a non-problem.  I am still waiting, for the nth time in a row, for gastropod to use the phrase "cheaper payment system" when I repeat it in every sentence of my post.

That nobody seems to be understanding the crux of your argument may indicate that your argument isn't particularly clear...

But ok. "cheaper payment system". Cheaper than what? To who? And how? Let's see some evidence. Why isn't it being more broadly used? What problem do you think the creators of the Lightning Network set out to solve? Was it "cheaper payments"? Further, do you think it's reasonable to compare costs of systems with under 60k users with ones serving over 1 billion people? Do you think Visa's operating at-cost, or do they operate on a profit because the market can bear that much in fees? If LN helped them lower their operating costs, do you think they'd adopt LN?

What's extra funny about this is: LN is a de-decentralization scheme. It's a mechanism to try to strike a balance between centralization and decentralization, because decentralization is inherently slow. In response to my assertion that blockchain almost exclusively solves non-problems, you cite a bypassing of the blockchain that makes blockchain-based systems faster as evidence that blockchain solves problems. With all due respect, that's a weird take, friend.

Let's define the competition as well:

Credit cards - Visa charges 14 bps + 5 - 22c to facilitate the transaction. The majority of the headline 2-3% transaction cost is split between the issuing and receiving bank to facilitate the loan and provide consumer protections and benefits (rewards).

Debit cards - Visa charges 5 bps + 22c per transaction. The consumer protections are still better with a debit card than the non-guaranty provided by the lightening network, but at least compare the right product. The fees on a $100 debit transaction are 27c.

Are we not discussing this from an actual human use case?

As a credit card end user, I have never paid a fee to use a credit card.  0$ per transaction.  For that 0$, I have protection from the issuing bank against fraudulent use of my credit, the ability to perform a chargeback should a problem with a transaction arise, a warranty on a variety of items, insurance, and a rewards program.

A credit card end user doesn't see the fees paid by merchants, but that doesn't mean the fees are not passed on. I was making the point comparing the Lightning network to credit cards with all the benefits you highlighted is comparing apples to a five coarse meal. Debit cards with a merchant fee of 27 bps on a $100 transaction is the more direct comparison to the Lightning network.

People spend more on credit cards because the solve paycheck to paycheck cashflow issues. Merchants are willing to pay 200 - 300 bps because consumers are willing to spend more. Merchants could elect to only accept only debit cards and cut processing fees by 90%. I see very few businesses which accept debit only or place a surcharge on credit; until that changes, I don't think Lightning has a future.     
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on November 29, 2021, 01:35:47 PM
A credit card end user doesn't see the fees paid by merchants, but that doesn't mean the fees are not passed on. I was making the point comparing the Lightning network to credit cards with all the benefits you highlighted is comparing apples to a five coarse meal. Debit cards with a merchant fee of 27 bps on a $100 transaction is the more direct comparison to the Lightning network.

People spend more on credit cards because the solve paycheck to paycheck cashflow issues. Merchants are willing to pay 200 - 300 bps because consumers are willing to spend more. Merchants could elect to only accept only debit cards and cut processing fees by 90%. I see very few businesses which accept debit only or place a surcharge on credit; until that changes, I don't think Lightning has a future.   

Ah, I think I understand your point now . . . and agree with you.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 30, 2021, 06:21:52 AM
That nobody seems to be understanding the crux of your argument may indicate that your argument isn't particularly clear...

But ok. "cheaper payment system". Cheaper than what? To who? And how? Let's see some evidence. Why isn't it being more broadly used? What problem do you think the creators of the Lightning Network set out to solve? Was it "cheaper payments"? Further, do you think it's reasonable to compare costs of systems with under 60k users with ones serving over 1 billion people? Do you think Visa's operating at-cost, or do they operate on a profit because the market can bear that much in fees? If LN helped them lower their operating costs, do you think they'd adopt LN?

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

Making a payment system cheaper is not "solve non-existent problems", but is solving a real problem, which means your earlier quote was wrong.  I don't have to prove anything about Lightning Network itself, only that it is not "solve non-existent problems", but instead aims to make cheaper payments, which shows your earlier quote was wrong.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 30, 2021, 06:28:22 AM
Many people are confused by my repeated attempts to show that gastropod's earlier comment on this thread was wrong.  Lightning Network tries to solve a real problem, that of cheaper payments than say Western Union (charging $6 on $100 transfer).  It's not about Lightning Network's success or failure - just that it was brought up earlier, and targets a real problem - not "solve non-existent problems".

What I got, surprisingly, was 3 replies in a row from gastropod never talking about the main topic of every one of my posts.  If I post a quote at the end, gastropod talks about the quote.  If I avoid quotes, gastropod makes something up to discuss, or changes the goalposts by claiming Lighting Network isn't successful.  Calling payment systems a "non-existent problem" is wrong, even before analyzing the success or failure of the Lightning Network.  Now there's finally a reply mentioning the cheaper payment system, but ignoring the context of gastropod's earlier post.

That's the pattern - never replying to what I said, which was that trying to have a cheaper payment system is not "solve non-existent problems".
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on November 30, 2021, 06:49:26 AM
I reported three more trades over at my crypto- trading journal:

https://forum.mrmoneymustache.com/journals/tall-texan's-crypto-trading-journal/msg2939004/#msg2939004 (https://forum.mrmoneymustache.com/journals/tall-texan's-crypto-trading-journal/msg2939004/#msg2939004)

Nothing but gratitude to the group on this thread for affecting my thinking!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on November 30, 2021, 06:57:46 AM
That nobody seems to be understanding the crux of your argument may indicate that your argument isn't particularly clear...

But ok. "cheaper payment system". Cheaper than what? To who? And how? Let's see some evidence. Why isn't it being more broadly used? What problem do you think the creators of the Lightning Network set out to solve? Was it "cheaper payments"? Further, do you think it's reasonable to compare costs of systems with under 60k users with ones serving over 1 billion people? Do you think Visa's operating at-cost, or do they operate on a profit because the market can bear that much in fees? If LN helped them lower their operating costs, do you think they'd adopt LN?

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

Making a payment system cheaper is not "solve non-existent problems", but is solving a real problem, which means your earlier quote was wrong.  I don't have to prove anything about Lightning Network itself, only that it is not "solve non-existent problems", but instead aims to make cheaper payments, which shows your earlier quote was wrong.

😂 good god. Cool—I’m going to plant these magic beans I bought on eBay that solve world peace. Don’t dare question me whether they solve real problems!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: index on November 30, 2021, 07:28:02 AM
Many people are confused by my repeated attempts to show that gastropod's earlier comment on this thread was wrong.  Lightning Network tries to solve a real problem, that of cheaper payments than say Western Union (charging $6 on $100 transfer).  It's not about Lightning Network's success or failure - just that it was brought up earlier, and targets a real problem - not "solve non-existent problems".

What I got, surprisingly, was 3 replies in a row from gastropod never talking about the main topic of every one of my posts.  If I post a quote at the end, gastropod talks about the quote.  If I avoid quotes, gastropod makes something up to discuss, or changes the goalposts by claiming Lighting Network isn't successful.  Calling payment systems a "non-existent problem" is wrong, even before analyzing the success or failure of the Lightning Network.  Now there's finally a reply mentioning the cheaper payment system, but ignoring the context of gastropod's earlier post.

That's the pattern - never replying to what I said, which was that trying to have a cheaper payment system is not "solve non-existent problems".

Have you checked Western Union fees?

The service fee is $2 if you use a bank account and transferring to another bank (at least for India which I have used as well as Mexico). The $6 price you are quoting for a $100 transfer is to drop USD cash off at a store and have someone pick up Pesos in Mexico.

Wester Union charges a ~0.3% exchange rate when paying in cash or debit and transferring to a foreign bank and a 1.8% exchange rate when going cash to cash. If transferring bank to bank, the exchange rate is the spot rate.     

This site allows you to compare exchange rates and service fees for multiple transfer services:
https://www.exiap.com/

What is the exchange rate to use USD to buy BTC and later sell BTC and buy local currency? What infrastructure is needed by the person sending and receiving the money on the Lightning network to got USD->BTC->local currency? Western Union charges ~$6.80 for $100 ($26 for $1000) and neither the sender or receiver needs an internet connection or bank account to complete the transaction. If the sender and receiver both have a bank its $2 for up to $5000. If the sender has a bank and the receiver picks up cash it is $3 for up to $5000.

Western Union allows someone working in any country to send funds for local currency cash pickup in a different country. Can the Lightning network accomplish the same?     
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 30, 2021, 07:50:05 AM
That nobody seems to be understanding the crux of your argument may indicate that your argument isn't particularly clear...

But ok. "cheaper payment system". Cheaper than what? To who? And how? Let's see some evidence. Why isn't it being more broadly used? What problem do you think the creators of the Lightning Network set out to solve? Was it "cheaper payments"? Further, do you think it's reasonable to compare costs of systems with under 60k users with ones serving over 1 billion people? Do you think Visa's operating at-cost, or do they operate on a profit because the market can bear that much in fees? If LN helped them lower their operating costs, do you think they'd adopt LN?

Every example future use-case given in this thread was people taking the solution (blockchain, duh) to solve non-existent problems they didn't understand.

Making a payment system cheaper is not "solve non-existent problems", but is solving a real problem, which means your earlier quote was wrong.  I don't have to prove anything about Lightning Network itself, only that it is not "solve non-existent problems", but instead aims to make cheaper payments, which shows your earlier quote was wrong.

😂 good god. Cool—I’m going to plant these magic beans I bought on eBay that solve world peace. Don’t dare question me whether they solve real problems!
And you're back to ignoring the topic again.  You were the one who said "solve non-existent problems", which I quoted repeatedly.  This thread takes aim at payment systems, which are not "non-existent problems" (again quoting you).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 30, 2021, 07:52:45 AM
Many people are confused by my repeated attempts to show that gastropod's earlier comment on this thread was wrong.  Lightning Network tries to solve a real problem, that of cheaper payments than say Western Union (charging $6 on $100 transfer).  It's not about Lightning Network's success or failure - just that it was brought up earlier, and targets a real problem - not "solve non-existent problems".

What I got, surprisingly, was 3 replies in a row from gastropod never talking about the main topic of every one of my posts.  If I post a quote at the end, gastropod talks about the quote.  If I avoid quotes, gastropod makes something up to discuss, or changes the goalposts by claiming Lighting Network isn't successful.  Calling payment systems a "non-existent problem" is wrong, even before analyzing the success or failure of the Lightning Network.  Now there's finally a reply mentioning the cheaper payment system, but ignoring the context of gastropod's earlier post.

That's the pattern - never replying to what I said, which was that trying to have a cheaper payment system is not "solve non-existent problems".

Have you checked Western Union fees?

The service fee is $2 if you use a bank account and transferring to another bank (at least for India which I have used as well as Mexico). The $6 price you are quoting for a $100 transfer is to drop USD cash off at a store and have someone pick up Pesos in Mexico.

Wester Union charges a ~0.3% exchange rate when paying in cash or debit and transferring to a foreign bank and a 1.8% exchange rate when going cash to cash. If transferring bank to bank, the exchange rate is the spot rate.     

This site allows you to compare exchange rates and service fees for multiple transfer services:
https://www.exiap.com/

What is the exchange rate to use USD to buy BTC and later sell BTC and buy local currency? What infrastructure is needed by the person sending and receiving the money on the Lightning network to got USD->BTC->local currency? Western Union charges ~$6.80 for $100 ($26 for $1000) and neither the sender or receiver needs an internet connection or bank account to complete the transaction. If the sender and receiver both have a bank its $2 for up to $5000. If the sender has a bank and the receiver picks up cash it is $3 for up to $5000.

Western Union allows someone working in any country to send funds for local currency cash pickup in a different country. Can the Lightning network accomplish the same?     

I had to post less and less context because gastropod never focused on what I said.  So I stopped including the original context for this, which was not me:

I don't expect Bitcoin to work miracles in El Salvador, but I can easily imagine that thousands of people are already seeing tangible benefits. Let's say my neighbor and I both receive $100/month remittance from a relative in the United States, which is a very common situation there. Every month we walk to the Western Union office where we collect $94 after fees. Only this month I've received $100 through the Chivo App with no fees and didn't have to leave my home. I'm already $6 ahead, which is the first real-world tangible benefit most El Salvadorans will notice.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on November 30, 2021, 08:45:38 AM
And you're back to ignoring the topic again.  You were the one who said "solve non-existent problems", which I quoted repeatedly.  This thread takes aim at payment systems, which are not "non-existent problems" (again quoting you).


The problem you're talking about solving with the Lightning Network is a problem caused by the failure of Bitcoin to be able to act as a currency.  It's still an open question if Bitcoin really needs to act as a currency (the non-existent problem).

To give you an analogy - I start smashing my head with a hammer.  This hurts.  So I invent a special helmet that allows me to smash my head with a hammer without it hurting any more.  Have I solved a problem?  Kind of.  Was it a real problem to begin with, or a non-existent problem?  That depends on your acceptance of the need to smash your head with a hammer.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on November 30, 2021, 08:53:22 AM
And you're back to ignoring the topic again.  You were the one who said "solve non-existent problems", which I quoted repeatedly.  This thread takes aim at payment systems, which are not "non-existent problems" (again quoting you).


The problem you're talking about solving with the Lightning Network is a problem caused by the failure of Bitcoin to be able to act as a currency.  It's still an open question if Bitcoin really needs to act as a currency (the non-existent problem).

To give you an analogy - I start smashing my head with a hammer.  This hurts.  So I invent a special helmet that allows me to smash my head with a hammer without it hurting any more.  Have I solved a problem?  Kind of.  Was it a real problem to begin with, or a non-existent problem?  That depends on your acceptance of the need to smash your head with a hammer.

so why are you still smashing your head on this hammer?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on November 30, 2021, 09:22:40 AM
And you're back to ignoring the topic again.  You were the one who said "solve non-existent problems", which I quoted repeatedly.  This thread takes aim at payment systems, which are not "non-existent problems" (again quoting you).


The problem you're talking about solving with the Lightning Network is a problem caused by the failure of Bitcoin to be able to act as a currency.  It's still an open question if Bitcoin really needs to act as a currency (the non-existent problem).

To give you an analogy - I start smashing my head with a hammer.  This hurts.  So I invent a special helmet that allows me to smash my head with a hammer without it hurting any more.  Have I solved a problem?  Kind of.  Was it a real problem to begin with, or a non-existent problem?  That depends on your acceptance of the need to smash your head with a hammer.

so why are you still smashing your head on this hammer?

Because I strongly believe that hammers are the future?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on November 30, 2021, 08:00:49 PM
And you're back to ignoring the topic again.  You were the one who said "solve non-existent problems", which I quoted repeatedly.  This thread takes aim at payment systems, which are not "non-existent problems" (again quoting you).


The problem you're talking about solving with the Lightning Network is a problem caused by the failure of Bitcoin to be able to act as a currency.  It's still an open question if Bitcoin really needs to act as a currency (the non-existent problem).

To give you an analogy - I start smashing my head with a hammer.  This hurts.  So I invent a special helmet that allows me to smash my head with a hammer without it hurting any more.  Have I solved a problem?  Kind of.  Was it a real problem to begin with, or a non-existent problem?  That depends on your acceptance of the need to smash your head with a hammer.

so why are you still smashing your head on this hammer?

Because I strongly believe that hammers are the future?

If you had a hammer...
https://www.youtube.com/watch?v=01M_J7c1ft4 (https://www.youtube.com/watch?v=01M_J7c1ft4)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on December 01, 2021, 05:01:27 AM
And you're back to ignoring the topic again.  You were the one who said "solve non-existent problems", which I quoted repeatedly.  This thread takes aim at payment systems, which are not "non-existent problems" (again quoting you).
The problem you're talking about solving with the Lightning Network is a problem caused by the failure of Bitcoin to be able to act as a currency.  It's still an open question if Bitcoin really needs to act as a currency (the non-existent problem).
If you read my post again, I said "cheaper payment systems" in that post and several before it.  So no, you are not capturing "the problem [I'm] talking about solving", which is cheaper payment systems.  Others previously compared Lightning Network to Visa, which I quoted in an earlier post:

I really, really hate paying credit card transaction fees. Crypto has the promise to solve this and make humanity vastly better off, but because bitcoin is so terribly designed it is actually preventing that scenario from becoming a reality.

I don't expect Bitcoin to work miracles in El Salvador, but I can easily imagine that thousands of people are already seeing tangible benefits. Let's say my neighbor and I both receive $100/month remittance from a relative in the United States, which is a very common situation there. Every month we walk to the Western Union office where we collect $94 after fees. Only this month I've received $100 through the Chivo App with no fees and didn't have to leave my home. I'm already $6 ahead, which is the first real-world tangible benefit most El Salvadorans will notice.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on December 01, 2021, 11:33:40 AM
I think the disconnect is cheaper payments could be the goal of Lightning, but that's not the outcome in a practical sense, except for a tiny number of niche use cases. 

In the sending money to El Salvador example, both parties can avoid going to the Western Union office, so there could be some utility there.  But there still are a minimum of two blockchain transactions required to send and make the Bitcoin spendable.  At that point, there are little or no savings to be had.   And that is the same case for consumer transactions as well.  Two blockchain transactions are required.   

If you are really serious about regular cheaper payments, you could send money to El Salvador by ACH, which is essentially free, and simpler than Lightning.  It does require both parties to have a bank account, however. 

Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on December 01, 2021, 12:17:46 PM
I think the disconnect is cheaper payments could be the goal of Lightning, but that's not the outcome in a practical sense, except for a tiny number of niche use cases. 

In the sending money to El Salvador example, both parties can avoid going to the Western Union office, so there could be some utility there.  But there still are a minimum of two blockchain transactions required to send and make the Bitcoin spendable.  At that point, there are little or no savings to be had.   And that is the same case for consumer transactions as well.  Two blockchain transactions are required.   

If you are really serious about regular cheaper payments, you could send money to El Salvador by ACH, which is essentially free, and simpler than Lightning.  It does require both parties to have a bank account, however.

I think there's also a real concern about holding a wildly variable commodity like bitcoin instead of a stable currency like the US dollar.  You might have 100$ worth of bitcoin transferred to you that is only 80$ (or that has gone up to 120$) when you want to spend it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on December 01, 2021, 12:30:44 PM
For sure!  And take the example of say, a low margin business like a restaurant.  The customer payments are on the gross, so if you get even small movement in the wrong direction you can wipe out your yearly profit in one night.   

Bitcoin/Lightning tech is very clever, but they never stopped to think about how money works.   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: index on December 01, 2021, 01:08:03 PM
And you're back to ignoring the topic again.  You were the one who said "solve non-existent problems", which I quoted repeatedly.  This thread takes aim at payment systems, which are not "non-existent problems" (again quoting you).
The problem you're talking about solving with the Lightning Network is a problem caused by the failure of Bitcoin to be able to act as a currency.  It's still an open question if Bitcoin really needs to act as a currency (the non-existent problem).
If you read my post again, I said "cheaper payment systems" in that post and several before it.  So no, you are not capturing "the problem [I'm] talking about solving", which is cheaper payment systems.  Others previously compared Lightning Network to Visa, which I quoted in an earlier post:

I really, really hate paying credit card transaction fees. Crypto has the promise to solve this and make humanity vastly better off, but because bitcoin is so terribly designed it is actually preventing that scenario from becoming a reality.

I don't expect Bitcoin to work miracles in El Salvador, but I can easily imagine that thousands of people are already seeing tangible benefits. Let's say my neighbor and I both receive $100/month remittance from a relative in the United States, which is a very common situation there. Every month we walk to the Western Union office where we collect $94 after fees. Only this month I've received $100 through the Chivo App with no fees and didn't have to leave my home. I'm already $6 ahead, which is the first real-world tangible benefit most El Salvadorans will notice.

The fee in question is $2 not $6.

(https://i.postimg.cc/YqcdWWr9/2021-12-01-14-05-44-Send-Transfer-Money-Online-Now-Western-Union-US.png)

I addition, the super low fees with Chivo work because the government of El Salvador is subsidizing the money transfer. Conversion at the ATM has a 0.2 to 0.3% spread the round trip "fee" on the transaction USD->BTC->USD is about 50c.

The big problem with this setup is the government of El Salvador is the custodian of your dollars and BTC. They are making money by lending the USD and BTC float just like Venmo/Paypal. You cannot transfer BTC held in Chivo to an outside wallet, so the government can hold and lend the BTC and just keep a record of how the digital BTC is trading hands within the country. By using Chivo, you are trusting a government with a history of corruption to hold BTC and USD reserves. 70% of El Salvadorians do not have a bank, so transfers out of the app will be limited. If confidence is lost in the system, you are relying on government sponsored ATMs to withdraw cash. The daily cash withdraw limit is $1000. There are 231 Chivo ATMs that can hold a maximum of 200k each if stocked with all $100s, more than likely these are stocked with 10% to 25% of that of that amount. So a $5M-12M run on the government ATMs (with a population of 6.5M) and you have a real situation on your hands...

So options are:
A. Get a bank in El Salvador and transfer out of Chivo - USD-BTC-USD costs 0.5%
B. Get a bank in El Salvador - Bank to Bank with Western Union costs 1%, maybe there are better methods?
C. Trust the government and use Chivo as your bank - USD-BTC-US costs 0.5%
D. Western Union - costs 2%

This all gets more complicated if you are transferring to a country that doesn't use a reserve currency. Right now the transaction would go - USD -> (1.5% fee) -> BTC -> (1.5% Fee) -> USD -> (0.25%+ spread "fee") -> local currency (maybe ATM fee). Western Union is doing this without BTC for around 2%.



   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on December 03, 2021, 12:24:25 PM
And you're back to ignoring the topic again.  You were the one who said "solve non-existent problems", which I quoted repeatedly.  This thread takes aim at payment systems, which are not "non-existent problems" (again quoting you).
The problem you're talking about solving with the Lightning Network is a problem caused by the failure of Bitcoin to be able to act as a currency.  It's still an open question if Bitcoin really needs to act as a currency (the non-existent problem).
If you read my post again, I said "cheaper payment systems" in that post and several before it.  So no, you are not capturing "the problem [I'm] talking about solving", which is cheaper payment systems.  Others previously compared Lightning Network to Visa, which I quoted in an earlier post:

I really, really hate paying credit card transaction fees. Crypto has the promise to solve this and make humanity vastly better off, but because bitcoin is so terribly designed it is actually preventing that scenario from becoming a reality.

I don't expect Bitcoin to work miracles in El Salvador, but I can easily imagine that thousands of people are already seeing tangible benefits. Let's say my neighbor and I both receive $100/month remittance from a relative in the United States, which is a very common situation there. Every month we walk to the Western Union office where we collect $94 after fees. Only this month I've received $100 through the Chivo App with no fees and didn't have to leave my home. I'm already $6 ahead, which is the first real-world tangible benefit most El Salvadorans will notice.

The fee in question is $2 not $6.

(https://i.postimg.cc/YqcdWWr9/2021-12-01-14-05-44-Send-Transfer-Money-Online-Now-Western-Union-US.png)

I addition, the super low fees with Chivo work because the government of El Salvador is subsidizing the money transfer. Conversion at the ATM has a 0.2 to 0.3% spread the round trip "fee" on the transaction USD->BTC->USD is about 50c.

The big problem with this setup is the government of El Salvador is the custodian of your dollars and BTC. They are making money by lending the USD and BTC float just like Venmo/Paypal. You cannot transfer BTC held in Chivo to an outside wallet, so the government can hold and lend the BTC and just keep a record of how the digital BTC is trading hands within the country. By using Chivo, you are trusting a government with a history of corruption to hold BTC and USD reserves. 70% of El Salvadorians do not have a bank, so transfers out of the app will be limited. If confidence is lost in the system, you are relying on government sponsored ATMs to withdraw cash. The daily cash withdraw limit is $1000. There are 231 Chivo ATMs that can hold a maximum of 200k each if stocked with all $100s, more than likely these are stocked with 10% to 25% of that of that amount. So a $5M-12M run on the government ATMs (with a population of 6.5M) and you have a real situation on your hands...

So options are:
A. Get a bank in El Salvador and transfer out of Chivo - USD-BTC-USD costs 0.5%
B. Get a bank in El Salvador - Bank to Bank with Western Union costs 1%, maybe there are better methods?
C. Trust the government and use Chivo as your bank - USD-BTC-US costs 0.5%
D. Western Union - costs 2%

This all gets more complicated if you are transferring to a country that doesn't use a reserve currency. Right now the transaction would go - USD -> (1.5% fee) -> BTC -> (1.5% Fee) -> USD -> (0.25%+ spread "fee") -> local currency (maybe ATM fee). Western Union is doing this without BTC for around 2%.



   


Solid research Index, thanks for compiling and sharing this with us. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on December 05, 2021, 08:42:14 PM
Ah shit
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on December 06, 2021, 08:50:24 AM
yeah, things got a lot lower over the weekend. If you were 5% crypto on Friday, you're probably 4% crypto today.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on December 06, 2021, 09:19:41 AM
yeah, things got a lot lower over the weekend. If you were 5% crypto on Friday, you're probably 4% crypto today.

If you believe that crypto is the future, that should be a great thing right?  Price drops mean that stuff is on sale!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on December 06, 2021, 09:22:34 AM
yeah, things got a lot lower over the weekend. If you were 5% crypto on Friday, you're probably 4% crypto today.

If you believe that crypto is the future, that should be a great thing right?  Price drops mean that stuff is on sale!

good point when the market drops 30% i typically cut costs more to drop more into the market - are the crypto peoples doing this b/c you know its going to recover?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on December 06, 2021, 10:11:19 AM
yeah, things got a lot lower over the weekend. If you were 5% crypto on Friday, you're probably 4% crypto today.

If you believe that crypto is the future, that should be a great thing right?  Price drops mean that stuff is on sale!

good point when the market drops 30% i typically cut costs more to drop more into the market - are the crypto peoples doing this b/c you know its going to recover?

I did the same thing during the last market drop. For me, it's an emotional decision and might not make much sense. During a market drop, if I make a sacrifice (not going out to dinner), and put extra money into VTSAX, it feels better. I feel like I'm getting a bigger bang for my buck. Once the market recovers, I lose motivation engage in additional sacrifice and go back to my old habits.

During the last market drop, my life got cheaper mostly due to COVID-19 restrictions. I was kind of forced to spend less money. Places were I would normally spend money were closed.   

Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on December 06, 2021, 10:22:22 AM
yeah, things got a lot lower over the weekend. If you were 5% crypto on Friday, you're probably 4% crypto today.

If you believe that crypto is the future, that should be a great thing right?  Price drops mean that stuff is on sale!

good point when the market drops 30% i typically cut costs more to drop more into the market - are the crypto peoples doing this b/c you know its going to recover?

I did the same thing during the last market drop. For me, it's an emotional decision and might not make much sense. During a market drop, if I make a sacrifice (not going out to dinner), and put extra money into VTSAX, it feels better. I feel like I'm getting a bigger bang for my buck. Once the market recovers, I lose motivation engage in additional sacrifice and go back to my old habits.

During the last market drop, my life got cheaper mostly due to COVID-19 restrictions. I was kind of forced to spend less money. Places were I would normally spend money were closed.

yeah it was timed great we stopped driving stopped going out lots of extra capital laying around.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on December 06, 2021, 11:25:45 AM
yeah, things got a lot lower over the weekend. If you were 5% crypto on Friday, you're probably 4% crypto today.

If you believe that crypto is the future, that should be a great thing right?  Price drops mean that stuff is on sale!

good point when the market drops 30% i typically cut costs more to drop more into the market - are the crypto peoples doing this b/c you know its going to recover?

I did the same thing during the last market drop. For me, it's an emotional decision and might not make much sense. During a market drop, if I make a sacrifice (not going out to dinner), and put extra money into VTSAX, it feels better. I feel like I'm getting a bigger bang for my buck. Once the market recovers, I lose motivation engage in additional sacrifice and go back to my old habits.

During the last market drop, my life got cheaper mostly due to COVID-19 restrictions. I was kind of forced to spend less money. Places were I would normally spend money were closed.

yeah it was timed great we stopped driving stopped going out lots of extra capital laying around.

That's the story for millions of people worldwide. It's why consumer debt payments / disposable income is at levels last seen in 1991-1995 and 2010-2014. In both cases, 5 years of strong stock returns followed.
https://fred.stlouisfed.org/series/CDSP (https://fred.stlouisfed.org/series/CDSP)

Household debt to GDP continues to fall:
https://fred.stlouisfed.org/series/HDTGPDUSQ163N (https://fred.stlouisfed.org/series/HDTGPDUSQ163N)

But maybe not for long... The personal savings rate plummeted from 13.6% in Oct. 2020 to 7.3% in Oct. 2021.  https://fred.stlouisfed.org/series/PSAVERT (https://fred.stlouisfed.org/series/PSAVERT)

We're now back to the economy of 2013-2019, except with a bunch of consumer debt problems wiped out. Consumer-suckas are flush.


Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on December 06, 2021, 11:29:50 AM
yeah, things got a lot lower over the weekend. If you were 5% crypto on Friday, you're probably 4% crypto today.

If you believe that crypto is the future, that should be a great thing right?  Price drops mean that stuff is on sale!

good point when the market drops 30% i typically cut costs more to drop more into the market - are the crypto peoples doing this b/c you know its going to recover?

I did the same thing during the last market drop. For me, it's an emotional decision and might not make much sense. During a market drop, if I make a sacrifice (not going out to dinner), and put extra money into VTSAX, it feels better. I feel like I'm getting a bigger bang for my buck. Once the market recovers, I lose motivation engage in additional sacrifice and go back to my old habits.

During the last market drop, my life got cheaper mostly due to COVID-19 restrictions. I was kind of forced to spend less money. Places were I would normally spend money were closed.

yeah it was timed great we stopped driving stopped going out lots of extra capital laying around.

That's the story for millions of people worldwide. It's why consumer debt payments / disposable income is at levels last seen in 1991-1995 and 2010-2014. In both cases, 5 years of strong stock returns followed.
https://fred.stlouisfed.org/series/CDSP (https://fred.stlouisfed.org/series/CDSP)

Household debt to GDP continues to fall:
https://fred.stlouisfed.org/series/HDTGPDUSQ163N (https://fred.stlouisfed.org/series/HDTGPDUSQ163N)

But maybe not for long... The personal savings rate plummeted from 13.6% in Oct. 2020 to 7.3% in Oct. 2021.  https://fred.stlouisfed.org/series/PSAVERT (https://fred.stlouisfed.org/series/PSAVERT)

We're now back to the economy of 2013-2019, except with a bunch of consumer debt problems wiped out. Consumer-suckas are flush.

yeah thanks for throwing down the data i've read about most of these exact things over the pandemic it does appear there is a lot of capital on the table and what happens is that gets spent.  It is really refreshing to see people take these payments and use them to their own financial advantage over the last year though it appears to be going away.  I'm also a big fan of the monthly pay out of the CTC b/c it makes people work it into a budget for needs as opposed to buying a new toy with their tax return.  these things arent what this thread is about but it was good to see people shift focus if only for a little bit.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on December 06, 2021, 02:09:28 PM
yeah, things got a lot lower over the weekend. If you were 5% crypto on Friday, you're probably 4% crypto today.

If you believe that crypto is the future, that should be a great thing right?  Price drops mean that stuff is on sale!

good point when the market drops 30% i typically cut costs more to drop more into the market - are the crypto peoples doing this b/c you know its going to recover?

I'm hardly the most "pro-" person on this thread, but the low prices will result in me purchasing more because of the system I follow.

Part of my system involves only trading on 1st and 15th of the month, so I'm not breaking with that to try to rush money into the market early, the low prices will need to last for nine more days for me to benefit.

No matter how fantastic the underlying asset, allowing myself to trade "whenever I feel like it" doesn't seem wise.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on December 06, 2021, 03:56:57 PM
I personally think bitcoin is so awful (for reasons that have already been discussed) that it needs to die for crypto to achieve it's potential, so I'm personally rooting for it to crash and crash hard. But that's just me. I have no skin in the game or interest in playing, so it's just entertainment, so long as it doesn't take down some other more important part of the financial system simultaneously.

-W

Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on December 07, 2021, 06:42:54 AM
In the recent pullback, Bitcoin has seemed comparatively safe when you look at Alt-coins.

Bitcoin today is trading at 74% of its all-time-high. For Litecoin, Chainlink, and ZRX (just to pick at the rest of my portfolio), they're all 40% or less.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DaKini on January 04, 2022, 12:54:38 PM
I find it interesting how the discussion ceased together with the latest meltdown.
I bet that we will see crypto discussions pop up again with the next run.

Isn’t that telling?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on January 04, 2022, 01:09:56 PM
I find it interesting how the discussion ceased together with the latest meltdown.
I bet that we will see crypto discussions pop up again with the next run.

Isn’t that telling?
This is the way it has been for at least the 5 years. Maybe a whole decade now even. BTC price runs up and way too many people jump on the crypto bandwagon and start talking about it way too much. Prices go down or even just stay level for a while and most of the pro-crypto crowd largely shuts the hell up. The rest of us would prefer not to discuss it all anyway. I need it to crash further though - threads here have quieted but I definitely could still use some more silence on crypto elsewhere.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on January 04, 2022, 01:28:07 PM
HODL HODL HODL
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on January 04, 2022, 01:49:37 PM
I find it interesting how the discussion ceased together with the latest meltdown.
I bet that we will see crypto discussions pop up again with the next run.

Isn’t that telling?
This is the way it has been for at least the 5 years. Maybe a whole decade now even. BTC price runs up and way too many people jump on the crypto bandwagon and start talking about it way too much. Prices go down or even just stay level for a while and most of the pro-crypto crowd largely shuts the hell up. The rest of us would prefer not to discuss it all anyway. I need it to crash further though - threads here have quieted but I definitely could still use some more silence on crypto elsewhere.

Three of the six currencies I track have increased in price since 12/15/2021 (Poly/Matic, ZRX and CHAINLINK). Because Bitcoin is so large, the total market cap is probably lower, sure. I've continued to trade even while not being active here.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on January 04, 2022, 04:09:24 PM
I'm sort of amused that BTC $46,000 and ETH $3,800 are a "crash".

Those are within about 35% of record levels in highly volatile items. Previous crashes had much bigger drops, like 70% or 90% neighborhood. Using a logarithmic history, current values are within a hairsbreadth of the top for items that appreciated over 1,000 to 1 (10 or more doublings so far; still well within the top band of the 10.)

Also I'm pretty sure they're both higher than some point in the last 6 or 8 months. (ETA: ETH is up nearly 25% since Sept 20's $3,062; almost doubled since July 12's $1896. BTC up slightly since Sept 20's $43,209; up about 50% since July 12's $31,797 per Yahoo Finance.) Previously, sometimes a drop lasted 2 or 3 years.

Neither depth nor duration really says crash to me yet. To me it looks more like churning.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DaTrill on January 04, 2022, 08:04:04 PM
0% crypto is the best LT allocation.  ST play with small amount of your portfolio (dividend yield on SP 500) and you won't be hurt to badly if/when the sands shift like pot stock, SPACs, IPOs, (whatever else Wall Street dreams up to "help individual investors" ;) 

I'm experienced enough to have seen several booms and bust where "reputable" media outlets (after significant ad dollars are bought by fly by night industry) would pose "Should (Arabian horses, Japanese conglomerates/Railroad/Radio/eyeball/Napster) be part of your portfolio?"  The correct answer is always 0%, but maybe this time is different this time;) 

The crypto price will take years to unwind as too many have been paid not to work and have just speculated their way to paper wealth.  I can count the number of people on my thumb who have correctly pulled the plug on any of the above manias, crypto will be the same.  Ending the student debt moratorium (May 2022) will be the final nail in the coffin but could have a few dead cat bounces between now and then.         
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on January 06, 2022, 05:45:24 AM
The S&P 500 has had 3 amazing years in a row, which pushes P/E ratios up to 26.5.  And then you have CAPE reaching it's 2nd all time highest point (the 1st being right before the dot-com crash).  There's many ways this could play out, but ultimately I think it shows 2022 is a riskier year.

I'd like to avoid having very risky assets in a very risky year, so I've sold all of my crypto.  My direct holdings, ETHE, and calls on BITO.  It seems like crypto follows the stock market, so that a risk for growth stocks is a risk for crypto.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 22, 2022, 11:00:39 AM
How the faith in crypto is holding up here these days?

1. As a currency (superior to fiat USD).
2. As an inflation hedge (against legacy fiat).
3. As AA not correlated to the market.
4. As a store of value?
5. As an amazing tech changing our lives.
6. HODL? Or BUY more?

What is the current sentiment for 200k forecast for 2022?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 22, 2022, 11:27:41 AM
It always recovers buy the drop it's on sale. Look at it's insanely long history. Apply the same logic as we apply to stocks.

Thanks for the tip. I think i will go all in.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on January 22, 2022, 12:21:45 PM
It always recovers buy the drop it's on sale. Look at it's insanely long history. Apply the same logic as we apply to stocks.

Thanks for the tip. I think i will go all in.

You're welcome!

I like to time markets so I'm waiting for it to be worth negative 12k before I buy in.

I'd be willing to buy in at -11k.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on January 22, 2022, 03:18:03 PM
Probably mostly preaching to the choir at this point, as the enthusiasm has gone silent. But for anyone still on the fence, I found this to be a remarkably well done (if long) video explaining the problems with crypto: https://www.youtube.com/watch?v=YQ_xWvX1n9g
Title: Re: What do you think of adding a low% of crypto allocation
Post by: EvenSteven on January 22, 2022, 03:45:26 PM
Probably mostly preaching to the choir at this point, as the enthusiasm has gone silent. But for anyone still on the fence, I found this to be a remarkably well done (if long) video explaining the problems with crypto: https://www.youtube.com/watch?v=YQ_xWvX1n9g

Ha! I just watched that and came here to drop a link.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 22, 2022, 06:04:42 PM
Probably mostly preaching to the choir at this point, as the enthusiasm has gone silent. But for anyone still on the fence, I found this to be a remarkably well done (if long) video explaining the problems with crypto: https://www.youtube.com/watch?v=YQ_xWvX1n9g

Wow! A nice resource. Even worse scams than i have imagined!  I learned, in the video, a lot about the NFTs current landscape. Thanks a lot!

I'm a SW Engineer. Years ago I studied BTC, and especially blockchain protocols (to be potentially hired for some side chains implementations). It was apparent quite early to me that it is "no go" for many reasons. So I stayed away.

---

Funny thing. A year ago, during the NFT mania, there was a program on a respectable radio station (CBC), where the host invited an NFT expert to explain how cool and promise of golden future the NFTs have. The expert started: "NFTs are so cool, and are the future, but complicated. Two weeks ago I did not know what blockchain is...".

And these people are telling (us) that we don't get it, don't understand it. Funny.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on January 22, 2022, 10:32:32 PM
I am even more excited for Bitcoin now than i was in 2017.  Bear markets are where I make the best financial decisions because that is when I buy.  That said, we have a lot more red candles in store before I start buying because I have a good idea of where this is headed eventually.  I don't even if this is the real bear yet, or just another instance of what we had 6 months ago.  I think the bull is tired but I thought it was tired 6 months ago as well and i was proven wrong then.

I've consistently said that an extended downturn was coming, that this cycle is no different, and that I was concerned for the people going all in on Alts because I predicted they would get rekted when the bear starts.  I've seen it happen before.  Anyways, I will start buying when Bitcoin is down 65% from its highs and I think it will probably go as low as 75%.  If it doesn't go that low; it doesn't happen, but I think it will.  As last time, I am confident that it will rebound.  But, if it doesn't, I never put in more than 5% salary into it on any given year.  It's worked out for me fabulously so far so heres to a repeat of 2018-2020!

Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 23, 2022, 08:52:58 AM
@onecoolcat

How you can be more excited now than in 2017, when all the "promises" for BTC been proven wrong, one after another:
1. As a currency (superior to fiat USD).
2. As an inflation hedge (against legacy fiat).
3. As AA not correlated to the market.
4. As a store of value?
5. As an amazing tech changing our lives.

I guess new promises will be invented?

It looks to me that you are just a gambler, gambling. That could be fair. But just admit it, it would be easier to communicate.

But not for me, the gambling supports the rotten BTC ecosystem, polluting our planet. The gambling is a hope to get rich at the expense of other fellow beings and our Mother Earth.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on January 23, 2022, 10:07:47 AM
Still enthusiastic about the long term prospects for BTC here.

BTC has not been proven wrong - it has not been proven right or wrong YET. I'll reconsider if it's not become more established as a store of value / more widely adopted / still rattling around <$100k in 2025-7, but not before. I'm in no hurry, things take time. I'm happy to wait and watch, and see how things develop.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on January 23, 2022, 12:26:27 PM
Still enthusiastic about the long term prospects for BTC here.

BTC has not been proven wrong - it has not been proven right or wrong YET. I'll reconsider if it's not become more established as a store of value / more widely adopted / still rattling around <$100k in 2025-7, but not before. I'm in no hurry, things take time. I'm happy to wait and watch, and see how things develop.

Tulips haven't been proven right or wrong YET either. People still plant them. And buy them. It's fucking insane to make posts like this see above.

Maybe if it actually stored the energy it consumed. It has no utility. It's only as valuable as the next guy is willing to pay you for it. You just bought art or a beanie baby if you can't see that you're not looking at how the world actually operates.

You're still comparing it to fucking dollars in your post. Further proving my points.

You've repeatedly emphasised ad nauseum that BTC only has a 13yr history. Yet it's "fucking insane" when I make the same point (that's it's still early days) ?

I compare it it to dollars as that's the current convention. Feel free to convert to gold or pork-bellies or CNY, etc. if you prefer. It doesn't make any difference.

I get it that you don't see any BTC utility. Others have a different view, and are actively using it for various purposes. The current broad trend is for wider adoption among a wider population that find it useful, but only time will tell.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DaTrill on January 23, 2022, 01:03:42 PM
The correct allocation when asset risk is included in any MPT portfolio is 0%.  All accounts will eventually reflect this, either by not ever buying the digital collectable or letting the positions ride down to $0. 

I actually appreciate the cryptos were around during all these financial experiments (bond buying QE, direct checks, rent/loan moratorium) as it gave stupid/greedy people something to waste their money on rather than dumping it in ZM, ARK, PTON, creating more losses in the market. 

One can replace "socialism" with "crypto" and the sentences all sound and will end the same way, a few corrupt parties will make a ton, leave their respective countries, find a more corrupt sunny place for shady people and live a life of luxury.  Everyone else will be left waiting in line for panty hose and toilet paper.  If you are a HODLer and haven't picked out your villa yet, you're in the latter group and should find a retailer that will take crypto for toilet paper.       
Title: Re: What do you think of adding a low% of crypto allocation
Post by: vand on January 23, 2022, 01:56:54 PM
Haven't read any of the rest of the thread, but crypto and blockchain technology has been around for well over a decade now and despite all the hype and bullshit, there hasn't yet been anyone who's acutally come up with a demonstrably useful application of it that some existing tech couldn't have done just as well if not better.

Emperor's new clothes.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 23, 2022, 02:14:33 PM
OK. Here is another "crypto argument" buster.

Over the time i have had a few exchanges with crypto holders. At the end they just used argument "you are just envy that you did not get in earlier".
So, now it is >50% down. And even Tom Lee (I still like the guy) expects 200k for 2022. So, now would be a very good time to get in.

And i don't get in. So, they were wrong that i was jealous. On the second thought if goes like -10K, even -1K i might consider. But on third thought no, I cannot support this crap.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on January 23, 2022, 03:29:26 PM
Still enthusiastic about the long term prospects for BTC here.

BTC has not been proven wrong - it has not been proven right or wrong YET. I'll reconsider if it's not become more established as a store of value / more widely adopted / still rattling around <$100k in 2025-7, but not before. I'm in no hurry, things take time. I'm happy to wait and watch, and see how things develop.

Tulips haven't been proven right or wrong YET either. People still plant them. And buy them. It's fucking insane to make posts like this see above.

Maybe if it actually stored the energy it consumed. It has no utility. It's only as valuable as the next guy is willing to pay you for it. You just bought art or a beanie baby if you can't see that you're not looking at how the world actually operates.

You're still comparing it to fucking dollars in your post. Further proving my points.

You've repeatedly emphasised ad nauseum that BTC only has a 13yr history. Yet it's "fucking insane" when I make the same point (that's it's still early days) ?

I compare it it to dollars as that's the current convention. Feel free to convert to gold or pork-bellies or CNY, etc. if you prefer. It doesn't make any difference.

I get it that you don't see any BTC utility. Others have a different view, and are actively using it for various purposes. The current broad trend is for wider adoption among a wider population that find it useful, but only time will tell.

Really wtf are you actively using it to do?

And what is the broad trend that's happening for those who find it useful and again what in the hell is it being USED for

As previously discussed, my primary interest in BTC is as a store of value, an asset. It's not a very good SOV right now but my expectation is that volatility will reduce over time as adoption widens - and at a much higher level. So, in the shorter term, it's also speculative.

Others are are using it as a regular medium of exchange and to send money home, etc. - mostly in developing countries, esp. those with high inflation / weak currencies.

You can argue that this is all misguided but it's false to say that BTC doesn't have utility. Many find it useful and are choosing to use it.
The broad trend is increasing adoption = increasing utility = increasing value.

I'm not here claiming that BTC is definitely the future or that it's the best thing ever. However, I am opposing the concrete assertions that it's absolutely definitely all a worthless waste of time, energy and money. I just don't see the justification for such certainty at this stage of the game. Predicting the future is notoriously difficult.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 23, 2022, 04:22:22 PM
Hi @LateStarter
By adoption you mean some institutions just feeling FOMO that others making $, pardon the lang, on fools? These institution only "adopt" to make money on the suckers. They are not committing themselves (ignoring things like COIN, SQUARE, BLOCK, these are more sophisticated in the game of screwing others, garbing as much $ as possible from the mob). Or you mean San Salvador, healthy economy matching Swiss?
:)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 23, 2022, 05:50:14 PM
Trying to self answer since have not gotten much of responses to these important items.
Based on this thread and "other places".

Cryptos/blockchain values:

1. As a currency (superior to fiat USD).
Aka utility. There is i think already a wide consensus that this not happening. Almost no-one claims (anymore) in the last year that crypto's feature is utility.

2. As an inflation hedge (against legacy fiat).
Proven recently that it is not true.

3. As AA not correlated to the market.
Proven recently that it is not true.

4. As a store of value?
This item is often mentioned. If something has (intrinsic) value, then why in the last few weeks the value halfed? Is any logical reason why? Nope, just a sentiment. What kind of value it is?
So, this cannot be considered as stored value.

5. As an amazing tech changing our lives.
Blockchain/crypto is already over 10y old, and no (really) useful application was born. Give it another 10y? 

6. Killing the planet for absolutely nothing back.
If e.g. someone invents effective food production that is not killing the planet, but uses a lot if electricity that would be fine with me.

All left is pure speculation. Cult like behaviours, religion, pump and dump etc. Fuelled by the mob greed.
If desired i could try to expand more the reasons for 1-6, if needed.

Sorry, i felt for a long time to give my voice on this.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maisymouser on January 24, 2022, 05:45:51 AM
Trying to self answer since have not gotten much of responses to these important items.
Based on this thread and "other places".

Cryptos/blockchain values:

1. As a currency (superior to fiat USD).
Aka utility. There is i think already a wide consensus that this not happening. Almost no-one claims (anymore) in the last year that crypto's feature is utility.

2. As an inflation hedge (against legacy fiat).
Proven recently that it is not true.

3. As AA not correlated to the market.
Proven recently that it is not true.

4. As a store of value?
This item is often mentioned. If something has (intrinsic) value, then why in the last few weeks the value halfed? Is any logical reason why? Nope, just a sentiment. What kind of value it is?
So, this cannot be considered as stored value.

5. As an amazing tech changing our lives.
Blockchain/crypto is already over 10y old, and no (really) useful application was born. Give it another 10y? 

6. Killing the planet for absolutely nothing back.
If e.g. someone invents effective food production that is not killing the planet, but uses a lot if electricity that would be fine with me.

All left is pure speculation. Cult like behaviours, religion, pump and dump etc. Fuelled by the mob greed.
If desired i could try to expand more the reasons for 1-6, if needed.

Sorry, i felt for a long time to give my voice on this.

Don't be sorry. That seems like a pretty apt summary to me.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on January 24, 2022, 06:03:00 AM
I'll own that I've been building positions in crypto- (although they're probably smaller than they would be if I had not read the anti-crypto arguments in this thread).

And, dang, this period has been tough. Bear markets of this sort are what you sign on for when you participate. I banked a lot of gains during the run-up in early 2021, but this is really cutting into those.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: vand on January 24, 2022, 06:08:52 AM
I'm introducing a new meme:

HOFDL = Hold On For Dear Life
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on January 24, 2022, 06:27:07 AM
Trying to self answer since have not gotten much of responses to these important items.
Based on this thread and "other places".

Cryptos/blockchain values:

1. As a currency (superior to fiat USD).
Aka utility. There is i think already a wide consensus that this not happening. Almost no-one claims (anymore) in the last year that crypto's feature is utility.

2. As an inflation hedge (against legacy fiat).
Proven recently that it is not true.

3. As AA not correlated to the market.
Proven recently that it is not true.

4. As a store of value?
This item is often mentioned. If something has (intrinsic) value, then why in the last few weeks the value halfed? Is any logical reason why? Nope, just a sentiment. What kind of value it is?
So, this cannot be considered as stored value.

5. As an amazing tech changing our lives.
Blockchain/crypto is already over 10y old, and no (really) useful application was born. Give it another 10y? 

6. Killing the planet for absolutely nothing back.
If e.g. someone invents effective food production that is not killing the planet, but uses a lot if electricity that would be fine with me.

All left is pure speculation. Cult like behaviours, religion, pump and dump etc. Fuelled by the mob greed.
If desired i could try to expand more the reasons for 1-6, if needed.

Sorry, i felt for a long time to give my voice on this.

Don't be sorry. That seems like a pretty apt summary to me.

At some point, when an idea has been so thoroughly debunked that there's no saving people from themselves, the challenge becomes to package the refutations into as small and concise sentences as possible. This post is a contender for the parsimony award.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: 4tify on January 24, 2022, 11:08:12 AM
I decided to add a low crypto allocation at the end of last year. Lol. Guess I’ll be sticking with vtsax!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: erjkism on January 24, 2022, 12:13:20 PM
I am even more excited for Bitcoin now than i was in 2017.  Bear markets are where I make the best financial decisions because that is when I buy.  That said, we have a lot more red candles in store before I start buying because I have a good idea of where this is headed eventually.  I don't even if this is the real bear yet, or just another instance of what we had 6 months ago.  I think the bull is tired but I thought it was tired 6 months ago as well and i was proven wrong then.

I've consistently said that an extended downturn was coming, that this cycle is no different, and that I was concerned for the people going all in on Alts because I predicted they would get rekted when the bear starts.  I've seen it happen before.  Anyways, I will start buying when Bitcoin is down 65% from its highs and I think it will probably go as low as 75%.  If it doesn't go that low; it doesn't happen, but I think it will.  As last time, I am confident that it will rebound.  But, if it doesn't, I never put in more than 5% salary into it on any given year.  It's worked out for me fabulously so far so heres to a repeat of 2018-2020!

I bought lottery tickets at the gas station for 2 years and it's worked out so I'm going to keep doing it.

Great strategy. And good use of those green soldiers you work so hard for.

Honestly can't wait til you all lose your shirts on this. It's not a solution for anything and is terrible for the environment.

This crash/bear market (like the 5th now at least?) we are entering is going to give no-coiners another chance to buy low, yet they are too stubborn and will miss out again and continue to complain. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on January 24, 2022, 12:23:05 PM
I am even more excited for Bitcoin now than i was in 2017.  Bear markets are where I make the best financial decisions because that is when I buy.  That said, we have a lot more red candles in store before I start buying because I have a good idea of where this is headed eventually.  I don't even if this is the real bear yet, or just another instance of what we had 6 months ago.  I think the bull is tired but I thought it was tired 6 months ago as well and i was proven wrong then.

I've consistently said that an extended downturn was coming, that this cycle is no different, and that I was concerned for the people going all in on Alts because I predicted they would get rekted when the bear starts.  I've seen it happen before.  Anyways, I will start buying when Bitcoin is down 65% from its highs and I think it will probably go as low as 75%.  If it doesn't go that low; it doesn't happen, but I think it will.  As last time, I am confident that it will rebound.  But, if it doesn't, I never put in more than 5% salary into it on any given year.  It's worked out for me fabulously so far so heres to a repeat of 2018-2020!

I bought lottery tickets at the gas station for 2 years and it's worked out so I'm going to keep doing it.

Great strategy. And good use of those green soldiers you work so hard for.

Honestly can't wait til you all lose your shirts on this. It's not a solution for anything and is terrible for the environment.

This crash/bear market (like the 5th now at least?) we are entering is going to give nocoiners have another chance to buy low, yet they are too stubborn and will miss out again and continue to complain.

There's also a chance to buy tulips and beanie babies low right now.  I'm too stubborn and will likely miss out on them again too.  Somehow life manages to go on.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on January 24, 2022, 12:24:07 PM
Complain about what? I'm freaking FI because I didn't go for any of the various sure-thing get rich quick crap over the years. I know an awful lot of crypto enthusiasts still working their day jobs...

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on January 24, 2022, 12:55:34 PM
Suppose I own $2,000 in crypto, but I have $50,000 in $VTI. Over the last 24 hours, I'm down $500 on the crypto, and I'm down $1,500 on the VTI. Are we more accepting of the latter because of the 90+year track record of stocks making money?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Psychstache on January 24, 2022, 01:02:14 PM
Suppose I own $2,000 in crypto, but I have $50,000 in $VTI. Over the last 24 hours, I'm down $500 on the crypto, and I'm down $1,500 on the VTI. Are we more accepting of the latter because of the 90+year track record of stocks making money?

Aren't we more accepting of a 3% drop than a 25% drop?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 24, 2022, 01:04:59 PM
Suppose I own $2,000 in crypto, but I have $50,000 in $VTI. Over the last 24 hours, I'm down $500 on the crypto, and I'm down $1,500 on the VTI. Are we more accepting of the latter because of the 90+year track record of stocks making money?

No value to go up is called a faith.
Value going up is called a hope.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BeanCounter on January 24, 2022, 01:14:00 PM
Suppose I own $2,000 in crypto, but I have $50,000 in $VTI. Over the last 24 hours, I'm down $500 on the crypto, and I'm down $1,500 on the VTI. Are we more accepting of the latter because of the 90+year track record of stocks making money?

Aren't we more accepting of a 3% drop than a 25% drop?
Exactly. I’ve been chuckling along at this thread for awhile but that on takes the cake.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on January 24, 2022, 01:15:12 PM
Suppose I own $2,000 in crypto, but I have $50,000 in $VTI. Over the last 24 hours, I'm down $500 on the crypto, and I'm down $1,500 on the VTI. Are we more accepting of the latter because of the 90+year track record of stocks making money?

No, I'm more accepting because the stocks are at least *mostly* companies that provide actual goods/services that create value even if the stock price drops. Obviously there are some crappy companies out there, but mostly they are worth *something* even if their stock price goes to zero. I can hold on and collect dividends/make a return regardless of what other investors think.

Not so much with BTC.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: erjkism on January 24, 2022, 02:07:22 PM
I am even more excited for Bitcoin now than i was in 2017.  Bear markets are where I make the best financial decisions because that is when I buy.  That said, we have a lot more red candles in store before I start buying because I have a good idea of where this is headed eventually.  I don't even if this is the real bear yet, or just another instance of what we had 6 months ago.  I think the bull is tired but I thought it was tired 6 months ago as well and i was proven wrong then.

I've consistently said that an extended downturn was coming, that this cycle is no different, and that I was concerned for the people going all in on Alts because I predicted they would get rekted when the bear starts.  I've seen it happen before.  Anyways, I will start buying when Bitcoin is down 65% from its highs and I think it will probably go as low as 75%.  If it doesn't go that low; it doesn't happen, but I think it will.  As last time, I am confident that it will rebound.  But, if it doesn't, I never put in more than 5% salary into it on any given year.  It's worked out for me fabulously so far so heres to a repeat of 2018-2020!

I bought lottery tickets at the gas station for 2 years and it's worked out so I'm going to keep doing it.

Great strategy. And good use of those green soldiers you work so hard for.

Honestly can't wait til you all lose your shirts on this. It's not a solution for anything and is terrible for the environment.

This crash/bear market (like the 5th now at least?) we are entering is going to give nocoiners have another chance to buy low, yet they are too stubborn and will miss out again and continue to complain.

There's also a chance to buy tulips and beanie babies low right now.  I'm too stubborn and will likely miss out on them again too.  Somehow life manages to go on.

Yes because billionaires, investment firms, nation states, etc. were also buying into beanie babies and tulips. Enjoy missing out again.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on January 24, 2022, 02:28:15 PM
Actually the 1600s equivalents of billionaires and hedge funds were definitely involved in the Tulip mania. Likewise the 2007 housing crash. Rich investors are just as dumb as everyone else when it comes right down to it.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: erjkism on January 24, 2022, 03:02:35 PM
Complain about what? I'm freaking FI because I didn't go for any of the various sure-thing get rich quick crap over the years. I know an awful lot of crypto enthusiasts still working their day jobs...

-W

Sorry I didn't mean to say you specifically were complaining about it. In my personal life it just seems like the people who never bought crypto complain about the wealth other people have made from it. These people seem to just have a lot of resentment and want the entire crypto market to collapse so they don't feel dumb/jealous.

And tulip buying was not nearly as widespread as cryptocurrency is today. I don't think the two are really comparable at this point. They psychological similarities might hold true to bitcoin in the early days or newer cryptocurrencies, but the industry has advanced a lot. 

per wikipedia on tulip mania: While Mackay's account held that a wide array of society was involved in the tulip trade, Goldgar's study of archived contracts found that even at its peak the trade in tulips was conducted almost exclusively by merchants and skilled craftsmen who were wealthy, but not members of the nobility.[58] Any economic fallout from the bubble was very limited. Goldgar, who identified many prominent buyers and sellers in the market, found fewer than half a dozen who experienced financial troubles in the time period, and even of these cases it is not clear that tulips were to blame
Title: Re: What do you think of adding a low% of crypto allocation
Post by: solon on January 24, 2022, 05:10:04 PM
Complain about what? I'm freaking FI because I didn't go for any of the various sure-thing get rich quick crap over the years. I know an awful lot of crypto enthusiasts still working their day jobs...

-W

Sorry I didn't mean to say you specifically were complaining about it. In my personal life it just seems like the people who never bought crypto complain about the wealth other people have made from it. These people seem to just have a lot of resentment and want the entire crypto market to collapse so they don't feel dumb/jealous.

And tulip buying was not nearly as widespread as cryptocurrency is today. I don't think the two are really comparable at this point. They psychological similarities might hold true to bitcoin in the early days or newer cryptocurrencies, but the industry has advanced a lot. 

per wikipedia on tulip mania: While Mackay's account held that a wide array of society was involved in the tulip trade, Goldgar's study of archived contracts found that even at its peak the trade in tulips was conducted almost exclusively by merchants and skilled craftsmen who were wealthy, but not members of the nobility.[58] Any economic fallout from the bubble was very limited. Goldgar, who identified many prominent buyers and sellers in the market, found fewer than half a dozen who experienced financial troubles in the time period, and even of these cases it is not clear that tulips were to blame

This is really weird. People with wealth are definitely not complaining about the "wealth" of crypto traders. We pity them because they have no wealth. That's why we lump them in the same category as tulip traders.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on January 24, 2022, 05:17:10 PM
Complain about what? I'm freaking FI because I didn't go for any of the various sure-thing get rich quick crap over the years. I know an awful lot of crypto enthusiasts still working their day jobs...

-W

Sorry I didn't mean to say you specifically were complaining about it. In my personal life it just seems like the people who never bought crypto complain about the wealth other people have made from it. These people seem to just have a lot of resentment and want the entire crypto market to collapse so they don't feel dumb/jealous.

And tulip buying was not nearly as widespread as cryptocurrency is today. I don't think the two are really comparable at this point. They psychological similarities might hold true to bitcoin in the early days or newer cryptocurrencies, but the industry has advanced a lot. 

per wikipedia on tulip mania: While Mackay's account held that a wide array of society was involved in the tulip trade, Goldgar's study of archived contracts found that even at its peak the trade in tulips was conducted almost exclusively by merchants and skilled craftsmen who were wealthy, but not members of the nobility.[58] Any economic fallout from the bubble was very limited. Goldgar, who identified many prominent buyers and sellers in the market, found fewer than half a dozen who experienced financial troubles in the time period, and even of these cases it is not clear that tulips were to blame

This is really weird. People with wealth are definitely not complaining about the "wealth" of crypto traders. We pity them because they have no wealth. That's why we lump them in the same category as tulip traders.

Yeah, really weird way to see things.  I don't care how you make your wealth.

There are people out there who were able to sell their bottled farts and make 50k a year.  More power to 'em.  But I'm going to take every chance to point out that the emperor has no clothes . . . and that failing to bottle your own farts for sale is not likely to lose you much in the long run.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 24, 2022, 05:45:53 PM
@erjkism You might be referring to me too.

In my personal life it just seems like the people who never bought crypto complain about the wealth other people have made from it. These people seem to just have a lot of resentment and want the entire crypto market to collapse so they don't feel dumb/jealous.

Well, I still have active income, FI @2.5% (at least before the drop, have not checked the balance for a week or so, no reason :)). Holding only quality index ETFs.
I mentioned yesterday that if i would be jealous i would buy crypto on this drop (would be good entry point, right?), gave my reason why not.

Believe me, more weird is for the crypto holders (no value) to HODL, than no crypto guys not buying crypto. Non crypto guys just want to help you (not resent you), and save the planet.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 24, 2022, 08:07:40 PM
The answer is: nothing.

https://apple.news/ArpcXReo8Sk6bskfV6FEjNA
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on January 24, 2022, 10:31:10 PM
Sorry I didn't mean to say you specifically were complaining about it. In my personal life it just seems like the people who never bought crypto complain about the wealth other people have made from it. These people seem to just have a lot of resentment and want the entire crypto market to collapse so they don't feel dumb/jealous.

And tulip buying was not nearly as widespread as cryptocurrency is today. I don't think the two are really comparable at this point. They psychological similarities might hold true to bitcoin in the early days or newer cryptocurrencies, but the industry has advanced a lot. 

per wikipedia on tulip mania: While Mackay's account held that a wide array of society was involved in the tulip trade, Goldgar's study of archived contracts found that even at its peak the trade in tulips was conducted almost exclusively by merchants and skilled craftsmen who were wealthy, but not members of the nobility.[58] Any economic fallout from the bubble was very limited. Goldgar, who identified many prominent buyers and sellers in the market, found fewer than half a dozen who experienced financial troubles in the time period, and even of these cases it is not clear that tulips were to blame

The Tulip Bulb comment is just a metaphor.   I don't like using that metaphor because it sounds pejorative, and that's not a good way to have a conversation. 

That said, when you boil it down Bitcoin's price is based on the number of people who want to own it.  If more people want to own in the future, the price will go up.  If not, the price will go down. 

So what's the case that more people want to own Bitcoin in the future?  It isn't because it works well for transactions.  It isn't because it is a store of value. 



Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on January 25, 2022, 09:00:06 AM
Bitcoin Booster: I'm a millionaire because of this incredible stake in Bitcoin I've built.
Me: At today's prices, you are a millionaire, but your crypto stake could easily be worth only $500,000 48 hours from now.
Bitcoin Booster: Why don't you appreciate how smart I was to buy this stuff three years ago?
Me: ???
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on January 25, 2022, 11:34:40 AM
Hi @LateStarter
By adoption you mean some institutions just feeling FOMO that others making $, pardon the lang, on fools? These institution only "adopt" to make money on the suckers. They are not committing themselves (ignoring things like COIN, SQUARE, BLOCK, these are more sophisticated in the game of screwing others, garbing as much $ as possible from the mob). Or you mean San Salvador, healthy economy matching Swiss?
:)

Hi ArnoldK
By 'adoption', I mean wider adoption by all categories - individuals, institutions, states, etc. etc. etc.
Do you have a thorough knowledge of the motives and operations / trades of all these institutions ? Or are you just guessing / assuming ?

The hard fact is that none of us know everything that's going on and none of us know how things will progress. Some of us think it has great potential. Some of us think it's all terrible and is doomed to failure. That's all fine - vive la difference.
Some claim to know that it's all terrible and will definitely fail. As I said, I am challenging that certainty.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DaTrill on January 25, 2022, 11:55:36 AM
Is it me or does every crypto zealot sound like the have some kind of persecution complex?  They all seem to repeat "Everyone is against us, we will overcome, drink the Kool-Aide and join us".  Cults always end the same way. 

I only know a few people who dabbled in crypto along with myself in 2016-2017 and never had more than vacation money in this.  Everyone I know has made money, but not one believes this will change anything in the future.  It's also still not a legitimate trading vehicle for anything otherwise there wouldn't be a 33% discount from BTC to GBTC.  One price has to be fake, either one that trades on regulated exchanges or one that trades in 3rd world servers?   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on January 25, 2022, 11:58:05 AM
Trying to self answer since have not gotten much of responses to these important items.
Based on this thread and "other places".

Cryptos/blockchain values:

1. As a currency (superior to fiat USD).
Aka utility. There is i think already a wide consensus that this not happening. Almost no-one claims (anymore) in the last year that crypto's feature is utility.

2. As an inflation hedge (against legacy fiat).
Proven recently that it is not true.

3. As AA not correlated to the market.
Proven recently that it is not true.

4. As a store of value?
This item is often mentioned. If something has (intrinsic) value, then why in the last few weeks the value halfed? Is any logical reason why? Nope, just a sentiment. What kind of value it is?
So, this cannot be considered as stored value.

5. As an amazing tech changing our lives.
Blockchain/crypto is already over 10y old, and no (really) useful application was born. Give it another 10y? 

6. Killing the planet for absolutely nothing back.
If e.g. someone invents effective food production that is not killing the planet, but uses a lot if electricity that would be fine with me.

All left is pure speculation. Cult like behaviours, religion, pump and dump etc. Fuelled by the mob greed.
If desired i could try to expand more the reasons for 1-6, if needed.

Sorry, i felt for a long time to give my voice on this.

Don't be sorry. That seems like a pretty apt summary to me.

At some point, when an idea has been so thoroughly debunked that there's no saving people from themselves, the challenge becomes to package the refutations into as small and concise sentences as possible. This post is a contender for the parsimony award.

The key word to add to most of these points is YET. Why would you presume to know that it's all done with ?

The game isn't over YET.
My view is that the game is only just beginning.
Most here think it's all over bar the shouting (and should never have started in the first place!).

Either way, it's clearly not finished YET - to the tune of $700billion for BTC. It's premature to think it's all over.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on January 25, 2022, 12:06:22 PM
Exactly how I feel about tulips.  I'll admit - there has been a bit of a lull since the 17th century . . . but in the Netherlands alone, 220 million euros of tulips were exported in 2020.  That's a LOT MORE euros (100% by my math) than were spent during the HEIGHT of tulip mania!

The game isn't over YET.
It's only just the beginning.
Don't prematurely judge tulips as down and out.


We've only started to scratch the potential of flower chain technologies:
(https://i3.wp.com/www.firefliesandmudpies.com/wp-content/uploads/2013/05/how-to-make-flower-chain-crowns-for-imaginative-play2.jpg)


#HODL HORTICULTURE 4EVA
Title: Re: What do you think of adding a low% of crypto allocation
Post by: beee on January 25, 2022, 12:46:05 PM
Quote
to the tune of $700billion for BTC

Could you please correct me if I am wrong?
As I understand, the market cap is calculated based on the current price only.
So
there're 100 coins of currency A
current price is $1/coin, market cap $100
99 coins are traded $1/coin
then price changes to $1,000/coin, but only 1 coin is traded
but the market cap is now $100,000, even though $100k were not used ever in trading of currency A

Am I right?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on January 25, 2022, 12:52:41 PM
I suppose you're correct, but a market has bid/asks, so that trade at $1,000 meant that there were people offering $995/coin who couldn't find a seller.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: index on January 25, 2022, 12:57:12 PM
Quote
to the tune of $700billion for BTC

Could you please correct me if I am wrong?
As I understand, the market cap is calculated based on the current price only.
So
there're 100 coins of currency A
current price is $1/coin, market cap $100
99 coins are traded $1/coin
then price changes to $1,000/coin, but only 1 coin is traded
but the market cap is now $100,000, even though $100k were not used ever in trading of currency A

Am I right?

Yes that is right. That is how the market cap of stocks are calculated as well. Current price multiplied by shares outstanding.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 25, 2022, 03:15:42 PM
Hi @LateStarter
By adoption you mean some institutions just feeling FOMO that others making $, pardon the lang, on fools? These institution only "adopt" to make money on the suckers. They are not committing themselves (ignoring things like COIN, SQUARE, BLOCK, these are more sophisticated in the game of screwing others, garbing as much $ as possible from the mob). Or you mean San Salvador, healthy economy matching Swiss?
:)

Hi ArnoldK
By 'adoption', I mean wider adoption by all categories - individuals, institutions, states, etc. etc. etc.
Do you have a thorough knowledge of the motives and operations / trades of all these institutions ? Or are you just guessing / assuming ?

The hard fact is that none of us know everything that's going on and none of us know how things will progress. Some of us think it has great potential. Some of us think it's all terrible and is doomed to failure. That's all fine - vive la difference.
Some claim to know that it's all terrible and will definitely fail. As I said, I am challenging that certainty.

Hi LateStarter,

Agreed, no-one knows everything. Just to be clear, i have not been saying that this thing will disappear at a specific moment (but i wish since it is bad for the planet not producing anything useful). I was saying that the only reason, at least for the most crypto traders, is a speculation. I consider it as a fact. They are not admitting it directly. I don't see happening that it could be more than that (and i could be wrong).
I do think that "crypto" could be useful. But i would call it crypto 2.0, maybe governments issued, not necessary using blockchain.
So let's assume that 2.0 comes, and is successful/usefull. What would happened to BTC, dog coins etc? I think that the gamblers expect some kind of conversion to happen. One doge to one AmericaCoin 2.0? Why not, it has a value, right?

About adoption:
Yes, there are more casinos (aka companies "doing" crypto) popping up since there is more gamblers (it always will go up mentality). Still, sure it would be OK with me if a harmless play. But the cost of the gambling is very bad for everyone (killing the planet), there is a typical social cost like normal gambling has, and there is major risk for the whole economy when the thing pops up. I would really hate that the gamblers are rescued by "feds" at everyones cost, when becomes "too big to fail". Plus, imagine what would happen if the enormous $, engineering, marketing would be spent instead on something useful for the society. It is one big waste, a radioactive waste that will hurt for a long time. 

Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on January 25, 2022, 04:42:50 PM
Hi @LateStarter
By adoption you mean some institutions just feeling FOMO that others making $, pardon the lang, on fools? These institution only "adopt" to make money on the suckers. They are not committing themselves (ignoring things like COIN, SQUARE, BLOCK, these are more sophisticated in the game of screwing others, garbing as much $ as possible from the mob). Or you mean San Salvador, healthy economy matching Swiss?
:)

Hi ArnoldK
By 'adoption', I mean wider adoption by all categories - individuals, institutions, states, etc. etc. etc.
Do you have a thorough knowledge of the motives and operations / trades of all these institutions ? Or are you just guessing / assuming ?

The hard fact is that none of us know everything that's going on and none of us know how things will progress. Some of us think it has great potential. Some of us think it's all terrible and is doomed to failure. That's all fine - vive la difference.
Some claim to know that it's all terrible and will definitely fail. As I said, I am challenging that certainty.

Hi LateStarter,

Agreed, no-one knows everything. Just to be clear, i have not been saying that this thing will disappear at a specific moment (but i wish since it is bad for the planet not producing anything useful). I was saying that the only reason, at least for the most crypto traders, is a speculation. I consider it as a fact. They are not admitting it directly. I don't see happening that it could be more than that (and i could be wrong).

Yes, I guess we just have different opinions. Time will tell.

I do think that "crypto" could be useful. But i would call it crypto 2.0, maybe governments issued, not necessary using blockchain.
So let's assume that 2.0 comes, and is successful/usefull. What would happened to BTC, dog coins etc? I think that the gamblers expect some kind of conversion to happen. One doge to one AmericaCoin 2.0? Why not, it has a value, right?

There's plenty talk about CBDCs - probably will happen in some countries - maybe many. However, CBDC's would just be a different representation of existing currencies, and thus wouldn't have the best features of BTC, ie. decentralised, finite, etc. I don't see CBDCs as much of a threat to BTC.

I have no interest in meme coins. My assumption is that most are fads and will vanish in time.

About adoption:
Yes, there are more casinos (aka companies "doing" crypto) popping up since there is more gamblers (it always will go up mentality). Still, sure it would be OK with me if a harmless play. But the cost of the gambling is very bad for everyone (killing the planet), there is a typical social cost like normal gambling has, and there is major risk for the whole economy when the thing pops up. I would really hate that the gamblers are rescued by "feds" at everyones cost, when becomes "too big to fail".

I don't get the "too big to fail" argument for crypto. Maybe, you're referring to the risk of over-extended banks going bust - if so, that's a banking problem rather than a crypto problem.

My guess is that most governments / central banks would be happy to see Bitcoin fail.

Plus, imagine what would happen if the enormous $, engineering, marketing would be spent instead on something useful for the society. It is one big waste, a radioactive waste that will hurt for a long time.

But I do see BTC as something useful for society, so . . .
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 25, 2022, 04:47:53 PM
Exactly how I feel about tulips.  I'll admit - there has been a bit of a lull since the 17th century . . . but in the Netherlands alone, 220 million euros of tulips were exported in 2020.  That's a LOT MORE euros (100% by my math) than were spent during the HEIGHT of tulip mania!

The game isn't over YET.
It's only just the beginning.
Don't prematurely judge tulips as down and out.


We've only started to scratch the potential of flower chain technologies:
(https://i3.wp.com/www.firefliesandmudpies.com/wp-content/uploads/2013/05/how-to-make-flower-chain-crowns-for-imaginative-play2.jpg)


#HODL HORTICULTURE 4EVA

I see. So you think that in future there will be some useful digital currency that will be widely used. Sure, almost 100%.
But what it has to do with the current cryptos?

Did you invest in Palm or BB mobile phone company? Mobile devices succeeded.

If black tulip price was more than a home price back then, what it has to do with 1$ flowers now? Why not compare with parsley? Just a name matching?

Sorry if I didn’t detect sarcasm if intended. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 25, 2022, 05:02:20 PM
@LateStarter
I was thinking that BTC is a meme. Now i'm confused. Could you tell me which cryptos from what, now like 5000 cryptos are the "real thing"?
I was thinking that doge coin is the real thing, even a top billionaire supports it (someone used the argument about billionaires). :)

Anyway, regardless of all, good luck to you and your investments!

UPDATE:
Too big too fail i mean the government to avoid possible a social unrests. If millions have crypto as their (only?) wealth, and government / Feds are closing it (one way or another), they might be forced to give some carrot to the poor souls. But other variants of TBTF are also possible.
I think that this is #1 reason feds are not doing much to kill, they just hope that it will softly collapses itself in early stages.

Nothing to do with banks. As i said before, such institutions are not committing to crypto. They just see some gambling $ coming their way, why not be the middle man?
A good example of other adoptions. AMC, failed company, no future for their business. They got some unexpected rain of $. They have not figure out their business model for the future, legacy business. And what they did? We do BTC! The mob started cheering. How pathetic!

But i'm afraid the no logical arguments can make change minds. This is more for human psychology discussion: faith, greed, tendency to avoid hard work etc.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: erjkism on January 25, 2022, 06:13:20 PM
Complain about what? I'm freaking FI because I didn't go for any of the various sure-thing get rich quick crap over the years. I know an awful lot of crypto enthusiasts still working their day jobs...

-W

Sorry I didn't mean to say you specifically were complaining about it. In my personal life it just seems like the people who never bought crypto complain about the wealth other people have made from it. These people seem to just have a lot of resentment and want the entire crypto market to collapse so they don't feel dumb/jealous.

And tulip buying was not nearly as widespread as cryptocurrency is today. I don't think the two are really comparable at this point. They psychological similarities might hold true to bitcoin in the early days or newer cryptocurrencies, but the industry has advanced a lot. 

per wikipedia on tulip mania: While Mackay's account held that a wide array of society was involved in the tulip trade, Goldgar's study of archived contracts found that even at its peak the trade in tulips was conducted almost exclusively by merchants and skilled craftsmen who were wealthy, but not members of the nobility.[58] Any economic fallout from the bubble was very limited. Goldgar, who identified many prominent buyers and sellers in the market, found fewer than half a dozen who experienced financial troubles in the time period, and even of these cases it is not clear that tulips were to blame

I want it to fail bc it's a waste of resources. I'm FIREd and have no resentment from the wealth being stolen from people who have no idea what investing even is.

I understand that bitcoin has an environmental cost. Whether that is a "waste" depends on who you ask. It has practical uses and is also a "philosophical" coin, a religion basically.

There are other cryptocurrencies that have little to no environmental impact. I just think it is foolish to ignore this sector, it has been a fast path to FIRE for most people I know. Crypto is not going anywhere, buy cheap, take profits along the way, and diversify into index funds.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: erjkism on January 25, 2022, 06:20:52 PM
Is it me or does every crypto zealot sound like the have some kind of persecution complex?  They all seem to repeat "Everyone is against us, we will overcome, drink the Kool-Aide and join us".  Cults always end the same way. 

I only know a few people who dabbled in crypto along with myself in 2016-2017 and never had more than vacation money in this.  Everyone I know has made money, but not one believes this will change anything in the future.  It's also still not a legitimate trading vehicle for anything otherwise there wouldn't be a 33% discount from BTC to GBTC.  One price has to be fake, either one that trades on regulated exchanges or one that trades in 3rd world servers?   

That's because cryptocurrencies can help persecuted populations. As a jew I don't want my wealth confiscated like has been historically.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FLBiker on January 26, 2022, 09:51:29 AM
I just think it is foolish to ignore this sector, it has been a fast path to FIRE for most people I know.

Wow, is that really true?  Most of the people you know have retired early based on wealth the accumulated quickly through crypto?  We clearly travel in different circles, but I don't personally know anyone who has retired based on their crypto earnings, despite knowing at least a few people who invest in crypto.  If that has been your experience, though, I can see why crypto would seem like  a foolish thing to ignore.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on January 26, 2022, 10:00:34 AM
Is it me or does every crypto zealot sound like the have some kind of persecution complex?  They all seem to repeat "Everyone is against us, we will overcome, drink the Kool-Aide and join us".  Cults always end the same way. 

I only know a few people who dabbled in crypto along with myself in 2016-2017 and never had more than vacation money in this.  Everyone I know has made money, but not one believes this will change anything in the future.  It's also still not a legitimate trading vehicle for anything otherwise there wouldn't be a 33% discount from BTC to GBTC.  One price has to be fake, either one that trades on regulated exchanges or one that trades in 3rd world servers?   

That's because cryptocurrencies can help persecuted populations. As a jew I don't want my wealth confiscated like has been historically.

Does cryptocurrency really help with this?

It's hard for someone to kick down your door and just steal your crypto sure, but it's not a currency . . . so a population that wants to persecute you could just camp out at the crypto exchanges for when you want to make the crypto usable, couldn't they?

Then you look at all the neo-nazis who have gained wealth from cryptocurrency . . . https://www.splcenter.org/hatewatch/2021/12/09/how-cryptocurrency-revolutionized-white-supremacist-movement (https://www.splcenter.org/hatewatch/2021/12/09/how-cryptocurrency-revolutionized-white-supremacist-movement).  It seems tricky to say that this is a clear benefit for persecuted populations.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 26, 2022, 10:05:47 AM
Is it me or does every crypto zealot sound like the have some kind of persecution complex?  They all seem to repeat "Everyone is against us, we will overcome, drink the Kool-Aide and join us".  Cults always end the same way. 

I only know a few people who dabbled in crypto along with myself in 2016-2017 and never had more than vacation money in this.  Everyone I know has made money, but not one believes this will change anything in the future.  It's also still not a legitimate trading vehicle for anything otherwise there wouldn't be a 33% discount from BTC to GBTC.  One price has to be fake, either one that trades on regulated exchanges or one that trades in 3rd world servers?   

That's because cryptocurrencies can help persecuted populations. As a jew I don't want my wealth confiscated like has been historically.

Does cryptocurrency really help with this?

Let's say that tomorrow all of your assets are frozen and you are legit persecuted and you want to get to another country and claim asylum (or if you are lucky enough you have a second passport). But you don't have any money. How do you get there?

Now imagine that 10% of your net worth was in XMR in offline wallets.

Which position would you rather be in?

EDITed to add - that's not an investment per say, it is not speculating that XMR will go up, it's just a hedge against loss of access to your traditional assets.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on January 26, 2022, 10:26:15 AM
Let's say that tomorrow all of your assets are frozen and you are legit persecuted and you want to get to another country and claim asylum (or if you are lucky enough you have a second passport). But you don't have any money. How do you get there?

Now imagine that 10% of your net worth was in XMR in offline wallets.

Which position would you rather be in?

EDITed to add - that's not an investment per say, it is not speculating that XMR will go up, it's just a hedge against loss of access to your traditional assets.

For the 99%+ of people buying cryptocurrencies on exchanges that have to abide by KYC regulations, any moderately competent government will know you have these holdings—even if they've been moved to hardware wallets. If you're being persecuted this aggressively, there's a non-negligible likelihood you're doing to be violently threatened to give up that hardware wallet too. Cue https://xkcd.com/538/
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 26, 2022, 10:51:09 AM
Let's say that tomorrow all of your assets are frozen and you are legit persecuted and you want to get to another country and claim asylum (or if you are lucky enough you have a second passport). But you don't have any money. How do you get there?

Now imagine that 10% of your net worth was in XMR in offline wallets.

Which position would you rather be in?

EDITed to add - that's not an investment per say, it is not speculating that XMR will go up, it's just a hedge against loss of access to your traditional assets.

For the 99%+ of people buying cryptocurrencies on exchanges that have to abide by KYC regulations, any moderately competent government will know you have these holdings—even if they've been moved to hardware wallets. If you're being persecuted this aggressively, there's a non-negligible likelihood you're doing to be violently threatened to give up that hardware wallet too. Cue https://xkcd.com/538/

Indeed, if you are holding crypto for persecution reasons you should:
1. Not leave a paper trail.
2. Never disclose what you have to any government or person.
3. Break it up into more than one wallet.

This is easier than you might think. There are multiple websites on the non-dark web where you can find people who will trade XMR for USD.

As long as you never sell any of it I don't believe that you are breaking any tax laws with this plan.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on January 26, 2022, 11:23:40 AM
Is it me or does every crypto zealot sound like the have some kind of persecution complex?  They all seem to repeat "Everyone is against us, we will overcome, drink the Kool-Aide and join us".  Cults always end the same way. 

I only know a few people who dabbled in crypto along with myself in 2016-2017 and never had more than vacation money in this.  Everyone I know has made money, but not one believes this will change anything in the future.  It's also still not a legitimate trading vehicle for anything otherwise there wouldn't be a 33% discount from BTC to GBTC.  One price has to be fake, either one that trades on regulated exchanges or one that trades in 3rd world servers?   

That's because cryptocurrencies can help persecuted populations. As a jew I don't want my wealth confiscated like has been historically.

Are people really piling into crypto to avoid a scenario where someone else steals their wealth? People are losing tens of millions on every hack, with no recourse, and no one cares. 

It's like a plan to redistribute wealth to computer hackers and away from bros who get investment advice from YouTube. It's like we've set up a version of the Olympic games for hacking, and the prizes are to become a multi-millionaire.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 26, 2022, 11:39:52 AM
Is it me or does every crypto zealot sound like the have some kind of persecution complex?  They all seem to repeat "Everyone is against us, we will overcome, drink the Kool-Aide and join us".  Cults always end the same way. 

I only know a few people who dabbled in crypto along with myself in 2016-2017 and never had more than vacation money in this.  Everyone I know has made money, but not one believes this will change anything in the future.  It's also still not a legitimate trading vehicle for anything otherwise there wouldn't be a 33% discount from BTC to GBTC.  One price has to be fake, either one that trades on regulated exchanges or one that trades in 3rd world servers?   

That's because cryptocurrencies can help persecuted populations. As a jew I don't want my wealth confiscated like has been historically.

Are people really piling into crypto to avoid a scenario where someone else steals their wealth? People are losing tens of millions on every hack, with no recourse, and no one cares. 

It's like a plan to redistribute wealth to computer hackers and away from bros who get investment advice from YouTube. It's like we've set up a version of the Olympic games for hacking, and the prizes are to become a multi-millionaire.

Well said.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FreelanceToFreedom on January 26, 2022, 11:57:03 AM
Crypto is interesting to me, and I hold a very small amount of a few tokens.

But what is more interesting to me is the underlying blockchain technology. I think people get caught up in the price movements and FOMO of the tokens themselves, but don't understand that the tokens are simply made for paying fees to interact with the underlying blockchain. So ETH is literally just a token that enables you to access and utilize the Ethereum blockchain. At least that was the original concept!

I am still learning about blockchain and won't claim to be an expert. But I do know that an incredible number of extremely intelligent people are flocking to blockchain projects en masse. Not investing in crypto, necessarily, but leaving prestigious tech jobs in order to pursue blockchain startups and ventures. I think it was an episode of the Tim Ferris show where he said he had never seen so many intelligent people drop everything to pursue a new technology.

Sure, there's definitely a gold-rush aspect to it. But there's also genuine excitement in the tech industry about the future potential of blockchain. And that alone is enough to grab my interest.

tl;dr many tokens are completely worthless and/or massively overhyped, but I personally believe that some type of blockchain/smart contract tech will likely play a much bigger role in the world than it does today. Whether that's an existing blockchain or one that has yet to be created is anyone's guess.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 26, 2022, 12:31:32 PM
Crypto is interesting to me, and I hold a very small amount of a few tokens.

But what is more interesting to me is the underlying blockchain technology. I think people get caught up in the price movements and FOMO of the tokens themselves, but don't understand that the tokens are simply made for paying fees to interact with the underlying blockchain. So ETH is literally just a token that enables you to access and utilize the Ethereum blockchain. At least that was the original concept!

I am still learning about blockchain and won't claim to be an expert. But I do know that an incredible number of extremely intelligent people are flocking to blockchain projects en masse. Not investing in crypto, necessarily, but leaving prestigious tech jobs in order to pursue blockchain startups and ventures. I think it was an episode of the Tim Ferris show where he said he had never seen so many intelligent people drop everything to pursue a new technology.

Sure, there's definitely a gold-rush aspect to it. But there's also genuine excitement in the tech industry about the future potential of blockchain. And that alone is enough to grab my interest.

tl;dr many tokens are completely worthless and/or massively overhyped, but I personally believe that some type of blockchain/smart contract tech will likely play a much bigger role in the world than it does today. Whether that's an existing blockchain or one that has yet to be created is anyone's guess.

Smart as realizing that they can steal lily pops from babies in the light of the day. Become programmer and issue your own crypto. Pump it, get rich. Tell them that you use blockchain. They will be delighted to throw fiat on you.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: erjkism on January 26, 2022, 12:31:48 PM
Is it me or does every crypto zealot sound like the have some kind of persecution complex?  They all seem to repeat "Everyone is against us, we will overcome, drink the Kool-Aide and join us".  Cults always end the same way. 

I only know a few people who dabbled in crypto along with myself in 2016-2017 and never had more than vacation money in this.  Everyone I know has made money, but not one believes this will change anything in the future.  It's also still not a legitimate trading vehicle for anything otherwise there wouldn't be a 33% discount from BTC to GBTC.  One price has to be fake, either one that trades on regulated exchanges or one that trades in 3rd world servers?   

That's because cryptocurrencies can help persecuted populations. As a jew I don't want my wealth confiscated like has been historically.

Does cryptocurrency really help with this?

It's hard for someone to kick down your door and just steal your crypto sure, but it's not a currency . . . so a population that wants to persecute you could just camp out at the crypto exchanges for when you want to make the crypto usable, couldn't they?

Then you look at all the neo-nazis who have gained wealth from cryptocurrency . . . https://www.splcenter.org/hatewatch/2021/12/09/how-cryptocurrency-revolutionized-white-supremacist-movement (https://www.splcenter.org/hatewatch/2021/12/09/how-cryptocurrency-revolutionized-white-supremacist-movement).  It seems tricky to say that this is a clear benefit for persecuted populations.

If necessary you could just send the cryptocurrency to a friend/relative/associate to hold so that the persecuting population couldn't  access to it. Sure, they could torture you to make you tell them where you sent it, but they can never really get access to the cryptocurrency unless the person sends it back. 

With regards to camping out at exchanges, there are so many decentralized exchanges that allow you to swap from one currency to another with no central authority saying who can and can't use the service. Sure, to perform an electronic bank transfer and get local currency in your bank account you would need to go through a centralized exchange at some point though. But you can also just make direct barter for local currency 1 on 1 with a person through localbitcoins or something like that.

And on the Nazi issue... there was actually an incident where the internet nazi kid Nick Fuentes had 500k from his bank account completely drained by the federal government. This is an issue that can really affect anyone anywhere. https://www.worldtribune.com/doj-confiscated-bank-account-500000-from-nick-fuentes/
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 26, 2022, 01:11:13 PM
I feel like a troll here 😀. Sorry, will limit my posts.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on January 26, 2022, 01:19:59 PM
Is it me or does every crypto zealot sound like the have some kind of persecution complex?  They all seem to repeat "Everyone is against us, we will overcome, drink the Kool-Aide and join us".  Cults always end the same way. 

I only know a few people who dabbled in crypto along with myself in 2016-2017 and never had more than vacation money in this.  Everyone I know has made money, but not one believes this will change anything in the future.  It's also still not a legitimate trading vehicle for anything otherwise there wouldn't be a 33% discount from BTC to GBTC.  One price has to be fake, either one that trades on regulated exchanges or one that trades in 3rd world servers?   

That's because cryptocurrencies can help persecuted populations. As a jew I don't want my wealth confiscated like has been historically.

Does cryptocurrency really help with this?

It's hard for someone to kick down your door and just steal your crypto sure, but it's not a currency . . . so a population that wants to persecute you could just camp out at the crypto exchanges for when you want to make the crypto usable, couldn't they?

Then you look at all the neo-nazis who have gained wealth from cryptocurrency . . . https://www.splcenter.org/hatewatch/2021/12/09/how-cryptocurrency-revolutionized-white-supremacist-movement (https://www.splcenter.org/hatewatch/2021/12/09/how-cryptocurrency-revolutionized-white-supremacist-movement).  It seems tricky to say that this is a clear benefit for persecuted populations.

If necessary you could just send the cryptocurrency to a friend/relative/associate to hold so that the persecuting population couldn't  access to it. Sure, they could torture you to make you tell them where you sent it, but they can never really get access to the cryptocurrency unless the person sends it back. 

With regards to camping out at exchanges, there are so many decentralized exchanges that allow you to swap from one currency to another with no central authority saying who can and can't use the service. Sure, to perform an electronic bank transfer and get local currency in your bank account you would need to go through a centralized exchange at some point though. But you can also just make direct barter for local currency 1 on 1 with a person through localbitcoins or something like that

Let's look at the string of fragile systems and assumptions that must be in place for a person to use cryptocurrency to escape repression:

1) A working, secure, and private internet connection and electricity. This assumption might fail in the event of a solar flare, internet-wide malware vulnerability, local unrest, or authoritarian lockdown. Would you submit your passwords through China's great firewall, where you know for sure someone is watching you? How about through an African internet cafe?

2) Existence of trustworthy exchanges. I.e. in the future, exchanges must not have been banned or compromised to the point they are untrustworthy. They have to be legit businesses, not some bullshit supposedly based on a rogue Caribbean island, but who knows, right? More and more countries are banning cryptocurrencies, so at what point do the exchanges themselves become either underground or sketchy third-world operations? You'd never know until they day you tried to go back to fiat currency, and even then ponzi schemes can make payments to early investors.

3) A device not infected with malware. A significant percentage of the people who lose their entire crypto balances do so because they had spyware on their computer. Tough luck. There's practically no law enforcement, no insurance, and no recourse.

4) Secure password storage. In the event you had to flee unrest or crisis, how will you transport your passwords? Will they be stored on a steal-able laptop? Will it be written in a note folded into your shoe? Or will you make it simple enough to be guessable within the first few million tries of a cracking program?

5) A way to trade your crypto for fiat. So you've escaped persecution with your login information tatooed on your private parts in morse code disguised as moles, and landed in a place where crypto exchanges are legal. You set up a brand new burner phone with your last $30, log into your crypto exchange, and then what? How do you sell your crypto and acquire enough local currency to rent a hotel tonight? You'll need to depend on the banking system (brick and mortar banks, PayPal-like forms, credit card companies, etc.) to receive transfers of local currency from your exchange account in a format the hotel will accept*. But of course, if they are still dependable, what did you need to use crypto for?

*Unless you think the exchanges will set up some parallel economy to serve you, which would somehow not have the same vulnerabilities as the existing banking system, and would thereby be a relevant solution for this "last mile" problem.

The traditional banking system is vulnerable to #1 only. In the event of #3 and #4 your bank will likely work with you to confirm your identity in person and restore access or use insurance to cover the losses. Similarly, if the plan is to entrust your life savings to a friend in a non-persecuted population or in a place without unrest so that the bad guys can't torture the password out of you, you could have just given them a suitcase of cash or done a wire transfer at that point.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: erjkism on January 26, 2022, 01:51:00 PM
Is it me or does every crypto zealot sound like the have some kind of persecution complex?  They all seem to repeat "Everyone is against us, we will overcome, drink the Kool-Aide and join us".  Cults always end the same way. 

I only know a few people who dabbled in crypto along with myself in 2016-2017 and never had more than vacation money in this.  Everyone I know has made money, but not one believes this will change anything in the future.  It's also still not a legitimate trading vehicle for anything otherwise there wouldn't be a 33% discount from BTC to GBTC.  One price has to be fake, either one that trades on regulated exchanges or one that trades in 3rd world servers?   

That's because cryptocurrencies can help persecuted populations. As a jew I don't want my wealth confiscated like has been historically.

Does cryptocurrency really help with this?

It's hard for someone to kick down your door and just steal your crypto sure, but it's not a currency . . . so a population that wants to persecute you could just camp out at the crypto exchanges for when you want to make the crypto usable, couldn't they?

Then you look at all the neo-nazis who have gained wealth from cryptocurrency . . . https://www.splcenter.org/hatewatch/2021/12/09/how-cryptocurrency-revolutionized-white-supremacist-movement (https://www.splcenter.org/hatewatch/2021/12/09/how-cryptocurrency-revolutionized-white-supremacist-movement).  It seems tricky to say that this is a clear benefit for persecuted populations.

If necessary you could just send the cryptocurrency to a friend/relative/associate to hold so that the persecuting population couldn't  access to it. Sure, they could torture you to make you tell them where you sent it, but they can never really get access to the cryptocurrency unless the person sends it back. 

With regards to camping out at exchanges, there are so many decentralized exchanges that allow you to swap from one currency to another with no central authority saying who can and can't use the service. Sure, to perform an electronic bank transfer and get local currency in your bank account you would need to go through a centralized exchange at some point though. But you can also just make direct barter for local currency 1 on 1 with a person through localbitcoins or something like that

Let's look at the string of fragile systems and assumptions that must be in place for a person to use cryptocurrency to escape repression:

1) A working, secure, and private internet connection and electricity. This assumption might fail in the event of a solar flare, internet-wide malware vulnerability, local unrest, or authoritarian lockdown. Would you submit your passwords through China's great firewall, where you know for sure someone is watching you? How about through an African internet cafe?

2) Existence of trustworthy exchanges. I.e. in the future, exchanges must not have been banned or compromised to the point they are untrustworthy. They have to be legit businesses, not some bullshit supposedly based on a rogue Caribbean island, but who knows, right? More and more countries are banning cryptocurrencies, so at what point do the exchanges themselves become either underground or sketchy third-world operations? You'd never know until they day you tried to go back to fiat currency, and even then ponzi schemes can make payments to early investors.

3) A device not infected with malware. A significant percentage of the people who lose their entire crypto balances do so because they had spyware on their computer. Tough luck. There's practically no law enforcement, no insurance, and no recourse.

4) Secure password storage. In the event you had to flee unrest or crisis, how will you transport your passwords? Will they be stored on a steal-able laptop? Will it be written in a note folded into your shoe? Or will you make it simple enough to be guessable within the first few million tries of a cracking program?

5) A way to trade your crypto for fiat. So you've escaped persecution with your login information tatooed on your private parts in morse code disguised as moles, and landed in a place where crypto exchanges are legal. You set up a brand new burner phone with your last $30, log into your crypto exchange, and then what? How do you sell your crypto and acquire enough local currency to rent a hotel tonight? You'll need to depend on the banking system (brick and mortar banks, PayPal-like forms, credit card companies, etc.) to receive transfers of local currency from your exchange account in a format the hotel will accept*. But of course, if they are still dependable, what did you need to use crypto for?

*Unless you think the exchanges will set up some parallel economy to serve you, which would somehow not have the same vulnerabilities as the existing banking system, and would thereby be a relevant solution for this "last mile" problem.

The traditional banking system is vulnerable to #1 only. In the event of #3 and #4 your bank will likely work with you to confirm your identity in person and restore access or use insurance to cover the losses. Similarly, if the plan is to entrust your life savings to a friend in a non-persecuted population or in a place without unrest so that the bad guys can't torture the password out of you, you could have just given them a suitcase of cash or done a wire transfer at that point.


1) A working, secure, and private internet connection and electricity.

You can have keep your private keys safe offline in a hardware wallet for most cryptocurrencies. The pin/password is pretty simple usually, and if you really want to you could memorize your 12-24 word seed phrase so that you don't even need to write it down anywhere.


2) Existence of trustworthy exchanges.

This isn't really a problem, there are a ton of centralized/decentralized exchanges that have been trusted with billions of dollars. Coinbase is publically traded company. 


3) A device not infected with malware

This is a risk, no doubt. Proper security and common sense can help prevent hackers.  I know someone who has millions of dollars in crypto stored on a computer that has never been hooked to the internet. Depositing the money on it is weird and above my pay-grade, so I have never done anything like that, but it is possible.

4) Secure password storage.

if you want to, you could memorize your 12-24 word backup phrase.

5) A way to trade your crypto for fiat.

There are tons of centralized/decentralized exchanges that let you trade for USD stable coins. Most exchanges let you withdraw to a bank account. If you don't have a bank account, there are websites that help you trade crypto for cash, or if you know someone personally you could just make a deal with them and avoid the banking system all together.



"The traditional banking system is vulnerable to #1 only. In the event of #3 and #4 your bank will likely work with you to confirm your identity in person and restore access or use insurance to cover the losses. Similarly, if the plan is to entrust your life savings to a friend in a non-persecuted population or in a place without unrest so that the bad guys can't torture the password out of you, you could have just given them a suitcase of cash or done a wire transfer at that point."

You trust sending a suitcase full of cash through the mail? I would never do that lol.  A wire transfer will only work if the government hasn't confiscated your assets already.

-
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 26, 2022, 01:59:03 PM
1) A working, secure, and private internet connection and electricity. This assumption might fail in the event of a solar flare, internet-wide malware vulnerability, local unrest, or authoritarian lockdown. Would you submit your passwords through China's great firewall, where you know for sure someone is watching you? How about through an African internet cafe?

The blockchain lives on the internet. You don't need "secure internet" any more than you need "secure internet" to check your online banking with a secure TLS connection. The internet isn't secure, period. The only thing you can do is use reasonably safe cryptographic protocols.

2) Existence of trustworthy exchanges. I.e. in the future, exchanges must not have been banned or compromised to the point they are untrustworthy. They have to be legit businesses, not some bullshit supposedly based on a rogue Caribbean island, but who knows, right? More and more countries are banning cryptocurrencies, so at what point do the exchanges themselves become either underground or sketchy third-world operations? You'd never know until they day you tried to go back to fiat currency, and even then ponzi schemes can make payments to early investors.

You need to find someone, somewhere, that will trade your crypto for cash or cash equivalents. This exists today.

3) A device not infected with malware. A significant percentage of the people who lose their entire crypto balances do so because they had spyware on their computer. Tough luck. There's practically no law enforcement, no insurance, and no recourse.

This is actually a problem. Really paranoid security researchers go to BestBuy, buy a laptop, and immediately re-image it. That's probably overboard.

4) Secure password storage. In the event you had to flee unrest or crisis, how will you transport your passwords? Will they be stored on a steal-able laptop? Will it be written in a note folded into your shoe? Or will you make it simple enough to be guessable within the first few million tries of a cracking program?

Secure password storage is an issue. But the cracking thing isn't, or at least it shouldn't be depending on the currency and the wallet. To be more specific I recently had to recover an XMR offline paper wallet and even knowing the password it took a long time to recover the electronic wallet. This is because it is a cryptographically intensive process. Also, if you screw it up, you don't know. You just end up with a wallet with 0 XMR in it.

5) A way to trade your crypto for fiat. So you've escaped persecution with your login information tatooed on your private parts in morse code disguised as moles, and landed in a place where crypto exchanges are legal. You set up a brand new burner phone with your last $30, log into your crypto exchange, and then what? How do you sell your crypto and acquire enough local currency to rent a hotel tonight? You'll need to depend on the banking system (brick and mortar banks, PayPal-like forms, credit card companies, etc.) to receive transfers of local currency from your exchange account in a format the hotel will accept*. But of course, if they are still dependable, what did you need to use crypto for?

Crypto-for-cash is a thing today. But obviously if you are worried enough to keep a bunch of cryptocurrency in offline wallet(s) you should probably also have some cash money and maybe even some gold.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on January 26, 2022, 02:24:40 PM
This is a pretty good in-depth summary of the current state of crypto and NFTs:
https://www.youtube.com/watch?v=YQ_xWvX1n9g&ab_channel=FoldingIdeas (https://www.youtube.com/watch?v=YQ_xWvX1n9g&ab_channel=FoldingIdeas)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: zing12 on January 26, 2022, 02:43:43 PM
This is a pretty good in-depth summary of the current state of crypto and NFTs:
https://www.youtube.com/watch?v=YQ_xWvX1n9g&ab_channel=FoldingIdeas (https://www.youtube.com/watch?v=YQ_xWvX1n9g&ab_channel=FoldingIdeas)

Wild. I have been a skeptic for a while and don't own any crypto, but I never fully made the pyramid scheme connection til now. It's just an MLM scheme that targets bros instead of moms.

A few years ago, I thought that "well I'm skeptical on the value of it as a currency, but I think there could be interesting applications of blockchain technology" and now I'm not even so sure of that lol.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: bacchi on January 26, 2022, 02:59:36 PM
This is a pretty good in-depth summary of the current state of crypto and NFTs:
https://www.youtube.com/watch?v=YQ_xWvX1n9g&ab_channel=FoldingIdeas (https://www.youtube.com/watch?v=YQ_xWvX1n9g&ab_channel=FoldingIdeas)

Wild. I have been a skeptic for a while and don't own any crypto, but I never fully made the pyramid scheme connection til now. It's just an MLM scheme that targets bros instead of moms.

A few years ago, I thought that "well I'm skeptical on the value of it as a currency, but I think there could be interesting applications of blockchain technology" and now I'm not even so sure of that lol.

Blockchain didn't invent the  consensus algorithm. To put it another way, distributed agents can be used without silly PoW or PoS algorithms that waste CPU cycles or require money (or "money").
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on January 26, 2022, 03:25:06 PM
I am still learning about blockchain and won't claim to be an expert. But I do know that an incredible number of extremely intelligent people are flocking to blockchain projects en masse. Not investing in crypto, necessarily, but leaving prestigious tech jobs in order to pursue blockchain startups and ventures. I think it was an episode of the Tim Ferris show where he said he had never seen so many intelligent people drop everything to pursue a new technology.

That was the episode focused on NTFs I believe.  The crypto-experts he's had on invariably have had brilliant careers in tech before focusing on blockchain.  No question the brain power of people in this sector is off the charts. 

But there are two problems that seem to be insurmountable, and really it is just one problem:   They are just making collectables.  For example, in the NTF episode, they discussed how you could have a metaverse/game world where all the objects are NTFs and therefore authenticable and transferrable--even between games.  That's cool, but I don't see what problem they are solving unless there is a big market for authenticable virtual stuff. 

The second problem which is part of the first problem is these guys are so focused on technology none of them have thought about how money works in the real world.   Bitcoin was intended to be money.  But it wasn't designed to be money, it was designed to be a collectable.   Therefore it doesn't work as currency and will never work as currency. 

Title: Re: What do you think of adding a low% of crypto allocation
Post by: DaTrill on January 26, 2022, 09:39:56 PM
Wall Street vampires will such every drop of profit out of this Ponzi scheme.  The juice on trading cryptos is the only thing attracting WS, nothing to do with usage or adoption. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on January 26, 2022, 10:12:02 PM
Pet peeve:  There is no aspect of crypto that meets the definition of a Ponzi scheme.  It does appear to be a speculative bubble.  Things tend to get tedious and boring when we get pedantic like I'm doing, but definitions are important.   Crypto is not a Ponzi scheme. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FLBiker on January 27, 2022, 07:11:04 AM
It's interesting to see the "stop government from seizing your assets" argument for crypto.

I'm a pretty pessimistic guy, government-wise -- I mean, I literally moved to Canada from the US a couple of year ago so that my family could have two passports, just in case.  At the same time, I have very little fear of the government seizing my assets.  Or, to put it another way, I think the odds are much greater that crypto could go to zero, or my wallet could get hacked, or whatever.  Plus, in a world where "the government" (meaning either Canada or the US, in my case) is seizing the assets of its citizens indiscriminately, I'm probably screwed regardless.  Unless you're imagining a world where the government seizes your assets, but grocery stores, hospitals, utilities, etc. all continue to function as per usual (despite the fact that only folks who kept assets in crypto would be able to afford them).  I'm just trying to get my head around this scenario.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on January 27, 2022, 07:35:25 AM
Plus, in a world where "the government" (meaning either Canada or the US) in my case is seizing the assets of its citizens indiscriminately, I'm probably screwed regardless.  Unless you're imagining a world where the government seizes your assets, but grocery stores, hospitals, utilities, etc. all continue to function as per usual (despite the fact that only folks who kept assets in crypto would be able to afford them).  I'm just trying to get my head around this scenario.

I think think the romanticized zombie movies and the like have let imaginations run with what an actual collapse would look like.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on January 27, 2022, 07:36:58 AM
Pet peeve:  There is no aspect of crypto that meets the definition of a Ponzi scheme.  It does appear to be a speculative bubble.  Things tend to get tedious and boring when we get pedantic like I'm doing, but definitions are important.   Crypto is not a Ponzi scheme.

It's a decentralized cross between a Ponzi scheme and a pyramid scheme. Disprove that statement.

Ponzi Scheme:  A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves.

With little or no legitimate earnings, Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit new investors, or when large numbers of existing investors cash out, these schemes tend to collapse.



That seems to fit bitcoin reasonably well.  Early investors are paid when they cash out by the liquidity provided by new investors.  The value of bitcoin depends entirely upon new money coming into the system.  Bitcoin itself generates little or no legitimate earnings.  A large number of investors cashing out would crash Bitcoin.


Pyramid scheme:  A pyramid scheme is a fraudulent system of making money based on recruiting an ever-increasing number of  "investors."  The initial promoters recruit  investors, who in turn recruit more investors, and so on. The scheme is called a "pyramid" because at each level, the number of investors increases. The small group of initial promotors at the top require a large base of later investors to support the scheme by providing profits to the earlier investors.

This also seems to fit reasonably well.  Bitcoin early adopters are virtually all shills/evangelists bent on recruiting more investors. Due to the deflationary nature of bitcoin,  the earlier you get in the greater the rewards.  In order to allow those early investors with large numbers of bitcoin to cash out, it's necessary that a large base of later investors support the scheme buy purchasing their bitcoin.



Story seems to check out.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BeanCounter on January 27, 2022, 08:14:14 AM
Pet peeve:  There is no aspect of crypto that meets the definition of a Ponzi scheme.  It does appear to be a speculative bubble.  Things tend to get tedious and boring when we get pedantic like I'm doing, but definitions are important.   Crypto is not a Ponzi scheme.

It's a decentralized cross between a Ponzi scheme and a pyramid scheme. Disprove that statement.

Ponzi Scheme:  A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves.

With little or no legitimate earnings, Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit new investors, or when large numbers of existing investors cash out, these schemes tend to collapse.



That seems to fit bitcoin reasonably well.  Early investors are paid when they cash out by the liquidity provided by new investors.  The value of bitcoin depends entirely upon new money coming into the system.  Bitcoin itself generates little or no legitimate earnings.  A large number of investors cashing out would crash Bitcoin.


Pyramid scheme:  A pyramid scheme is a fraudulent system of making money based on recruiting an ever-increasing number of  "investors."  The initial promoters recruit  investors, who in turn recruit more investors, and so on. The scheme is called a "pyramid" because at each level, the number of investors increases. The small group of initial promotors at the top require a large base of later investors to support the scheme by providing profits to the earlier investors.

This also seems to fit reasonably well.  Bitcoin early adopters are virtually all shills/evangelists bent on recruiting more investors. Due to the deflationary nature of bitcoin,  the earlier you get in the greater the rewards.  In order to allow those early investors with large numbers of bitcoin to cash out, it's necessary that a large base of later investors support the scheme buy purchasing their bitcoin.



Story seems to check out.
Absolutely!!!

Some guys from my hometown started a token last summer. It was advertised heavily to locals and really driven on hometown pride in a struggling Midwestern manufacturing town. I was invited to a FB group about the coin by an old elementary school friend and through that I followed along as they all continued to hype this coin with absolutely zero utility. (The "white paper" was hilarious) Lots of boys posting HODL, and "diamond hands" etc. etc.
This went on for about six months and ultimately the group of early buyers cashed out, advertising and promotions stopped and the thing tanked to $0.
If that isn't a MLM/pyramid scheme/ponzi scheme then I don't know what is.

The sad thing is that all these awesome, hard working, blue collar folks who got caught up in the hype that people they knew from their hometown were building this "investment" for them lost money that they couldn't afford to lose.
(I actually got booted from the FB group for pointing out that it wasn't an investment)
And this is why I want crypto to fail. It's not an investment. It has no utility and is simply a collectable where the value of the collectable is strictly driven by others who bought in (or paid celebrities) to hype it up.

I'm 44 and FI. I did it by investing in Index funds and a few individual stocks of companies that I thought were good during recessions. (walmart, dollar tree, united health group, Microsoft, Apple etc. Stuff that I saw people struggling in my hometown still buying with what little they had) Becoming FI takes discipline and patience, not genius. There actually isn't anything magical about it. I've never had to HODL.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on January 27, 2022, 09:43:56 AM
Ponzi Scheme:  A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves.

With little or no legitimate earnings, Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit new investors, or when large numbers of existing investors cash out, these schemes tend to collapse.



That seems to fit bitcoin reasonably well.  Early investors are paid when they cash out by the liquidity provided by new investors.  The value of bitcoin depends entirely upon new money coming into the system.  Bitcoin itself generates little or no legitimate earnings.  A large number of investors cashing out would crash Bitcoin.


Pyramid scheme:  A pyramid scheme is a fraudulent system of making money based on recruiting an ever-increasing number of  "investors."  The initial promoters recruit  investors, who in turn recruit more investors, and so on. The scheme is called a "pyramid" because at each level, the number of investors increases. The small group of initial promotors at the top require a large base of later investors to support the scheme by providing profits to the earlier investors.

This also seems to fit reasonably well.  Bitcoin early adopters are virtually all shills/evangelists bent on recruiting more investors. Due to the deflationary nature of bitcoin,  the earlier you get in the greater the rewards.  In order to allow those early investors with large numbers of bitcoin to cash out, it's necessary that a large base of later investors support the scheme buy purchasing their bitcoin.



Story seems to check out.

Haven't frequented these forums much lately and figured I would drop in, but I see that the quality of discussion here hasn't improved much.

Sorry, you're being disingenuous about what a ponzi scheme and pyramid scheme actually are. It is like you've wrote the definition out and then proceeded to ignore what you just wrote simply to say that it applies to bitcoin.

A ponzi scheme is a scheme designed to enrich someone by defrauding others. You take people's money through fraud and telling them that you're investing their money into something when you're not. Anyone that wants to get money out of the scheme you must pay them from the money you're stealing from others. In order to continually make money through this fraud scheme, you must continue to steal money from people otherwise the scheme collapses. Investors don't actually own anything at all in a ponzi scheme. The second they give their money to the ponzi fraudster, they were scammed. A ponzi scheme, by definition promises returns on an investment where no returns are to be had. The ponzi fraudster is pocketing money of victims that are expecting a return above and beyond the money they put into the scheme. You wrote that equivalently in your definition, but it seems as if you're ignoring that definition when trying to apply it to bitcoin.

This literally does not fit the definition of bitcoin at all. Contrary to your claims, bitcoin doesn't require new investors or money into the system in order for it to have value. By your assessment, every commodity is a ponzi scheme. If there are only 100 people on earth that own, use, and value bitcoin and they all value it at $100 dollars equivalently, then it doesn't take 100 more people to have it continually valued as such. This is a basic understanding of market economics that you're ignoring. At some point, just purely by population limitations, there will be a stabilization of the number of new people owning bitcoin. That doesn't mean the price of bitcoin will collapse because the people that do own and use bitcoin will continue to value it according to what the market dictates. Bitcoin could remain at today's price of $36,500 perpetually if the market dictated it even without requiring a new influx of investors. Contrast that with an actual ponzi scheme that would collapse under such a scenario where the number of new investors stabilizes because the ponzi fraudster is stealing money behind their victims' backs.

The same can be said for your reasoning for calling it a pyramid scheme. These things have very specific definitions to what they are.

https://en.wikipedia.org/wiki/Pyramid_scheme

It is easy to just toss out words like "ponzi scheme" or "pyramid scheme" as a criticism, but at the end of the day bitcoin doesn't fit those definitions. There are plenty of criticisms you could put out there toward bitcoin, but you lose credibility when you call it something with clear definitions for what they are that don't factually fit in this case. There have no doubt been actual ponzi schemes that have come and gone during the cryptocurrency craze. A vast majority of cryptocurrencies are scams at best and fraud is rampant in the space. A majority of them are solutions in search of a problem. But at the end of the day, if you're going to have credibility in a discussion about what bitcoin is and isn't, then we need to be truthful and genuine in the arguments we have for or against it.

Sorry, but Telecaster is right here and being disingenuous about what the definition of these things are isn't going to help anyone here. This is one of the reasons why I stepped back from these forums because of the poor balance of discussions that these threads have. It gets real tiring when crtics can't rise to the level of debate that is asked because as Telecaster said, it is just tiresome when definitions are skewed for the sake of making logical fallacies.

Pet peeve:  There is no aspect of crypto that meets the definition of a Ponzi scheme.  It does appear to be a speculative bubble.  Things tend to get tedious and boring when we get pedantic like I'm doing, but definitions are important.   Crypto is not a Ponzi scheme. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on January 27, 2022, 10:43:56 AM
If there are only 100 people on earth that own, use, and value bitcoin and they all value it at $100 dollars equivalently, then it doesn't take 100 more people to have it continually valued as such. This is a basic understanding of market economics that you're ignoring. At some point, just purely by population limitations, there will be a stabilization of the number of new people owning bitcoin. That doesn't mean the price of bitcoin will collapse because the people that do own and use bitcoin will continue to value it according to what the market dictates. Bitcoin could remain at today's price of $36,500 perpetually if the market dictated it even without requiring a new influx of investors.

I'd quibble with this. Miners exist, and take money out of the system. Therefore, new investors are required to "invest" money in to keep the price stable. Let's remember another important point: this is not part of a functioning economy—there is no circular flow of income. Bitcoin—and every other cryptocurrency—works only in terms of the conventional currency system..

When you buy $100 of Bitcoin, you're just giving an older investor $100 in exchange for their tokens—minus a little bit for transaction fees you pay to the miners. You then can effectively do nothing with that until you eventually decide to sell it, converting it back to some number of US dollars, which will require some new sucker to enter the game, to pay you out.

Why do people enter the system? This is imperative to understand. Virtually every investor in cryptocurrency invests into the system because the number goes up. The number goes up because an increasing number of people have spent an increasing amount of money to pay out older investors. A stable Bitcoin—even if that could exist—would lose the vast majority of its interest and investors.

I don't think anyone is being disingenuous describing cryptocurrencies as Ponzi schemes or pyramid schemes. While cryptos may not meet the strictest definitions of ponzis/pyramits, the distinctions are effectively meaningless and, imo, boring. The mechanisms of fraud are much the same. I've seen people use the term "Nakamoto Scheme" to describe it, and it's effectively a hybrid Ponzi/Pyramid scheme with the "strength"—from the perspective of the fraudster—of both and the weaknesses of neither. It promises high investment returns, takes very little effort to invest in, recruits new participants as self-interested evangelists of the scheme. It's not presently illegal, as it's still largely regarded as "TECHNICAL INNOVATION!", so has been largely looked over by regulators. Quibbling about the precise semantics of "Ponzi scheme", I think is missing the point. This is massive fraud happening in front of us all.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 27, 2022, 11:28:49 AM
Pet peeve:  There is no aspect of crypto that meets the definition of a Ponzi scheme.  It does appear to be a speculative bubble.  Things tend to get tedious and boring when we get pedantic like I'm doing, but definitions are important.   Crypto is not a Ponzi scheme.

It's a decentralized cross between a Ponzi scheme and a pyramid scheme. Disprove that statement.

The US dollar is a centralized cross between a Ponzi scheme and a pyramid scheme. Disprove that statement.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on January 27, 2022, 11:37:03 AM

The US dollar is a centralized cross between a Ponzi scheme and a pyramid scheme. Disprove that statement.

Nobody expects the US dollar to produce a return on investment.

I'm perplexed at the outrage, here. Like... the mechanisms of fraud are nearly identical between ponzis and cryptocurrencies. The details that don't precisely match the definition aren't meaningful. I think this is a pretty funny and hyper-anal take on a "early retirement" message board, where the owner very much does definitionally still do "work". Yet, the term "retirement" is useful to describe Pete's situation, as people are very familiar with it, and it's, for all intents and purposes, true that he is retired.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on January 27, 2022, 12:02:13 PM
Pet peeve:  There is no aspect of crypto that meets the definition of a Ponzi scheme.  It does appear to be a speculative bubble.  Things tend to get tedious and boring when we get pedantic like I'm doing, but definitions are important.   Crypto is not a Ponzi scheme.
It's a decentralized cross between a Ponzi scheme and a pyramid scheme. Disprove that statement.
Bitcoin's code is open source, for all to view.  Every Bitcoin transaction is on the blockchain, for all to view.  What percentage of Ponzi schemes have 100% transparency?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 27, 2022, 12:11:21 PM

The US dollar is a centralized cross between a Ponzi scheme and a pyramid scheme. Disprove that statement.

Nobody expects the US dollar to produce a return on investment.

Nobody today does (that's called deflation, and is not unknown to the US dollar). But also, I do not believe that there is any fundamental reason you couldn't create an inflationary crytopcurrency. In fact, to the extent that (some people) arguably want cryptocurrency to be a currency it would be a very good thing.

But that gets us to a different question: what is it? If it's a currency you want it to go down in value (like the US dollar usually does). But that's obviously not what most of the people on this thread are talking about.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on January 27, 2022, 12:15:28 PM
I'd quibble with this. Miners exist, and take money out of the system. Therefore, new investors are required to "invest" money in to keep the price stable. Let's remember another important point: this is not part of a functioning economy—there is no circular flow of income. Bitcoin—and every other cryptocurrency—works only in terms of the conventional currency system..

When you buy $100 of Bitcoin, you're just giving an older investor $100 in exchange for their tokens—minus a little bit for transaction fees you pay to the miners. You then can effectively do nothing with that until you eventually decide to sell it, converting it back to some number of US dollars, which will require some new sucker to enter the game, to pay you out.

This is factually untrue. Miners are not required to take money out of the system. Miners are paid for the work they're doing with transactions fees that are paid in bitcoin. They could theoretically pay their electric bills in bitcoin, therefore new investors are not "required". Just because the system exists within our current economy does not mean that it can't exist outside of it. The world could theoretically switch to a bitcoin based monetary system and it would function just fine. It doesn't NEED fiat currencies to exist, therefore the argument that because bitcoin is currently operating within our current fiat monetary system it is a ponzi scheme is a fallacy. As I said, a ponzi scheme would collapse under such scenarios, bitcoin wouldn't. There are many pockets of economies all around the world that are functioning on bitcoin. Is it a minuscule amount compared with the whole? Absolutely. But claiming the contrary just so you can make a disingenuous argument that it is a ponzi scheme shows your bias and privilege here.

Your argument is akin to attacking the inventor of the automobile because they're riding a horse. Operating within the confines of our current systems does not preclude something from operating without it. Again, another fallacy being pushed.

I'm not arguing that there aren't many people out there that are looking to bitcoin in the hopes of quick riches. There certainly are. But, you're so laser focused on that aspect of it that you erroneously resort to calling it a ponzi scheme and you end up overlooking the fact that there are more and more people using bitcoin every day because they have no other financial option except bitcoin.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: mjr on January 27, 2022, 12:40:46 PM
lifeanon is 100% correct
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on January 27, 2022, 12:43:53 PM
It's a decentralized cross between a Ponzi scheme and a pyramid scheme. Disprove that statement.

Ponzi Scheme:  A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves.

With little or no legitimate earnings, Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit new investors, or when large numbers of existing investors cash out, these schemes tend to collapse.


That seems to fit bitcoin reasonably well.  Early investors are paid when they cash out by the liquidity provided by new investors.  The value of bitcoin depends entirely upon new money coming into the system.  Bitcoin itself generates little or no legitimate earnings.  A large number of investors cashing out would crash Bitcoin.

Pyramid scheme:  A pyramid scheme is a fraudulent system of making money based on recruiting an ever-increasing number of  "investors."  The initial promoters recruit  investors, who in turn recruit more investors, and so on. The scheme is called a "pyramid" because at each level, the number of investors increases. The small group of initial promotors at the top require a large base of later investors to support the scheme by providing profits to the earlier investors.

This also seems to fit reasonably well.  Bitcoin early adopters are virtually all shills/evangelists bent on recruiting more investors. Due to the deflationary nature of bitcoin,  the earlier you get in the greater the rewards.  In order to allow those early investors with large numbers of bitcoin to cash out, it's necessary that a large base of later investors support the scheme buy purchasing their bitcoin.

Story seems to check out.

A common component between pyramid and Ponzi schemes is that they pay out returns and then collapse when there are not enough new investors to provide the promised returns.     Bitcoin does not pay returns and does not promise to pay returns.  So right there it cannot be a pyramid or Ponzi scheme, by definition. 

Another area that doesn't meet the definition is that pyramid and Ponzi scheme is that they both require new investors to pay off older investors.   Bitcoin's price isn't necessarily dependent on new investors.  The original investors can bid the price up or down.   That part doesn't meet the definition either. 

Another area where the definition breaks down is that pyramid and Ponzi schemes are a type of fraud.   Fraud requires malice.   Let me give you a couple examples:    Lets say the price of Beanie Babies is going through the roof.   I say, truthfully, I've made a lot of money owning Bean Babies.   Would you like to buy one?  You say yes and make the transaction.  The price of Beanie Babies now goes to zero.   Was there any fraud?  No.   I didn't misrepresent anything, and you got the Beanie Baby as promised.  If I sold you a different Bean Baby than the one I promised, that would be fraud, but it wouldn't be a pyramid or Ponzi scheme. 

Or lets say I am touting a tech stock that I own that seems to have huge promise.  You are impressed and buy some stock.  The company collapses and you lose your money.   Did I commit fraud?  Unless I made false statements the answer is no, and even then the answer is probably no.   If the company made false statements then they may have committed fraud, but I didn't.  If being a schill for tech stocks that later went bust were a crime then Jim Cramer would be serving a life sentence. 

Similarly, let's say someone is schilling for Bitcoin and you buy it based on their arguments,  and the price goes down, is that fraud?  The answer is no.   Even if they didn't believe what they are saying the answer is still no.  You got exactly what you thought you were getting.  On top of that though, the Bitcoin proponents here and elsewhere I've talked to seem to be true believers.  They really think Bitcoin is the way of the future.  It is not fraud to hold a certain vision of the future. 

Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on January 27, 2022, 12:47:45 PM
The US dollar is a centralized cross between a Ponzi scheme and a pyramid scheme. Disprove that statement.

The US dollar does not require new investors in the dollar to pay off later investors.   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on January 27, 2022, 12:50:48 PM
Pet peeve:  There is no aspect of crypto that meets the definition of a Ponzi scheme.  It does appear to be a speculative bubble.  Things tend to get tedious and boring when we get pedantic like I'm doing, but definitions are important.   Crypto is not a Ponzi scheme.
It's a decentralized cross between a Ponzi scheme and a pyramid scheme. Disprove that statement.
Bitcoin's code is open source, for all to view.  Every Bitcoin transaction is on the blockchain, for all to view.  What percentage of Ponzi schemes have 100% transparency?

Your argument is that if I murder a person in broad daylight (in front of a police officer, a juggling clown, and 50 witnesses), no crime has been committed because a relatively low percentage of murders are committed that way?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on January 27, 2022, 12:56:30 PM
Pet peeve:  There is no aspect of crypto that meets the definition of a Ponzi scheme.  It does appear to be a speculative bubble.  Things tend to get tedious and boring when we get pedantic like I'm doing, but definitions are important.   Crypto is not a Ponzi scheme.
It's a decentralized cross between a Ponzi scheme and a pyramid scheme. Disprove that statement.
Bitcoin's code is open source, for all to view.  Every Bitcoin transaction is on the blockchain, for all to view.  What percentage of Ponzi schemes have 100% transparency?
Your argument is that if I murder a person in broad daylight (in front of a police officer, a juggling clown, and 50 witnesses), no crime has been committed because a relatively low percentage of murders are committed that way?
I think you're wrong that a low percentage of Ponzi schemes have full transparency.  I think it's zero, because revealing what happens is how a Ponzi scheme collapses.

Bitcoin has full transparency and hasn't collapsed, which is not the case for Ponzi schemes.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on January 27, 2022, 01:03:53 PM
I don't think anyone is being disingenuous describing cryptocurrencies as Ponzi schemes or pyramid schemes. While cryptos may not meet the strictest definitions of ponzis/pyramits, the distinctions are effectively meaningless and, imo, boring. The mechanisms of fraud are much the same. I've seen people use the term "Nakamoto Scheme" to describe it, and it's effectively a hybrid Ponzi/Pyramid scheme with the "strength"—from the perspective of the fraudster—of both and the weaknesses of neither. It promises high investment returns, takes very little effort to invest in, recruits new participants as self-interested evangelists of the scheme. It's not presently illegal, as it's still largely regarded as "TECHNICAL INNOVATION!", so has been largely looked over by regulators. Quibbling about the precise semantics of "Ponzi scheme", I think is missing the point. This is massive fraud happening in front of us all.

I agree it is something new. Just as Ponzi schemes and pyramid/MLM schemes existed before they had a name, this sort of herd/social media driven frenzy and crash exists today, and will someday have a name. Just because an older name for a category of fraud isn't an exact fit doesn't make crypto any less of a scam. Similarly, the assignment of a name to the fraud by Webster's dictionary or whomever does not suddenly transform a thing from legit to fraudulent.

Crypto is not 100% a Ponzi because the creators of a coin usually pump it and dump it (as illustrated by @BeanCounter above), rather than gathering new rounds of investors to pay off the earlier investors who sell, in perpetuity until they're caught. Maybe this is a "one-cycle Ponzi" but the more clearcut description is basic investment fraud, like when a broker puts a client 100% into an obscure penny stock so they can sell their shares at a profit.

Similarly, it's not exactly a pyramid scheme because no one crypto investor receives a commission when a new ape is sold on plowing all their savings into ButtholeCoin(r) or whatever. That new ape's purchase is a drop in the bucket of a larger marketplace.

The mystery is how a pyramid scheme can exist when the participants are only indirectly compensated? Isn't it smarter, as a participant, to freeload and let everyone else do the hard evangelizing work? Well, social media turns that rationale on its head because now you can do a podcast or TikTok about ButtholeCoin(r), reach tens of thousands of people, and earn a profit from doing the evangelizing itself.

Now the mystery shifts to why so many people would gravitate to such a dumb podcast or subscribe to such dumb videos? Then, why would they be persuaded to spend their energy evangelizing an abstraction just to be a member of an online herd? The answer to that question is psychological, and includes the word "dopamine". I.e. doing so has intrinsic psychological rewards and feels good. There's an element of cultish identity involved too.

If I may humbly suggest a term to describe social-media-induced investment scams, how about "Dopaherd Scheme"?

 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on January 27, 2022, 01:12:21 PM
This is factually untrue. Miners are not required to take money out of the system. Miners are paid for the work they're doing with transactions fees that are paid in bitcoin. They could theoretically pay their electric bills in bitcoin, therefore new investors are not "required". Just because the system exists within our current economy does not mean that it can't exist outside of it. The world could theoretically switch to a bitcoin based monetary system and it would function just fine. It doesn't NEED fiat currencies to exist, therefore the argument that because bitcoin is currently operating within our current fiat monetary system it is a ponzi scheme is a fallacy. As I said, a ponzi scheme would collapse under such scenarios, bitcoin wouldn't. There are many pockets of economies all around the world that are functioning on bitcoin. Is it a minuscule amount compared with the whole? Absolutely. But claiming the contrary just so you can make a disingenuous argument that it is a ponzi scheme shows your bias and privilege here.

Your argument is akin to attacking the inventor of the automobile because they're riding a horse. Operating within the confines of our current systems does not preclude something from operating without it. Again, another fallacy being pushed.

The crux of this argument depends upon the assumption that some day it will be possible for bitcoin to function as a currency, and that miners will be able to buy the energy they need to do their job with bitcoin (instead of the current state where it's necessary to sell bitcoin and use a currency).

In response to that, I'd argue that some day bitcoin might not require a constant influx of money to go on.  Today though that's not how things operate.  New investors are required in current practice.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on January 27, 2022, 01:12:36 PM
Pet peeve:  There is no aspect of crypto that meets the definition of a Ponzi scheme.  It does appear to be a speculative bubble.  Things tend to get tedious and boring when we get pedantic like I'm doing, but definitions are important.   Crypto is not a Ponzi scheme.
It's a decentralized cross between a Ponzi scheme and a pyramid scheme. Disprove that statement.
Bitcoin's code is open source, for all to view.  Every Bitcoin transaction is on the blockchain, for all to view.  What percentage of Ponzi schemes have 100% transparency?

Your argument is that if I murder a person in broad daylight (in front of a police officer, a juggling clown, and 50 witnesses), no crime has been committed because a relatively low percentage of murders are committed that way?

I'm not @MustacheAndaHalf but Ponzi schemes require deception to work.   Where is the deception with Bitcoin? 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on January 27, 2022, 01:16:00 PM
Crypto is not 100% a Ponzi because the creators of a coin usually pump it and dump it (as illustrated by @BeanCounter above), rather than gathering new rounds of investors to pay off the earlier investors who sell, in perpetuity until they're caught. Maybe this is a "one-cycle Ponzi" but the more clearcut description is basic investment fraud, like when a broker puts a client 100% into an obscure penny stock so they can sell their shares at a profit.

Similarly, it's not exactly a pyramid scheme because no one crypto investor receives a commission when a new ape is sold on plowing all their savings into ButtholeCoin(r) or whatever. That new ape's purchase is a drop in the bucket of a larger marketplace.


Crypto is 0% a Ponzi scheme because it meets no definition of a Ponzi scheme. 

However, we already have a name for the phenomon:  Speculative bubble.  People hope the apes will be worth more in the future, so they are buying apes.  Not because they actually want to own apes.  Buying something with the hopes its value will increase is not a crime. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on January 27, 2022, 01:32:50 PM
Pet peeve:  There is no aspect of crypto that meets the definition of a Ponzi scheme.  It does appear to be a speculative bubble.  Things tend to get tedious and boring when we get pedantic like I'm doing, but definitions are important.   Crypto is not a Ponzi scheme.
It's a decentralized cross between a Ponzi scheme and a pyramid scheme. Disprove that statement.
Bitcoin's code is open source, for all to view.  Every Bitcoin transaction is on the blockchain, for all to view.  What percentage of Ponzi schemes have 100% transparency?

Your argument is that if I murder a person in broad daylight (in front of a police officer, a juggling clown, and 50 witnesses), no crime has been committed because a relatively low percentage of murders are committed that way?

I'm not @MustacheAndaHalf but Ponzi schemes require deception to work.   Where is the deception with Bitcoin?

Have you talked to Satoshi?  Do you know if this was not invented for that reason. Before Bernie Madoff was convicted no one thought he was deceiving them either.

Could we start with the deceptive name?  Bitcoin is neither a coin, nor a currency.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DaTrill on January 27, 2022, 01:37:35 PM
Crypto is not 100% a Ponzi because the creators of a coin usually pump it and dump it (as illustrated by @BeanCounter above), rather than gathering new rounds of investors to pay off the earlier investors who sell, in perpetuity until they're caught. Maybe this is a "one-cycle Ponzi" but the more clearcut description is basic investment fraud, like when a broker puts a client 100% into an obscure penny stock so they can sell their shares at a profit.

Similarly, it's not exactly a pyramid scheme because no one crypto investor receives a commission when a new ape is sold on plowing all their savings into ButtholeCoin(r) or whatever. That new ape's purchase is a drop in the bucket of a larger marketplace.


Crypto is 0% a Ponzi scheme because it meets no definition of a Ponzi scheme. 

However, we already have a name for the phenomon:  Speculative bubble.  People hope the apes will be worth more in the future, so they are buying apes.  Not because they actually want to own apes.  Buying something with the hopes its value will increase is not a crime.

What is your definition of a Ponzi scheme?  Crypto/NFT is the definition of a Ponzi scheme from Wiki.

A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. The scheme leads victims to believe that profits are coming from legitimate business activity.

https://en.wikipedia.org/wiki/Ponzi_scheme
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on January 27, 2022, 01:41:03 PM
The crux of this argument depends upon the assumption that some day it will be possible for bitcoin to function as a currency, and that miners will be able to buy the energy they need to do their job with bitcoin (instead of the current state where it's necessary to sell bitcoin and use a currency).

In response to that, I'd argue that some day bitcoin might not require a constant influx of money to go on.  Today though that's not how things operate.  New investors are required in current practice.

My point about the theoretical was to counter the point that bitcoin is a ponzi. The fact that it can, even theoretically, operate on its own as its own economy, proves that it isn't a ponzi scheme. It doesn't matter that it is operating within the confines of our fiat monetary system today (in fact everything currently does). That's irrelevant to the fact that by virtue of being possible it counters the claim that it is a ponzi scheme. It doesn't matter whether bitcoin someday is or isn't the world monetary reserve currency. It doesn't need to be for it to not meet the definition of a ponzi scheme. The fact that it could is enough here.

Just because there are new influxes of new investors today to bitcoin, doesn't mean that alone is the sole criteria of what makes a ponzi scheme a ponzi. There are so many investments today that are receiving new influxes of investors every day. That alone is not the determining factor for what is and isn't a ponzi scheme. Another logical fallacy being made. If a ponzi scheme could exist without an influx of new investors, then it probably would be the fraud scheme it is. This fact seems to be lost on you.

I guess I'll conclude with the following question: what makes bitcoin a ponzi scheme in your eyes and not similar to any other commodity or asset out there that is traded in our current monetary system?

Looks more like tulip mania to me.

http://en.wikipedia.org/wiki/Tulip_mania (http://en.wikipedia.org/wiki/Tulip_mania)

I find it quite ironic that you've somehow managed to call bitcoin both a ponzi scheme while also comparing it to tulip bulbs (which are in no way a ponzi scheme). So which is it, is it a commodity craze like tulip bulbs or is it a ponzi scheme?? Both things can't be true here.

Or could it be that your line of arguments against bitcoin just happen to be the same tired and lazy arguments being made by people who don't have better arguments?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on January 27, 2022, 01:46:51 PM
A common component between pyramid and Ponzi schemes is that they pay out returns and then collapse when there are not enough new investors to provide the promised returns.     Bitcoin does not pay returns and does not promise to pay returns.  So right there it cannot be a pyramid or Ponzi scheme, by definition.

What do you call it when I sell my sick Bitcoins and buy rad moon lambos? I'd call that "a return". And where'd that return come from? Whoever bought my bitcoin—a new investor. This is pretty standard definition of "return" https://www.investopedia.com/terms/r/returnoninvestment.asp

And re: "does not promise to pay returns"... Are you for real? Have you ever talked to a Bitcoiner? Virtually everything they say is about promising huge returns. Any critique otherwise is "FUD". "Noiconers" are "ngmi" and will have to "have fun staying poor" while "diamond hands" "hodl" and bitcoin will "go to the moon". John McAfee (may he rest) predicted in 2017 that Bitcoin would hit $500k by 2020. Then he shortly thereafter upped it, to $1M. Michael Saylor—no stranger to fraud—also constantly recommends people mortgage their homes to buy more bitcoin to make sick gaaaaiinnnnnzzzz. Show me a single prominent Bitcoiner who doesn't promise huge gains.
Another area that doesn't meet the definition is that pyramid and Ponzi scheme is that they both require new investors to pay off older investors.   Bitcoin's price isn't necessarily dependent on new investors.  The original investors can bid the price up or down.   That part doesn't meet the definition either.

This is no different than a literal Ponzi scheme. 2 participants can continue to dump more money in. It'd be a silly thing that'd implode rather quickly, but it *could* be done and still be a Ponzi. Bitcoin is no different—for it to have the huge run-up it's had, it needs more participants. Too few would run out of money too quickly to keep the price inflating and maintain some minimum amount of liquidity.

Another area where the definition breaks down is that pyramid and Ponzi schemes are a type of fraud.   Fraud requires malice.   Let me give you a couple examples:    Lets say the price of Beanie Babies is going through the roof.   I say, truthfully, I've made a lot of money owning Bean Babies.   Would you like to buy one?  You say yes and make the transaction.  The price of Beanie Babies now goes to zero.   Was there any fraud?  No.   I didn't misrepresent anything, and you got the Beanie Baby as promised.  If I sold you a different Bean Baby than the one I promised, that would be fraud, but it wouldn't be a pyramid or Ponzi scheme.

Fraud does not require malice. It does require deception, but that can happen due ill-informed good intentions. One of the most popular examples of a Ponzi-scheme is that of Jan Lewan—The Polka King—who began his Ponzi-scheme with honest intentions of paying back his investors, and things quickly spiraled out of control for him, ultimately winding him up in jail. This was 100% fraud, even though he meant well.

Similarly, let's say someone is schilling for Bitcoin and you buy it based on their arguments,  and the price goes down, is that fraud?  The answer is no.   Even if they didn't believe what they are saying the answer is still no.  You got exactly what you thought you were getting.  On top of that though, the Bitcoin proponents here and elsewhere I've talked to seem to be true believers.  They really think Bitcoin is the way of the future.  It is not fraud to hold a certain vision of the future.

This is an interesting point. And this uncovers one interesting facet of cryptocurrencies: decentralized responsibility. Every bitcoin evangelist is, in some small respect, responsible for some fraud, I'd argue. But the brilliance is that there isn't one, wholly responsible and punishable entity. It's, in some respects, legalized fraud until we have better systems to deal with it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on January 27, 2022, 01:51:57 PM
Have you talked to Satoshi?  Do you know if this was not invented for that reason. Before Bernie Madoff was convicted no one thought he was deceiving them either.

Madoff was in actual fact deceiving people.   He was taking people's money and claimed to invest it, providing false statements showing high returns.  He created false stock transactions to create a "paper trail" to provide back up for his investment success.  In fact, the money was just kept in a bank account that Madoff would draw from to pay off people making redemptions.  When the redemptions exceeded the account balance the scheme collapsed. 

AFAIK, Satoshi only sold Bitcoin (and I don't actually know if he even sold any).  He never promised or paid returns.  He didn't create false transaction statements.  He didn't manage anyone's money.  The original white paper lays out in detail how Bitcoin works.   

So specifically, what action of his was fraud?  It is hard to argue that making money off an idea (if he even did) is illegal.   



Title: Re: What do you think of adding a low% of crypto allocation
Post by: index on January 27, 2022, 02:12:12 PM
It's not a Ponzi scheme or MLM. It is a collectible like gold, beanie babies, and tulip bulbs.

Does it have staying power like gold or is it the new beanie baby craze with less cuddly cuteness?

It's worthless as a currency as long as it is as volatile as it is. Sure people are bartering with it in Venezuela and Nigeria and you can use it to pay for less savory good and services, but who the hell cares? Digital currency has a future - but that digital currency will be issued by governments.

Real currency is backed by guns and power. China and now Russia have banned crypto and the US or EU could end BTC with a signature.     
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on January 27, 2022, 02:12:59 PM
This is no different than a literal Ponzi scheme. 2 participants can continue to dump more money in. It'd be a silly thing that'd implode rather quickly, but it *could* be done and still be a Ponzi. Bitcoin is no different—for it to have the huge run-up it's had, it needs more participants. Too few would run out of money too quickly to keep the price inflating and maintain some minimum amount of liquidity.

This is where your fallacy fails though. You keep saying that bitcoin needs more participants. But that is factually not true as I've stated. A ponzi scheme serves no other purpose other than to enrich its creator (and maybe a few insiders). It will collapse simply because of the fact that it isn't sustainable. The more participants in the system there are, the more newer participants it requires to sustain itself. A ponzi scheme is exponentially more and more unstable and unsustainable. This is why all ponzi scheme eventually fail. This just isn't factually true or analogous to bitcoin whatsoever. Bitcoin can exist at a stable price without any additional new participants required and used within a circular economy. Just because there are new investors each day that own bitcoin is not the determining factor for being a ponzi scheme.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on January 27, 2022, 02:15:00 PM
It's not a Ponzi scheme or MLM. It is a collectible like gold, beanie babies, and tulip bulbs.

Does it have staying power like gold or is it the new beanie baby craze with less cuddly cuteness?

It's a collectible that vanishes overnight unless you pay the miners to keep it going.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on January 27, 2022, 02:15:03 PM
There are multiple examples of pump and dump schemes in this space just because some are lasting longer due to others being hyped up more doesn't mean deception wasn't the plan from the start.

There are absolutely pump and dump schemes in the cryptocurrency space along with a whole host of other fraudulent schemes the industry is ripe with. But this particular discussion was about the claims that bitcoin is a ponzi or pyramind scheme, both of which have very specific definitions that bitcoin most certainly does not meet.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on January 27, 2022, 02:15:29 PM
The crux of this argument depends upon the assumption that some day it will be possible for bitcoin to function as a currency, and that miners will be able to buy the energy they need to do their job with bitcoin (instead of the current state where it's necessary to sell bitcoin and use a currency).

In response to that, I'd argue that some day bitcoin might not require a constant influx of money to go on.  Today though that's not how things operate.  New investors are required in current practice.

My point about the theoretical was to counter the point that bitcoin is a ponzi. The fact that it can, even theoretically, operate on its own as its own economy, proves that it isn't a ponzi scheme. It doesn't matter that it is operating within the confines of our fiat monetary system today (in fact everything currently does). That's irrelevant to the fact that by virtue of being possible it counters the claim that it is a ponzi scheme. It doesn't matter whether bitcoin someday is or isn't the world monetary reserve currency. It doesn't need to be for it to not meet the definition of a ponzi scheme. The fact that it could is enough here.

Just because there are new influxes of new investors today to bitcoin, doesn't mean that alone is the sole criteria of what makes a ponzi scheme a ponzi. There are so many investments today that are receiving new influxes of investors every day. That alone is not the determining factor for what is and isn't a ponzi scheme. Another logical fallacy being made. If a ponzi scheme could exist without an influx of new investors, then it probably would be the fraud scheme it is. This fact seems to be lost on you.

Wouldn't it have seemed possible before he was caught for Bernie Madoff to have paid people back in a legitimate way at some future date too?  Even though a close examination of things would have pointed to probable dishonesty?

It's clearly not possible right now for Bitcoin to operate in the way you're talking about.  Therefore that can't be used as evidence that it's not a pyramid/ponzi scheme at the moment.




I guess I'll conclude with the following question: what makes bitcoin a ponzi scheme in your eyes and not similar to any other commodity or asset out there that is traded in our current monetary system?

I guess it would be how closely bitcoin appears to be following the dictionary definitions of both ponzi and pyramid schemes.


Looks more like tulip mania to me.

http://en.wikipedia.org/wiki/Tulip_mania (http://en.wikipedia.org/wiki/Tulip_mania)

I find it quite ironic that you've somehow managed to call bitcoin both a ponzi scheme while also comparing it to tulip bulbs (which are in no way a ponzi scheme). So which is it, is it a commodity craze like tulip bulbs or is it a ponzi scheme?? Both things can't be true here.

Or could it be that your line of arguments against bitcoin just happen to be the same tired and lazy arguments being made by people who don't have better arguments?

I originally viewed crypto as a speculative commodity like beanie babies or tulips (as per the 8 year old comment).  It wasn't until boarder mentioned the ponzi/pyramid thing a page or so ago that I really seriously looked into how closely those definitions fit bitcoin.

I'm still undecided which fits better.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on January 27, 2022, 02:31:13 PM
This is where your fallacy fails though. You keep saying that bitcoin needs more participants. But that is factually not true as I've stated.
I've responded to this retort. One of the following is true:
1. You disagree that the lion's share of Bitcoin holders are Bitcoin hodlers because they expect to make a positive return
2. Bitcoin needs an ever-increasing number of participants to keep up the expectations of return

Remember: in aggregate, the total sum of returns Bitcoin investors can expect to receive is less than what they put in. (Miners must remove $ from the system to pay electrical bills, upgraded machinery, profit, etc. And exchanges—which virtually everyone uses—also take their cut). There is no value created anywhere, it is strictly a transfer of dollars with a lot of techno babble in between.
A ponzi scheme serves no other purpose other than to enrich its creator (and maybe a few insiders). It will collapse simply because of the fact that it isn't sustainable. The more participants in the system there are, the more newer participants it requires to sustain itself. A ponzi scheme is exponentially more and more unstable and unsustainable. This is why all ponzi scheme eventually fail. This just isn't factually true or analogous to bitcoin whatsoever. Bitcoin can exist at a stable price without any additional new participants required and used within a circular economy. Just because there are new investors each day that own bitcoin is not the determining factor for being a ponzi scheme.

Again, I don't think you've addressed my response. All of this seems to reasonably describe Bitcoin. Madoff's Ponzi lasted longer than Bitcoin has existed. Bitcoin's stability is, no doubt, aided by the massively suspicious stablecoin factory, Tether. Let's see how this plays out over the next couple decades!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 27, 2022, 02:42:12 PM
The US dollar is a centralized cross between a Ponzi scheme and a pyramid scheme. Disprove that statement.

The US dollar does not require new investors in the dollar to pay off later investors.

All currencies require a buyer and a seller to trade them. If I want to trade my USD for GBP I have to find someone that has GBP but wants USD. I'm not sure how this is different than BTC, ETH, or XMR except that the cryptocurrencies don't have central bankers. Also, I didn't buy my first cryptocurrency for it to appreciate in USD terms. I bought my first cryptocurrency to buy goods from markets that didn't accept USD, just like I might buy a foreign currency.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on January 27, 2022, 02:54:02 PM
What is your definition of a Ponzi scheme?  Crypto/NFT is the definition of a Ponzi scheme from Wiki.

A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. The scheme leads victims to believe that profits are coming from legitimate business activity.

https://en.wikipedia.org/wiki/Ponzi_scheme

You stopped reading too soon (emphasis added):

The scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds. A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment and still believe in the non-existent assets they are purported to own.

In the case of Bitcoin, what do investors believe is the legitimate business activity?  They don't.  Everyone knows there is no underlying business.  They just want to own Bitcoin.   

What is the source of funds?  Simply the price.  There is no claim of profits or promise of return.  If the price goes up, you win.  If the price goes down you lose.  Everyone knows that too.

The last one really illustrates why Bitcoin meets no definition of a  Ponzi scheme.  Ponzi schemes collapse when investors can't redeem their promised assets.  With Bitcoin, you own the asset.  You control it.  It is in your wallet or whenever you want it to be.  It might be valueless when you choose to sell, but you had control over it the whole time.   That is literally nothing--at all--like a Ponzi scheme. 

It is really hard to argue that selling something that goes down in value is fraud unless there is deception.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on January 27, 2022, 02:57:48 PM
The US dollar is a centralized cross between a Ponzi scheme and a pyramid scheme. Disprove that statement.

The US dollar does not require new investors in the dollar to pay off later investors.

All currencies require a buyer and a seller to trade them. If I want to trade my USD for GBP I have to find someone that has GBP but wants USD. I'm not sure how this is different than BTC, ETH, or XMR except that the cryptocurrencies don't have central bankers. Also, I didn't buy my first cryptocurrency for it to appreciate in USD terms. I bought my first cryptocurrency to buy goods from markets that didn't accept USD, just like I might buy a foreign currency.

I don't understand what you are saying.  Once you own, BTC you own it.  It is in your control.  It does not require later investors to buy in for you to get your BTC. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 27, 2022, 03:16:26 PM
The US dollar is a centralized cross between a Ponzi scheme and a pyramid scheme. Disprove that statement.

The US dollar does not require new investors in the dollar to pay off later investors.

All currencies require a buyer and a seller to trade them. If I want to trade my USD for GBP I have to find someone that has GBP but wants USD. I'm not sure how this is different than BTC, ETH, or XMR except that the cryptocurrencies don't have central bankers. Also, I didn't buy my first cryptocurrency for it to appreciate in USD terms. I bought my first cryptocurrency to buy goods from markets that didn't accept USD, just like I might buy a foreign currency.

I don't understand what you are saying.  Once you own, BTC you own it.  It is in your control.  It does not require later investors to buy in for you to get your BTC.

I guess that we are in agreement.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 27, 2022, 03:18:22 PM
All currencies require a buyer and a seller to trade them. If I want to trade my USD for GBP I have to find someone that has GBP but wants USD. I'm not sure how this is different than BTC, ETH, or XMR except that the cryptocurrencies don't have central bankers. Also, I didn't buy my first cryptocurrency for it to appreciate in USD terms. I bought my first cryptocurrency to buy goods from markets that didn't accept USD, just like I might buy a foreign currency.

What legal markets don't accept tender from standard fiat?

Who said that they were legal? But in all seriousness there are goods that PayPal and MasterCard don't want to be a part of even if they are legal. If you are running an international company shipping goods that MasterCard won't let you sell on their network BTC/ETH/XMR is a real option that I have actually seen used.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dreadmoose on January 27, 2022, 03:19:20 PM
I don't understand what you are saying.  Once you own, BTC you own it.  It is in your control.  It does not require later investors to buy in for you to get your BTC.

I mean, the people Madoff scammed owned the fake transaction receipts he gave them too. But when they went to redeem it and it wasn't worth what they were promised that was probably little solace to them.

For whoever above said more and more people are using it because they have to I would have expected this chart to trend upwards rather than flat or even a down year last year...

Statista BTC Transactions (https://www.statista.com/statistics/730806/daily-number-of-bitcoin-transactions/#:~:text=Bitcoin%20(BTC)%20daily%20transaction%20history,as%20of%20January%209%2C%202021&text=Bitcoin%20around%20330%2C000%20daily%20transactions,400%2C000%20in%20early%20January%202021.)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on January 27, 2022, 03:21:32 PM
You stopped reading too soon (emphasis added):

The scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds. A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment and still believe in the non-existent assets they are purported to own.

In the case of Bitcoin, what do investors believe is the legitimate business activity?  They don't.  Everyone knows there is no underlying business.  They just want to own Bitcoin.
   
Bitcoin victims believe that profits are coming from currency appreciation (sometimes commodity appreciation when they're smart enough to figure out it's not a currency).  That's why they want to own bitcoin.

What is the source of funds?  Simply the price.  There is no claim of profits or promise of return.  If the price goes up, you win.  If the price goes down you lose.  Everyone knows that too.

Are you arguing that most people investing in Bitcoin do in fact, know that the total value and utility of bitcoin is derived only from new investors pumping cash into the system, and that the system would completely fall apart today if this cash infusion stopped?  That doesn't seem like common knowledge from any of the bitcoin proponents I've talked with.

The last one really illustrates why Bitcoin meets no definition of a  Ponzi scheme.  Ponzi schemes collapse when investors can't redeem their promised assets.  With Bitcoin, you own the asset.  You control it.  It is in your wallet or whenever you want it to be.  It might be valueless when you choose to sell, but you had control over it the whole time.   That is literally nothing--at all--like a Ponzi scheme.

But here's the thing.  You can't use or control a bitcoin if nobody's mining.  You won't get the miners necessary to record the blockchain without a constant influx of real cash into the system.  That means that you won't even be able to sell when Bitcoin collapses.  You are left with literally nothing --at all-- . . . which is very like a Ponzi scheme.

Crypto and NFTs  . . . is there a better definition of 'non-existent asset'?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 27, 2022, 03:25:00 PM
You can't use or control a bitcoin if nobody's mining.

That's true, but it is also true that people were mining before anyone was buying/selling BTC for USD.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on January 27, 2022, 03:26:35 PM
You stopped reading too soon (emphasis added):

The scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds. A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment and still believe in the non-existent assets they are purported to own.

Bitcoin may not strictly meet the legal definition of a Ponzi—for what it's worth, neither did Madoff's, whose Ponzi did not guarantee a return. The relevant debate, in my opinion, is whether this is meaningful. Nobody is legally going after Bitcoin miners for operation of a Ponzi scheme. The legal definition isn't particularly relevant when deciding: 1. whether it's a good investment, and 2. roughly how the investment operates. Bitcoin certainly quacks like the fraud that is a Ponzi, in layman's terms. Those rough terms, as we've outlined several times in this thread are roughly:

1. People invest into it because they expect large profits
2. That expectation is sustained by such profits being paid to those who choose to cash out—and are very vocal about this
3. However, there is no external source of revenue for those payoffs
4. Instead, the payoffs come entirely from new investment money
5. Meanwhile, the operators take away a large portion of this money

Features 3,4, and 5 mean that, in aggregate, Bitcoin is a negative-sum game. That is, an average investor can expect to lose money, much like the lottery. Features 1 and 2—while the operators (miners) know about features 3, 4, and 5, and do not warn them of the negative-sum characteristics, makes this a game of fraud. But not only do operators not warn investors, they virtually always predict massive returns, and claim that bitcoins will have very important widespread uses in the future. Just HODL.

In the case of Bitcoin, what do investors believe is the legitimate business activity?  They don't.  Everyone knows there is no underlying business.  They just want to own Bitcoin.   

Why do people want to own Bitcoin? I'd split them into roughly three camps:
1. People who are techno-gold-bugs and really believe in the ideology
2. People who need to work outside the legal realm (buy drugs, transfer money to countries where it's difficult/expensive/illegal)
3. People who are investing with an expectation of return.

I think any reasonable person would agree that the vast majority of Bitcoin holders fall squarely into bucket #3. Would you agree?

People who fall into bucket #3 probably do not have a good understanding of why the price goes up. And that's, in part, by design. There is very much technical and economic obfuscation and plenty of claims about an uncertain future. Is this "business activity" strictly speaking? No. But it is explanation enough to fleece the huge majority of Bitcoin holders.

What is the source of funds?  Simply the price.  There is no claim of profits or promise of return.  If the price goes up, you win.  If the price goes down you lose.  Everyone knows that too.

As I mentioned earlier, even Madoff's Ponzi doesn't meet this rigorous definition. He had no "promise" of returns. Bitcoin and Madoff gave the expectation of returns. That is what's important here.

The last one really illustrates why Bitcoin meets no definition of a  Ponzi scheme.  Ponzi schemes collapse when investors can't redeem their promised assets.  With Bitcoin, you own the asset.  You control it.  It is in your wallet or whenever you want it to be.  It might be valueless when you choose to sell, but you had control over it the whole time.   That is literally nothing--at all--like a Ponzi scheme. 

It is really hard to argue that selling something that goes down in value is fraud unless there is deception.

You seem very interested in debating the attributes historical Ponzis had, and less interested in the characteristics that made them fraudulent investments. Past Ponzis suddenly and permanently crashed because they depended on a (relatively) easily debunked lie. When that lie was exposed, it made the schemes impossible to continue. Bitcoin's lie hides behind lots of techno babble, fear mongering, and fomo. This has, thus far, allowed its price to crater 80%+ and recover, making it unusual among Ponzis, to be sure.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on January 27, 2022, 03:28:25 PM
You can't use or control a bitcoin if nobody's mining.

That's true, but it is also true that people were mining before anyone was buying/selling BTC for USD.

Yep.  Hobbyists were doing the mining for fun when you didn't even need a high powered graphics card.  But bitcoin was explicitly designed to crush all the inexpensive mining in short order.  Do you really believe that these same miners will step up to spend the energy costs of a small nation without payout when all the big companies doing it now quit?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 27, 2022, 03:32:40 PM
Why do people want to own Bitcoin? I'd split them into roughly three camps:
1. People who are techno-gold-bugs and really believe in the ideology
2. People who need to work outside the legal realm (buy drugs, transfer money to countries where it's difficult/expensive/illegal)
3. People who are investing with an expectation of return.

I would add 2a: people who live in countries with truly shitty fiat like Venezuela.

Also, I would like to get back to a world where people buy cryptocurrency to buy drugs on the internet, like god intended. You know, a real crypto-currency with emphasis on currency.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 27, 2022, 03:34:21 PM
You can't use or control a bitcoin if nobody's mining.

That's true, but it is also true that people were mining before anyone was buying/selling BTC for USD.

Yep.  Hobbyists were doing the mining for fun when you didn't even need a high powered graphics card.  But bitcoin was explicitly designed to crush all the inexpensive mining in short order.  Do you really believe that these same miners will step up to spend the energy costs of a small nation without payout when all the big companies doing it now quit?

Technically speaking, since it is a consensus algorithm, if everyone stops mining can't it be forked to allow for cheap mining again?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on January 27, 2022, 03:39:48 PM
You can't use or control a bitcoin if nobody's mining.

That's true, but it is also true that people were mining before anyone was buying/selling BTC for USD.

Yep.  Hobbyists were doing the mining for fun when you didn't even need a high powered graphics card.  But bitcoin was explicitly designed to crush all the inexpensive mining in short order.  Do you really believe that these same miners will step up to spend the energy costs of a small nation without payout when all the big companies doing it now quit?

Technically speaking, since it is a consensus algorithm, if everyone stops mining can't it be forked to allow for cheap mining again?

Sure could.

But how are you going to make the mining worth their while without paying for the costs?  Once the scheme is well known, I suspect you'll have far fewer folks signing up for it.  I guess you could massively devalue bitcoin by issuing new coins to miners.  Either way, no victim will get the full amount of their 'investment' back.

I love that the solution to bitcoin's ponzi problem is a central group of . . . let's call them 'bankers' getting together to decide to devalue their 'currency'.  It's delicious.  :P
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on January 27, 2022, 03:43:35 PM
Also, I would like to get back to a world where people buy cryptocurrency to buy drugs on the internet, like god intended. You know, a real crypto-currency with emphasis on currency.

Yes, this was what initially was exciting to me about crypto way back almost a decade ago. Unfortunately BTC is basically the opposite of what you'd want in a currency. I can think of a variety of nerdy ways to try to construct a currency that would keep it stable/very slowly depreciating, minimize energy use, be secure, etc, etc. There would be of course plenty of tradeoffs and room to disagree about details. But BTC doesn't do ANY of those things. It's a real shame the designers let their ideology come first (assuming they actually wanted to create a useful currency, that is).

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 27, 2022, 03:43:46 PM
Either way, no victim will get the full amount of their 'investment' back.

Hypothetically speaking, how is that different than Peloton stock?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 27, 2022, 03:46:10 PM
Also, I would like to get back to a world where people buy cryptocurrency to buy drugs on the internet, like god intended. You know, a real crypto-currency with emphasis on currency.

Yes, this was what initially was exciting to me about crypto way back almost a decade ago. Unfortunately BTC is basically the opposite of what you'd want in a currency. I can think of a variety of nerdy ways to try to construct a currency that would keep it stable/very slowly depreciating, minimize energy use, be secure, etc, etc. There would be of course plenty of tradeoffs and room to disagree about details. But BTC doesn't do ANY of those things. It's a real shame the designers let their ideology come first (assuming they actually wanted to create a useful currency, that is).

-W

I think that you are being a little hard on the designers of the first successful cryptocurrency. Gopher is dead and has been replaced with better protocols, that's kind of how technology works. I have $0 in BTC because I think that there are better cryptocurrencies that have replaced it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on January 27, 2022, 03:48:56 PM
Also, I would like to get back to a world where people buy cryptocurrency to buy drugs on the internet, like god intended. You know, a real crypto-currency with emphasis on currency.

Yes, this was what initially was exciting to me about crypto way back almost a decade ago. Unfortunately BTC is basically the opposite of what you'd want in a currency. I can think of a variety of nerdy ways to try to construct a currency that would keep it stable/very slowly depreciating, minimize energy use, be secure, etc, etc. There would be of course plenty of tradeoffs and room to disagree about details. But BTC doesn't do ANY of those things. It's a real shame the designers let their ideology come first (assuming they actually wanted to create a useful currency, that is).

-W

I think that you are being a little hard on the designers of the first successful cryptocurrency. Gopher is dead and has been replaced with better protocols, that's kind of how technology works. I have $0 in BTC because I think that there are better cryptocurrencies that have replaced it.

Come on, a first year econ student could do a better job. Like a lot of engineers they focused entirely on the problems that interested them and lost sight of the forest for the trees. Or else they wanted to make digital gold and maybe wreck the environment just as much as real gold.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 27, 2022, 03:51:20 PM
Come on, a first year econ student could do a better job. Like a lot of engineers they focused entirely on the problems that interested them and lost sight of the forest for the trees. Or else they wanted to make digital gold and maybe wreck the environment just as much as real gold.

-W

I don't think that they were a first year econ student. I think that they were a cryptographer.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on January 27, 2022, 03:54:02 PM
Come on, a first year econ student could do a better job. Like a lot of engineers they focused entirely on the problems that interested them and lost sight of the forest for the trees. Or else they wanted to make digital gold and maybe wreck the environment just as much as real gold.

-W

Exactly.  I mentioned up thread the designers never really thought about how money is or how it works.  So it BTC works like a collectable because the designers thought that's how money works. 

And for the record, producing a collectable is not a Ponzi scheme. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on January 27, 2022, 04:12:21 PM
Come on, a first year econ student could do a better job. Like a lot of engineers they focused entirely on the problems that interested them and lost sight of the forest for the trees. Or else they wanted to make digital gold and maybe wreck the environment just as much as real gold.

-W

Exactly.  I mentioned up thread the designers never really thought about how money is or how it works.  So it BTC works like a collectable because the designers thought that's how money works. 

And for the record, producing a collectable is not a Ponzi scheme. 

There aren't many collectibles I'm aware of where you lose ownership (ability to sell/trade) if you stop paying people to 'mine' it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on January 27, 2022, 04:34:25 PM
The possibility of a collectible's value going to zero by itself does not meet any definition of a Ponzi scheme.  A Ponzi scheme requires fraud, by definition. 

It would be extremely hard to argue that the knowledge that mining is a component of Bitcoin transactions has been hidden from future buyers.   It is right there in the white paper.   

Question:  If this is a Ponzi scheme, specifically who would you arrest in this case and what would you charge them with? 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on January 28, 2022, 03:19:12 AM
Well, this seems potentially significant: https://www.barrons.com/articles/white-house-executive-action-regulate-cryptos-national-security-51643312454

This comes just days after Putin effectively did the same thing in Russia.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: davisgang90 on January 28, 2022, 05:15:07 AM
I've got 0.27% of my portfolio in BTC and I'm comfortable with that level of exposure. I view it as pure speculation at this point.

To be clear, I've "invested" only my personal allowance in BTC, none of our investment dollars. I keep all our investments purely in index funds.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DaKini on January 28, 2022, 10:21:19 AM
For me (as 20 years experienced IT guy in it security and programmer), this looks really fishy and that’s the reason why i dont hold any crypto.

While the first years it looked pretty nice to me and i wanted to see the vision getting real - at some point i realized that this is a fundamental part of the issue.
That very vision was long time part if the „marketing scheme“, a sellable end-state that has a low probability of ever getting real, while juicy enough to get people on board.
All that blockchain-crypto-fluff is just there to hide the scam. Its an illusion, the perfect fraud - long time it was not clear if it is illegal, and now i come to believe *that* was intentional. It is the perfect robbery where it is designed to be pyramid-like, getting people to freely bring you their money, while legally its hard to fight because obviously its not illegal to sell those tokens.

Cryptos are mocking our free world values and are gaming our system for personal gain. The technological wrapping is just there to disguise the pyramid.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 28, 2022, 04:40:15 PM
Either way, no victim will get the full amount of their 'investment' back.

Hypothetically speaking, how is that different than Peloton stock?

And overly hyped stock still has some assets and revenue. BTC has neither.

That is no guarantee that as a shareholder you will ever see a dime of the assets or revenue. When a company goes bankrupt (eg, GM) shareholders get nothing. But yea, you technically own a share of a potentially worthless company, just like owning a fraction of a potentially worthless cryptocurrency.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on January 28, 2022, 04:57:10 PM
Either way, no victim will get the full amount of their 'investment' back.

Hypothetically speaking, how is that different than Peloton stock?

And overly hyped stock still has some assets and revenue. BTC has neither.

That is no guarantee that as a shareholder you will ever see a dime of the assets or revenue. When a company goes bankrupt (eg, GM) shareholders get nothing. But yea, you technically own a share of a potentially worthless company, just like owning a fraction of a potentially worthless cryptocurrency.
Significantly different levels of "potentially" with regards to "worthless" there. So not "just like".
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 28, 2022, 05:27:04 PM
It's why we don't recommend buying individual stocks in these parts make the same fucking argument for apple or Google.

Me too! I'm 99% VT. I just don't buy the ponzi-scheme-fraud argument.

Why don't you go play poker every night? You could easily be a billionaire.

Poker is actually really easy to win at against average opponents, but I don't like the ambiance of the places where it is played.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 28, 2022, 05:39:12 PM
So have fun using your collectibles to buy illegal shit. Clearly proving it doesn't actually have a purpose in society.

Last time you needed to send money to a family member in Vietnam how did you do it? Because I sent ETH.

EDITed to add - I usually just buy my drugs with cash money US dollars.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 28, 2022, 06:29:28 PM
Going to be a fun convo when it's hey I just sent you 10k in USD. Well I only got 5usd

Do you actually believe that? Because I'd take that bet. I bet you that in the next 10 years that won't happen. That is, there will not be a single point in time where if I transferred ETH worth $10K USD that after two gas fees and market volatility that $10,000 USD would be reduced to $5 USD within a 24 hour time-frame. If you win I'll give you $240. If I win you can give me 1 ETH.

I almost forgot to add that the very coolest "illegal shit" that you can buy with these "collectibles" is anonymous online internet hosting. In the USA this might not seem like a big deal to you, but if you are a dissident in Myanmar, China, or Iran it opens up opportunities to get information out. Of course, it might be illegal. If liking that is wrong then I don't want to be right.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 28, 2022, 06:36:47 PM
Going to be a fun convo when it's hey I just sent you 10k in USD. Well I only got 5usd

Do you actually believe that? Because I'd take that bet. I bet you that in the next 10 years that won't happen. That is, there will not be a single point in time where if I transferred ETH worth $10K USD that after two gas fees and market volatility that $10,000 USD would be reduced to $5 USD within a 24 hour time-frame. If you win I'll give you $240. If I win you can give me 1 ETH.

I almost forgot to add that the very coolest "illegal shit" that you can buy with these "collectibles" is anonymous online internet hosting. In the USA this might not seem like a big deal to you, but if you are a dissident in Myanmar, China, or Iran it opens up opportunities to get information out. Of course, it might be illegal. If liking that is wrong then I don't want to be right.

You mean this entirely open source everyone can see every transaction decentralized Blockchain is actually the latest est in espionage tech.

Fuck I'm impressed.

XMR whitepaper (https://github.com/monero-project/research-lab/blob/master/whitepaper/whitepaper.pdf).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 28, 2022, 06:52:11 PM
You mean this entirely open source everyone can see every transaction decentralized Blockchain is actually the latest est in espionage tech.

Fuck I'm impressed.

XMR whitepaper (https://github.com/monero-project/research-lab/blob/master/whitepaper/whitepaper.pdf).

Oh yay a white paper

These are great here's a bunch of shit we might do or say we're doing but aren't legally obligated to do but trust us we're doing it.

I have a white paper for ya.

Send boarder42 11million dollars and four sketches of unicorn farts and you can be the first investor and nft creator of unicorn farts. Once we sell a billion unicorn farts you might be rich but if you're not you'll at least he one of the first investors and creators in this new revolutionary idea that makes everyone rich with unicorns farts. If you miss out today. I'll find someone tomorrow this is too good to pass up.

Oh yay sarcasm.

As you just wrote, the implementation is open source and it is a decentralized consensus based algorithm. The whitepaper has been out for eight years. The big risk is that cryptography is hard and sometimes it takes a lot of smart people a long time to notice a flaw. But that algorithms and techniques that they are using aren't new. Just the way that they have chosen to combine them.

Hard pass on the unicorn fart investment until you have a similar whitepaper and open source implementation with a proven track-record.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 28, 2022, 07:05:40 PM
Bc the entire thing is bullshit topped with bullshit. You can push as much of it as you want. Everyone pushing crypto owns crypto so congrats on you part in the MLM portion of the enterprise best of luck in your accelerated destruction of earth.

Those crypto bros are such losers that they likely do/will not have children. Thus they don't give a fuck that they contribute to the planet distraction.
Otherwise the grand kids would say: "Grampa, why the planet is destroyed? Grampa did you take part in the biggest scam ever? Why did you do that!"
Grampa : "I was just a greedy bustard, the $ was meant for the family future". "Fuck you grampa!"
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 28, 2022, 07:07:38 PM
Everyone pushing crypto owns crypto so congrats on you part in the MLM portion of the enterprise best of luck in your accelerated destruction of earth.

You think the tiny number of XMR that I own are hurting the earth more than all the VT? If you are worried about emissions from cryptocurrency mining I strongly suggest that you advocate for a carbon tax. I do.

PS - I mined them to keep my house warm in the winter when I had resistance baseboard heaters. As soon as I moved to a house with gas heat I stopped mining, although come to think of it my 100% green power is cleaner than my natural gas.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 28, 2022, 07:23:43 PM
Cool you're still a pro crypto person who owns crypto. Which benefits you personally to support crypto since it's a negative sum game. Which makes it part ponzi part MLM. So again I don't give a fuck where you're from who you're sending it to. You are just proving my point so thanks.

What I fail to understand is how that is any different from any other currency? If I have US dollars I want them to be good by some metric of goodness. Same for Turkish Lira. Everyone that owns any currency doesn't want it to go to $0 tomorrow. Or commodities, or oil company stock.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 28, 2022, 07:31:57 PM
Cool you're still a pro crypto person who owns crypto. Which benefits you personally to support crypto since it's a negative sum game. Which makes it part ponzi part MLM. So again I don't give a fuck where you're from who you're sending it to. You are just proving my point so thanks.

What I fail to understand is how that is any different from any other currency? If I have US dollars I want them to be good by some metric of goodness. Same for Turkish Lira. Everyone that owns any currency doesn't want it to go to $0 tomorrow. Or commodities, or oil company stock.

You need a better understanding of global economics and investing with a statement like this.

Please enlighten me. I extra want to know how oil company stock isn't a negative sum game for the planet. Also maybe while you are at it you can explain to me why trading forex is inherently different than trading crypto.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 28, 2022, 08:19:11 PM
Negative sum was in regards to the fact that crypto miners take a cut.

Indeed, just like the MasterCard network or a wire transfer.

Forex and crypto are both not ways to build wealth so thanks for that connection.

So this thread could be titled why not hold a small bit of euros

Uh bc it's fucking dumb unless your in Europe.

I'm not advocating to trade forex (https://www.investopedia.com/articles/forex/082515/day-life-professional-forex-trader.asp) or crypto. I'm just questioning all of the extra assertions that you are making. I never claimed that cryptocurrency was the new gold. I'd still like it to be a functional currency.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: erjkism on January 28, 2022, 08:21:41 PM
Everyone pushing crypto owns crypto so congrats on you part in the MLM portion of the enterprise best of luck in your accelerated destruction of earth.

You think the tiny number of XMR that I own are hurting the earth more than all the VT? If you are worried about emissions from cryptocurrency mining I strongly suggest that you advocate for a carbon tax. I do.

PS - I mined them to keep my house warm in the winter when I had resistance baseboard heaters. As soon as I moved to a house with gas heat I stopped mining, although come to think of it my 100% green power is cleaner than my natural gas.

Cool you're still a pro crypto person who owns crypto. Which benefits you personally to support crypto since it's a negative sum game. Which makes it part ponzi part MLM. So again I don't give a fuck where you're from who you're sending it to. You are just proving my point so thanks.

If someone believes cryptocurrency is a good thing of course they are going to add some to their portfolio.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on January 30, 2022, 11:01:46 AM
For whoever above said more and more people are using it because they have to I would have expected this chart to trend upwards rather than flat or even a down year last year...

Statista BTC Transactions (https://www.statista.com/statistics/730806/daily-number-of-bitcoin-transactions/#:~:text=Bitcoin%20(BTC)%20daily%20transaction%20history,as%20of%20January%209%2C%202021&text=Bitcoin%20around%20330%2C000%20daily%20transactions,400%2C000%20in%20early%20January%202021.)

This chart is not at all an indication of usage. It is just a chart of the total number of on-chain transactions that have taken place. Bitcoin transactions are settlement. Most exchanges over the last year or two have transitioned to batch transactions for their withdrawal activity. This means that when you withdraw from an exchange, they wait until there are many transactions from their customers to then broadcast a transaction on the network. So a single transaction from these institutions is usually the activity of many hundreds or even thousands of people. One bitcoin transaction does not equal one individual's activity, it is a settlement of many.

So because many exchanges have moved to batching over the last year or so, it has made the bitcoin blockchain much more efficient when it comes to block space utilization. Therefore you can't draw conclusions about bitcoin usage using the chart you presented. A much better indication of usage comes from charts like the UTXO set or total value of transactions being posted. Both of these charts shows a continuous rise in number over the years.

https://www.blockchain.com/charts/utxo-count
https://www.blockchain.com/charts/estimated-transaction-volume-usd

Furthermore is the usage of the lightning network where all transactions take place off-chain. Due to the privacy features of the network, there is no way to tell how many transactions are currently taking place on the network. However, we do have a few indicators such as the growth in the overall size of the network which has seen tremendous growth over the last couple years. Combined with the fact that anecdotal information from my personal lightning node as well as others have seen a ton of transaction forwarding taking place lately.

https://bitcoinvisuals.com/lightning

So yes, more and more activity is taking place with bitcoin and it continues to go up year over year, regardless of what the exchange value is.


Bitcoin victims believe that profits are coming from currency appreciation (sometimes commodity appreciation when they're smart enough to figure out it's not a currency).  That's why they want to own bitcoin.

Are you arguing that most people investing in Bitcoin do in fact, know that the total value and utility of bitcoin is derived only from new investors pumping cash into the system, and that the system would completely fall apart today if this cash infusion stopped?  That doesn't seem like common knowledge from any of the bitcoin proponents I've talked with.

But here's the thing.  You can't use or control a bitcoin if nobody's mining.  You won't get the miners necessary to record the blockchain without a constant influx of real cash into the system.  That means that you won't even be able to sell when Bitcoin collapses.  You are left with literally nothing --at all-- . . . which is very like a Ponzi scheme.

Crypto and NFTs  . . . is there a better definition of 'non-existent asset'?

Again, the system would not completely fall apart today if cash infusion stopped. That is a complete fallacy devoid of any reality. Money has come and gone in bitcoin many times throughout many cycles and the system has not "collapsed" at all. The bitcoin network continues to churn out blocks like it always has despite the many calls of its demise. A ponzi scheme has a specific fraudser(s) involved that is defrauding the many in order to steal their money at their expense. Bitcoin is a completely open and honest system where anyone is free to come and go. Contrary to what you keep claiming, there is no sole beneficiary of said fraud.

Even the early investors have come and gone throughout bitcoin's life. There are countless people who were invested in the early days when it was worth just a few cents or dollars and have since sold their bitcoin to others. One thing that seems lost on you is that for every seller there is a buyer. For every seller in the early days, there must have been a new buyer in the early days. This open and free market just doesn't exist for a ponzi scheme. The idea of an "early investor" in your mind is such a transitory term in reality. For every "early" investor that bought in the early days there was someone who got out early on. That holds true every single day. People have been calling bitcoin a ponzi scheme for years and yet somehow the idea that there is a continuous stream of buyers and sellers together in an open market completely contradicts their claims every single day which makes their ponzi claims all the more ridiculous. What is "early" exactly? A couple years ago people were still calling bitcoin a ponzi scheme and yet every day since then there were buyers coupled with sellers all coming to agreement on the value they see in bitcoin. Every day that those buyers and sellers meet in the open and free marketplace and agree upon a value, they prove the ponzi claimers wrong.

You're also completely wrong on the mining. Bitcoin mining isn't what decides ownership of bitcoin. The blockchain is just a ledger of transactions. I host a bitcoin node that stores this blockchain ledger on it. This ledger database is what determines who owns what. Mining does not do that. Digital signatures is what determines ownership. Mining is transient. In general a block is produced every 10 minutes, but there are periods that go by much longer than 10 minutes and during that time that doesn't mean ownership of bitcoin has ceased. My bitcoin node has no idea who is mining, how many people are mining, how much hashpower is being used, etc. It only knows when a new block is broadcast on the network. We calculate approximately how many miners are mining and the appropriate difficulty level based on how frequently new blocks are seen being broadcast. Theoretically an undetermined amount of time could go by without seeing a new block produced, but that doesn't mean that people suddenly "stop owning bitcoin" as you insinuate because as I said, digital signatures are what determines ownership.

Bitcoin mining is simply to secure the network and confirm transactions. It is an economically incentivized process. So you're going against economic theory if you're claiming that there won't be anyone available to mine and secure the network while there are still participants, regardless of whether there is still new influx of participants. If there are no blocks being produced, but there are people who really want bitcoin transactions to be confirmed, then they'll be willing to pay for it through transaction fees. What you're claiming is that miners will be willing to leave money on the table when it is presented to them and that is an absolutely silly thing to say. Over the next several years as more block reward halvings take place, the price of bitcoin becomes less and less important to these mining incentizes. At some point in the next several years, the majority of the block reward for miners will come from transaction fees which means the price of bitcoin becomes a negligible aspect for these mining incentives and these economics are even truer. At the end of the day, if there are people who want to transact with bitcoin, there will be miners willing to confirm those transactions and the mechanisms built within the bitcoin protocol ensure that (difficulty adjustment, reward halving, block size limits, etc).

That doesn't even touch about the countless ways with which you can now transact with bitcoin without the need for a miner's confirmation (Lightning network, Liquid network, physical bitcoin, off-chain processors, sidechains, etc).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on January 30, 2022, 12:50:54 PM
I run a business that sells stuff almost exclusively to white 30-50 year olds with college (or graduate) degrees, many of whom are engineers. The stereotype of a BTC person.

I am retired at this point so last year I only processed 240 transactions (2+ years ago it was closer to 500 a year). Exactly zero of those people has EVER so much as offered to pay with BTC. Zero. When casually discussing this with other business owners, their story is the same.

I'm a small sample but I have a hard time believing anyone is doing any actual commerce with BTC. The transactions are presumably 100% exchanging BTC for dollars/fiat or other cryptos, or vise versa. Digital gold.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BeanCounter on January 30, 2022, 01:22:27 PM


I'm a small sample but I have a hard time believing anyone is doing any actual commerce with BTC. The transactions are presumably 100% exchanging BTC for dollars/fiat or other cryptos, or vise versa. Digital gold.

-W
How or why would you even use it for commerce? With BTC being so volatile wouldn’t the business owner be taking a huge risk that when they go to exchange it into dollars for more product or to pay bills that it would be suddenly worth 30% less?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 30, 2022, 01:57:04 PM


I'm a small sample but I have a hard time believing anyone is doing any actual commerce with BTC. The transactions are presumably 100% exchanging BTC for dollars/fiat or other cryptos, or vise versa. Digital gold.

-W
How or why would you even use it for commerce? With BTC being so volatile wouldn’t the business owner be taking a huge risk that when they go to exchange it into dollars for more product or to pay bills that it would be suddenly worth 30% less?

Crypto bros are like a broken record. It has been proven by many, even crypto supporters, that BTC can’t be used widely as a currency. Simple like that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on January 30, 2022, 03:38:16 PM
OK. Crypto bros. These are the current facts. Please stop repeating false statements.
I do realize that you believe that propaganda would work. Nope, not here in MMM forum.
Do not play Putin's game. A lie repeated 100 times does not make it true.

Quote
Cryptos/blockchain values:

1. As a currency (superior to fiat USD).
Aka utility. There is i think already a wide consensus that this not happening. Almost no-one claims (anymore) in the last year that crypto's feature is utility.

2. As an inflation hedge (against legacy fiat).
Proven recently that it is not true.

3. As AA not correlated to the market.
Proven recently that it is not true.

4. As a store of value?
This item is often mentioned. If something has (intrinsic) value, then why in the last few weeks the value halfed? Is any logical reason why? Nope, just a sentiment. What kind of value it is?
So, this cannot be considered as stored value.

5. As an amazing tech changing our lives.
Blockchain/crypto is already over 10y old, and no (really) useful application was born. Give it another 10y? 

6. Killing the planet for absolutely nothing back.
If e.g. someone invents effective food production that is not killing the planet, but uses a lot if electricity that would be fine with me.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on January 30, 2022, 10:11:24 PM
Bitcoin is a terrible investment because this one time it went from $1,000 to $19,000 and crashed all the way down to $3,800.  And another time, it went from $8,000 to $69,000 and crashed all the way down to $35,000.  Moral of the story, don't buy Bitcoin because you know it will crash.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 30, 2022, 10:51:46 PM
Bitcoin is a terrible investment because this one time it went from $1,000 to $19,000 and crashed all the way down to $3,800.  And another time, it went from $8,000 to $69,000 and crashed all the way down to $35,000.  Moral of the story, don't buy Bitcoin because you know it will crash.

I can't tell if you are being serious or not, but I bought in at $450.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on January 30, 2022, 11:13:06 PM
Bitcoin is a terrible investment because this one time it went from $1,000 to $19,000 and crashed all the way down to $3,800.  And another time, it went from $8,000 to $69,000 and crashed all the way down to $35,000.  Moral of the story, don't buy Bitcoin because you know it will crash.

I can't tell if you are being serious or not, but I bought in at $450.

Pretty sure the previous poster is serious, but it illustrates a problem:  Bitcoin is touted as being better than gold. But it has wild price fluctuations.  If the value isn't there when you need it, then it doesn't have much utility in that regard.

If you buy it with the expectation it will always trend up, that's a different thing.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 30, 2022, 11:14:49 PM
OK. Crypto bros. These are the current facts. Please stop repeating false statements.
I do realize that you believe that propaganda would work. Nope, not here in MMM forum.
Do not play Putin's game. A lie repeated 100 times does not make it true.

Quote
Cryptos/blockchain values:

1. As a currency (superior to fiat USD).
Aka utility. There is i think already a wide consensus that this not happening. Almost no-one claims (anymore) in the last year that crypto's feature is utility.

2. As an inflation hedge (against legacy fiat).
Proven recently that it is not true.

3. As AA not correlated to the market.
Proven recently that it is not true.

4. As a store of value?
This item is often mentioned. If something has (intrinsic) value, then why in the last few weeks the value halfed? Is any logical reason why? Nope, just a sentiment. What kind of value it is?
So, this cannot be considered as stored value.

5. As an amazing tech changing our lives.
Blockchain/crypto is already over 10y old, and no (really) useful application was born. Give it another 10y? 

6. Killing the planet for absolutely nothing back.
If e.g. someone invents effective food production that is not killing the planet, but uses a lot if electricity that would be fine with me.

Can I intuit from your post that you are not a believer in the efficient market hypothesis?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 30, 2022, 11:16:19 PM
Pretty sure the previous poster is serious, but it illustrates a problem:  Bitcoin is touted as being better than gold. But it has wild price fluctuations.  If the value isn't there when you need it, then it doesn't have much utility in that regard.

If you buy it with the expectation it will always trend up, that's a different thing.

I might be in the minority, but I just think of it as a shitty currency. Better than venezuelan bolívar but worse than the US dollar.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on January 31, 2022, 08:29:49 AM
Pretty sure the previous poster is serious, but it illustrates a problem:  Bitcoin is touted as being better than gold. But it has wild price fluctuations.  If the value isn't there when you need it, then it doesn't have much utility in that regard.

If you buy it with the expectation it will always trend up, that's a different thing.

I might be in the minority, but I just think of it as a shitty currency. Better than venezuelan bolívar but worse than the US dollar.

IDK, with the Venezuelan bolivar, there is at least some intrinsic value in the gag gift market:
https://www.ebay.com/itm/384703155545?hash=item5992184d59:g:NNEAAOSwPfBhU6PO (https://www.ebay.com/itm/384703155545?hash=item5992184d59:g:NNEAAOSwPfBhU6PO)

Plus, Venezuela is getting to be too poor to print any more banknotes, and they are routinely destroyed as a way to build campfires, so it's actually deflationary from a collectibles perspective. I have a feeling there is a deeper truth about crypto buried here, but I just can't quite grasp it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on January 31, 2022, 12:43:25 PM
OK. Crypto bros. These are the current facts. Please stop repeating false statements.
I do realize that you believe that propaganda would work. Nope, not here in MMM forum.
Do not play Putin's game. A lie repeated 100 times does not make it true.

Quote
Cryptos/blockchain values:

1. As a currency (superior to fiat USD).
Aka utility. There is i think already a wide consensus that this not happening. Almost no-one claims (anymore) in the last year that crypto's feature is utility.

2. As an inflation hedge (against legacy fiat).
Proven recently that it is not true.

3. As AA not correlated to the market.
Proven recently that it is not true.

4. As a store of value?
This item is often mentioned. If something has (intrinsic) value, then why in the last few weeks the value halfed? Is any logical reason why? Nope, just a sentiment. What kind of value it is?
So, this cannot be considered as stored value.

5. As an amazing tech changing our lives.
Blockchain/crypto is already over 10y old, and no (really) useful application was born. Give it another 10y? 

6. Killing the planet for absolutely nothing back.
If e.g. someone invents effective food production that is not killing the planet, but uses a lot if electricity that would be fine with me.

"A lie repeated 100 times does not make it true" says ArnoldK - repeating his own opinions as if that made them true . . .
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on January 31, 2022, 03:01:18 PM
I get it that the Bitcoin energy issue is a topic worthy of examination and discussion, but the reporting in the general media is pretty shabby. Supposedly reliable sources are randomly conflating "electricity" comparisons with "energy" comparisons.

"The cryptocurrency consumes more energy than Norway." - not true
https://www.theguardian.com/technology/2022/jan/30/how-do-we-solve-bitcoins-carbon-problem (https://www.theguardian.com/technology/2022/jan/30/how-do-we-solve-bitcoins-carbon-problem)

"Bitcoin uses more energy than Argentina - if Bitcoin was a country, it would be in the top 30 energy users worldwide"not true
https://www.bbc.co.uk/news/technology-56012952 (https://www.bbc.co.uk/news/technology-56012952)

and there's plenty of similar examples out there  . . .

Simple careless errors ? Intentional scaremongering ? Either way, it's nonsense.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: windytrail on January 31, 2022, 03:15:00 PM
I get it that the Bitcoin energy issue is a topic worthy of examination and discussion, but the reporting in the general media is pretty shabby. Supposedly reliable sources are randomly conflating "electricity" comparisons with "energy" comparisons.

"The cryptocurrency consumes more energy than Norway." - not true
https://www.theguardian.com/technology/2022/jan/30/how-do-we-solve-bitcoins-carbon-problem (https://www.theguardian.com/technology/2022/jan/30/how-do-we-solve-bitcoins-carbon-problem)

"Bitcoin uses more energy than Argentina - if Bitcoin was a country, it would be in the top 30 energy users worldwide"not true
https://www.bbc.co.uk/news/technology-56012952 (https://www.bbc.co.uk/news/technology-56012952)

and there's plenty of similar examples out there  . . .

Simple careless errors ? Intentional scaremongering ? Either way, it's nonsense.

This source (https://www.moneysupermarket.com/gas-and-electricity/features/crypto-energy-consumption/) states that a single Bitcoin transaction uses an average of 1,173 Kilowatt Hours (kWh), enough to power a typical UK home for more than three months. Are you saying this is incorrect? If so, where are your sources?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 31, 2022, 03:29:52 PM
This source (https://www.moneysupermarket.com/gas-and-electricity/features/crypto-energy-consumption/) states that a single Bitcoin transaction uses an average of 1,173 Kilowatt Hours (kWh), enough to power a typical UK home for more than three months. Are you saying this is incorrect? If so, where are your sources?

Indeed. Bitcoin is the MySpace of cryptocurrencies. I would imagine that eventually people will catch on.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on January 31, 2022, 03:38:19 PM
I get it that the Bitcoin energy issue is a topic worthy of examination and discussion, but the reporting in the general media is pretty shabby. Supposedly reliable sources are randomly conflating "electricity" comparisons with "energy" comparisons.

"The cryptocurrency consumes more energy than Norway." - not true
https://www.theguardian.com/technology/2022/jan/30/how-do-we-solve-bitcoins-carbon-problem (https://www.theguardian.com/technology/2022/jan/30/how-do-we-solve-bitcoins-carbon-problem)

"Bitcoin uses more energy than Argentina - if Bitcoin was a country, it would be in the top 30 energy users worldwide"not true
https://www.bbc.co.uk/news/technology-56012952 (https://www.bbc.co.uk/news/technology-56012952)

and there's plenty of similar examples out there  . . .

Simple careless errors ? Intentional scaremongering ? Either way, it's nonsense.

Do you have evidence that your claims here are valid?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on January 31, 2022, 04:23:33 PM
I get it that the Bitcoin energy issue is a topic worthy of examination and discussion, but the reporting in the general media is pretty shabby. Supposedly reliable sources are randomly conflating "electricity" comparisons with "energy" comparisons.

"The cryptocurrency consumes more energy than Norway." - not true
https://www.theguardian.com/technology/2022/jan/30/how-do-we-solve-bitcoins-carbon-problem (https://www.theguardian.com/technology/2022/jan/30/how-do-we-solve-bitcoins-carbon-problem)

"Bitcoin uses more energy than Argentina - if Bitcoin was a country, it would be in the top 30 energy users worldwide"not true
https://www.bbc.co.uk/news/technology-56012952 (https://www.bbc.co.uk/news/technology-56012952)

and there's plenty of similar examples out there  . . .

Simple careless errors ? Intentional scaremongering ? Either way, it's nonsense.

This source (https://www.moneysupermarket.com/gas-and-electricity/features/crypto-energy-consumption/) states that a single Bitcoin transaction uses an average of 1,173 Kilowatt Hours (kWh), enough to power a typical UK home for more than three months. Are you saying this is incorrect? If so, where are your sources?

Irrelevant. I think you misunderstood my point.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on January 31, 2022, 04:24:03 PM
I get it that the Bitcoin energy issue is a topic worthy of examination and discussion, but the reporting in the general media is pretty shabby. Supposedly reliable sources are randomly conflating "electricity" comparisons with "energy" comparisons.

"The cryptocurrency consumes more energy than Norway." - not true
https://www.theguardian.com/technology/2022/jan/30/how-do-we-solve-bitcoins-carbon-problem (https://www.theguardian.com/technology/2022/jan/30/how-do-we-solve-bitcoins-carbon-problem)

"Bitcoin uses more energy than Argentina - if Bitcoin was a country, it would be in the top 30 energy users worldwide"not true
https://www.bbc.co.uk/news/technology-56012952 (https://www.bbc.co.uk/news/technology-56012952)

and there's plenty of similar examples out there  . . .

Simple careless errors ? Intentional scaremongering ? Either way, it's nonsense.

Do you have evidence that your claims here are valid?

The source for most of the articles seems to be this Cambridge Uni data.
Bitcoin's electricity usage (131 tWh pa) is greater than Norway's electricity usage (124 tWh pa). I've not seen anyone arguing against this comparison. I'm happy to believe it's probably true.
https://ccaf.io/cbeci/index/comparisons (https://ccaf.io/cbeci/index/comparisons) - scroll down to "country ranking".


Bitcoin's electricity/energy usage (131 tWh pa) is NOT greater than Norway's energy usage (500 tWh pa).
https://ourworldindata.org/energy/country/norway#how-much-energy-does-the-country-consume-each-year (https://ourworldindata.org/energy/country/norway#how-much-energy-does-the-country-consume-each-year)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on January 31, 2022, 04:34:34 PM
I get it that the Bitcoin energy issue is a topic worthy of examination and discussion, but the reporting in the general media is pretty shabby. Supposedly reliable sources are randomly conflating "electricity" comparisons with "energy" comparisons.

"The cryptocurrency consumes more energy than Norway." - not true
https://www.theguardian.com/technology/2022/jan/30/how-do-we-solve-bitcoins-carbon-problem (https://www.theguardian.com/technology/2022/jan/30/how-do-we-solve-bitcoins-carbon-problem)

"Bitcoin uses more energy than Argentina - if Bitcoin was a country, it would be in the top 30 energy users worldwide"not true
https://www.bbc.co.uk/news/technology-56012952 (https://www.bbc.co.uk/news/technology-56012952)

and there's plenty of similar examples out there  . . .

Simple careless errors ? Intentional scaremongering ? Either way, it's nonsense.

Do you have evidence that your claims here are valid?

The source for most of the articles seems to be this Cambridge Uni data.
Bitcoin's electricity usage (131 tWh pa) is greater than Norway's electricity usage (124 tWh pa). I've not seen anyone arguing against this comparison. I'm happy to believe it's probably true.
https://ccaf.io/cbeci/index/comparisons (https://ccaf.io/cbeci/index/comparisons) - scroll down to "country ranking".


Bitcoin's electricity/energy usage (131 tWh pa) is NOT greater than Norway's energy usage (500 tWh pa).
https://ourworldindata.org/energy/country/norway#how-much-energy-does-the-country-consume-each-year (https://ourworldindata.org/energy/country/norway#how-much-energy-does-the-country-consume-each-year)


Comparing bitcoin's electricity usage is not going to be greater than Norway's total energy usage - because you're comparing apples and oranges.  That's invalid.

Calculate bitcoin's energy usage.  You need to find the total energy costs of not just the servers running, but of all the air conditioning necessary to host the server farms, all the energy used in the concrete that builds the buildings that hold the servers, all of the energy costs associated with the heavy marketing of bitcoin, etc.  Then get back with a number.  That's what they've tried to do here (https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)) for example.

For the moment, there is still no evidence you've brought forth supporting the claim that Bitcoin's energy usage is less than Norway's.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Vienna4ever on January 31, 2022, 05:21:04 PM

https://jacobinmag.com/2022/01/cryptocurrency-scam-blockchain-bitcoin-economy-decentralization

Cryptocurrency Is a Giant Ponzi Scheme

...Given that cryptocurrencies don’t produce anything of material value, this enormous waste of resources renders the whole enterprise a negative-sum game. Investors can only cash out by selling their coins to other investors — but only after the miners and various cryptocurrency service providers take the house’s rake. In other words, investors cannot — in the aggregate — cash out for even what they put in, as cryptocurrencies are inefficient by design.

This makes them a poor and costly form of currency and absolutely ludicrous as a long-term investment. We could dismiss them as a doomed experiment in the “greater fool” theory of investing, in which investors attempt to profit on overvalued or even worthless assets by selling them on to the next “greater fool” — think of it as gambling on a high-stakes game of musical chairs — if the rising price of Bitcoin and other cryptocurrencies were simply a function of demand.

This isn’t the case. Price manipulation plays as much or more of a role than demand in driving prices higher....

...Tether has become integral to the functioning of global crypto markets. The majority of Bitcoin trades are now conducted in Tether, 70 percent by volume. By comparison, only 8 percent of trade volume is conducted in real dollars, with the remainder being other crypto-to-crypto pairs. Many industry skeptics, and even proponents, see this as a systemic risk and ticking time bomb. The whole system relies on traders actually being able to exchange tethers for real cash or — far more commonly in practice — other traditional cryptocurrencies that can be sold for cash on banked exchanges like Coinbase or Gemini, both headquartered in the United States...

...No one knows exactly how this would shake out, but we know that investors will never be able to realize the gains they have made on paper. The cryptocurrency market’s oft-touted $2 trillion market cap, calculated by multiplying existing coins by the latest spot price, is a meaningless figure. Nowhere near that much has actually been invested into cryptocurrencies, and nowhere near that much will ever come out of them.

In fact, investors won’t — on average — be able to cash out for even as much as they put in. Much of that money went to cryptocurrency mining. Recent analysis shows that around $25 billion and growing has already gone to Bitcoin miners, who, by best estimates, are now spending $1 billion just on electricity every month, possibly more....






Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on January 31, 2022, 05:41:13 PM
I get it that the Bitcoin energy issue is a topic worthy of examination and discussion, but the reporting in the general media is pretty shabby. Supposedly reliable sources are randomly conflating "electricity" comparisons with "energy" comparisons.

"The cryptocurrency consumes more energy than Norway." - not true
https://www.theguardian.com/technology/2022/jan/30/how-do-we-solve-bitcoins-carbon-problem (https://www.theguardian.com/technology/2022/jan/30/how-do-we-solve-bitcoins-carbon-problem)

"Bitcoin uses more energy than Argentina - if Bitcoin was a country, it would be in the top 30 energy users worldwide"not true
https://www.bbc.co.uk/news/technology-56012952 (https://www.bbc.co.uk/news/technology-56012952)

and there's plenty of similar examples out there  . . .

Simple careless errors ? Intentional scaremongering ? Either way, it's nonsense.

Do you have evidence that your claims here are valid?

The source for most of the articles seems to be this Cambridge Uni data.
Bitcoin's electricity usage (131 tWh pa) is greater than Norway's electricity usage (124 tWh pa). I've not seen anyone arguing against this comparison. I'm happy to believe it's probably true.
https://ccaf.io/cbeci/index/comparisons (https://ccaf.io/cbeci/index/comparisons) - scroll down to "country ranking".


Bitcoin's electricity/energy usage (131 tWh pa) is NOT greater than Norway's energy usage (500 tWh pa).
https://ourworldindata.org/energy/country/norway#how-much-energy-does-the-country-consume-each-year (https://ourworldindata.org/energy/country/norway#how-much-energy-does-the-country-consume-each-year)


Comparing bitcoin's electricity usage is not going to be greater than Norway's total energy usage - because you're comparing apples and oranges.  That's invalid.

Calculate bitcoin's energy usage.  You need to find the total energy costs of not just the servers running, but of all the air conditioning necessary to host the server farms, all the energy used in the concrete that builds the buildings that hold the servers, all of the energy costs associated with the heavy marketing of bitcoin, etc.  Then get back with a number.  That's what they've tried to do here (https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)) for example.

For the moment, there is still no evidence you've brought forth supporting the claim that Bitcoin's energy usage is less than Norway's.

If you use the digiconomist figure for Bitcoin energy of 205 tWh pa, that's still only 41% of Norway's 500 tWh pa. I don't know if the figures are directly comparable in every respect, but that's a pretty wide safety margin.
I'll back off on my claim that Bitcoin DEFINITELY uses less energy than Norway as there is some uncertainty there, but that would still seem to be the most reasonable conclusion.

The main point I was making is that the media claims I quoted, that Bitcoin uses more energy than Norway/Argentina based purely on electricity usage data is, without question, bullshit.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on January 31, 2022, 05:54:21 PM
...Given that cryptocurrencies don’t produce anything of material value, this enormous waste of resources renders the whole enterprise a negative-sum game. Investors can only cash out by selling their coins to other investors — but only after the miners and various cryptocurrency service providers take the house’s rake. In other words, investors cannot — in the aggregate — cash out for even what they put in, as cryptocurrencies are inefficient by design.

How is that different from dollar bills or the MasterCard network?

EDITed to add - I mined most of my crypto. Maybe I should start mining again.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on February 02, 2022, 08:00:00 AM
...Given that cryptocurrencies don’t produce anything of material value, this enormous waste of resources renders the whole enterprise a negative-sum game. Investors can only cash out by selling their coins to other investors — but only after the miners and various cryptocurrency service providers take the house’s rake. In other words, investors cannot — in the aggregate — cash out for even what they put in, as cryptocurrencies are inefficient by design.

How is that different from dollar bills or the MasterCard network?

EDITed to add - I mined most of my crypto. Maybe I should start mining again.

I feel like this has been answered before, but let's do it again: because nobody "invests" in dollar bills or MasterCard transactions (whatever that even would mean). Most governments strive to make their currencies inflationary, precisely to discourage hoarding—the opposite of what people advocate you do with Bitcoin and other cryptos.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on February 02, 2022, 08:09:51 AM
...Given that cryptocurrencies don’t produce anything of material value, this enormous waste of resources renders the whole enterprise a negative-sum game. Investors can only cash out by selling their coins to other investors — but only after the miners and various cryptocurrency service providers take the house’s rake. In other words, investors cannot — in the aggregate — cash out for even what they put in, as cryptocurrencies are inefficient by design.

How is that different from dollar bills or the MasterCard network?

EDITed to add - I mined most of my crypto. Maybe I should start mining again.

I feel like this has been answered before, but let's do it again: because nobody "invests" in dollar bills or MasterCard transactions (whatever that even would mean). Most governments strive to make their currencies inflationary, precisely to discourage hoarding—the opposite of what people advocate you do with Bitcoin and other cryptos.

Perhaps we are actually in agreement. I disagree with the premise that cryptocurrency (or the MasterCard network) is useless but it could well turn out to have its value inflated away, if not in this generation than the next. But again, there are professional currency traders. You can earn a living doing that.

But people absolutely do invest in MasterCard transactions. Why do you think that businesses pay the fee and investors buy MA?

EDITed to add - Economist: Billions of banknotes are missing. Why does nobody care? (https://www.economist.com/1843/2021/10/18/billions-of-banknotes-are-missing-why-does-nobody-care). Perhaps people do "invest" in dollars.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on February 02, 2022, 08:11:57 AM
Pretty sure the previous poster is serious, but it illustrates a problem:  Bitcoin is touted as being better than gold. But it has wild price fluctuations.  If the value isn't there when you need it, then it doesn't have much utility in that regard.

If you buy it with the expectation it will always trend up, that's a different thing.

I might be in the minority, but I just think of it as a shitty currency. Better than venezuelan bolívar but worse than the US dollar.

This is pretty close to my opinion, which isn't worth much in this space.

I listened to a podcast on biggerpockets two years ago. Some rich guy has 1% of his net worth in bitcoin. He talked about the Venezuelan Bolivar. Many of the residents use Bitcoin because it's more stable than the Bolivar. The interview made total sense. The story illustrated clear value. However, the application was only toward countries with extremely unstable currencies. 

I'm still in the accumulation phase and I'm having tons of fun with stocks and real estate. I really don't like it when people with a very low net worth tell me that I need to be buying bitcoin, otherwise I will miss out. I firmly believe that I will never buy Bitcoin, when I'm in the accumulation phase. However, if I ever end up with way more money than I need, I could see a 1% allocation based on the application of value discussed above.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on February 02, 2022, 08:17:44 AM
...Given that cryptocurrencies don’t produce anything of material value, this enormous waste of resources renders the whole enterprise a negative-sum game. Investors can only cash out by selling their coins to other investors — but only after the miners and various cryptocurrency service providers take the house’s rake. In other words, investors cannot — in the aggregate — cash out for even what they put in, as cryptocurrencies are inefficient by design.

How is that different from dollar bills or the MasterCard network?

EDITed to add - I mined most of my crypto. Maybe I should start mining again.

I feel like this has been answered before, but let's do it again: because nobody "invests" in dollar bills or MasterCard transactions (whatever that even would mean). Most governments strive to make their currencies inflationary, precisely to discourage hoarding—the opposite of what people advocate you do with Bitcoin and other cryptos.

Perhaps we are actually in agreement. I disagree with the premise that cryptocurrency (or the MasterCard network) is useless but it could well turn out to have its value inflated away, if not in this generation than the next. But again, there are professional currency traders. You can earn a living doing that.

But people absolutely do invest in MasterCard transactions. Why do you think that businesses pay the fee and investors buy MA?

EDITed to add - Economist: Billions of banknotes are missing. Why does nobody care? (https://www.economist.com/1843/2021/10/18/billions-of-banknotes-are-missing-why-does-nobody-care). Perhaps people do "invest" in dollars.

Perhaps. This is one of the difficulties in talking about Bitcoin. Its true believers believe (nonsensically, I might add) that Bitcoin is simultaneously: a great currency and a great asset for investment. These two things are strictly at odds.

Investing in MasterCard, the business, is fundamentally different from investing in Bitcoin for a multitude of reasons. Among them is: MasterCard is a profitable business. Its stockholders receive earnings via profits, which come from legitimate business activity.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on February 02, 2022, 08:30:14 AM
Perhaps. This is one of the difficulties in talking about Bitcoin. Its true believers believe (nonsensically, I might add) that Bitcoin is simultaneously: a great currency and a great asset for investment. These two things are strictly at odds.

Investing in MasterCard, the business, is fundamentally different from investing in Bitcoin for a multitude of reasons. Among them is: MasterCard is a profitable business. Its stockholders receive earnings via profits, which come from legitimate business activity.

I agree entirely about BTC, I sold all of mine (that I purchased as a means of exchange) years ago. If cryptocurrency is going to be a thing, I don't think that BTC's first mover advantage is going to save it.

But in my MasterCard analogy the miners and stakers are the network. If you are invested in a Proof of Stake (https://www.investopedia.com/terms/p/proof-stake-pos.asp) cryptocurrency then you get paid dividends in the form of more cryptocurrency.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on February 02, 2022, 09:06:13 AM
I agree entirely about BTC, I sold all of mine (that I purchased as a means of exchange) years ago. If cryptocurrency is going to be a thing, I don't think that BTC's first mover advantage is going to save it.

But in my MasterCard analogy the miners and stakers are the network. If you are invested in a Proof of Stake (https://www.investopedia.com/terms/p/proof-stake-pos.asp) cryptocurrency then you get paid dividends in the form of more cryptocurrency.

I think we keep losing sight of the big picture. Users of the MasterCard network overwhelmingly are buying/selling goods and services—not MasterCard tokens/points/shares/etc. MasterCard provides a useful service—including consumer protections, etc. for a fee they charge per transaction.

Users of cryptocurrencies almost exclusively are buying and selling these cryptocurrencies themselves in speculative manners. Sure, there are some micro-economies—especially for illegal goods/services—using cryptocurrencies. But the lion's share of crypto users are exclusively interested in "investing". In such a system, network operators collecting a fee are much less analogous to MasterCard and are much more analogous to a casino or—as I've argued—a Ponzi operator.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on February 02, 2022, 09:11:22 AM
I agree entirely about BTC, I sold all of mine (that I purchased as a means of exchange) years ago. If cryptocurrency is going to be a thing, I don't think that BTC's first mover advantage is going to save it.

But in my MasterCard analogy the miners and stakers are the network. If you are invested in a Proof of Stake (https://www.investopedia.com/terms/p/proof-stake-pos.asp) cryptocurrency then you get paid dividends in the form of more cryptocurrency.

I think we keep losing sight of the big picture. Users of the MasterCard network overwhelmingly are buying/selling goods and services. MasterCard provides a useful service—including consumer protections, etc. for a fee they charge per transaction.

Users of cryptocurrencies almost exclusively are buying and selling these cryptocurrencies in speculative manners. Sure, there are some micro-economies—especially for illegal goods/services—using cryptocurrencies. But the lion's share of crypto users are exclusively interested in "investing". In such a system, network operators collecting a fee are much less analogous to MasterCard and are much more analogous to a casino or—as I've argued—a Ponzi operator.

That might be why I have a hard time agreeing: I've owned multiple cryptocurrencies but I've never purchased it speculatively hoping for it to go up. I've mined it to be part of the network and I've purchased it to buy goods. So I've used it as an actual currency and not an investment.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on February 02, 2022, 09:17:01 AM
That might be why I have a hard time agreeing: I've owned multiple cryptocurrencies but I've never purchased it speculatively hoping for it to go up. I've mined it to be part of the network and I've purchased it to buy goods. So I've used it as an actual currency and not an investment.

Understandable. But the title of this thread: "What do you think about adding a low % of crypto allocation" is about speculation. It's not titled "What do you think about buying groceries with Dogecoin?"
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on February 02, 2022, 09:22:24 AM
That might be why I have a hard time agreeing: I've owned multiple cryptocurrencies but I've never purchased it speculatively hoping for it to go up. I've mined it to be part of the network and I've purchased it to buy goods. So I've used it as an actual currency and not an investment.

Understandable. But the title of this thread: "What do you think about adding a low % of crypto allocation" is about speculation. It's not titled "What do you think about buying groceries with Dogecoin?"

I agree entirely, and I'm answering that question.

Or maybe I'll put it another way: when I invest in cryptocurrency I do so by mining it and paying my taxes on the profits allowing me to invest into a SEP-IRA or to deduct the losses from my ordinary income. I would also seriously considering staking.

But as long as people say "stop mining beanie babies it's a fraud" I'll keep replying.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 02, 2022, 09:30:45 AM
That might be why I have a hard time agreeing: I've owned multiple cryptocurrencies but I've never purchased it speculatively hoping for it to go up. I've mined it to be part of the network and I've purchased it to buy goods. So I've used it as an actual currency and not an investment.

Understandable. But the title of this thread: "What do you think about adding a low % of crypto allocation" is about speculation. It's not titled "What do you think about buying groceries with Dogecoin?"

I agree entirely, and I'm answering that question.

Or maybe I'll put it another way: when I invest in cryptocurrency I do so by mining it and paying my taxes on the profits allowing me to invest into a SEP-IRA or to deduct the losses from my ordinary income. I would also seriously considering staking.

But as long as people say "stop mining beanie babies it's a fraud" I'll keep replying.

I'm curious . . . what sorts of stuff are you buying with your cryptocurrency?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on February 02, 2022, 09:31:48 AM
You don't get to just hand-wave away significant chunks of the system, and pretend they're not there, because you like some of the concepts of parts of the system.

Tether exists. BlockFI exists. Bitcoin exists. Bitcoin maximalists like Michael Saylor, the Winklevoss twins, and so on... they exist, and serve to pump the speculation ever-higher. And, speculators do make up the vast majority of participants in the cryptocurrency ecosystems.

The activities you find in these communities is directly as a result of the system as it was designed. The system is fraudulent—whether that was the intent or not.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on February 02, 2022, 09:40:44 AM
You don't get to just hand-wave away significant chunks of the system, and pretend they're not there, because you like some of the concepts of parts of the system.

I think that I do, actually. People do that all the time for all sorts of systems. But I'm not pretending that they don't exist, I've written multiple times in this thread that due to the problems with BTC I will no longer support it.

Tether exists. BlockFI exists. Bitcoin exists. Bitcoin maximalists like Michael Saylor, the Winklevoss twins, and so on... they exist, and serve to pump the speculation ever-higher.

BlockFI is old school capitalism. They make their money through financial arbitrage. Libertarians exist, should I condemn the US dollar?

The activities you find in these communities is directly as a result of the system as it was designed. The system is fraudulent—whether that was the intent or not.

It's not fraud if it is unintentional (https://www.mitchell-attorneys.com/common-law-fraud).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on February 02, 2022, 09:41:34 AM
I'm curious . . . what sorts of stuff are you buying with your cryptocurrency?

Gray market goods from international sellers that MasterCard doesn't want on their network even if the goods are legal to sell.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on February 02, 2022, 09:53:21 AM
BlockFI is old school capitalism. They make their money through financial arbitrage. Libertarians exist, should I condemn the US dollar?

Bit of an aside, but in addition to their "old school capitalism" game of borrowing crypto from retail, and lending it to institutional investors at a higher rate, they also decided it'd be a good idea to become a prop fund, too. They are one of the largest holders of Grayscale BTC—buying it for the premium. That premium dropped, and trades at a ~20% discount to NAV. In other words, if you borrow retail investors BTC to create GBTC shares which are locked up for a year... What could go wrong?!

Source: https://www.coindesk.com/business/2021/03/11/crypto-lender-blockfi-raises-350m-at-a-3b-valuation/

It's not fraud if it is unintentional.

You're, of course, right. I don't mean that anyone will be legally liable for "fraud". But law is generally written after bad things happen. We don't have a law or regulation around this beast, yet. That doesn't make it ethical, sensible, or a good thing.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: index on February 02, 2022, 10:23:11 AM
I'm curious . . . what sorts of stuff are you buying with your cryptocurrency?

Gray market goods from international sellers that MasterCard doesn't want on their network even if the goods are legal to sell.

Like certain items illegal at the Federal level but legal in Oregon?


The activities you find in these communities is directly as a result of the system as it was designed. The system is fraudulent—whether that was the intent or not.

It's not fraud if it is unintentional (https://www.mitchell-attorneys.com/common-law-fraud).

Shitcoins are pumped by the beneficiaries. The Saylors of the world want the value to stay high so they can get out. Let the Meme Apes trade a few coins back and forth, bid up the price, and slowly turn your shitcoin position into a real asset.

The real utility of crypto is crime as you attested. The "value" of these shitcoins is the zero sum game of victims trading real assets for coins and bidding the price up in return. The mania will subside at some point, and the Meme Apes will have been fleeced by the Saylors.

Is it fraud? It's a digital coin with the only recognized utility of supporting crime and is pumped by those controlling the supply of digital coins. Where is all the shitcoin wealth coming from?   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on February 02, 2022, 10:33:25 AM
I'm curious . . . what sorts of stuff are you buying with your cryptocurrency?

Gray market goods from international sellers that MasterCard doesn't want on their network even if the goods are legal to sell.

Like certain items illegal at the Federal level but legal in Oregon?

No, I buy those with drug money, AKA US currency, from my local dealer.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on February 02, 2022, 11:14:21 AM
It's not fraud if it is unintentional (https://www.mitchell-attorneys.com/common-law-fraud).

In talking with Bitcoin proponents here and elsewhere I'm convinced they are all true believers.  They all share the viewpoint that Bitcoin has desirable properties and will become widely adopted some day.  If they were an early adopter, then their viewpoint has been financially well rewarded, which I'm sure reinforces their viewpoints. 

But promoting your point of view, even if it is mistaken, is not fraud.  Saylor might be talking his book, but he's also buying Bitcoin.  He's a believer.   If more people want to own Bitcoin in the future, the price will go up.  If not the price will go down.  I believe that due to the inherent problems with Bitcoin there will be a maximum number of people who want to own it.   My belief does not make Bitcoin a fraud.   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 02, 2022, 11:17:36 AM
I'm curious . . . what sorts of stuff are you buying with your cryptocurrency?

Gray market goods from international sellers that MasterCard doesn't want on their network even if the goods are legal to sell.

Ah.  That makes sense.

Semi-legal to illegal markets seem to have seen the biggest acceptance of crypto as a currency.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on February 02, 2022, 11:25:36 AM
It's not fraud if it is unintentional (https://www.mitchell-attorneys.com/common-law-fraud).

In talking with Bitcoin proponents here and elsewhere I'm convinced they are all true believers.  They all share the viewpoint that Bitcoin has desirable properties and will become widely adopted some day.  If they were an early adopter, then their viewpoint has been financially well rewarded, which I'm sure reinforces their viewpoints. 

But promoting your point of view, even if it is mistaken, is not fraud.  Saylor might be talking his book, but he's also buying Bitcoin.  He's a believer.   If more people want to own Bitcoin in the future, the price will go up.  If not the price will go down.  I believe that due to the inherent problems with Bitcoin there will be a maximum number of people who want to own it.   My belief does not make Bitcoin a fraud.

What if I get involved with a pyramid scheme, and start recruiting others into the scheme, but it's because I'm a true religious convert and actually in my heart of hearts think it "can't go tits-up!" and will increase in value for the next 100 years.

The person who recruited me by doing the exact same behaviors knows exactly how these scams work and is on the bottom floor of his 5th pyramid scheme with one foot out the door with the profits.

Is my behavior legal/ethical but his behavior is illegal/unethical even though they are objectively the same behavior due to something that is unobservable to anyone else - our inner thoughts? How is a jury or a law enforcement officer supposed to decide which person acted with whatever intent? Moreover, was I not actually promoting a scam because I drank the Kool-aid? I.e. did the nature of the investment change because of what I believed?


Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on February 02, 2022, 11:41:31 AM
What if I get involved with a pyramid scheme, and start recruiting others into the scheme, but it's because I'm a true religious convert and actually in my heart of hearts think it "can't go tits-up!" and will increase in value for the next 100 years.

The person who recruited me by doing the exact same behaviors knows exactly how these scams work and is on the bottom floor of his 5th pyramid scheme with one foot out the door with the profits.

Is my behavior legal/ethical but his behavior is illegal/unethical even though they are objectively the same behavior due to something that is unobservable to anyone else - our inner thoughts? How is a jury or a law enforcement officer supposed to decide which person acted with whatever intent? Moreover, was I not actually promoting a scam because I drank the Kool-aid? I.e. did the nature of the investment change because of what I believed?

Agreed. Much of the legal system attempts to deal with this stuff—like the distinctions between murder, manslaughter, reckless endangerment, etc. And while it's certainly interesting in its own respect, for our discussion—that is, the way cryptocurrency systems function—I think the questions are pretty boring and irrelevant. They're only relevant when it comes to punishing people. The system of cryptocurrency is harmful. The legal systems are adjusting and will increasingly weigh in on how to treat cryptocurrencies. Until then, I think it's perfectly fair to look at how these systems operate, and acknowledge the hubbub.

Before speeding laws were written and put into place, it was still negligent to drive a car at high speeds through highly-populated areas. It wasn't always clear who was responsible for traffic deaths—the auto manufacturer? The driver? Law decided that after-the-fact. Similarly, it's unclear who—if anyone—is ultimately responsible for the fraud occurring in cryptocurrencies today. This does not mean that no fraud has occurred.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on February 02, 2022, 12:42:19 PM
Before speeding laws were written and put into place, it was still negligent to drive a car at high speeds through highly-populated areas. It wasn't always clear who was responsible for traffic deaths—the auto manufacturer? The driver? Law decided that after-the-fact. Similarly, it's unclear who—if anyone—is ultimately responsible for the fraud occurring in cryptocurrencies today. This does not mean that no fraud has occurred.

Fun fact: it was actually more illegal to kill someone with your car before the speed laws. This is well documented in Fighting Traffic: The Dawn of the Motor Age in the American City by Peter D. Norton. Once it became in the corporate interests to sell more cars the criminal negligence standard was loosened. Which is exactly what I expect to see happen with the cryptocurrencies that benefit large institutional invests.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 02, 2022, 02:25:02 PM
It is hard to have a honest discussion related to the use of the word "fraud" when the conversation so easily flip flops between referring to bitcoin and/or referring to cryptocurrencies in general. There is a ton of fraud in the overall cryptocurrency space. As thousands of these tokens have come and gone over the last several years, there are well documented cases of fraud. Tezos and Ripple for example have lawsuits against them for just that. The space is ripe with fraud. It is akin to venture-capitalism that pushes hype above product. If your argument is against fraud in the whole space in general, then I'd agree completely with many of the comments being said. I think that is perhaps one of the largest hurdles for bitcoin to overcome, and that is trying to separate itself from the dirt of the overall industry.

Fidelity, coincidentally in fact, just came out with a new report titled "Bitcoin First" about how and why bitcoin is differentiated against the rest of the crowd.

https://www.fidelitydigitalassets.com/articles/bitcoin-first?sf253214177=1 (https://www.fidelitydigitalassets.com/articles/bitcoin-first?sf253214177=1)

If your argument then is that bitcoin itself is fraud, then I'd have to completely disagree with that stance. I think you'd be hard pressed to argue fraud in this instance where you have a completely open protocol that is completely decentralized without any authority or owner and everyone is free to educate and understand what this open network of participants is. There might be individual cases of fraud where an individual is "peddling" bitcoin as something it isn't or taking advantage of individuals' wealth in some fraud scheme unrelated to bitcoin itself. But I think it would be difficult to argue that bitcoin itself is the fraud. Anyone is free to participant and come and go as they please and the entire system is open and transparent. It is so transparent that anyone can host their own bitcoin node and completely verify every bitcoin transaction that has ever taken place. You can also completely verify the current supply yourself as well as verify the monetary rules that will dictate future supply. I'd love to hear genuine valid arguments as to how fraud applies here. The "ponzi" and "pyramid" arguments already fell flat, so if we're now just going with a general blanket "fraud" statement, I'd love to hear well reasoned arguments on how it applies here.

As I mentioned earlier, people often confused the speculative nature that often drives upward price swings with the idea that bitcoin has no utility outside of that speculation. But I'd love to hear them say that to #EndSARS protesters (Feminist Coalition) against police brutality in Nigeria who switched to funding their protests solely with bitcoin as the government shut off access to their bank accounts. Or the Russian opposition leader Navalny who raised over $3 million in bitcoin as his bank accounts were similarly shut down. Or the palestinians who used bitcoin to transact across the border during their conflict. Or the Belarus non-profit that used bitcoin to help fund protesters there. Or the impoverished family seeking remittances from their family member abroad. Or the Hong Kong protesters that turned to bitcoin for funding. Or the almost 2 billion people currently facing double-digit inflation or the 53% percent of the world living under an authoritarian government.

It is easy to falsely claim that bitcoin is used by criminals (even though less than 0.5% is used for actual illicit activity), when in reality bitcoin is used as a tool in fighting for individual freedom worldwide. What is clearly apparent in these forums (unsurprisingly) is that we have a bunch of privileged wealthy individuals who don't know what it is like to not have easy access to trustworthy financial services. We all have easy access to the stock market and transact from our reputable neighborhood credit unions that are all protected with countless consumer protection laws. We also are fortunate to earn our wealth with a currency that is backed by the strongest military in the world that also happens to hold reserve status around the world. They say we can pick our friend, but not our family. Well we also can't pick the country we're born into and for all too many their countries are stricken with government corruption and monetary instability.

Feel free to research any of the above instances I mentioned as they're all factual and there are countless more cases like them. This is bitcoin's utility right here and claiming that it can't do a lot of good for people in the world while sitting and an ivory tower and ignoring these cases isn't going to help your argument of claiming it is fraud.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on February 02, 2022, 02:44:25 PM
It is hard to have a honest discussion related to the use of the word "fraud" when the conversation so easily flip flops between referring to bitcoin and/or referring to cryptocurrencies in general. There is a ton of fraud in the overall cryptocurrency space. As thousands of these tokens have come and gone over the last several years, there are well documented cases of fraud. Tezos and Ripple for example have lawsuits against them for just that. The space is ripe with fraud. It is akin to venture-capitalism that pushes hype above product. If your argument is against fraud in the whole space in general, then I'd agree completely with many of the comments being said. I think that is perhaps one of the largest hurdles for bitcoin to overcome, and that is trying to separate itself from the dirt of the overall industry.

Fidelity, coincidentally in fact, just came out with a new report titled "Bitcoin First" about how and why bitcoin is differentiated against the rest of the crowd.

https://www.fidelitydigitalassets.com/articles/bitcoin-first?sf253214177=1 (https://www.fidelitydigitalassets.com/articles/bitcoin-first?sf253214177=1)

If your argument then is that bitcoin itself is fraud, then I'd have to completely disagree with that stance. I think you'd be hard pressed to argue fraud in this instance where you have a completely open protocol that is completely decentralized without any authority or owner and everyone is free to educate and understand what this open network of participants is. There might be individual cases of fraud where an individual is "peddling" bitcoin as something it isn't or taking advantage of individuals' wealth in some fraud scheme unrelated to bitcoin itself. But I think it would be difficult to argue that bitcoin itself is the fraud. Anyone is free to participant and come and go as they please and the entire system is open and transparent. It is so transparent that anyone can host their own bitcoin node and completely verify every bitcoin transaction that has ever taken place. You can also completely verify the current supply yourself as well as verify the monetary rules that will dictate future supply. I'd love to hear genuine valid arguments as to how fraud applies here. The "ponzi" and "pyramid" arguments already fell flat, so if we're now just going with a general blanket "fraud" statement, I'd love to hear well reasoned arguments on how it applies here.

No, I stand by my statement that Bitcoin, itself, is fraud. And that it is, for all intents-and-purposes, a Ponzi scheme. I don't believe anyone even responded to my—I think—fairly reasoned arguments from this previous post  (https://forum.mrmoneymustache.com/investor-alley/what-do-you-think-of-adding-a-low-of-crypto-allocation/msg2969119/#msg2969119) that classify it as such.

As I mentioned earlier, people often confused the speculative nature that often drives upward price swings with the idea that bitcoin has no utility outside of that speculation. But I'd love to hear them say that to #EndSARS protesters (Feminist Coalition) against police brutality in Nigeria who switched to funding their protests solely with bitcoin as the government shut off access to their bank accounts. Or the Russian opposition leader Navalny who raised over $3 million in bitcoin as his bank accounts were similarly shut down. Or the palestinians who used bitcoin to transact across the border during their conflict. Or the Belarus non-profit that used bitcoin to help fund protesters there. Or the impoverished family seeking remittances from their family member abroad. Or the Hong Kong protesters that turned to bitcoin for funding. Or the almost 2 billion people currently facing double-digit inflation or the 53% percent of the world living under an authoritarian government.

It is easy to falsely claim that bitcoin is used by criminals (even though less than 0.5% is used for actual illicit activity), when in reality bitcoin is used as a tool in fighting for individual freedom worldwide.

Ok, this is an important thing to clarify:

1. It stands that the VAST majority of people who own/use Bitcoin are doing so for speculative purposes
2. It also stands that the things you are describing are, in fact, illegal. Often times, law is very immoral. And in these cases, this is a good use-case. But it's important to acknowledge what's happening here—you're advocating for tools for bypassing the law.

What is clearly apparent in these forums (unsurprisingly) is that we have a bunch of privileged wealthy individuals who don't know what it is like to not have easy access to trustworthy financial services. We all have easy access to the stock market and transact from our reputable neighborhood credit unions that are all protected with countless consumer protection laws. We also are fortunate to earn our wealth with a currency that is backed by the strongest military in the world that also happens to hold reserve status around the world. They say we can pick our friend, but not our family. Well we also can't pick the country we're born into and for all too many their countries are stricken with government corruption and monetary instability.

Feel free to research any of the above instances I mentioned as they're all factual and there are countless more cases like them. This is bitcoin's utility right here and claiming that it can't do a lot of good for people in the world while sitting and an ivory tower and ignoring these cases isn't going to help your argument of claiming it is fraud.

Oh, please. Firstly: the average crypto investor is a 38 year old white man who makes $111k/year. 74% of crypto investors are men. 71% are white. Source: https://cheddar.com/media/crypto-investor-white-male-survey-demographic-change

What absolutely drives me nuts about this type of response, is it's such obvious bullshit. Crypto enthusiasts only/ care about "the unbanked" or fighting authoritarianism when they can use it as a cheap talking point to pump crypto. Bitcoin was not designed from first-principles to fix these things. It's been post-hoc rationalized as a great solution for everything from venue ticketing to fixing iced tea (https://en.wikipedia.org/wiki/Long_Blockchain_Corp), to solving inequality and poverty in a cynical attempt to reverse-robinhood steal from these poor people.

Look at the El Salvador situation. Crypto zealots hate authoritarians. Unless they also help shill crypto. Bukele is now like a demi-god amongst bitcoiners. They cheer him on as he day-trades with public funds and hires known fraudsters to head up volcano bonds or bitcoin beach events.

Yes. We are generally a fortunate bunch here. There are lots of people with lots of terrible and difficult-to-solve problems in the world. It is the height of arrogance to think this thing you just so happen to profit from increased adoption of, is the solution to those problems.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on February 02, 2022, 02:47:32 PM
What if I get involved with a pyramid scheme, and start recruiting others into the scheme, but it's because I'm a true religious convert and actually in my heart of hearts think it "can't go tits-up!" and will increase in value for the next 100 years.

The person who recruited me by doing the exact same behaviors knows exactly how these scams work and is on the bottom floor of his 5th pyramid scheme with one foot out the door with the profits.

Is my behavior legal/ethical but his behavior is illegal/unethical even though they are objectively the same behavior due to something that is unobservable to anyone else - our inner thoughts? How is a jury or a law enforcement officer supposed to decide which person acted with whatever intent? Moreover, was I not actually promoting a scam because I drank the Kool-aid? I.e. did the nature of the investment change because of what I believed?

Let's look at a real world example:  Bernie Madoff.  His wealthy clients would tell their wealthy friends about how great their investment advisor was, and recommend they move their money to Madoff, and the circle of investors just kept growing to include Hollywood celebrities and so on.   They all saw paper statements about how great their money was doing so they would continue to recommend Madoff to their friends. 

However the statements were fraudulent which was unknown to the clients.  So when the pyramid collapsed, Madoff and his top circle were arrested because they were in on it, but none of the clients were arrested--even though the clients made objectively bad recommendations to their friends.  In fact, the law treated the clients as victims, and helped them claw some of their money back. 

In your example, the person who recruited you committed fraud because he falsely and knowingly misrepresented the system to you in order to enrich himself.  The fact he lied is proof of his intent.   So he's culpable.  You were unaware the system was fraudulent, so you are not culpable.   

Now let's put Saylor in your example.  Let's say he doesn't really believe everything he is saying is true, but he's just trying to pump up the value of his Bitcoin so he can sell it at a higher price later.   In this case (which I think is what you were getting at) it would be pretty hard to prove intent, because you'd have to show that he was lying about what he really believed in order to make a financial gain.  It is possible he is trying to commit a type of fraud, but I find it unlikely we will ever know.

That said, Bitcoin proponents all seem to truly believe what they are saying.  Since they aren't lying (as far as I know) and acting with good intent,  there is no fraud.   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on February 02, 2022, 03:37:04 PM
What is clearly apparent in these forums (unsurprisingly) is that we have a bunch of privileged wealthy individuals who don't know what it is like to not have easy access to trustworthy financial services. We all have easy access to the stock market and transact from our reputable neighborhood credit unions that are all protected with countless consumer protection laws. We also are fortunate to earn our wealth with a currency that is backed by the strongest military in the world that also happens to hold reserve status around the world. They say we can pick our friend, but not our family. Well we also can't pick the country we're born into and for all too many their countries are stricken with government corruption and monetary instability.

Feel free to research any of the above instances I mentioned as they're all factual and there are countless more cases like them. This is bitcoin's utility right here and claiming that it can't do a lot of good for people in the world while sitting and an ivory tower and ignoring these cases isn't going to help your argument of claiming it is fraud.

Oh, please. Firstly: the average crypto investor is a 38 year old white man who makes $111k/year. 74% of crypto investors are men. 71% are white. Source: https://cheddar.com/media/crypto-investor-white-male-survey-demographic-change
...
Yes. We are generally a fortunate bunch here. There are lots of people with lots of terrible and difficult-to-solve problems in the world. It is the height of arrogance to think this thing you just so happen to profit from increased adoption of, is the solution to those problems.

I'm with lifeanon269. I know actual people who actually still transact real estate deals with gold and cut jewels in a certain third world country because they don't trust their local currency. We are incredibly fortunate to have access to the US banking system.

But, on the off chance that I'm wrong, I guess it's going to be a bunch of wealthy younger white men who get hurt. So what do you care?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 02, 2022, 03:54:49 PM
But, on the off chance that I'm wrong, I guess it's going to be a bunch of wealthy younger white men who get hurt.

Yeah.  Like how the 2007 housing market crash only impacted the wealthy white bankers who caused it.  That's how things unfolded, right?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on February 02, 2022, 03:58:14 PM
But, on the off chance that I'm wrong, I guess it's going to be a bunch of wealthy younger white men who get hurt.

Yeah.  Like how the 2007 housing market crash only impacted the wealthy white bankers who caused it.  That's how things unfolded, right?

I do not recall only wealthy younger white men owning houses. Also, as of right now the US housing market is ~$43T. The total world crypto market cap is ~$3T.

I, personally, am more worried about the housing market.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on February 02, 2022, 04:04:54 PM
But, on the off chance that I'm wrong, I guess it's going to be a bunch of wealthy younger white men who get hurt.

Yeah.  Like how the 2007 housing market crash only impacted the wealthy white bankers who caused it.  That's how things unfolded, right?

I do not recall only wealthy younger white men owning houses. Also, as of right now the US housing market is ~$43T. The total world crypto market cap is ~$3T.

I, personally, am more worried about the housing market.

Oh for fucks sake recency bias to the max. I really wanted to leave this thread but this is fucking ridiculous.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on February 02, 2022, 04:05:56 PM
I don't want anyone to get hurt.  That's why I try to mention the limitations of Bitcoin.   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on February 02, 2022, 04:10:00 PM
I, personally, am more worried about the housing market.

Oh for fucks sake recency bias to the max. I really wanted to leave this thread but this is fucking ridiculous.

It's not recency bias to worry about the US housing market in a rising rate environment. Especially if either political party got their act together to build affordable housing or reduce regulatory barriers to building high density housing.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on February 02, 2022, 04:15:34 PM
I, personally, am more worried about the housing market.

Oh for fucks sake recency bias to the max. I really wanted to leave this thread but this is fucking ridiculous.

It's not recency bias to worry about the US housing market in a rising rate environment. Especially if either political party got their act together to build affordable housing or reduce regulatory barriers to building high density housing.

That statement and literally the title of this thread are recency bias.

I'm more worried about something that provides one of the three basic needs and has a shortage of supply relative to demand. Than the fart I just jarred from my unicorn failing. Fuck

I'm out.

Sorry I'll bookmark this thread to return in 10 years to say told ya so and dance on the tears of the followers. Maybe sooner.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on February 02, 2022, 04:30:54 PM
I, personally, am more worried about the housing market.

Oh for fucks sake recency bias to the max. I really wanted to leave this thread but this is fucking ridiculous.

It's not recency bias to worry about the US housing market in a rising rate environment. Especially if either political party got their act together to build affordable housing or reduce regulatory barriers to building high density housing.

What concept within the housing market are you worried? Are you worried that prices will go down and people with have negative equity? Are you worried that people will not be able make their payments? All of the above?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on February 02, 2022, 04:34:02 PM
I, personally, am more worried about the housing market.

Oh for fucks sake recency bias to the max. I really wanted to leave this thread but this is fucking ridiculous.

It's not recency bias to worry about the US housing market in a rising rate environment. Especially if either political party got their act together to build affordable housing or reduce regulatory barriers to building high density housing.

What concept within the housing market are you worried? Are you worried that prices will go down and people with have negative equity? Are you worried that people will not be able make their payments? All of the above?

First of all, since the global crypto market is $3T I'm 0% worried about it. So it is easy to be more worried than that.

But specifically the "user cost" of owning correlates pretty well with rental prices. Or to quote Assessing High House Prices: Bubbles, Fundamentals and Misperceptions (https://pubs.aeaweb.org/doi/pdfplus/10.1257/089533005775196769) by Himmelberg et al, "House Prices are More Sensitive to Changes in Real Interest Rates When Rates are Already Low." Basically, even if an incredibly constrained market, why would you pay substantially more to buy than to rent? And the user cost to owning depends greatly on interest rates. EDITed to add: but yes, people underwater in the USA.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 02, 2022, 05:00:04 PM
No, I stand by my statement that Bitcoin, itself, is fraud. And that it is, for all intents-and-purposes, a Ponzi scheme. I don't believe anyone even responded to my—I think—fairly reasoned arguments from this previous post  (https://forum.mrmoneymustache.com/investor-alley/what-do-you-think-of-adding-a-low-of-crypto-allocation/msg2969119/#msg2969119) that classify it as such.

That's because your response wasn't well reasoned. 1) You move the goalposts on what the definition of a ponzi is and in the same sentence as saying that the definition of a ponzi scheme doesn't matter you turn around and say that "in layman's terms" it fits. 2) You then outline those terms as being the reason why bitcoin fits the bill of a ponzi:

Quote
1. People invest into it because they expect large profits
2. That expectation is sustained by such profits being paid to those who choose to cash out—and are very vocal about this
3. However, there is no external source of revenue for those payoffs
4. Instead, the payoffs come entirely from new investment money
5. Meanwhile, the operators take away a large portion of this money


There are several problems with this. It isn't people's expectations that determine the fraud, it is the promises made that do. Bitcoin makes no promises of returns. It is merely software with no authority. If it were people's expectations that determined what is and isn't fraud, then fraud would exist nearly everywhere we look. People have the most absurd expectations with just about everything in life (jobs, income, education, elections, investments, goods, services, etc). If someone buys a new car and expects it to fly, but the manufacturer never made any promises that the car would or could fly, does that mean there was fraud? Of course not. Now, if the manufacturer promised that it would fly and it indeed does not, then that is fraud. That's the big difference here.

You also fail to understand that bitcoin trades that take place always have a buyer and a seller and neither side's cost basis is guaranteed. A seller who is selling to a buyer could very well have losses from their cost basis with said sale and that buyer is setting a cost basis for themselves that is also not guaranteed. The fact that a seller could be selling for a loss and setting up a new buyer in position for future gains further disproves your claims of a ponzi. There are many instances of people who owned bitcoin back in 2013 and lost money on bitcoin with later buyers coming along in 2016 whose bitcoin appreciated greatly for them. Your statement of "operators take away a large portion of this money" also holds no merit (I explained this in another post already).

Ok, this is an important thing to clarify:

1. It stands that the VAST majority of people who own/use Bitcoin are doing so for speculative purposes
2. It also stands that the things you are describing are, in fact, illegal. Often times, law is very immoral. And in these cases, this is a good use-case. But it's important to acknowledge what's happening here—you're advocating for tools for bypassing the law.

What I challenge of you is to determine how any of what you said above against bitcoin so far doesn't also apply to something like gold. Please do so. Only an extremely small percentage of gold (less than 3% of above ground stock) is actually used for utility (electronics, jewelry, etc). People love to gamble and speculate on things. It is human nature. The derivatives market (ie, gambling) dwarfs every market of the true underlying no matter where you look. Estimates have the derivatives market at over $1 quadrillion. That is almost purely speculatively driven which means that the underlying spot markets are dwarfed in comparison. So yes, speculation in bitcoin is a key driver of its price upward, but its utility that people around the world are embracing is what drives its floor price continually upward as they're the true buyers of last resort out of necessity. The percentage doesn't matter. The fact remains that bitcoin's utility is providing for millions around the world.

As far as legality, I agree, legality doesn't mean morality. But none of what you stated changes anything. Bitcoin can and will be used for good, regardless of its legal status. That is its utility as a monetary good. And yes, I am indeed advocating for something that will help humans pursue individual freedom from tyranny, even if that means escaping unjust laws.


Oh, please. Firstly: the average crypto investor is a 38 year old white man who makes $111k/year. 74% of crypto investors are men. 71% are white. Source: https://cheddar.com/media/crypto-investor-white-male-survey-demographic-change

What absolutely drives me nuts about this type of response, is it's such obvious bullshit. Crypto enthusiasts only/ care about "the unbanked" or fighting authoritarianism when they can use it as a cheap talking point to pump crypto. Bitcoin was not designed from first-principles to fix these things. It's been post-hoc rationalized as a great solution for everything from venue ticketing to fixing iced tea (https://en.wikipedia.org/wiki/Long_Blockchain_Corp), to solving inequality and poverty in a cynical attempt to reverse-robinhood steal from these poor people.

Look at the El Salvador situation. Crypto zealots hate authoritarians. Unless they also help shill crypto. Bukele is now like a demi-god amongst bitcoiners. They cheer him on as he day-trades with public funds and hires known fraudsters to head up volcano bonds or bitcoin beach events.

Yes. We are generally a fortunate bunch here. There are lots of people with lots of terrible and difficult-to-solve problems in the world. It is the height of arrogance to think this thing you just so happen to profit from increased adoption of, is the solution to those problems.

Quoting demographics from a US exchange survey (Gemini) as a means of discrediting all the good things around the world that bitcoin is achieving for people that weren't questioned in said US survey is hardly an adequate rebuttal here. Nothing you said changes the reality of all that I previously presented. Again, people love to gamble and speculation in every single market in the world dwarfs the size of the actual utility of any given spot.

All you're doing is rather than argue with me and the points I've made, you make generalizations about "crypto bros" this and "crypto bros" that. I'm not a crypto bro and my arguments are my own. If you care to genuinely debate me, then debate my arguments on their merit as I have done yours. I could care less what "crypto bros" are saying in regards to Bukele. He is a dictator like the rest of them that has sought power by any means necessary. But again, that is all irrelevant to all that I've said so far and is not in any way a meaningful rebuttal. Again, none of that changes the reality of bitcoin's utility and the good that it is providing and will continue to provide for people.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on February 02, 2022, 06:52:14 PM
@lifeanon269
I don’t get why you are wasting your time on convincing MMM forum users that crypto is good. You know what owner of this site thinks about it. Why don't find a better forum that is big on crypto instead? Bro to Bro talk, could be actually nice.

I don’t see ARK holders doing such. The are not pumping ARK here like you.

It must be something strange happening to crypto holders. Once they get crypto they become strange. Like a cult members.  Jehovah witness like. I sense some deep insecurity.

Can you just HODL and move on? You are welcome to think about us that we are losers and don’t understand. But don’t say these to us, think privately and be happy.

Why we have to agree with your crypto investments? The answer seems simple. Bros have to pump because this makes more chances on their gamble. Deep inside they have insecurities about crypto. If you really believe in crypto, why do that? I happened to e.g. think that SOXX has good long term outlook, but i don't force everyone around me to get it. It is all so weird.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 02, 2022, 08:01:42 PM
@lifeanon269
I don’t get why you are wasting your time on convincing MMM forum users that crypto is good. You know what owner of this site thinks about it. Why don't find a better forum that is big on crypto instead? Bro to Bro talk, could be actually nice.

I would argue that any time spent on a forum is of equal waste/merit, whether it is between agreements or arguments is irrelevant. As I mentioned in a previous post and as you can see from my history, I have dropped off from the forum for a while.

Haven't frequented these forums much lately and figured I would drop in

I also do have frequent discussion with those that work with bitcoin as I do quite a bit of development on several bitcoin and non-bitcoin projects. However, I don't think it is appropriate for anyone to quarantine themselves off into echo chambers as I don't think that does anyone a bit of good. I do find merit in having frank discussions on topics I am interested in even if it is not among those I agree with. Hearing and understanding opposing views helps me ground my own views. As you can see from my post history, I never resort to ad hominem arguments and always try to stick to debating the subject at hand and keeping things civil.

I don’t see ARK holders doing such. The are not pumping ARK here like you.

I beg to differ. For a community that prides itself low risk investing, there are quite a bit of posts in these investment threads related to investing in any given company, regardless of how questionable or the risk entailed.

Can you just HODL and move on? You are welcome to think about us that we are losers and don’t understand. But don’t say these to us, think privately and be happy.

As I said, I don't think anyone here are losers. Most people here are very intelligent and successful people. I've gravitated toward these forums because I find most people here like minded with myself. I am an extremely frugal person saving over 50% of my income and I wish people outside these forums practiced this lifestyle. In fact, it is one of the reasons why I've also gravitated toward bitcoin seeing how it is in direct contrast to our expansive monetary policies that push consumption and consumerist lifestyles above all else.

People are free to believe what they want. No one is forced to use bitcoin and I would never want bitcoin forced on anyone. However, I'm free to have debate here and so is anyone else. Move on? The same could be said of anyone here, regardless of whether they're arguing for or against. Telling someone to move on just because they hold a different point of view isn't productive. If you take offense to anything I say or are annoying by any of this conversation, then perhaps it is you that should step away for your own sake?

Why we have to agree with your crypto investments? The answer seems simple. Bros have to pump because this makes more chances on their gamble. Deep inside they have insecurities about crypto. If you really believe in crypto, why do that? I happened to e.g. think that SOXX has good long term outlook, but i don't force everyone around me to get it. It is all so weird.

As I said, that's the beauty of a free market; you don't need to agree. If you've read my posts, you'll see that I hold a lot of agreement with many here with regard to there being massive amounts of fraud in the cryptocurrency space. I am merely arguing base on the fact that there is a big difference between what a majority of that industry is doing and bitcoin. I often simply chime in here because I often see things said in regards to bitcoin that is blatantly false. There are a lot of things that are valid critiques of bitcoin and allowing myself to be exposed to those critiques provides me a better education on the subject than if I were to just keep to an echo-chamber. If only everyone applied that same concept to the things we each partake in.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Blender Bender on February 02, 2022, 08:09:07 PM
@lifeanon269
You are right, i guess i responded poorly. Sorry for that, trying to shortcut open discussions.
I think that the best for me would be not post on this thread anymore, will try. Just makes me feel crazy following it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 02, 2022, 08:25:32 PM
@lifeanon269
You are right, i guess i responded poorly. Sorry for that, trying to shortcut open discussions.
I think that the best for me would be not post on this thread anymore, will try. Just makes me feel crazy following it.

No hard feelings. I totally get it. I can only debate the same circular debates for so long as well, hence my drop of for quite a period of time.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on February 02, 2022, 08:34:12 PM
ArnoldK is right, it is absolutely pointless to try and discuss crypto as a topic on this forum.  I completely agree with him.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on February 02, 2022, 11:25:27 PM
No, I stand by my statement that Bitcoin, itself, is fraud. And that it is, for all intents-and-purposes, a Ponzi scheme. I don't believe anyone even responded to my—I think—fairly reasoned arguments from this previous post  (https://forum.mrmoneymustache.com/investor-alley/what-do-you-think-of-adding-a-low-of-crypto-allocation/msg2969119/#msg2969119) that classify it as such.

You were responding to me, and I didn't have anything to add that I hadn't previously said to I didn't respond back.    But since you asked...Your position seemed to be (please correct me if I'm wrong) that Bitcoin's price increases are dependent upon more and more money being pumped into the system.  I agree with that 100%.

That part I disagree with what  you're saying (again, please correct me if I'm wrong) that because miners collect a fee as money enters and leaves the system, that makes it a fraud.  However, I don't see the fraud.  Unlike Bernie Madoff who handed you a fake balance statement, everyone who buys Bitcoin gets exactly what they were expecting.  Everyone knows, or should know, the miners charge a transaction fee.   None of that is concealed.   

There is a legal term caveat emptor "let the buyer beware."   It is the buyer's responsibility to understand what she is buying.  If the buyer gets exactly what she was expecting, and nothing is concealed, it is hard to see an instance of fraud.

Because there is no deception, there cannot be fraud, and because there is no fraud, it cannot be a Ponzi scheme.  Therefore, Bitcoin is much better explained as a speculative bubble.   Similar to other speculative bubbles like the South Sea Bubble or the US housing market in the 2000s. 

Obviously some people disagree with me and think something is fraudulent, but no one has ever, not once, said what the deception actually is.

So I think a more fruitful avenue to explore are the use cases of Bitcoin.  Does it function as a currency or as a store of value?   And does it do those things as well as alternatives?  Those are the real questions. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: AlexK on February 03, 2022, 12:41:29 AM
I've really been enjoying this thread. Thanks for the great read. It's a fascinating topic and there are smart arguments and people on both sides. It appears that everyone agrees cryptocurrencies are having a speculative bubble (regardless if that was the intent). If (some say when) the bubble pops a lot of people will be poorer and a few will be richer. Both sides agree there are good aspects like helping those with unstable currencies and governments and bad aspects like contribution to climate change and pollution.

Because the title of the thread asks what we think of adding a low% of crypto allocation: I am of the opinion that crypto is a fad that will eventually go out of favor, closer to beanie babies than the new gold, and because of that I'm staying out. I don't want to get caught up in the collapse and I wouldn't want to make gains at the expense of other's misfortune even if I could time it right. That and the environmental reasons are enough to keep it out of my investment portfolio. Besides, there are plenty of other things to invest in that are clearly not speculative bubbles like companies that make food or productivity increasing machines so why take the risk? Of course if I'm wrong I will happily transact in Shiba Inu just like everyone else when it becomes our next world reserve currency. I make no predictions about when the cryptocurrency fad will end therefore I cannot be proven wrong.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: vand on February 03, 2022, 06:54:47 AM
Its worth noting that Zuckerberg has decided to drop his FB/Meta crypto project.

Is crypto so cool now that even the likes of Zuckerberg doesn't "get it?"
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on February 03, 2022, 08:30:39 AM
You were responding to me, and I didn't have anything to add that I hadn't previously said to I didn't respond back.    But since you asked...

You didn't owe a response :) I was just trying to respond to the claim that my argument had been debunked when no-one had even responded to it. Regardless, thanks for the response!

Your position seemed to be (please correct me if I'm wrong) that Bitcoin's price increases are dependent upon more and more money being pumped into the system.  I agree with that 100%.

Yup! So far so good...

That part I disagree with what  you're saying (again, please correct me if I'm wrong) that because miners collect a fee as money enters and leaves the system, that makes it a fraud.  However, I don't see the fraud.  Unlike Bernie Madoff who handed you a fake balance statement, everyone who buys Bitcoin gets exactly what they were expecting.  Everyone knows, or should know, the miners charge a transaction fee.   None of that is concealed.   

You're close to reiterating my point, but my point has a little bit more nuance that I'd like to hopefully more clearly articulate:
1. I'm not super-interested in talking about the legal definitions of a Ponzi. As I've stated, law is necessarily reactive. So, much law around Ponzi schemes is, understandably, focused on the attributes of past Ponzis. What I'm trying to suggest is that for all intents and purposes, Bitcoin has the same effects as a Ponzi. The system operates in the same manner.
2. There is not one canonical definition of a Ponzi scheme. Even from a legal standpoint, different jurisdictions have different requirements for determining whether something is or is not a Ponzi. That a lie was told is not a requirement for prosecution in many jurisdictions. Even the "promise" thing you've mentioned before, isn't required for prosecution in many jurisdictions. Madoff made no promises, though he did certainly lie.
3. The part that is "concealed" is through technical obfuscation. Crypto enthusiasts often like to talk about "transparency" and that the code is "open-source", likely having never read a line of the source code. There is a reason things like Bitconnect (an actual prosecuted Ponzi scheme) are able to operate so readily in this world—most people involved are already clueless about how the scheme works, they just see the number going up, and know that something sophisticated and probably legitimate must be happening behind the scenes. I think it's disingenuous to suggest the majority of crypto enthusiasts understand that this is a negative-sum-game they're playing. Most would be outraged at the suggestion that they're gambling. They have been misled.
4. In addition to the tech-obfuscation, you have crypto-celebrities and famous investors constantly—based on literally nothing—predicting wildly optimistic future prices of Bitcoins (https://www.bitcoinprice.com/predictions/). You also have—as you've seen in this thread even very recently—wild claims about how crypto will one day "bank the unbanked", become a global currency, free citizens of repressive regimes, end corruption, etc. Ethereum enthusiasts argue that "smart contracts" will one day replace the need for lawyers and legal systems. Code is law! Many crypto companies make outrageous claims about partnerships with big companies like Samsung or Microsoft, to appear more legitimate (https://www.pymnts.com/cryptocurrency/2018/samsung-coppay-partnership-rumor-startup/) The point is, even if all of these unlikely predictions or lies manifested themselves, none of them would result in a source of revenue for people holding crypto. There may be more transaction fees to go to miners/stakers, but the "investors" simply holding the coins would not benefit, and I posit: most holders of these coins do not understand this point. They, almost by definition, do not understand what a good investment is. They don't understand why it's any different than gold, stocks, bonds, etc. They do not understand why investing in a negative-sum-game is a bad idea. Because they've been repeatedly fed misinformation.

There is a legal term caveat emptor "let the buyer beware."   It is the buyer's responsibility to understand what she is buying.  If the buyer gets exactly what she was expecting, and nothing is concealed, it is hard to see an instance of fraud.

Because there is no deception, there cannot be fraud, and because there is no fraud, it cannot be a Ponzi scheme.  Therefore, Bitcoin is much better explained as a speculative bubble.   Similar to other speculative bubbles like the South Sea Bubble or the US housing market in the 2000s. 

Obviously some people disagree with me and think something is fraudulent, but no one has ever, not once, said what the deception actually is.

So I think a more fruitful avenue to explore are the use cases of Bitcoin.  Does it function as a currency or as a store of value?   And does it do those things as well as alternatives?  Those are the real questions.

I think I addressed this above. To reiterate, though: I'm arguing that there is, indeed deception happening. The huge majority of HODLers do not understand the game they're playing. Most would aggressively disagree with your assessment that they're participating in a negative-sum-game. They do not understand—not because they're stupid—but because they've been misinformed by people with a profit-motive.

Edited to add: I don't really want to appeal-to-authority here, but I do want to show that this isn't some completely unfair or off-the-hinges take.

- US economist Nouriel Roubini calls Bitcoin a Ponzi scheme: https://www.coindesk.com/markets/2014/03/10/economist-nouriel-roubini-slams-bitcoin-calls-it-a-ponzi-game/
- The World Bank calls it a Ponzi: https://www.coindesk.com/markets/2014/07/17/world-bank-report-bitcoin-is-a-naturally-occurring-ponzi/
- Investment analyst David Webb calls it a "Distributed Ponzi": https://www.cfoinnovation.com/risk-management/webb-bitcoin-first-decentralized-ponzi-scheme-for-betting-others-greater-stupidity
- Jim Yong Kim of the World Bank also calls it a Ponzi: https://www.cfoinnovation.com/management/world-bank-compares-bitcoin-to-ponzi-scheme-while-goldman-warns-a-crash-to-zero
- Nassim Taleb calls Bitcoin an "Open Ponzi scheme": https://www.cnbc.com/2021/04/23/bitcoin-a-gimmick-and-resembles-a-ponzi-scheme-black-swan-author-.html
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 03, 2022, 10:05:57 AM
There is not one canonical definition of a Ponzi scheme. Even from a legal standpoint, different jurisdictions have different requirements for determining whether something is or is not a Ponzi. That a lie was told is not a requirement for prosecution in many jurisdictions. Even the "promise" thing you've mentioned before, isn't required for prosecution in many jurisdictions. Madoff made no promises, though he did certainly lie.

The point Telecaster was making about Madoff wasn't that he necessarily made promises, but he did deceive and lie. He literally wrote fake statements made up of fake baskets of investments that he sent to clients. That is fraud. There is no such thing taking place with bitcoin as bitcoin has no owner or authority governing it. That doesn't mean there aren't individuals out there making bogus promises about its potential, but that does not equate fraud because they're not in charge of that potential. It is no different than a gold bug making grandious claims about gold's future investment potential. Anyone is free to educate themselves about both gold and bitcoin and decide for themselves.

3. The part that is "concealed" is through technical obfuscation. Crypto enthusiasts often like to talk about "transparency" and that the code is "open-source", likely having never read a line of the source code. There is a reason things like Bitconnect (an actual prosecuted Ponzi scheme) are able to operate so readily in this world—most people involved are already clueless about how the scheme works, they just see the number going up, and know that something sophisticated and probably legitimate must be happening behind the scenes. I think it's disingenuous to suggest the majority of crypto enthusiasts understand that this is a negative-sum-game they're playing. Most would be outraged at the suggestion that they're gambling. They have been misled.

I wholeheartedly disagree here and this also does not equate to fraud. Just because someone doesn't understand something, when they have the full potential to do so, doesn't mean there is fraud. That is not deception. It might be laziness on behalf of the investor to not do more research, sure. But that is not fraud. Again, it goes back to my previous point about how faulty expectations does not equate to fraud. Just because someone might have incorrect expectations set for something does not mean fraud took place. I completely agree that there is a lot of fraud in the cryptocurrency space, which is why, as I previously said, I think it is important to differentiate between bitcoin and the rest of the space.

You also have—as you've seen in this thread even very recently—wild claims about how crypto will one day "bank the unbanked", become a global currency, free citizens of repressive regimes, end corruption, etc.

As I've shown, I have not made "claims" of such, I was simply stating what was actually happening around the world. The examples I gave are real-world examples and I have no reason to believe that these examples of bitcoin helping people in these situations are suddenly going to stop in our world. Do you? Don't take my word for it though:

https://www.nytimes.com/2019/02/23/opinion/sunday/venezuela-bitcoin-inflation-cryptocurrencies.html
https://www.coindesk.com/markets/2019/04/24/russian-opposition-leader-raises-3-million-in-bitcoin-donations/
https://qz.com/africa/1922466/how-bitcoin-powered-nigerias-endsars-protests/
https://www.coindesk.com/policy/2020/09/09/belarus-nonprofit-helps-protestors-with-bitcoin-grants/
https://www.coindesk.com/markets/2018/09/18/palestinians-are-using-bitcoin-to-transact-across-borders-amid-conflict/

I could go on more...

Ethereum enthusiasts argue that "smart contracts" will one day replace the need for lawyers and legal systems. Code is law! Many crypto companies make outrageous claims about partnerships with big companies like Samsung or Microsoft, to appear more legitimate (https://www.pymnts.com/cryptocurrency/2018/samsung-coppay-partnership-rumor-startup/) The point is, even if all of these unlikely predictions came true, none of them would result in a source of revenue for people holding crypto. There may be more transaction fees to go to miners/stakers, but the "investors" simply holding the coins would not benefit, and I posit: most holders of these coins do not understand this point. They, almost by definition, do not understand what a good investment is.

I agree completely that there are overly-hyped claims about cryptocurrencies and "blockchain tech". At the end of the day, a blockchain (which is just a type of database) is only good for removing trust in a decentralized fashion. So the idea that it could possibly revolutionize things like the shipping industry, lending, legal systems, voting, etc. are all bullshit because all those things inherently rely upon trust. You're not going to lend money to someone unless you trust them and you perform proper credit risk. A blockchain database isn't going to do a bit of good in a shipping industry since your business would be in complete control of the database and hence would have no need for the benefits such a distributed DB would provide. I fully agree that these claims about benefits from a blockchain in any of these scenarios and more are anything but hype. That is why I think it is so important to differentiate between bitcoin and other cryptocurrencies. Bitcoin remains as just being focus on the one area that a blockchain can actually provide a benefit, maintaining decentralization in a monetary system.

They don't understand why it's any different than gold, stocks, bonds, etc. They do not understand why investing in a negative-sum-game is a bad idea. Because they've been repeatedly fed misinformation.

But here is the thing, as I've asked now several times, you have yet to describe why you feel gold is any different.

All the critiques you've provided against bitcoin can also be said of gold. There are grandious claims said by gold bugs all the time. Gold miners don't pay for their expenses (fuel, equipment, property, etc) with gold. So they're always taking gold out of the system. Only an extremely small percentage of the gold that has been mined is used for things like jewelry and electronics. At the end of the day, it doesn't matter if only a little bit of it is used for utility. Just like bitcoin, it is that small portion of utility that it provides to society that drives its overall value. So, as with every single asset on earth, speculation will flood into the market. Like I previously said, speculation dwarfs the size of every single spot market on earth. At the end of the day, people love to gamble. That doesn't mean there is fraud at play.

I think I addressed this above. To reiterate, though: I'm arguing that there is, indeed deception happening. The huge majority of HODLers do not understand the game they're playing. Most would aggressively disagree with your assessment that they're participating in a negative-sum-game. They do not understand—not because they're stupid—but because they've been misinformed by people with a profit-motive.

You're confusing fraud taking place at an individual level with what is fraud at a systemic level. Bitcoin is what it is. Akin to gold in that respect. Anyone is free to do their research about what gold and bitcoin are and aren't. Those two things are not frauds. You're free to learn about them as you wish. I agree there might be fraud at an individual level where someone is promising something grandious to someone else just to get them to invest into something without being informed about where their money is actually going. But don't mistake fraud that takes place at the individual level with fraud at a systemic level.

Your claims about "technical obfuscation" fail here. People don't need to understand how the internet works in order to understand it at its basic level and understand the benefits that could come from using such a technology. The same is true of bitcoin. While there is so much to learn about it at a technical level, that does not mean you need to be extremely tech savvy to be able to use it and understand the potential benefits that could come from using such a tech. This only gets more and more true as the technology matures as evidenced with both the internet and bitcoin.

- US economist Nouriel Roubini calls Bitcoin a Ponzi scheme: https://www.coindesk.com/markets/2014/03/10/economist-nouriel-roubini-slams-bitcoin-calls-it-a-ponzi-game/
- The World Bank calls it a Ponzi: https://www.coindesk.com/markets/2014/07/17/world-bank-report-bitcoin-is-a-naturally-occurring-ponzi/
- Investment analyst David Webb calls it a "Distributed Ponzi": https://www.cfoinnovation.com/risk-management/webb-bitcoin-first-decentralized-ponzi-scheme-for-betting-others-greater-stupidity
- Jim Yong Kim of the World Bank also calls it a Ponzi: https://www.cfoinnovation.com/management/world-bank-compares-bitcoin-to-ponzi-scheme-while-goldman-warns-a-crash-to-zero
- Nassim Taleb calls Bitcoin an "Open Ponzi scheme": https://www.cnbc.com/2021/04/23/bitcoin-a-gimmick-and-resembles-a-ponzi-scheme-black-swan-author-.html

BREAKING...this just in...People most threatened by bitcoin call it a ponzi scheme!...[eyeroll]
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 03, 2022, 10:13:11 AM
There is not one canonical definition of a Ponzi scheme. Even from a legal standpoint, different jurisdictions have different requirements for determining whether something is or is not a Ponzi. That a lie was told is not a requirement for prosecution in many jurisdictions. Even the "promise" thing you've mentioned before, isn't required for prosecution in many jurisdictions. Madoff made no promises, though he did certainly lie.

The point Telecaster was making about Madoff wasn't that he necessarily made promises, but he did deceive and lie. He literally wrote fake statements made up of fake baskets of investments that he sent to clients. That is fraud. There is no such thing taking place with bitcoin as bitcoin has no owner or authority governing it. That doesn't mean there aren't individuals out there making bogus promises about its potential, but that does not equate fraud because they're not in charge of that potential. It is no different than a gold bug making grandious claims about gold's future investment potential. Anyone is free to educate themselves about both gold and bitcoin and decide for themselves.

Bitcoin is not a coin, and has yet to have functioned as a currency.  Deception and lies would appear to be built into the very name.

By the same 'anyone is free to educate themselves about gold and bitcoin and decide" token . . . was the same not true for Madoff's investments?  He was offering 11% guaranteed returns.  That's simply not possible to guarantee - and anyone who was educated about investments should have spotted that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 03, 2022, 12:03:17 PM
Bitcoin is not a coin, and has yet to have functioned as a currency.  Deception and lies would appear to be built into the very name.

I beg to differ about it being used as a currency.

By the same 'anyone is free to educate themselves about gold and bitcoin and decide" token . . . was the same not true for Madoff's investments?  He was offering 11% guaranteed returns.  That's simply not possible to guarantee - and anyone who was educated about investments should have spotted that.

I think you answered your own question. No, the same was absolutely not true for Madoff's investments. Much of Madoff's scheme was kept private and he was creating fake statements as to the investments that were being made while the truth behind the scenes was very different. Many people suspected that his numbers were fake and impossible, but it wasn't until the entire thing collapsed that it became apparent. That's the thing, these things either need an investigation from jurisdictional authority to peel back what is hidden from public eye or they collapse when everything fails. But the big difference is the openness with which information is freely shared. That's the part that you're missing here. Yes, "guaranteed" returns of any kind should be an immediate red flag, but that still doesn't change the massive difference between the blatant fraud of Madoff where a scheme was hidden from view and bitcoin. It is amazing that this still needs to be said here with such circular arguments. This is extremely different from bitcoin where you're free to educate yourself about what it is and isn't and the information is freely available and open to anyone on the internet. You have no argument on these grounds whatsoever.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BeanCounter on February 03, 2022, 12:25:14 PM
So celebrities paid to shill crypto isn't dishonest or misleading at all?

https://slate.com/technology/2021/10/ben-mckenzie-crypto-celebrities-kardashian-brady-lohan.html (https://slate.com/technology/2021/10/ben-mckenzie-crypto-celebrities-kardashian-brady-lohan.html)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on February 03, 2022, 12:27:16 PM
The point Telecaster was making about Madoff wasn't that he necessarily made promises, but he did deceive and lie. He literally wrote fake statements made up of fake baskets of investments that he sent to clients. That is fraud. There is no such thing taking place with bitcoin as bitcoin has no owner or authority governing it. That doesn't mean there aren't individuals out there making bogus promises about its potential, but that does not equate fraud because they're not in charge of that potential. It is no different than a gold bug making grandious claims about gold's future investment potential. Anyone is free to educate themselves about both gold and bitcoin and decide for themselves.

The reason I chose to respond to Telecaster instead of you is because I felt they both were arguing in good faith, and clearly understood my arguments. While you might be arguing in good faith—it's still not clear—you absolutely are misinterpreting my responses pretty badly. I'll try once more to clear these misunderstandings up, but I'm not feeling like the effort put in thus far has been mutually respectful.

Now. I completely understood Telecasters point. Telecaster mentioned, in previous posts, that a promise of a return is a necessary component of a Ponzi. While this is, indeed, a common attribute—and a sometimes a necessary one in some jurisdictions—it is one attribute that Bernie Madoff's Ponzi failed to include. My point was simply: there are different legal definitions of Ponzis. Some of the biggest Ponzis of the past do not include all of the definitions from all legal jurisdictions. Failing to meet all the criteria of all legal jurisdictions is not sufficient to conclude a system is not a Ponzi.

I wholeheartedly disagree here and this also does not equate to fraud. Just because someone doesn't understand something, when they have the full potential to do so, doesn't mean there is fraud. That is not deception. It might be laziness on behalf of the investor to not do more research, sure. But that is not fraud. Again, it goes back to my previous point about how faulty expectations does not equate to fraud. Just because someone might have incorrect expectations set for something does not mean fraud took place. I completely agree that there is a lot of fraud in the cryptocurrency space, which is why, as I previously said, I think it is important to differentiate between bitcoin and the rest of the space.

This isn't necessarily true. If you sign a Terms of Service that is, for example, usurious, there are laws that protect you from that—even though you were "too lazy" to understand or read the terms. This happens all the times with businesses Terms of Service—many of the terms are often not legally enforceable.

I'd argue: the proof's in the pudding, as they say. Fraud runs so rampant, and the lion's share of Bitcoiners are completely clueless about how the thing they're invested in actually functions. Again, for proof, you needn't do much beyond read through this thread. Either Bitcoiners are colossally lazy and stupid, as a group, or they've been deceived. Who's doing the deceiving? Well, certainly a bunch of people I've already mentioned. But also the system, itself, is deceiving. That puts it on shaky legal ground for prosecution, I understand. But as I've tried to reiterate: I'm not very interested in talking about this from a legal lens. I think the interesting discussion is whether Bitcoin uses the same mechanisms to separate fools and their money as Ponzis.

As I've shown, I have not made "claims" of such, I was simply stating what was actually happening around the world. The examples I gave are real-world examples and I have no reason to believe that these examples of bitcoin helping people in these situations are suddenly going to stop in our world. Do you? Don't take my word for it though:

https://www.nytimes.com/2019/02/23/opinion/sunday/venezuela-bitcoin-inflation-cryptocurrencies.html
https://www.coindesk.com/markets/2019/04/24/russian-opposition-leader-raises-3-million-in-bitcoin-donations/
https://qz.com/africa/1922466/how-bitcoin-powered-nigerias-endsars-protests/
https://www.coindesk.com/policy/2020/09/09/belarus-nonprofit-helps-protestors-with-bitcoin-grants/
https://www.coindesk.com/markets/2018/09/18/palestinians-are-using-bitcoin-to-transact-across-borders-amid-conflict/

I could go on more...

This is another case where my argument wasn't understood. I have no intention of arguing whether these things are happening, or if Bitcoin is capable of serving a good purpose for some people. My point is: all of this is completely irrelevant when it comes to answering: is this a good investment. It's a cynical distraction—deception.

I agree completely that there are overly-hyped claims about cryptocurrencies and "blockchain tech". At the end of the day, a blockchain (which is just a type of database) is only good for removing trust in a decentralized fashion. So the idea that it could possibly revolutionize things like the shipping industry, lending, legal systems, voting, etc. are all bullshit because all those things inherently rely upon trust. You're not going to lend money to someone unless you trust them and you perform proper credit risk. A blockchain database isn't going to do a bit of good in a shipping industry since your business would be in complete control of the database and hence would have no need for the benefits such a distributed DB would provide. I fully agree that these claims about benefits from a blockchain in any of these scenarios and more are anything but hype. That is why I think it is so important to differentiate between bitcoin and other cryptocurrencies. Bitcoin remains as just being focus on the one area that a blockchain can actually provide a benefit, maintaining decentralization in a monetary system.

Cool. We mostly agree here. I'd argue, you may have some blinders on about what "decentralized" means. You say it removes "trust", which is true. But importantly, it also removes accountability. Understanding this, I think, is key to understanding why fraud is so rampant. It's a feature, not a bug.

But here is the thing, as I've asked now several times, you have yet to describe why you feel gold is any different.

All the critiques you've provided against bitcoin can also be said of gold. There are grandious claims said by gold bugs all the time. Gold miners don't pay for their expenses (fuel, equipment, property, etc) with gold. So they're always taking gold out of the system. Only an extremely small percentage of the gold that has been mined is used for things like jewelry and electronics. At the end of the day, it doesn't matter if only a little bit of it is used for utility. Just like bitcoin, it is that small portion of utility that it provides to society that drives its overall value. So, as with every single asset on earth, speculation will flood into the market. Like I previously said, speculation dwarfs the size of every single spot market on earth. At the end of the day, people love to gamble. That doesn't mean there is fraud at play.

Hah. I actually thought to include a piece about gold in my last rant, but thought it'd be too irrelevant. Kinda glad you brought it up! Let's go! Remember in my initial post, I outlined 5 characteristics that make a Ponzi a Ponzi. They were:

1. People invest into it because they expect large profits
2. That expectation is sustained by such profits being paid to those who choose to cash out—and are very vocal about this
3. However, there is no external source of revenue for those payoffs
4. Instead, the payoffs come entirely from new investment money
5. Meanwhile, the operators take away a large portion of this money

Gold investors do not expect to turn large profits. Gold bugs are gold bugs because they want to hedge against inflation or societal collapse, or communists, or whatever. They absolutely treat it as a store of value, in the old school sense. So right off the bat, that nixes #1.

Gold HAS a source of revenue besides other speculators speculating the price higher. About 2/3 of gold production is actually used/purchased by consumers as jewelry, electronics manufacturing, etc.

Now, I'm hardly a gold bug, so feel weird "defending" gold much beyond that. It's still a very stupid investment, in my opinion. Just less stupid than Bitcoin. And it certainly doesn't meet the Ponzi rules.


You're confusing fraud taking place at an individual level with what is fraud at a systemic level. Bitcoin is what it is. Akin to gold in that respect. Anyone is free to do their research about what gold and bitcoin are and aren't. Those two things are not frauds. You're free to learn about them as you wish. I agree there might be fraud at an individual level where someone is promising something grandious to someone else just to get them to invest into something without being informed about where their money is actually going. But don't mistake fraud that takes place at the individual level with fraud at a systemic level.

It's not akin to gold, as I hope I've established above.

Your claims about "technical obfuscation" fail here. People don't need to understand how the internet works in order to understand it at its basic level and understand the benefits that could come from using such a technology. The same is true of bitcoin. While there is so much to learn about it at a technical level, that does not mean you need to be extremely tech savvy to be able to use it and understand the potential benefits that could come from using such a tech. This only gets more and more true as the technology matures as evidenced with both the internet and bitcoin.

People can freely use the Internet without investing in it (whatever that would even mean?!). This analogy does not hold up.

Regardless, I think my point was once again misunderstood. My point wasn't: one must understand the complete inner-workings of Bitcoin before investing. My point was: Bitcoin's inner-workings are cited often (see how many tech reporters claim Bitcoin mining is "solving complex math problems"—a completely ridiculous statement) almost as a symbol that there must be something happening that's producing the value. The technological complexity is used to lull people into a false sense that it must be 1. too complicated for them to understand, and 2. doing something valuable. The number goes up because something is worthwhile is happening. Arrogance, I think, compounds this, because people are too embarrassed to acknowledge they don't understand it, and feel part of an in-group by participating to show off how smart and ahead-of-the-pack they are. Blockchain is Computer Science's String Theory—a largely useless bunch of malarkey that not-all-that-bright dipshits think is "super-interesting" despite understanding virtually 0 of it.

- US economist Nouriel Roubini calls Bitcoin a Ponzi scheme: https://www.coindesk.com/markets/2014/03/10/economist-nouriel-roubini-slams-bitcoin-calls-it-a-ponzi-game/
- The World Bank calls it a Ponzi: https://www.coindesk.com/markets/2014/07/17/world-bank-report-bitcoin-is-a-naturally-occurring-ponzi/
- Investment analyst David Webb calls it a "Distributed Ponzi": https://www.cfoinnovation.com/risk-management/webb-bitcoin-first-decentralized-ponzi-scheme-for-betting-others-greater-stupidity
- Jim Yong Kim of the World Bank also calls it a Ponzi: https://www.cfoinnovation.com/management/world-bank-compares-bitcoin-to-ponzi-scheme-while-goldman-warns-a-crash-to-zero
- Nassim Taleb calls Bitcoin an "Open Ponzi scheme": https://www.cnbc.com/2021/04/23/bitcoin-a-gimmick-and-resembles-a-ponzi-scheme-black-swan-author-.html

BREAKING...this just in...People most threatened by bitcoin call it a ponzi scheme!...[eyeroll]

Y'know, to be honest, you seem offended at the implication that you're a "crypto bro", but you parrot the same really absurd arguments as crypto bros. How is Nassim Taleb—himself a former bit of crypto bro—threatened by Bitcoin? Is the World Bank actually threatened by Bitcoin? You've drank some kool-aid if that's really your perspective here.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 03, 2022, 03:11:43 PM
While you might be arguing in good faith—it's still not clear—you absolutely are misinterpreting my responses pretty badly. I'll try once more to clear these misunderstandings up, but I'm not feeling like the effort put in thus far has been mutually respectful.

In what way have I not been respectful? I am presenting my arguments the same way you are. I am absolutely welcoming of your arguments and I genuinely request your side so I can understand where you're coming from and thus present my argument in the most concise way I can.

Now. I completely understood Telecasters point. Telecaster mentioned, in previous posts, that a promise of a return is a necessary component of a Ponzi. While this is, indeed, a common attribute—and a sometimes a necessary one in some jurisdictions—it is one attribute that Bernie Madoff's Ponzi failed to include. My point was simply: there are different legal definitions of Ponzis. Some of the biggest Ponzis of the past do not include all of the definitions from all legal jurisdictions. Failing to meet all the criteria of all legal jurisdictions is not sufficient to conclude a system is not a Ponzi.

What?! First off, that is factually not true at all. Madoff absolutely made promises of returns. Guaranteed returns in fact, as was already talked about in this very thread. While I agree that promises of returns are required for a ponzi scheme to exist, they absolutely did in Madoff's case. Like you, I don't care much about what the legal definition of a ponzi scheme is. Doesn't matter whether you go by a legal definition or just a commonly understood definition, I think you'd be hard pressed to have anyone feel that a commodity, scarce or otherwise, is a ponzi scheme. That is very much where bitcoin lies. It is an open market commodity.


This isn't necessarily true. If you sign a Terms of Service that is, for example, usurious, there are laws that protect you from that—even though you were "too lazy" to understand or read the terms. This happens all the times with businesses Terms of Service—many of the terms are often not legally enforceable.

I'd argue: the proof's in the pudding, as they say. Fraud runs so rampant, and the lion's share of Bitcoiners are completely clueless about how the thing they're invested in actually functions. Again, for proof, you needn't do much beyond read through this thread. Either Bitcoiners are colossally lazy and stupid, as a group, or they've been deceived. Who's doing the deceiving? Well, certainly a bunch of people I've already mentioned. But also the system, itself, is deceiving. That puts it on shaky legal ground for prosecution, I understand. But as I've tried to reiterate: I'm not very interested in talking about this from a legal lens. I think the interesting discussion is whether Bitcoin uses the same mechanisms to separate fools and their money as Ponzis.

You talk about me not arguing in good faith and that I am not being respectful, but in the same post you talk about how I am a "cryto-bro" and that bitcoiners are lazy and stupid and I am supposed to take that how?? I have no used name calling in any of my responses nor have I used generalizations in any derogatory way.

This is another case where my argument wasn't understood. I have no intention of arguing whether these things are happening, or if Bitcoin is capable of serving a good purpose for some people. My point is: all of this is completely irrelevant when it comes to answering: is this a good investment. It's a cynical distraction—deception.

I feel like you're being disingenuous here. Your exact words in the previous post was:
Quote
4. In addition to the tech-obfuscation, you have crypto-celebrities and famous investors constantly—based on literally nothing—predicting wildly optimistic future prices of Bitcoins (https://www.bitcoinprice.com/predictions/). You also have—as you've seen in this thread even very recently—wild claims about how crypto will one day "bank the unbanked", become a global currency, free citizens of repressive regimes, end corruption, etc.


This was in response to Telecaster rebutting your point as to whether bitcoin is fraud or not. That sentence makes claims (almost certainly directed to me) about people in this very thread making wild claims about bitcoin "one day" doing these things. My counterpoint just now was that the things I brought up in this thread were not "one day" things that I'm claiming will someday happen. They are factual events that are indeed taking place today. Regardless of whether you think they're irrelevant to your arguments that it is fraud, I don't understand why stating factual events that are taking place  is cynical or deception.

Cool. We mostly agree here. I'd argue, you may have some blinders on about what "decentralized" means. You say it removes "trust", which is true. But importantly, it also removes accountability. Understanding this, I think, is key to understanding why fraud is so rampant. It's a feature, not a bug.

I don't think it removes accountability at all. Bitcoin is a neutral thing. Just like the internet or any other inanimate human creation. Humans have done a lot of good things using the internet to advance society, but in that same regard humans have used the internet to do a lot of bad things. The internet doesn't do these things though, humans do. Humans are ultimately accountable for their actions; accountability does not fall to the objects we choose to use, ever. Doesn't matter if it is bitcoin, the internet, cars, drugs, weapons, chemicals, energy, etc. Just because you have a new invention doesn't mean that invention removes accountability from humans in any way. I find you make generalized claims about things often in your arguments without any real world examples to back up what you're referring to when you say these things. Do you have any examples that might help illustrate your point about how bitcoin exactly removed accountability from a human?

Hah. I actually thought to include a piece about gold in my last rant, but thought it'd be too irrelevant. Kinda glad you brought it up! Let's go! Remember in my initial post, I outlined 5 characteristics that make a Ponzi a Ponzi. They were:

1. People invest into it because they expect large profits
2. That expectation is sustained by such profits being paid to those who choose to cash out—and are very vocal about this
3. However, there is no external source of revenue for those payoffs
4. Instead, the payoffs come entirely from new investment money
5. Meanwhile, the operators take away a large portion of this money

Gold investors do not expect to turn large profits. Gold bugs are gold bugs because they want to hedge against inflation or societal collapse, or communists, or whatever. They absolutely treat it as a store of value, in the old school sense. So right off the bat, that nixes #1.

Gold HAS a source of revenue besides other speculators speculating the price higher. About 2/3 of gold production is actually used/purchased by consumers as jewelry, electronics manufacturing, etc.

Now, I'm hardly a gold bug, so feel weird "defending" gold much beyond that. It's still a very stupid investment, in my opinion. Just less stupid than Bitcoin. And it certainly doesn't meet the Ponzi rules.

1) I already disagreed with your criteria for what makes a ponzi, but to go against point one I will say that a ponzi absolutely isn't required to promise outsized returns of any kind. You can just as easily have a ponzi with modest or minuscule returns to investors and it will still be a ponzi. So the fact that you exclude gold from being a ponzi scheme based on that merit is meaningless here.

2) Gold's source of "revenue" as you put it is gold's utility, which pales in comparison to the gold stocks in the world. Gold's utility is no more minuscule to its supply stocks as bitcoin's utility is to its own. Bitcoin's utility being that of a monetary good where people are using it as a hedge against local monetary inflation, against censorship, and as a means of exchange and store of value in daily life. Your other mistake is that you're measuring gold's utility against its supply, not its stock. However, gold's supply inflation rate is about 1.5% and Bitcoin's currently is at 1.8%, so they happen to be almost identical. So that means gold's utility is an extremely small portion of its stocks similar to bitcoin's utility to its stocks.

And as I mentioned, gold miners don't pay their expenses in gold, so #5 in your post still applies to gold here.

So with both my points in rebuttal to yours, I still fail to see how you have differentiated gold from bitcoin here and certainly failed to see how you've excluded gold from even your own loose definition of a ponzi scheme.

People can freely use the Internet without investing in it (whatever that would even mean?!). This analogy does not hold up.

I don't mean to be pedantic here, but you don't think people are invested in the internet? They may not be holding a certificate or token saying they "own some internet", but they absolutely are invested in it. Take away the internet and most businesses probably won't have a business. If that isn't being invested in something, I don't know what either. Regardless, my point about comparing the two still stands because your claim was that "technical obfuscation" is part of bitcoin's fraud.

Regardless, I think my point was once again misunderstood. My point wasn't: one must understand the complete inner-workings of Bitcoin before investing. My point was: Bitcoin's inner-workings are cited often (see how many tech reporters claim Bitcoin mining is "solving complex math problems"—a completely ridiculous statement) almost as a symbol that there must be something happening that's producing the value. The technological complexity is used to lull people into a false sense that it must be 1. too complicated for them to understand, and 2. doing something valuable. The number goes up because something is worthwhile is happening. Arrogance, I think, compounds this, because people are too embarrassed to acknowledge they don't understand it, and feel part of an in-group by participating to show off how smart and ahead-of-the-pack they are. Blockchain is Computer Science's String Theory—a largely useless bunch of malarkey that not-all-that-bright dipshits think is "super-interesting" despite understanding virtually 0 of it.

Your examples of bitcoin mining being described as "solving complex math problems" is hardly an apt description of this fraud your claiming exists. Media is simply writing articles for mass appeal and accurately describing bitcoin mining as running the SHA256 algorithm over and over again on bundled transactions with randomized nonce values until the output meets the current difficulty requirements is hardly going to help non-technical readers understand anything more than simply stating that it is "solving complex math problems" which is certainly accurate enough for the majority of people to get the gist. Claiming that simplifying something down is fraud is quite the stretch.

Whether you consider mining as something productive thus comes down to whether or not you feel bitcoin is of value to humanity as this is a required component for the bitcoin network's security. If you don't feel bitcoin is of benefit to humanity, then obviously you won't see that as being productive and vice versa.

Y'know, to be honest, you seem offended at the implication that you're a "crypto bro", but you parrot the same really absurd arguments as crypto bros. How is Nassim Taleb—himself a former bit of crypto bro—threatened by Bitcoin? Is the World Bank actually threatened by Bitcoin? You've drank some kool-aid if that's really your perspective here.

Again, I am not going to get into name calling here to prove points. My arguments will stand on their own without resorting to that. I'm also not going to appeal to authority like this either. The World Bank doesn't need to feel threatened to realize that bitcoin stands for everything the World Bank is not. No one expects the World Bank to say anything nice toward bitcoin seeing as how bitcoin stands for everything the WB isn't. Therefore it is hardly the unbiased take you should look for if you're going to appeal to any authority. That's like expecting an honest perspective on climate change from the oil industry.

For what it is worth, Nassim Taleb's change of heart almost certainly has to do with his beef with another bitcoin proponent (Ammous) with whom he wrote a foreword for and they had a falling out. So if Taleb's authority is who you're going to look to as evidence of bitcoin's fraud in this case, it falls flat when even many noted bitcoin critiques have called Taleb's paper criticizing bitcoin absolute "drivel" (which it is):

https://twitter.com/GeorgeSelgin/status/1407866340459884551 (https://twitter.com/GeorgeSelgin/status/1407866340459884551)

George Selgin has been in moderated debates against bitcoin and even he sees through Taleb's non-sense, which quite frankly he has exhibited some very strange behavior and comments over the last year. I mention Selgin here not as an appeal to authority, but as a contrast to Taleb being seen as an authority on the matter at all. If your critiques of bitcoin fail to even garner praise from other critics of it, you're doing something wrong.

I could get into it myself as to why Taleb's take on bitcoin makes absolutely zero sense, but that's for another time.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on February 03, 2022, 03:33:57 PM
So to sum up the argument, BTC is a ridiculous south seas bubble with super limited utility as a currency or store of value, but we are disagreeing about whether it's technically fraud/a Ponzi scheme.

Is that about right?

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DaTrill on February 03, 2022, 04:52:09 PM
"A fool and their money are easily parted"

This will take years to washout.  If one is a crypto bro and haven't paid for your Caribbean villa, you're too late.     

Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on February 03, 2022, 05:34:13 PM
With all due respect, lifeanon, you’ve just again repeatedly mischaracterized virtually every point I attempted to make. I don’t wish to continue discussing this with you. I mean you no ill will: either I’m writing in a very ambiguous manner or you’re misreading my writing, or some combination of both. This isn’t productive.

ETA: I will respond to the one point you did respond to: that Madoff promised returns. From the court documents:
Quote

First, the promise of exorbitant returns is often a characteristic of a Ponzi scheme but is not the sine qua non of a Ponzi scheme. See Dreier, 2014 WL 47774, at *9 (“These badges are, however, merely characteristics of many Ponzi schemes but a Ponzi scheme can exist without them.”). Certain transferee-defendants raised the same objection in Armstrong v. Collins, No. 01 Civ. 2437 (PAC), 2010 WL 1141158, at *23 (S.D.N.Y. Mar. 24, 2010). District Judge Crotty rejected the argument as a factual matter and added the following:
In any event, even assuming [the fraudster] did not promise or represent high rates of return, this does not mean that he was not running a Ponzi
- 14 -

scheme. “Case law has revealed that a clever twist on the Ponzi concept will not remove a fraudulent scheme from the definition of Ponzi.”
Id. (quoting Forman v. Salzano (In re Norvergence, Inc.), 405 B.R. 709, 730 (Bankr. D. N.J. 2009)).

Here, Madoff operated BLMIS as a classic Ponzi scheme notwithstanding the purported absence of the promise of high returns: he misrepresented to clients and prospective clients that he would invest their funds using the SSC Strategy

Source: https://www.nysb.uscourts.gov/sites/default/files/opinions/174497_18997_opinion.pdf
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 03, 2022, 06:34:30 PM
ETA: I will respond to the one point you did respond to: that Madoff promised returns. From the court documents:
Quote

First, the promise of exorbitant returns is often a characteristic of a Ponzi scheme but is not the sine qua non of a Ponzi scheme. See Dreier, 2014 WL 47774, at *9 (“These badges are, however, merely characteristics of many Ponzi schemes but a Ponzi scheme can exist without them.”). Certain transferee-defendants raised the same objection in Armstrong v. Collins, No. 01 Civ. 2437 (PAC), 2010 WL 1141158, at *23 (S.D.N.Y. Mar. 24, 2010). District Judge Crotty rejected the argument as a factual matter and added the following:
In any event, even assuming [the fraudster] did not promise or represent high rates of return, this does not mean that he was not running a Ponzi
- 14 -

scheme. “Case law has revealed that a clever twist on the Ponzi concept will not remove a fraudulent scheme from the definition of Ponzi.”
Id. (quoting Forman v. Salzano (In re Norvergence, Inc.), 405 B.R. 709, 730 (Bankr. D. N.J. 2009)).

Here, Madoff operated BLMIS as a classic Ponzi scheme notwithstanding the purported absence of the promise of high returns: he misrepresented to clients and prospective clients that he would invest their funds using the SSC Strategy

Source: https://www.nysb.uscourts.gov/sites/default/files/opinions/174497_18997_opinion.pdf

I don't think that proves your point the way you think it does. That was the defense's claims; that they didn't promise overly exuberant returns. Of course they're going to say that in their defense! But he did promise returns to his investors, which the defense claims weren't too far outside typical market returns (except for the fact that they were way too consistent to be real). This is what led many to suspect Bernie to be a fraud to begin with. The fact that Bernie didn't promise overly exuberant returns is one of the reasons why he was able to continue his ponzi scheme for so long. Typically ponzi schemes promise returns of 20-50% or more and they collapse quickly. However, Bernie was able to keep his ponzi going for decades.

But he absolutely did often promise returns to his investors, which is one way he was able to bring in new investors because he was promising returns during economic downturns that no one else was able to produce. Per FBI's records of criminal charges:

https://archives.fbi.gov/archives/newyork/press-releases/2009/nyfo031009.htm (https://archives.fbi.gov/archives/newyork/press-releases/2009/nyfo031009.htm)
Quote
Further, to induce new and continued investments by clients and prospective clients, MADOFF promised certain clients annual returns in varying amounts of up to approximately 46 percent per year. MADOFF also told certain clients that the fee for his services would be based on an approximately $0.04 per share commission on the stocks that MADOFF traded for such clients.
...
Furthermore, account statements and trade confirmations sent to clients reflected fictitious returns consistent with the returns that had previously been promised to them.

So yes, Bernie Madoff did promise returns to his investors.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on February 04, 2022, 07:22:55 AM
So celebrities paid to shill crypto isn't dishonest or misleading at all?

https://slate.com/technology/2021/10/ben-mckenzie-crypto-celebrities-kardashian-brady-lohan.html (https://slate.com/technology/2021/10/ben-mckenzie-crypto-celebrities-kardashian-brady-lohan.html)

The ongoing discussion re. fraud / not fraud is exclusively about Bitcoin.
Some shilling of a trivial alt-coin (with <1yr history and a market cap of $19 million) by a few trashy celebs says nothing about Bitcoin.

Nobody throughout this entire topic has claimed there is zero fraud in the crypto universe. There clearly is some, probably quite a lot in the murky depths of the smaller alt-coins.

An instance of fraud, or even a lot of fraud, does not prove that crypto itself is fundamentally fraudulent.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 04, 2022, 07:29:42 AM
The ongoing discussion re. fraud / not fraud is exclusively about Bitcoin.
Some shilling of a trivial alt-coin (with <1yr history and a market cap of $19 million) by a few trashy celebs says nothing about Bitcoin.

I present to you "Bitcoin for Hotties" - Megan Thee Stallion - a celebrity shilling for Bitcoin:
https://www.youtube.com/watch?v=5AN5veSPfY4&ab_channel=MeganTheeStallion (https://www.youtube.com/watch?v=5AN5veSPfY4&ab_channel=MeganTheeStallion)

But then there are also the celebrities who are shilling for Bitcoin without their knowledge because bitcoin pushers have fraudulently used them in ads:
https://finance.yahoo.com/news/harry-and-meghan-images-misused-in-fake-crypto-endorsement-103228176.html (https://finance.yahoo.com/news/harry-and-meghan-images-misused-in-fake-crypto-endorsement-103228176.html)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on February 04, 2022, 07:46:51 AM
The ongoing discussion re. fraud / not fraud is exclusively about Bitcoin.
Some shilling of a trivial alt-coin (with <1yr history and a market cap of $19 million) by a few trashy celebs says nothing about Bitcoin.

I present to you "Bitcoin for Hotties" - Megan Thee Stallion - a celebrity shilling for Bitcoin:
https://www.youtube.com/watch?v=5AN5veSPfY4&ab_channel=MeganTheeStallion (https://www.youtube.com/watch?v=5AN5veSPfY4&ab_channel=MeganTheeStallion)

Haha, that was truly educational on many levels !
I guess that's conclusive proof that the whole thing is a scam. I will sell immediately     /s


I think you maybe missed the relevance of my final sentence:

An instance of fraud, or even a lot of fraud, does not prove that crypto itself is fundamentally fraudulent.

Just as well too otherwise, thanks to Bernie Madoff, Enron, sub-prime CDO's, Theranos, etc. etc., we'd have nothing left in the conventional financial world to invest in either.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 04, 2022, 08:18:11 AM
An instance of fraud, or even a lot of fraud, does not prove that crypto itself is fundamentally fraudulent.

Just as well too otherwise, thanks to Bernie Madoff, Enron, sub-prime CDO's, Theranos, etc. etc., we'd have nothing left in the conventional financial world to invest in either.

I agree.  The dishonesty surrounding bitcoin doesn't mean that all other crypto is fraudulent.

But there very clearly currently exists dishonest and misleading representation regarding bitcoin, created by some of the people trying to sell the cryptocurrency.  This would seem to be a pretty good counter to the argument 'bitcoin can't be a ponzi scheme because there's no deception'.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on February 04, 2022, 08:18:31 AM
It’s fascinating to me how people can mentally categorize two things that are technically duplicates - one as a legit investment and the other as an obvious fraud.

Bitcoin and Ethereum are legit because they have more interest from the media and people buying them. 3,000 copy versions of these softwares, however, each with the exact same potential functionality as Bitcoin or Ethereum are obvious pump and dump scams that will end in tears.

If you paid thousands of dollars to own BTC and ETH because you think they’ll have utility in the future, why not pay a thousandth of a penny to own the latest altcoin with the exact same - or better! - use cases as future units of transaction. They are literally the same things.

The only answer to the question above is something about popularity, momentum, what other people are doing, and conclusions based on these two points about what other people will do in the future. This answer gives up any pretense of being about utility and dances around a core argument that greater fools will trade you more USD for these particular coins in the future.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 04, 2022, 08:27:49 AM
But then there are also the celebrities who are shilling for Bitcoin without their knowledge because bitcoin pushers have fraudulently used them in ads:
https://finance.yahoo.com/news/harry-and-meghan-images-misused-in-fake-crypto-endorsement-103228176.html (https://finance.yahoo.com/news/harry-and-meghan-images-misused-in-fake-crypto-endorsement-103228176.html)

Bitcoin has as much to do with these scams as the British pound does and yet I don't see people calling out the pound or dollar every time someone tries to scam someone for money. When it comes to scamming people for money, money will inherently be involved. Not sure why that is surprising to some.

These were some of the advertisement lines used to grab people's attention according to these articles:

"People earning millions from home by using Harry and Meghan latest advice."
"Harry and Meghan shocked everyone in the studio by revealing how they making an extra £128,000 every month."

Bitcoin just gets roped into these because people know people have made a lot of money with bitcoin as it appreciated so scammers inherently use its name to grab people's attention into your typical "get-rich-quick" scheme. Not sure why that is different from any other get-rich-quick scheme that has been touted decades. It is the same old story.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on February 04, 2022, 08:29:56 AM
It’s fascinating to me how people can mentally categorize two things that are technically duplicates - one as a legit investment and the other as an obvious fraud.

Bitcoin and Ethereum are legit because they have more interest from the media and people buying them. 3,000 copy versions of these softwares, however, each with the exact same potential functionality as Bitcoin or Ethereum are obvious pump and dump scams that will end in tears.

If you paid thousands of dollars to own BTC and ETH because you think they’ll have utility in the future, why not pay a thousandth of a penny to own the latest altcoin with the exact same - or better! - use cases as future units of transaction. They are literally the same things.

The only answer to the question above is something about popularity, momentum, what other people are doing, and conclusions based on these two points about what other people will do in the future. This answer gives up any pretense of being about utility and dances around a core argument that greater fools will trade you more USD for these particular coins in the future.

It’s fascinating to me how people can mentally categorise two things that are superficially similar as identical . . . . shrug
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 04, 2022, 08:33:42 AM
It’s fascinating to me how people can mentally categorize two things that are technically duplicates - one as a legit investment and the other as an obvious fraud.

Bitcoin and Ethereum are legit because they have more interest from the media and people buying them. 3,000 copy versions of these softwares, however, each with the exact same potential functionality as Bitcoin or Ethereum are obvious pump and dump scams that will end in tears.


And this is part of the problem right here. I don't think you will find many people that don't agree there aren't thousands of scams among cryptocurrencies. They're all hype at best and scams/fraud and worst.

The problem is that bitcoin has become eponymous with cryptocurrency and so anything to do with cryptocurrencies and the scams they bring will immediately be associated with bitcoin or sometimes even be called bitcoin when they couldn't be further from it. Unfortunately, as with any technology, regulators are way far beyond on being knowledgeable about the space enough to make any enforcement of what is taking place meaningful while at the same time not completely ruining the industry with inept policies.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: index on February 04, 2022, 08:55:44 AM
@lifeanon269, where are you getting only 3% of the gold stock has been used in jewelry? I'm seeing almost half of the world's gold stock is tied up in jewelry and roughly 60% of the yearly supply is used in jewelry or industrial purposes.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: erjkism on February 04, 2022, 09:06:09 AM
It’s fascinating to me how people can mentally categorize two things that are technically duplicates - one as a legit investment and the other as an obvious fraud.

Bitcoin and Ethereum are legit because they have more interest from the media and people buying them. 3,000 copy versions of these softwares, however, each with the exact same potential functionality as Bitcoin or Ethereum are obvious pump and dump scams that will end in tears.


And this is part of the problem right here. I don't think you will find many people that don't agree there aren't thousands of scams among cryptocurrencies. They're all hype at best and scams/fraud and worst.

The problem is that bitcoin has become eponymous with cryptocurrency and so anything to do with cryptocurrencies and the scams they bring will immediately be associated with bitcoin or sometimes even be called bitcoin when they couldn't be further from it. Unfortunately, as with any technology, regulators are way far beyond on being knowledgeable about the space enough to make any enforcement of what is taking place meaningful while at the same time not completely ruining the industry with inept policies.

People have been calling bitcoin a fraud since it's inception. There is nothing you can do to convince them otherwise, it's an idealogical stance not based on empirical evidence. When bitcoin is 500k and a reserve asset in sovereign wealth funds/pension funds/etc. they will still claim it is a fraud and that you have been a fool to be involved with it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 04, 2022, 09:12:00 AM
@lifeanon269, where are you getting only 3% of the gold stock has been used in jewelry? I'm seeing almost half of the world's gold stock is tied up in jewelry and roughly 60% of the yearly supply is used in jewelry or industrial purposes.

I stand corrected. You'd be correct. One of the graphs I was looking at was misleading since it only broke down the incoming supply by use-case, but not the total stock. This website was more clear and matches with your numbers:

https://www.gold.org/goldhub/data/above-ground-stocks (https://www.gold.org/goldhub/data/above-ground-stocks)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on February 04, 2022, 10:02:29 AM
The ongoing discussion re. fraud / not fraud is exclusively about Bitcoin.
Some shilling of a trivial alt-coin (with <1yr history and a market cap of $19 million) by a few trashy celebs says nothing about Bitcoin.

I present to you "Bitcoin for Hotties" - Megan Thee Stallion - a celebrity shilling for Bitcoin:
https://www.youtube.com/watch?v=5AN5veSPfY4&ab_channel=MeganTheeStallion (https://www.youtube.com/watch?v=5AN5veSPfY4&ab_channel=MeganTheeStallion)

But then there are also the celebrities who are shilling for Bitcoin without their knowledge because bitcoin pushers have fraudulently used them in ads:
https://finance.yahoo.com/news/harry-and-meghan-images-misused-in-fake-crypto-endorsement-103228176.html (https://finance.yahoo.com/news/harry-and-meghan-images-misused-in-fake-crypto-endorsement-103228176.html)

I cannot identify a false statement that Megan Thee Stallion makes in the video.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 04, 2022, 10:16:28 AM
The ongoing discussion re. fraud / not fraud is exclusively about Bitcoin.
Some shilling of a trivial alt-coin (with <1yr history and a market cap of $19 million) by a few trashy celebs says nothing about Bitcoin.

I present to you "Bitcoin for Hotties" - Megan Thee Stallion - a celebrity shilling for Bitcoin:
https://www.youtube.com/watch?v=5AN5veSPfY4&ab_channel=MeganTheeStallion (https://www.youtube.com/watch?v=5AN5veSPfY4&ab_channel=MeganTheeStallion)

But then there are also the celebrities who are shilling for Bitcoin without their knowledge because bitcoin pushers have fraudulently used them in ads:
https://finance.yahoo.com/news/harry-and-meghan-images-misused-in-fake-crypto-endorsement-103228176.html (https://finance.yahoo.com/news/harry-and-meghan-images-misused-in-fake-crypto-endorsement-103228176.html)

I cannot identify a false statement that Megan Thee Stallion makes in the video.


- bitcoin is not a currency (oddly enough, this is even disproven by her later statements that the only thing making bitcoin valuable is scarcity - like other non-currencies gold and silver . . . and unlike real currency)
- bitcoin cannot be controlled by anyone (51% attack makes this statement unequivocally false)

There are is also untruthful 'number goes up - always' messages, both spoken and unspoken:
- Are most bitcoin investors playing jenga with gold bars against their manservant at home?
- "With my knowledge and your hustle, you'll have your own empire in no time.  I'll see you at the top!"
Title: Re: What do you think of adding a low% of crypto allocation
Post by: joe189man on February 04, 2022, 10:28:20 AM
I think its fine to add a low % of crypto to your total asset allocation. I have a 0.38% in crypto at the moment and plan to add to it over time to achieve around 1-2% of total assets then re-assess.

I think you could interchange crypto with anything in the OPs subject line all in the name of diversification, things like single stocks, rental estate, raw land, collectible cars, precious metals, jewelry, art, antiques, etc.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on February 04, 2022, 10:46:49 AM
I think its fine to add a low % of crypto to your total asset allocation. I have a 0.38% in crypto at the moment and plan to add to it over time to achieve around 1-2% of total assets then re-assess.

I think you could interchange crypto with anything in the OPs subject line all in the name of diversification, things like single stocks, rental estate, raw land, collectible cars, precious metals, jewelry, art, antiques, etc.

...lotto tickets, Nigerian princes, Rush Limbaugh faced Gold Bullion coins, etc.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on February 04, 2022, 10:58:53 AM
The ongoing discussion re. fraud / not fraud is exclusively about Bitcoin.
Some shilling of a trivial alt-coin (with <1yr history and a market cap of $19 million) by a few trashy celebs says nothing about Bitcoin.

I present to you "Bitcoin for Hotties" - Megan Thee Stallion - a celebrity shilling for Bitcoin:
https://www.youtube.com/watch?v=5AN5veSPfY4&ab_channel=MeganTheeStallion (https://www.youtube.com/watch?v=5AN5veSPfY4&ab_channel=MeganTheeStallion)

But then there are also the celebrities who are shilling for Bitcoin without their knowledge because bitcoin pushers have fraudulently used them in ads:
https://finance.yahoo.com/news/harry-and-meghan-images-misused-in-fake-crypto-endorsement-103228176.html (https://finance.yahoo.com/news/harry-and-meghan-images-misused-in-fake-crypto-endorsement-103228176.html)

I cannot identify a false statement that Megan Thee Stallion makes in the video.


- bitcoin is not a currency (oddly enough, this is even disproven by her later statements that the only thing making bitcoin valuable is scarcity - like other non-currencies gold and silver . . . and unlike real currency)
- bitcoin cannot be controlled by anyone (51% attack makes this statement unequivocally false)

There are is also untruthful 'number goes up - always' messages, both spoken and unspoken:
- Are most bitcoin investors playing jenga with gold bars against their manservant at home?
- "With my knowledge and your hustle, you'll have your own empire in no time.  I'll see you at the top!"

Thank you for engaging.

I did not begin the day expecting to encounter a post with Megan Thee Stallion and 51% network attack contained within the same idea.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 04, 2022, 11:09:25 AM
The ongoing discussion re. fraud / not fraud is exclusively about Bitcoin.
Some shilling of a trivial alt-coin (with <1yr history and a market cap of $19 million) by a few trashy celebs says nothing about Bitcoin.

I present to you "Bitcoin for Hotties" - Megan Thee Stallion - a celebrity shilling for Bitcoin:
https://www.youtube.com/watch?v=5AN5veSPfY4&ab_channel=MeganTheeStallion (https://www.youtube.com/watch?v=5AN5veSPfY4&ab_channel=MeganTheeStallion)

But then there are also the celebrities who are shilling for Bitcoin without their knowledge because bitcoin pushers have fraudulently used them in ads:
https://finance.yahoo.com/news/harry-and-meghan-images-misused-in-fake-crypto-endorsement-103228176.html (https://finance.yahoo.com/news/harry-and-meghan-images-misused-in-fake-crypto-endorsement-103228176.html)

I cannot identify a false statement that Megan Thee Stallion makes in the video.


- bitcoin is not a currency (oddly enough, this is even disproven by her later statements that the only thing making bitcoin valuable is scarcity - like other non-currencies gold and silver . . . and unlike real currency)
- bitcoin cannot be controlled by anyone (51% attack makes this statement unequivocally false)

There are is also untruthful 'number goes up - always' messages, both spoken and unspoken:
- Are most bitcoin investors playing jenga with gold bars against their manservant at home?
- "With my knowledge and your hustle, you'll have your own empire in no time.  I'll see you at the top!"

Thank you for engaging.

I did not begin the day expecting to encounter a post with Megan Thee Stallion and 51% network attack contained within the same idea.

A day without at least a few surreal moments in it is a day wasted.  :P
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on February 04, 2022, 12:47:04 PM
It’s fascinating to me how people can mentally categorize two things that are technically duplicates - one as a legit investment and the other as an obvious fraud.

Bitcoin and Ethereum are legit because they have more interest from the media and people buying them. 3,000 copy versions of these softwares, however, each with the exact same potential functionality as Bitcoin or Ethereum are obvious pump and dump scams that will end in tears.


And this is part of the problem right here. I don't think you will find many people that don't agree there aren't thousands of scams among cryptocurrencies. They're all hype at best and scams/fraud and worst.

The problem is that bitcoin has become eponymous with cryptocurrency and so anything to do with cryptocurrencies and the scams they bring will immediately be associated with bitcoin or sometimes even be called bitcoin when they couldn't be further from it. Unfortunately, as with any technology, regulators are way far beyond on being knowledgeable about the space enough to make any enforcement of what is taking place meaningful while at the same time not completely ruining the industry with inept policies.

I have a couple of questions for you. I've been out of the space for years. I am interested in the critique of most crypto that it heavily rewards early adopters. By that, they (bitcoin, etherum, etc.) create hierarchies of wealth for their inventors and investors that seemingly undermines the spirit of the system. Someone who managed to keep their wallet of a couple of hundred bitcoin from a few years ago is now rolling deep, as well as all of the corporations who started mining when they could take advantage of the scale of larger rigs. This seems to punish late adopters- the folks who in theory would benefit most from a "decentralized" currency. I suspect this is some of the pointed anger of luddites that is felt by crypto enthusiasts, where those who missed the boat seemingly push back because they are envious. I don't doubt that there is some of that, but I also suspect that a lot of the push back is because there is something fishy about pushing a product that simultaneously makes the person rich. If the designers and early adopters donated all but a salary's worth of their crypto earnings each year then they might have a foot to stand on, but as it is, most developments (etherum, lightning network, etc.) only serve to get more people to buy the crypto, which at the end of the day is more cash for the holders.

My question: are there any coin projects that try to do away with this dilemma? Coins that don't have some kind of mechanism that re-distributes wealth to tech enthusiasts but instead is more egalitarian? It seems like a catch-22, in that it's hard to get masses of people to adopt a simple currency vs. a speculative growth coin. I don't go down to the car wash to exchange for their tokens just in case they raise in value. I just use them when I'm there because that's what's accepted. It would seem for a transition from speculation to currency would need to solve this, IMO.

I know this stuff is has been discussed somewhat in this thread, but am curious if anyone in the space has an answer to this.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on February 04, 2022, 01:51:48 PM
Stable coins (because they don't appreciate) seem like they would answer this critique.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 04, 2022, 05:22:07 PM
I have a couple of questions for you. I've been out of the space for years. I am interested in the critique of most crypto that it heavily rewards early adopters. By that, they (bitcoin, etherum, etc.) create hierarchies of wealth for their inventors and investors that seemingly undermines the spirit of the system. Someone who managed to keep their wallet of a couple of hundred bitcoin from a few years ago is now rolling deep, as well as all of the corporations who started mining when they could take advantage of the scale of larger rigs. This seems to punish late adopters- the folks who in theory would benefit most from a "decentralized" currency. I suspect this is some of the pointed anger of luddites that is felt by crypto enthusiasts, where those who missed the boat seemingly push back because they are envious.

I don't think it creates a hierarchy at all. There are so many people that held bitcoin early on, but because some of the massive price swings, they sold at some point. The number of people who have held through everything is very small. There are also plenty of people who bought and sold early on and lost money as each of the bubbles have created FOMO waves. I know some of those people; those who only paid attention during the hype cycles and bought in at the last moment only to have the rug pulled out from them. So there really isn't any concept of a hierarchy of early vs late adopters.

Also, the idea that those who bought and held since early on are rewarded isn't any different than any other investment. Those who bought Tesla and held through some of the worst negative news cycles as Tesla was massively shorted have been rewarded handsomely.

It all comes down to risk versus reward. Those who bought Tesla early on were taking on a ton of risk. It was a new car company that was being massively shorted and had a ton of cash flow problems. At one point it was on the verge of bankruptcy until Musk went all in himself. It isn't any different with bitcoin. Bitcoin early was just a nascent idea that many would never imagine would be worth $40,000 today.

Finally, I don't think late adopters are "punished" not being invested early on. Bitcoin didn't steal anything from them and they haven't been harmed in any way. They have a choice they can make every day whether or not they want to hold/use any or not. At the end of the day, even if the days of large returns in bitcoin are over, no one is punished for using or not using bitcoin. If you want to use bitcoin and you feel it benefits you, then use it. It is as simple as that. You can't change the past, all you can change is what happens next.

I don't doubt that there is some of that, but I also suspect that a lot of the push back is because there is something fishy about pushing a product that simultaneously makes the person rich. If the designers and early adopters donated all but a salary's worth of their crypto earnings each year then they might have a foot to stand on, but as it is, most developments (etherum, lightning network, etc.) only serve to get more people to buy the crypto, which at the end of the day is more cash for the holders.

I would argue that this is no different than just about anything someone wants to promote. If someone believes in something, they're likely going to be invested in it themselves, simple as that. If I believe in solar power and think it is going to really benefit society and help curb climate change, then I am going to be a really big proponent of solar power, but I'm also probably going to be invested in companies that produce solar panels. If I believe in electric cars because I think they're a better alternative, then I'm probably going to be driving an EV and might also be invested in an electric car company because I want them to succeed. People who are big proponents of things are also probably people who are more knowledgeable on the subject than your average person and so they're more likely to be comfortable investing in something they know a lot about. It is just the nature of these things.

Think of the flip side of it, what do you think would be fishier? Someone who is promoting bitcoin to other people but isn't invested in it themselves or someone who is promoting bitcoin but has a ton at stake in bitcoin? I would say the former is much more suspicious. It is called having "skin in the game" and I'd much rather take advice from someone who is just as invested in the thing they're promoted as those they're communicating with.

My question: are there any coin projects that try to do away with this dilemma? Coins that don't have some kind of mechanism that re-distributes wealth to tech enthusiasts but instead is more egalitarian? It seems like a catch-22, in that it's hard to get masses of people to adopt a simple currency vs. a speculative growth coin. I don't go down to the car wash to exchange for their tokens just in case they raise in value. I just use them when I'm there because that's what's accepted. It would seem for a transition from speculation to currency would need to solve this, IMO.

I know this stuff is has been discussed somewhat in this thread, but am curious if anyone in the space has an answer to this.

I guess it comes down to what benefits you're looking to get out of the system. At the end of the day, a blockchain's only benefit is to be decentralized with the least amount of trust required as possible. If you're going to have a stable-coin tied to the value of something else, that is inherently not going to be decentralized. Therefore there is no point in using a blockchain database. If you're just looking to have a system that provides speedy and cheap payments and don't care about decentralization, we have solutions like that (Venmo, Paypal, CashApp, Zelle, etc). Speedy and cheap payments isn't anything new in the tech world.

If you value decentralization then you're going to need a monetary policy that can be pre-programmed without requiring outside sources of information to be adjusted. Bitcoin's monetary policy is essentially completely arbitrary. The important thing is that it can be verified and is predictable. It very well could have been inflated forever and thus been less relatively scarce. But then you have the problem where decreasing block rewards are important for transitioning to a fee-based mining incentive. This is an important factor for ensuring that bitcoin's energy usage is as efficient as possible (economic transaction activity = energy spent).

Bitcoin had an "immaculate conception" with regards to its bootstrapping. It was created anonymously, circulated for several years before it ever even had an exchange price, had no pre-mine or closed insider circle of investors, and was created when the idea of a cryptocurrency was never a thought. This can never again be repeated. The cat is out of the bag. So, IMO this is the only chance at a truly fair and open decentralized currency that has no authority that creates or governs it and that can be trusted on those merits.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on February 04, 2022, 07:42:38 PM
It’s fascinating to me how people can mentally categorize two things that are technically duplicates - one as a legit investment and the other as an obvious fraud.

Bitcoin and Ethereum are legit because they have more interest from the media and people buying them. 3,000 copy versions of these softwares, however, each with the exact same potential functionality as Bitcoin or Ethereum are obvious pump and dump scams that will end in tears.


And this is part of the problem right here. I don't think you will find many people that don't agree there aren't thousands of scams among cryptocurrencies. They're all hype at best and scams/fraud and worst.

The problem is that bitcoin has become eponymous with cryptocurrency and so anything to do with cryptocurrencies and the scams they bring will immediately be associated with bitcoin or sometimes even be called bitcoin when they couldn't be further from it. Unfortunately, as with any technology, regulators are way far beyond on being knowledgeable about the space enough to make any enforcement of what is taking place meaningful while at the same time not completely ruining the industry with inept policies.

I have a couple of questions for you. I've been out of the space for years. I am interested in the critique of most crypto that it heavily rewards early adopters. By that, they (bitcoin, etherum, etc.) create hierarchies of wealth for their inventors and investors that seemingly undermines the spirit of the system. Someone who managed to keep their wallet of a couple of hundred bitcoin from a few years ago is now rolling deep, as well as all of the corporations who started mining when they could take advantage of the scale of larger rigs. This seems to punish late adopters- the folks who in theory would benefit most from a "decentralized" currency. I suspect this is some of the pointed anger of luddites that is felt by crypto enthusiasts, where those who missed the boat seemingly push back because they are envious. I don't doubt that there is some of that, but I also suspect that a lot of the push back is because there is something fishy about pushing a product that simultaneously makes the person rich. If the designers and early adopters donated all but a salary's worth of their crypto earnings each year then they might have a foot to stand on, but as it is, most developments (etherum, lightning network, etc.) only serve to get more people to buy the crypto, which at the end of the day is more cash for the holders.

My question: are there any coin projects that try to do away with this dilemma? Coins that don't have some kind of mechanism that re-distributes wealth to tech enthusiasts but instead is more egalitarian? It seems like a catch-22, in that it's hard to get masses of people to adopt a simple currency vs. a speculative growth coin. I don't go down to the car wash to exchange for their tokens just in case they raise in value. I just use them when I'm there because that's what's accepted. It would seem for a transition from speculation to currency would need to solve this, IMO.

I know this stuff is has been discussed somewhat in this thread, but am curious if anyone in the space has an answer to this.

Well, yes. The whole incentive for risking one's real money is to get rich by paying less for a cryptocoin than someone else will pay you for it in the future. That future is:

Quote
When bitcoin is 500k and a reserve asset in sovereign wealth funds/pension funds/etc.

And the people paying $500,000 USD to obtain a single bitcoin will be folks like me, because it's how the economy now operates, it's the only way to pay bills, my USD are nearly worthless, and/or I have no choice because I didn't get on the bandwagon soon enough. The handful of people who bought early will live in mansions paid for by the late adopters.

That. Is. The. Plan.

One thing I don't understand about the plan is how we'll live in a world where millions of blockchain transactions are processed every second and yet my only choice as a too-late adopter to cryptocurrency will be bitcoin (or pick any coin). I.e. the majority of people will choose to fork over their wealth to the holders of bitcoin rather than just picking another cryptocurrency to transact with and doing immediate USD>crypto conversions on their devices. There are already in 2022 phone apps that can let me pick which government currency I want to pay with or invest with, but somehow no such thing will ever exist for cryptocurrencies. Some technical barrier will prevent it, and all the too-late-adopters will be cornered into paying through the nose for the one limited supply currency of the future.

The other thing I don't understand about the plan is that in this future scenario where corporations start making sales and reporting earnings in the new reserve currency Bitcoin, wouldn't ownership of stock provide one with a way to obtain a steady stream of Bitcoin through dividends or by selling the stock for Bitcoin? This way, you get access to the currency of the future in the end, whether that currency is USD, fractional shares in a particular NFT that everyone decided on, or the 18th fork of LiteCoin, and you get to avoid all the risk of currency speculation. FIRE is FIRE even if we change currencies. The only net losers would be people in bonds or with mattresses stuffed full of paper bills. 

So to answer your question, there are two very good reasons why the supply of people willing to enrich earlier entrants will eventually run out.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 04, 2022, 08:17:16 PM
@ChpBstrd, I'm not sure I really follow much of what you're saying here. A circular economy under the dollar, bitcoin, or any other currency will largely operate the same. So I don't understand your statement about late-adopters forking over their wealth to early-adopters. You "fork over wealth" all the time under a circular economy with the USD. It is called buying things. People also "fork over wealth" to you for the work you do, it is called wages. Under a circular economy, people who have bitcoin will be buying things with it, whether they're a late or early adopter, it doesn't matter. If your wages today pays for groceries and rent every month, then that will be the case under a fiat or bitcoin circular economy. At the end of the day you're still going to have producers and consumers circulating goods and services all the same.

If you're a late-adopter and the price of bitcoin is $500,000, it isn't like you lost anything just because it is now that price and you're sitting on zero bitcoin. Your wages are still the same, so nothing changed there either.

The idea that the supply of entrants looking to enrich themselves will run out doesn't make sense in this regard when we're talking about bitcoin having a circular economy and being a part of sovereign wealth like you mentioned. Maybe I just didn't follow all that you said, as it was a lot. So correct me if I misunderstood.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on February 04, 2022, 10:02:48 PM
@ChpBstrd, I'm not sure I really follow much of what you're saying here. A circular economy under the dollar, bitcoin, or any other currency will largely operate the same. So I don't understand your statement about late-adopters forking over their wealth to early-adopters. You "fork over wealth" all the time under a circular economy with the USD. It is called buying things. People also "fork over wealth" to you for the work you do, it is called wages. Under a circular economy, people who have bitcoin will be buying things with it, whether they're a late or early adopter, it doesn't matter. If your wages today pays for groceries and rent every month, then that will be the case under a fiat or bitcoin circular economy. At the end of the day you're still going to have producers and consumers circulating goods and services all the same.

If you're a late-adopter and the price of bitcoin is $500,000, it isn't like you lost anything just because it is now that price and you're sitting on zero bitcoin. Your wages are still the same, so nothing changed there either.

The idea that the supply of entrants looking to enrich themselves will run out doesn't make sense in this regard when we're talking about bitcoin having a circular economy and being a part of sovereign wealth like you mentioned. Maybe I just didn't follow all that you said, as it was a lot. So correct me if I misunderstood.

I'll illustrate. My local grocery stores currently only accept payment in US dollars. If next week, next year, or next decade, they switch to only accepting payment in a particular cryptocurrency, I will be forced to purchase that currency from people who currently own it if I like to eat.

One way I might do so is if my job decides to or offers to stop paying me in US dollars and to instead start paying me in this particular cryptocurrency. Then I will be essentially working for the benefit of people holding that particular cryptocurrency (let's say Dogecoin wins the battle, just for illustration and fun).

I might have to trade a week's labor for a one-thousandth of a Dogecoin. My employer trades the outputs of my labor for the Dogecoin from an early adopter. Then I trade my one-thousandth of a Dogecoin for groceries.

One might say we all work for rich capitalists anyway, but this would be a case where we all suddenly switch to working for early adopters. The rich capitalists such as my employer and the shareholders in the grocery store might not see much change in their margins; they'd switch to "earning" Dogecoin. But any USD holdings such as bank accounts, money market accounts, bonds, or accounts payable would be decimated by the collapse of the USD, and that disappeared purchasing power would appear in the wallets of the people who bought Dogecoin for $0.20 when they had the chance. That's the plan.

Of course, it might make sense for all those market participants to decide not to pay the holders of Dogecoin $500,000 USD per coin. They could just stick with the USD and ride the hyperinflation rather than giving up everything to pay someone else for a working currency that could just as easily be copied. They could decide to create CapitalistPigCoin and forcibly create an economy around that rather than bidding at a desperate auction for a limited number of coins that nobody wants to sell or spend.

The point is, for the imagined transition to a crypto coin economy to take place, hundreds of millions of people would have to willingly choose to give a bunch of their cash wealth to someone else. They'd have to exit the circular government fiat economy where all payments are somebody else's earnings and enter a question mark economy where obtaining crypto coin from the people owning the crypto coin is the point. As the currency supply deflated, the HODLers would become nobles paying out smaller and smaller fractions of their hoard of coins in exchange for the labor of thousands of servants. We'd have to choose to do that too, rather than finding any other possible way to track, store, and transact wealth.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on February 05, 2022, 01:20:52 AM
Its worth noting that Zuckerberg has decided to drop his FB/Meta crypto project.

Is crypto so cool now that even the likes of Zuckerberg doesn't "get it?"
That's false, it was not Zuckerberg "doesn't get it" or "decided to stop".  It was regulators who put a stop to it, and not Zuckerberg himself as you falsely claimed.

"Mark Zuckerberg’s ambitious plan to build his own cryptocurrency is falling apart, amid growing pressure from regulators."
https://www.cnbc.com/2022/01/26/mark-zuckerbergs-botched-cryptocurrency-project-is-reportedly-for-sale.html
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 05, 2022, 06:54:25 AM
@ChpBstrd there are a few flaws I think in your analysis.

1) Any transition to a bitcoin circular economy (if we are to assume it occurs) would not happen cold turkey nor over night. FWIW I don't feel we'll ever be in a solely bitcoin circular economy and FIAT is here to stay. But for the sake of the scenario, if it were to happen, it would be a transitional event. Merchants that choose to accept bitcoin would accept bitcoin along side fiat currencies much like some are doing today.

2) The other flaw in your analysis is that if merchants were to move to only accepting bitcoin as a form of payment, they would only be doing so under the premise that sales in fiat currency have been completely abandoned. If sales in fiat payments are still being made in any meaningful volume, then I don't see them just abandoning it (barring any hyper-inflationary collapse).

3) This means that if fiat sales have been completely abandoned, it is mostly like because people are being paid in bitcoin. So the idea you're making that you'd need to "will be forced to purchase that currency from people who currently own it" is a false premise. We have exchanges today because we're in a fiat world and we're all paid in fiat currency and so that is how you acquire it today. If we were instead in a bitcoin world, that would not be the case. There would be no need for exchanges because bitcoin is what we earn and bitcoin is what we spend. There is a transitory period for sure, but it is not cold turkey and therefore the scenario you present just simply would not exist.

4) The other flaw in your analysis is that the fiat rich today would suddenly not exist and that simply isn't true. So the idea that we'd all be working for the bitcoin rich suddenly doesn't make sense either. The number of early adopter bitcoiners that will become rich from bitcoin becoming mainstream pales in comparison to the number of fiat rich in the world today. Those who hold the capital resources today will still hold it under a new bitcoin economy. The executives of all the top companies will still be there under a bitcoin economy. A transition of the money being used wouldn't change that. Certainly there will be a few new rich people in the world, but there are new rich people all the time in the world. I've mentioned some of the good that could come from bitcoin being used around the world and I personally believe that good would outweigh a small percentage of new rich people coming about (as if that's a bad thing anyway).

5) You also talked about how bitcoin could just be copied, but that simply isn't true. How about I run a fiber cable to your house and connect it to a computer I have running that has a website running on it and charge you $70 a month for it and call it the internet. No? Why? Because the internet can't be copied. It is a network effect where people are using the open internet because of everything that has been built up on it (services, websites, economy, etc). The same would be true for bitcoin. There are services, economic activity, software, and the security of the network that simply can't be duplicated. If bitcoin is accepted "everywhere you want to be" and all the trials and tribulations of bitcoin coming into existence and getting to where it is now widely accepted and being earned by workers, those trials and tribulations would be even more cumbersome for any other decentralized digital currency trying to overcome the incumbent. Any reason someone might have for wanting to use another currency could be built onto bitcoin as a secondary layer. It would be extremely difficult to overcome that network effect and duplicate much like it would be difficult (and pointless) to build a new internet when instead you can just build upon the one we have.

To largely sum up, earning wages in bitcoin is should not be considered "giving their wealth" to someone else any more than it is today. You're giving your productivity in return for compensation and you don't lose if you were to suddenly choose to be paid in bitcoin in that new world versus fiat so long as you're paid an equal value.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on February 05, 2022, 07:12:17 AM
Finally, I don't think late adopters are "punished" not being invested early on. Bitcoin didn't steal anything from them and they haven't been harmed in any way.

Look at it from a late adopter's perspective. If bitcoin/crypto were to become a main world currency (not just speculative vehicle), then there would be a massive redistribution of wealth, heavily favoring early adopters and large corps who built mining rigs.

For instance: my cousin is a teacher and makes 25K USD a year. He has slowly built himself a small and modest retirement fund. He won't get to retire until he's 55 or 60. But he is working hard and smart under the assumption that his USD will behave the same as it has for the last 100 years. He is busy and has kids, so has zero time to speculate on cyrptocurrency. The best he can do is buy bitcoin or dogecoin on coinbase if he were to ever, ever even have the time to research it enough to get to that point. It is a fun hobby for the young or techy, but it takes a shit ton of mental resources to approach and there are a lot of holes to fall in along the way. Smart for him thing to do is read to his kids at night and go for bike rides and just keep to himself. I would argue that he is contributing way more to society by doing this as well.

Say in 20 years Etherum has become the main world currency as some crypto enthusiasts would hope. It becomes the unit of measure for trade and GDP, etc. Now my brother's USD are relatively worthless, so he has to buy into this system. The problem is, he's one of the last "greater fools" to buy in. There are a ton of rich mother effers who speculated on Etherum and now a small % of folks own a huge portion of the coins.

I submit that this transfer of wealth IS stealing from them. It would be bunch of crypto folks siphoning massive amounts of wealth wealth simply because they're early adopters. There is no reason for my cousin to buy crypto right now except for to prevent himself being a late adopter. This to me is an ethical problem with the whole system. By design or by accident, it punishes late adopters, which doesn't line up with the lip service that is paid to the technology. It might liberate Venezuelans, but it does the opposite for US citizens (as it is currently designed).

There isn't much incentive to create or adopt crypto that doesn't follow this format.

I just realized that ChpBstrd said a similar thing. But this is the main stinker for me. I haven't heard a convincing response (and yours, lifeanon,  just further reinforces my stance, FYI, it dances around the problem as though there isn't one). I don't mean this in a crass way, just a matter-of-fact.


Also, the idea that those who bought and held since early on are rewarded isn't any different than any other investment. Those who bought Tesla and held through some of the worst negative news cycles as Tesla was massively shorted have been rewarded handsomely.

The difference is that my cousin who owns no Tesla (other than in index funds) doesn't have to own Tesla stock in some future envisioned scenario to make daily transactions. He can buy the new Chevy Bolt in 2030 with USD both of which benefit from Tesla's rise. He might have missed out on the Tesla growth, but his own $ isn't devalued in the process.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on February 05, 2022, 07:17:44 AM
The other flaw in your analysis is that the fiat rich today would suddenly not exist and that simply isn't true. So the idea that we'd all be working for the bitcoin rich suddenly doesn't make sense either. The number of early adopter bitcoiners that will become rich from bitcoin becoming mainstream pales in comparison to the number of fiat rich in the world today. Those who hold the capital resources today will still hold it under a new bitcoin economy.

You can't just hand wave it away! That's not a solution!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on February 05, 2022, 07:23:18 AM
Stable coins (because they don't appreciate) seem like they would answer this critique.

Don't these require a stable Fiat or resource to function? In other words, there wouldn't be a reason for most people to use the stablecoin when they could just own the resource/fiat directly?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 05, 2022, 07:54:28 AM
For instance: my cousin is a teacher and makes 25K USD a year. He has slowly built himself a small and modest retirement fund. He won't get to retire until he's 55 or 60. But he is working hard and smart under the assumption that his USD will behave the same as it has for the last 100 years. He is busy and has kids, so has zero time to speculate on cyrptocurrency. The best he can do is buy bitcoin or dogecoin on coinbase if he were to ever, ever even have the time to research it enough to get to that point. It is a fun hobby for the young or techy, but it takes a shit ton of mental resources to approach and there are a lot of holes to fall in along the way. Smart for him thing to do is read to his kids at night and go for bike rides and just keep to himself. I would argue that he is contributing way more to society by doing this as well.

I submit that this transfer of wealth IS stealing from them. It would be bunch of crypto folks siphoning massive amounts of wealth wealth simply because they're early adopters. There is no reason for my cousin to buy crypto right now except for to prevent himself being a late adopter. This to me is an ethical problem with the whole system. By design or by accident, it punishes late adopters, which doesn't line up with the lip service that is paid to the technology. It might liberate Venezuelans, but it does the opposite for US citizens (as it is currently designed).

There isn't much incentive to create or adopt crypto that doesn't follow this format.

I just realized that ChpBstrd said a similar thing. But this is the main stinker for me. I haven't heard a convincing response (and yours, lifeanon,  just further reinforces my stance, FYI, it dances around the problem as though there isn't one). I don't mean this in a crass way, just a matter-of-fact.


Also, the idea that those who bought and held since early on are rewarded isn't any different than any other investment. Those who bought Tesla and held through some of the worst negative news cycles as Tesla was massively shorted have been rewarded handsomely.

The difference is that my cousin who owns no Tesla (other than in index funds) doesn't have to own Tesla stock in some future envisioned scenario to make daily transactions. He can buy the new Chevy Bolt in 2030 with USD both of which benefit from Tesla's rise. He might have missed out on the Tesla growth, but his own $ isn't devalued in the process.

Except this isn't really how it would work out. Both you and ChpBstrd keep alluding to the idea that any transition away from the USD toward bitcoin would siphon away wealth from late adopters, but that isn't true at all. Your cousin who makes $25k a year as teacher would still be making $25k a year. If anything, I would argue that inflation under fiat currency has done way more damage to your cousins' and many others' wealth and wages than any transition away from fiat ever would. Just because someone else has become more wealthy in such an event doesn't mean someone else is getting poorer. Assuming the school your cousin works for continues to pay him the same wages when he transitions to a bitcoin wage, then how has he become poorer?

I'm assuming in this scenario that your cousin doesn't just have a huge stash of cash hidden in his mattress. Most people's future retirement savings is in some kind of equity or real estate and those things will still be productive and valuable in a bitcoin world all the same. The Amazons, Microsofts, Teslas, and Googles in the corporate world will all still be around. Stock investing would suddenly vanish. The idea that these things would suddenly cease production and thus everyone's wealth would vanish is ridiculous.

If there were such a transition where bitcoin became quite dominant, then there would likely be a decent reason for it (the USD value plummted for example). If that's the case, then it should hardly be seen as bitcoin's fault and anyone holding value in dollars still (under their mattress?) would be benefited by moving to bitcoin. Would they be benefited as much as early adopters? Certainly not, but to see flip that situation on its head and call it "siphoning wealth" away from people is quite the stretch.

I also think it is silly to categorize your cousin as the father who is reading to his kids at night and riding bikes with them as if people who own bitcoin don't also do those things.

At the end of the day, claiming that late adopters are "punished" for being late-adopters just simply isn't true. This is especially strange coming from a forum of people who strive to not fall into the "keeping up with the Jones's" trap. Just because your neighbor becomes wealthier for being an early adopter doesn't mean you become poorer for not doing so. You're still living the same life you always did earning the same wages you always have and are still invested in the same productive companies you've always been invested in.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 05, 2022, 08:22:30 AM
Stable coins (because they don't appreciate) seem like they would answer this critique.

Don't these require a stable Fiat or resource to function? In other words, there wouldn't be a reason for most people to use the stablecoin when they could just own the resource/fiat directly?

The reason that stablecoins exist is that they're a bandaid for the problem that crypto is unusuable as a currency.  Assuming that crypto of some form ever ends up used as a legitimate currency, I'd expect that the demand for stablecoins would drop off quite a bit.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on February 05, 2022, 09:19:01 AM
Just because someone else has become more wealthy in such an event doesn't mean someone else is getting poorer. Assuming the school your cousin works for continues to pay him the same wages when he transitions to a bitcoin wage, then how has he become poorer?

Does it not do this with a finite supply of coins? The more someone has, the less someone else can have
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on February 05, 2022, 09:25:02 AM
If anything, I would argue that inflation under fiat currency has done way more damage to your cousins' and many others' wealth and wages than any transition away from fiat ever would.


Some would argue that inflation is what keeps the economy rolling. If we were to have stagnant or deflating currency, the wealthy would hoard money. But because of inflation, they are better off investing it in the economy to outpace inflation. Folks like Elon and Bezos are rich because they have created products and services that are deemed valuable. They may be too wealthy, but nonetheless they have created massive companies.

I would agree that stagnant wages and the like are issues, but I don't see them as issues with inflation, and I don't see how crypto solves them. They are policy issues, such as taxes and unions, not currency ones
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on February 05, 2022, 09:28:15 AM
@lifeanon269
I don’t get why you are wasting your time on convincing MMM forum users that crypto is good. You know what owner of this site thinks about it. Why don't find a better forum that is big on crypto instead? Bro to Bro talk, could be actually nice.


I am actually getting a lot out of this discussion and have learned a bit. I applaud lifeanon for sticking with it because he is countering the echo chamber effect. That's not to say I agree with him/her. It might be a little bit of a circular discussion, reverting back to the same old points and there might be fundamental disagreements on priorities, but at least we can be aware of how everyone is approaching crypto. Should crypto be a flop or flourish we can say that at least we were thinking about it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on February 05, 2022, 09:30:39 AM
Stable coins (because they don't appreciate) seem like they would answer this critique.

Don't these require a stable Fiat or resource to function? In other words, there wouldn't be a reason for most people to use the stablecoin when they could just own the resource/fiat directly?

The reason that stablecoins exist is that they're a bandaid for the problem that crypto is unusuable as a currency.  Assuming that crypto of some form ever ends up used as a legitimate currency, I'd expect that the demand for stablecoins would drop off quite a bit.

That was my reading of them as well, no one is going to make a stableBitcoin should it be a widely functional currency.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on February 05, 2022, 09:32:34 AM
I'm assuming in this scenario that your cousin doesn't just have a huge stash of cash hidden in his mattress. Most people's future retirement savings is in some kind of equity or real estate and those things will still be productive and valuable in a bitcoin world all the same. The Amazons, Microsofts, Teslas, and Googles in the corporate world will all still be around. Stock investing would suddenly vanish. The idea that these things would suddenly cease production and thus everyone's wealth would vanish is ridiculous.


It's not the using of bitcoin that's the issue. It's the conversion of fiat to bitcoin as a late adopter. The transfer of wealth happens during that conversion, not after it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Gatzbie on February 05, 2022, 10:09:46 AM
ArnoldK is right, it is absolutely pointless to try and discuss crypto as a topic on this forum.  I completely agree with him.

Actually it isn't. But crypto has a culture where any fair criticism's of it or questioning it is considered "FUD" & is dismissed. This forum is a rare platform where free educated discussions can be had unlike a typical social media platform (Reddit, Twitter, etc.)

If you are not allowed to ask questions/freely discuss - something is not right. Look at the Wonderland Token incident in Defi recently. Many were scammed. Those questioning its legitimacy were all censored & labeled as "FUD" but were actually right (One of the founders is a serial scammer)

The early adopters who watched it go from 0-$9.5k each "knew something no one else did for the future" & the others who didn't participate "just didn't understand" Wonderland. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 05, 2022, 10:28:35 AM
Just because someone else has become more wealthy in such an event doesn't mean someone else is getting poorer. Assuming the school your cousin works for continues to pay him the same wages when he transitions to a bitcoin wage, then how has he become poorer?

Does it not do this with a finite supply of coins? The more someone has, the less someone else can have

In a relative sense there will always be rich and poor. Bitcoin doesn't change that and I don't necessarily think that's a problem. Rich get richer today and that doesn't mean that because of that I get poorer. People all over the world have been lifted out of poverty and the human population is in much better shape today from a wealth perspective than ever before even though the rich continue to get richer. That's the point I am making. The claim is being made that because someone else got rich, I then got poorer and that is the part I have contention with. There will always be people with bigger portions of the pie. What is important is that there is equity in the system and that just because someone has more than me that doesn't mean they have an advantage over me from a monetary perspective. Unfortunately under our current system, that just isn't true (see cantillon effect, something that doesn't apply to bitcoin).

If anything, I would argue that inflation under fiat currency has done way more damage to your cousins' and many others' wealth and wages than any transition away from fiat ever would.


Some would argue that inflation is what keeps the economy rolling. If we were to have stagnant or deflating currency, the wealthy would hoard money. But because of inflation, they are better off investing it in the economy to outpace inflation. Folks like Elon and Bezos are rich because they have created products and services that are deemed valuable. They may be too wealthy, but nonetheless they have created massive companies.

I would agree that stagnant wages and the like are issues, but I don't see them as issues with inflation, and I don't see how crypto solves them. They are policy issues, such as taxes and unions, not currency ones

People were investing in businesses and the economy was functioning without hording long before the dollar was depegged from gold. There is certainly debate to be had as to how much monetary deflation/inflation is good and bad. As with anything too much or too little of something is generally bad. But I don't think a deflationary spiral would be resultant from bitcoin and there is some history to suggest that. Most of the boom/bust recession cycles are due to malinvestment which comes from inflationary monetary policies. Just look at the markets today. All measures of proper valuation are completely lost in the market today. This results in wide spread malinvestment. When proper value companies are no longer strong investments in relation to others and there is so much money floating around, people seek riskier and riskier investments. That's obviously not sustainable and so the markets correct time and time again. These crashes hurt the poor more than they do the rich since the poor have a much smaller portion of their wealth in investments. They're the ones that continue to pay the biggest price whenever these crashes happen and these crashes are largely due to malinvestment in one way or another.


It's not the using of bitcoin that's the issue. It's the conversion of fiat to bitcoin as a late adopter. The transfer of wealth happens during that conversion, not after it.

That is sort of my point. There really won't be a "conversion" of fiat to bitcoin if bitcoin became widely used. You'd simply earn bitcoin as wages. The idea of exchanges would become less and less of a thing. Your $25k salary would just switch from being paid in bitcoin rather than USD. The value of your wages would still be the same, so you're not ending up "poorer". If you had some USD in your mattress, maybe you'd exchange that, but that's the thing with an exchange. You're getting an equal market value in that exchange. So you're not "losing" any value in that exchange. So the idea that you got "poorer" because of the transition is again the point that I have contention with. Again, minus any hyper-inflation, there isn't any loss of value that you experienced and even if there was hyper-inflation, bitcoin could hardly be blamed for that and should even be seen as a refuge in such a case.

I am actually getting a lot out of this discussion and have learned a bit. I applaud lifeanon for sticking with it because he is countering the echo chamber effect. That's not to say I agree with him/her. It might be a little bit of a circular discussion, reverting back to the same old points and there might be fundamental disagreements on priorities, but at least we can be aware of how everyone is approaching crypto. Should crypto be a flop or flourish we can say that at least we were thinking about it.

Agreed. Cheers mate! I always enjoy a cordial debate so long as things are civil and everyone for the most part is being very civil. Both sides benefit from a civil discussion.

The reason that stablecoins exist is that they're a bandaid for the problem that crypto is unusuable as a currency.  Assuming that crypto of some form ever ends up used as a legitimate currency, I'd expect that the demand for stablecoins would drop off quite a bit.

I would say that stable coins exist as a band-aid to the current traditional financial system. No one is buying stable coins as a means to escape the volatility of cryptocurrencies or using stable coins for making purchases, etc. People are using them as a means of sending fiat USD from one exchange to another. This is where the legacy systems have completely failed. It takes days to perform an ACH or wire transfer and when you want to send USD instantly from one exchange to another, that just doesn't cut it. They're essentially just using them as a transaction rail from one institution to another. I would also say that it is a way for traders send USD to off shore exchanges where legacy systems just don't serve. I've never used a stable coin before as I've never had a need for one because I don't trade at all. But that was always how I've seen them being used.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 05, 2022, 10:42:07 AM
It takes days to perform an ACH or wire transfer and when you want to send USD instantly from one exchange to another, that just doesn't cut it. They're essentially just using them as a transaction rail from one institution to another.

That's not a real problem.  I've been able to instantly send money to other people in other countries since the early 2000s with Paypal.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on February 05, 2022, 10:50:14 AM
Not sure I understand the StashingAway / ChpBstrd argument.

In very simple terms:

Even if you were ultimately forced to convert your unspendable USD to BTC, at whatever exchange rate, the market would be setting the prices in BTC just as it now sets them in USD.
It's not like the price of a loaf of bread would suddenly go from I USD to 1 BTC. In all likelihood it would cost the same in real terms.

The argument that late-adopters lose money in this scenario makes no sense. They merely missed the opportunity to make money.
Early-adopters would make money but, as has been pointed out, that risk/opportunity bet is open to everyone. Early-adopters took a risk, staked some money on an uncertain outcome, and won. What's wrong with that ?

Most people don't know a damned thing about Bitcoin. They've not even considered buying any in the near term. They have, by default, opted out from being an early-adopter.
Most people also don't know a damned thing about stock markets or forex or futures or options or bonds or commodities or . . or . . or . . or . . and don't actively participate in any of those things either. I fail to see the difference.


Young people of today (the late-adopters) are forced to buy into a highly-inflated property market and, if they have any money left over, have little choice but to buy into a highly-inflated stock market.
Most of us here (the earlier-adopters) have benefited greatly from those highly-inflated property and stock prices. Are we early-adopters stealing from the young late-adopters ? How is this not exactly the same ? I think it's probably worse.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 05, 2022, 11:13:05 AM
It takes days to perform an ACH or wire transfer and when you want to send USD instantly from one exchange to another, that just doesn't cut it. They're essentially just using them as a transaction rail from one institution to another.

That's not a real problem.  I've been able to instantly send money to other people in other countries since the early 2000s with Paypal.

It absolutely is a real problem. I've been working for a financial institution for 18+ years. It is a huge problem and institutions have actively been trying to come up with solutions for it over the last few years. Paypal?!?! That is not a solution here. Try sending tens of thousands of dollars with PayPal. Also, we're not talking about peer-to-peer transactions here. Stablecoins aren't being used for peer-2-peer payments. We're talking about sending large funds from one institution to another, often times in another country. I can unequivocally say that stable coins came about to solve this problem and it was a legacy financial institution problem.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on February 05, 2022, 12:23:48 PM
It takes days to perform an ACH or wire transfer and when you want to send USD instantly from one exchange to another, that just doesn't cut it. They're essentially just using them as a transaction rail from one institution to another.

That's not a real problem.  I've been able to instantly send money to other people in other countries since the early 2000s with Paypal.

It absolutely is a real problem. I've been working for a financial institution for 18+ years. It is a huge problem and institutions have actively been trying to come up with solutions for it over the last few years. Paypal?!?! That is not a solution here. Try sending tens of thousands of dollars with PayPal. Also, we're not talking about peer-to-peer transactions here. Stablecoins aren't being used for peer-2-peer payments. We're talking about sending large funds from one institution to another, often times in another country. I can unequivocally say that stable coins came about to solve this problem and it was a legacy financial institution problem.

Just transferred over 300k from principal to my chosen financial institution and it was done in less than 24 hours and reinvested at a cost of 70 dollars.

How much would that same transaction have cost me using Bitcoin. And how much would that time have really been worth happening faster?  Oh and my chosen institution gave me 1500 for the transfer and reimbursed the 70 dollars in fees.

There are extremely rare legal circumstances where hundreds of thousands of dollars need to change hands instantly.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Niceday on February 05, 2022, 12:31:54 PM

It absolutely is a real problem. I've been working for a financial institution for 18+ years. It is a huge problem and institutions have actively been trying to come up with solutions for it over the last few years. Paypal?!?! That is not a solution here. Try sending tens of thousands of dollars with PayPal. Also, we're not talking about peer-to-peer transactions here. Stablecoins aren't being used for peer-2-peer payments. We're talking about sending large funds from one institution to another, often times in another country. I can unequivocally say that stable coins came about to solve this problem and it was a legacy financial institution problem.

Just transferred over 300k from principal to my chosen financial institution and it was done in less than 24 hours and reinvested at a cost of 70 dollars.

How much would that same transaction have cost me using Bitcoin. And how much would that time have really been worth happening faster?  Oh and my chosen institution gave me 1500 for the transfer and reimbursed the 70 dollars in fees.

There are extremely rare legal circumstances where hundreds of thousands of dollars need to change hands instantly.

Was this $300k sent to you by you within the same country?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: beee on February 05, 2022, 12:37:40 PM
sending money from Russia to Canada via wire transfer was not a problem several years ago
it cost like $20 or $30 for "tens of thousands", took a couple of business days, if I remember correctly

what problem are stablecoins solving then?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 05, 2022, 02:22:44 PM
sending money from Russia to Canada via wire transfer was not a problem several years ago
it cost like $20 or $30 for "tens of thousands", took a couple of business days, if I remember correctly

what problem are stablecoins solving then?

Just transferred over 300k from principal to my chosen financial institution and it was done in less than 24 hours and reinvested at a cost of 70 dollars.

How much would that same transaction have cost me using Bitcoin. And how much would that time have really been worth happening faster?  Oh and my chosen institution gave me 1500 for the transfer and reimbursed the 70 dollars in fees.

There are extremely rare legal circumstances where hundreds of thousands of dollars need to change hands instantly.

It would have cost you about 20 cents and settled in about 10 minutes currently with bitcoin, but that's beside the point.

What I am not sure some of you are understanding is that most of these cryptocurrency exchanges are not involved with most of the clearing houses that traditional financial institutions settle with. So a lot of those rails are not an option. Furthermore, when making a cryptocurrency exchange, because cryptocurrency transactions are non-reversible, they must ensure that deposits are settled immediately to their system. They can't afford to have someone deposit cash to their system and have them exchange it for cryptocurrency and have it withdrawn only to have the deposit not fully clear. So most deposits done with ACH or wire transfers are fronted by the exchange, but there is a delay for any withdraws until the deposit is actually cleared with the traditional financial institution. Stable coins were created as basically a way for these exchanges to have a means of settling between each other without that delay. You can send tens of thousands of dollars with a stablecoin from one exchange to another anywhere in the world and have it instantly settled with complete finality. Stablecoins will settle immediately which means traders can complete and withdraw their trades immediately as well. Waiting a couple days for a fiat transaction to settle in the traditional financial system is overly cumbersome for most traders.

Like I said, I'm not a trader and I don't speculatively day trade, but I am well aware of the need that caused these stablecoins to come about and it absolutely is because of some of the limitations of the traditional finance systems and the lack of access to the traditional system many of these exchange have.

Transactions in the traditional finance world takes quite some time to settle with finality. Usually when you make a payment or deposit money, that money is shown as being deposited immediately but it isn't fully settled with the clearing house for days. The institution is just fronting you the money because you have a relationship with them and they want to make the appearances that everything was deposited successfully. In a world where cryptocurrency can be withdrawn irreversibly, customers can't be allowed that privilege.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on February 05, 2022, 02:45:05 PM
Even if you were ultimately forced to convert your unspendable USD to BTC, at whatever exchange rate, the market would be setting the prices in BTC just as it now sets them in USD.
It's not like the price of a loaf of bread would suddenly go from I USD to 1 BTC. In all likelihood it would cost the same in real terms.

Ok, let me try to clarify it a bit because I thin you're missing the devaluation of wealth part that I'm talking about.

I see a new kind of purple seashell on the coast of California. I say, "huh, that looks pretty cool. And it's unique and limited, but they're all over the shore here. I'm going to start collecting them and tell my friends to collect them because I think they'll be useful some day". I then do the same, and word gets out that folks are collecting seashells in Cali. Many in the know gather a bunch of bucketfuls that can be found at their feet, and realizing that they are running out of easy to access ones they start creating machines that can gather them in the shallows. Others come out of the woodworks to do the same. Some because they're bored and have time, others because the happen to live on that beach. Some folks think the blue or green seashells will be worth more (after all, the green ones are still being grown, ableit slowly, by crabs so they aren't unlimited).

We start trading the seashells for various things. Turns out foragers in Oregon happily send some mushrooms my way for the purple seashells because they can then trade the seashells to their buddies in Portland, say, 10,000 purple seashells for a pizza.

Corporations and foreign entities start hearing about it and send their workers to the coast to start gathering as well. Naturally, the seashells are harder to gather, but they have the resources to make large gathering rigs that can go deeper and get the harder to find seashells.

This mediphor is pretty obvious at this point, but let's keep going.

Eventually whole swaths of the world are trading in seashells. Those original gatherers of course don't have the lion's share, but they do have a disproportionate amount relative to their effort because they got the easy shoreside shells in buckets.

Eventually, my teacher cousin goes to the the grocery store with his USD and they say, "hey, we only accept purple seashells now. that loaf of bread is worth 1 seashell". He says, "fine, I'll go transfer my shells", but by the time he transfers, he can convert 100USD to one seashell. Last week the grocery store bought a bunch of seashells at 2USD per seashell as did most of the other corporations (how do you think the price got to 100USD per?). While no $ was actually lost here, his net valuation has dropped to 1/50 of what it would have been under USD.

This is particularly cruel because the original seashells were sold as alternatives to money that weren't subject to the whims of governmet, therefore would help the less fortunate navigate this world run by evil corps.

The way most of the crypto schemes play out is more similar to the above IMO. The general population won't be able to get in on the mad rush once it becomes apparent that USD is on it's way out. It will favor the already wealthy and connected (or, technologically ept). There doesn't seem to be a mechanism in which the poor (poor in education, wealth, experience or luck) make out better with crypto than with USD. It's bad for all of them.

You can say it won't happen that way but that's only as good as me saying that it will so where does that put us? I'm open to the idea of other currencies- Earth credits or whatever- but I don't think it can be a buy-in scheme.

Young people of today (the late-adopters) are forced to buy into a highly-inflated property market and, if they have any money left over, have little choice but to buy into a highly-inflated stock market.
Most of us here (the earlier-adopters) have benefited greatly from those highly-inflated property and stock prices. Are we early-adopters stealing from the young late-adopters ? How is this not exactly the same ? I think it's probably worse.

There are some differences, and I would think they're critical. Young people today are not forced to buy real estate. You don't have to own a house to transact or work or eat. It is indeed harder to participate in buying a house in the last few years, but again this isn't a currency issue. This is an issue with things like housing zoning and foreign purchase regulation. Switching currency does nothing to solve these issues whatsoever, it just creates another layer of them. If crypto were adopted, young late adopters are screwed not only by wage stagnation, high property value, high healthcare costs, but also missing out on the currency conversion? Many unlucky folks, mainly the poor, would probably be hit even harder by this. We're talking about all of the folks who are line workers in Oaklahoma or 40 year old cement workers in Washington or whatnot.

The second critical difference is that young people and early adopters are not analogous. Young people have always stepped into life with less resources than the old as a general rule. I graduated during the great recession. I was too poor to take advantage of the housing crash and it set my career back by years because of the lack of jobs. You know what? I'm doing fine right now. Just plugged away and index invested and while I wasn't able to time the market in any way, I also was able to keep a shirt on my back. This happened in the early 2000's and early 90's and early 80's... it's cyclic and it's the entire premise behind index investing. Every time it happens people hit it at bad times, but it's not a signifier that something is wrong, it's the nature of market pendulum swings. By the time I'm old I will have enough wealth to weather another downturn which is good as I won't have 40 years of workforce opportunity in front of me. If bitcoin becomes the main currency when I'm old and my live savings goes to 1/10 of it's equivalent USD value, then I'm screwed through no fault of my own and with no recourse. My other option to avoid this is to try to guess which coin will come out on top and invest enough of my savings in it to cover me. If I don't do it quick enough, I loose advantage of fair conversion, but if I do it too soon, I've sunk my life's savings into a failing coin.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on February 05, 2022, 03:10:11 PM
Y'all are missing the point. This is the future of the internet and currency.  And it solves 90% of the problems we have in this world. If we implement this on all systems from health care to taxes not only do we solve every issue we've been fighting politically it also solves global warming. Ah shit that is a political issue.

You just wait y'all are mad you didn buy in 4 months ago at 65k like I did.  Suck it bitches! 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on February 05, 2022, 03:25:15 PM
Currently it's only utility is a trading card game and y'all know what Pokemon 1st editions are selling for now. Get yourself on the ground floor of MTG and you can be a billionaire tomorrow. I mean technically we're at the top of trump tower (if you ask trump bc there is only one floor the TOP!). But we know it's going higher. Pretty soon youll see eve more utility. We'll be the new ticketmaster you know how much that shit is worth. Direct to artists from the consumers. You know just paying us a bit to process.  We're way better than ticketmaster though bc you know no evil corporation just a bunch of computers inefficiently solving the same equation til one gets it right and gets SOME OF YO MONEY! 

BUT SOMEONE WILL PAY You MORE FOR THIS. YOU KNOW IT I ONOW IT WE ALL KNOW IT.

FUTURES BITCHES!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 05, 2022, 03:36:34 PM
Eventually, my teacher cousin goes to the the grocery store with his USD and they say, "hey, we only accept purple seashells now. that loaf of bread is worth 1 seashell". He says, "fine, I'll go transfer my shells", but by the time he transfers, he can convert 100USD to one seashell. Last week the grocery store bought a bunch of seashells at 2USD per seashell as did most of the other corporations (how do you think the price got to 100USD per?). While no $ was actually lost here, his net valuation has dropped to 1/50 of what it would have been under USD.

This is the part that doesn't make sense and I feel you just skipped right to it without explanation just to fulfill your point. Why did the price of a loaf of bread just from its typical price to now over 100USD worth of seashells?

Let's say the price of 1 bitcoin is 1 dollar, for the sake of making the numbers easier. There are a bunch of people that got rich on bitcoin because they bought in when it was only worth ten thousandths of a penny. The price of bread is still $1 and the transition to a bitcoin economy is well underway. You're late to the game, but you're still earning what you've always earned, you just missed the boat with bitcoin. So now you need to transfer your wealth to bitcoin at an exchange of 1BTC for $1. You didn't lose any wealth at all because you're just exchanging at the fair market rate. What you're not explaining here is why suddenly there was massively hyper-inflation (I already mentioned earlier that this scenario excludes hyper-inflation scenarios).

Again, minus any hyper-inflation, there isn't any loss of value that you experienced and even if there was hyper-inflation, bitcoin could hardly be blamed for that and should even be seen as a refuge in such a case.

In a hyper-inflation scenario I would say you're right. Those that fail to abandon ship would certainly miss out and you're absolutely going to want to flee to something like bitcoin for refuge. But that wouldn't be bitcoin's fault and bitcoin would in fact be a safety net in those situations (see Venezuela, Turkey, Zimbabwe, Lebanon, etc). But what we're talking about is a world where there isn't any hyper-inflation but just that bitcoin is seeing more adoption and is now simply becoming widely used with its own circular economy and with more options to take earnings in bitcoin. There wouldn't be price inflation (ie, CPI) and so you're not losing anything by missing out on bitcoin's massive appreciation. You just simply exchange your current wealth and wages at the current fair market price.

If bitcoin becomes the main currency when I'm old and my live savings goes to 1/10 of it's equivalent USD value, then I'm screwed through no fault of my own and with no recourse. My other option to avoid this is to try to guess which coin will come out on top and invest enough of my savings in it to cover me. If I don't do it quick enough, I loose advantage of fair conversion, but if I do it too soon, I've sunk my life's savings into a failing coin.

What do you mean a "fair conversion"? The exchange rate at any given time for BTC\USD will always be the fair market price. Again, you just kind of skip to that claim without much economic theory as to why you think your wealth would suddenly go to 1/10 of its value. Do you think that Amazon and Microsoft would suddenly just stop being Amazon and Microsoft in a world where bitcoin is adopted as currency? Economic production in our world is still the same and that doesn't change. Farmers still grow food, chip makers still make computer chips, loggers still log trees for wood, etc. Bitcoin doesn't change any of that. Our economy keeps rolling as it always has and the work and production you do today would still have the same value relative to the cost of goods (minus any other variables like automation, demand, etc). I don't understand why you claim that all wealth outside of bitcoin would come crashing down and each time you skip right to that part in your examples you fail to explain why you think that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on February 05, 2022, 03:43:24 PM
I'm out.

Sorry I'll bookmark this thread to return in 10 years to say told ya so and dance on the tears of the followers. Maybe sooner.
Apparently not?  If you're going to return less than a week later, maybe don't post "I'm out... to return in 10 years"?


It takes days to perform an ACH or wire transfer and when you want to send USD instantly from one exchange to another, that just doesn't cut it. They're essentially just using them as a transaction rail from one institution to another.

That's not a real problem.  I've been able to instantly send money to other people in other countries since the early 2000s with Paypal.
It absolutely is a real problem. I've been working for a financial institution for 18+ years. It is a huge problem and institutions have actively been trying to come up with solutions for it over the last few years. Paypal?!?! That is not a solution here. Try sending tens of thousands of dollars with PayPal. Also, we're not talking about peer-to-peer transactions here. Stablecoins aren't being used for peer-2-peer payments. We're talking about sending large funds from one institution to another, often times in another country. I can unequivocally say that stable coins came about to solve this problem and it was a legacy financial institution problem.

Just transferred over 300k from principal to my chosen financial institution and it was done in less than 24 hours and reinvested at a cost of 70 dollars.

How much would that same transaction have cost me using Bitcoin. And how much would that time have really been worth happening faster?  Oh and my chosen institution gave me 1500 for the transfer and reimbursed the 70 dollars in fees.
Clearly a sign up bonus for a new account.  That doesn't represent the normal situation for international wire transfers.

Someone transferring $300k using PayPal would get charged 3%, or about $9,000 for the transaction.

Right now it looks like someone would pay $2 to transfer $300k on Bitcoin's network.
https://bitinfocharts.com/comparison/bitcoin-transactionfees.html#3y
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on February 05, 2022, 03:47:42 PM
Wait wait guys let's say for the sake of argument this currency that's not a currency bc it's gold. Ahh shit I mean let's just say today they're equal. One has a finite supply and cannot be used as currency.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on February 05, 2022, 03:49:28 PM
I'm out.

Sorry I'll bookmark this thread to return in 10 years to say told ya so and dance on the tears of the followers. Maybe sooner.
Apparently not?  If you're going to return less than a week later, maybe don't post "I'm out... to return in 10 years"?


It takes days to perform an ACH or wire transfer and when you want to send USD instantly from one exchange to another, that just doesn't cut it. They're essentially just using them as a transaction rail from one institution to another.

That's not a real problem.  I've been able to instantly send money to other people in other countries since the early 2000s with Paypal.
It absolutely is a real problem. I've been working for a financial institution for 18+ years. It is a huge problem and institutions have actively been trying to come up with solutions for it over the last few years. Paypal?!?! That is not a solution here. Try sending tens of thousands of dollars with PayPal. Also, we're not talking about peer-to-peer transactions here. Stablecoins aren't being used for peer-2-peer payments. We're talking about sending large funds from one institution to another, often times in another country. I can unequivocally say that stable coins came about to solve this problem and it was a legacy financial institution problem.

Just transferred over 300k from principal to my chosen financial institution and it was done in less than 24 hours and reinvested at a cost of 70 dollars.

How much would that same transaction have cost me using Bitcoin. And how much would that time have really been worth happening faster?  Oh and my chosen institution gave me 1500 for the transfer and reimbursed the 70 dollars in fees.
Clearly a sign up bonus for a new account.  That doesn't represent the normal situation for international wire transfers.

Someone transferring $300k using PayPal would get charged 3%, or about $9,000 for the transaction.

Right now it looks like someone would pay $2 to transfer $300k on Bitcoin's network.
https://bitinfocharts.com/comparison/bitcoin-transactionfees.html#3y

Just putting this out there one time so you stop responding. You're on my ignore list.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on February 05, 2022, 03:53:50 PM
@lifeanon269
It must be something strange happening to crypto holders. Once they get crypto they become strange. Like a cult members.  Jehovah witness like. I sense some deep insecurity.
...
Why we have to agree with your crypto investments? The answer seems simple. Bros have to pump because this makes more chances on their gamble. Deep inside they have insecurities about crypto. If you really believe in crypto, why do that? I happened to e.g. think that SOXX has good long term outlook, but i don't force everyone around me to get it. It is all so weird.
You do not have to agree - nor even visit the only crypto thread on the forum.

Why the need for personal attacks about "deep insecurities"?  Does it bother you other people could make money without passively investing?

Which is my point - this forum has people who "really believe" in passive investing which many forum members "have to pump".  If they "really believe in" passive investing, "why do that"?  Yes, the "cult" of passive investing "is all so weird".

Or, passive investing could be appropriate for many people... crypto could be appropriate for many people... and there could even be overlap.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on February 05, 2022, 03:54:48 PM
I'm out.

Sorry I'll bookmark this thread to return in 10 years to say told ya so and dance on the tears of the followers. Maybe sooner.
Apparently not?  If you're going to return less than a week later, maybe don't post "I'm out... to return in 10 years"?


It takes days to perform an ACH or wire transfer and when you want to send USD instantly from one exchange to another, that just doesn't cut it. They're essentially just using them as a transaction rail from one institution to another.

That's not a real problem.  I've been able to instantly send money to other people in other countries since the early 2000s with Paypal.
It absolutely is a real problem. I've been working for a financial institution for 18+ years. It is a huge problem and institutions have actively been trying to come up with solutions for it over the last few years. Paypal?!?! That is not a solution here. Try sending tens of thousands of dollars with PayPal. Also, we're not talking about peer-to-peer transactions here. Stablecoins aren't being used for peer-2-peer payments. We're talking about sending large funds from one institution to another, often times in another country. I can unequivocally say that stable coins came about to solve this problem and it was a legacy financial institution problem.

Just transferred over 300k from principal to my chosen financial institution and it was done in less than 24 hours and reinvested at a cost of 70 dollars.

How much would that same transaction have cost me using Bitcoin. And how much would that time have really been worth happening faster?  Oh and my chosen institution gave me 1500 for the transfer and reimbursed the 70 dollars in fees.
Clearly a sign up bonus for a new account.  That doesn't represent the normal situation for international wire transfers.

Someone transferring $300k using PayPal would get charged 3%, or about $9,000 for the transaction.

Right now it looks like someone would pay $2 to transfer $300k on Bitcoin's network.
https://bitinfocharts.com/comparison/bitcoin-transactionfees.html#3y

Just putting this out there one time so you stop responding. You're on my ignore list.
You replied to state you are ignoring me.  Which is it?  You reply, or ignore me?
And don't say you're ignoring me for 10 years - you've already tried that trick.

My point was that your free international wire transfer is a bogus comparison - you opened an account, and were given it free as a benefit.  You can't compare that to normal money transfers and pretend they're all free.

The scenario that was being discussed was PayPal, charging 3% or $9,000 of a $300k transfer... versus Bitcoin charging about $2 for a transfer of that amount.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 05, 2022, 04:11:30 PM
I'm out.

Sorry I'll bookmark this thread to return in 10 years to say told ya so and dance on the tears of the followers. Maybe sooner.
Apparently not?  If you're going to return less than a week later, maybe don't post "I'm out... to return in 10 years"?


It takes days to perform an ACH or wire transfer and when you want to send USD instantly from one exchange to another, that just doesn't cut it. They're essentially just using them as a transaction rail from one institution to another.

That's not a real problem.  I've been able to instantly send money to other people in other countries since the early 2000s with Paypal.
It absolutely is a real problem. I've been working for a financial institution for 18+ years. It is a huge problem and institutions have actively been trying to come up with solutions for it over the last few years. Paypal?!?! That is not a solution here. Try sending tens of thousands of dollars with PayPal. Also, we're not talking about peer-to-peer transactions here. Stablecoins aren't being used for peer-2-peer payments. We're talking about sending large funds from one institution to another, often times in another country. I can unequivocally say that stable coins came about to solve this problem and it was a legacy financial institution problem.

Just transferred over 300k from principal to my chosen financial institution and it was done in less than 24 hours and reinvested at a cost of 70 dollars.

How much would that same transaction have cost me using Bitcoin. And how much would that time have really been worth happening faster?  Oh and my chosen institution gave me 1500 for the transfer and reimbursed the 70 dollars in fees.
Clearly a sign up bonus for a new account.  That doesn't represent the normal situation for international wire transfers.

Someone transferring $300k using PayPal would get charged 3%, or about $9,000 for the transaction.

Right now it looks like someone would pay $2 to transfer $300k on Bitcoin's network.
https://bitinfocharts.com/comparison/bitcoin-transactionfees.html#3y

Just putting this out there one time so you stop responding. You're on my ignore list.
You replied to state you are ignoring me.  Which is it?  You reply, or ignore me?
And don't say you're ignoring me for 10 years - you've already tried that trick.

My point was that your free international wire transfer is a bogus comparison - you opened an account, and were given it free as a benefit.  You can't compare that to normal money transfers and pretend they're all free.

The scenario that was being discussed was PayPal, charging 3% or $9,000 of a $300k transfer... versus Bitcoin charging about $2 for a transfer of that amount.

Where are you getting your numbers from?

paypal.com/ca/webapps/mpp/paypal-fees (http://paypal.com/ca/webapps/mpp/paypal-fees)

Quote
Sending and receiving money

When you send money (initiated from the “Friends and Family” tab of the “Send Money” flow) to, or receive money into your PayPal account from, friends and family without making an underlying commercial transaction (that is, the payment is not for the purchase of goods or services or for making any other commercial transaction), we call that a “personal transaction”.

The rates relating to personal transactions are set out below.

Sending domestic personal transactions
PayPal balance or a bank account - No Fee

Sending international personal transactions
Europe I, Europe II, Northern Europe, and United States - PayPal balance or a bank account   2.99 CAD
Any other market/region - PayPal balance or a bank account   4.99 CAD

So we're talking about (worst possible case) 4.99 vs 2$ . . . of course this comes with the caveat that by the time you buy bitcoin and send it, the person you're sending to receives it, and then they turn it into real money to spend it it 's a lottery if the receiver actually get the value that you wanted to send.  It could very well be worth a higher or a lower amount.

Not really seeing any amazing crypto utility here.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on February 05, 2022, 04:37:42 PM
I'm out.

Sorry I'll bookmark this thread to return in 10 years to say told ya so and dance on the tears of the followers. Maybe sooner.
Apparently not?  If you're going to return less than a week later, maybe don't post "I'm out... to return in 10 years"?


It takes days to perform an ACH or wire transfer and when you want to send USD instantly from one exchange to another, that just doesn't cut it. They're essentially just using them as a transaction rail from one institution to another.

That's not a real problem.  I've been able to instantly send money to other people in other countries since the early 2000s with Paypal.
It absolutely is a real problem. I've been working for a financial institution for 18+ years. It is a huge problem and institutions have actively been trying to come up with solutions for it over the last few years. Paypal?!?! That is not a solution here. Try sending tens of thousands of dollars with PayPal. Also, we're not talking about peer-to-peer transactions here. Stablecoins aren't being used for peer-2-peer payments. We're talking about sending large funds from one institution to another, often times in another country. I can unequivocally say that stable coins came about to solve this problem and it was a legacy financial institution problem.

Just transferred over 300k from principal to my chosen financial institution and it was done in less than 24 hours and reinvested at a cost of 70 dollars.

How much would that same transaction have cost me using Bitcoin. And how much would that time have really been worth happening faster?  Oh and my chosen institution gave me 1500 for the transfer and reimbursed the 70 dollars in fees.
Clearly a sign up bonus for a new account.  That doesn't represent the normal situation for international wire transfers.

Someone transferring $300k using PayPal would get charged 3%, or about $9,000 for the transaction.

Right now it looks like someone would pay $2 to transfer $300k on Bitcoin's network.
https://bitinfocharts.com/comparison/bitcoin-transactionfees.html#3y

Just putting this out there one time so you stop responding. You're on my ignore list.
You replied to state you are ignoring me.  Which is it?  You reply, or ignore me?
And don't say you're ignoring me for 10 years - you've already tried that trick.

My point was that your free international wire transfer is a bogus comparison - you opened an account, and were given it free as a benefit.  You can't compare that to normal money transfers and pretend they're all free.

The scenario that was being discussed was PayPal, charging 3% or $9,000 of a $300k transfer... versus Bitcoin charging about $2 for a transfer of that amount.

Where are you getting your numbers from?

paypal.com/ca/webapps/mpp/paypal-fees (http://paypal.com/ca/webapps/mpp/paypal-fees)

Quote
Sending and receiving money

When you send money (initiated from the “Friends and Family” tab of the “Send Money” flow) to, or receive money into your PayPal account from, friends and family without making an underlying commercial transaction (that is, the payment is not for the purchase of goods or services or for making any other commercial transaction), we call that a “personal transaction”.

The rates relating to personal transactions are set out below.

Sending domestic personal transactions
PayPal balance or a bank account - No Fee

Sending international personal transactions
Europe I, Europe II, Northern Europe, and United States - PayPal balance or a bank account   2.99 CAD
Any other market/region - PayPal balance or a bank account   4.99 CAD

So we're talking about (worst possible case) 4.99 vs 2$ . . . of course this comes with the caveat that by the time you buy bitcoin and send it, the person you're sending to receives it, and then they turn it into real money to spend it it 's a lottery if the receiver actually get the value that you wanted to send.  It could very well be worth a higher or a lower amount.

Not really seeing any amazing crypto utility here.
I guess the $300k USD transaction wouldn't work with PayPal anyways - you would have to wait about 2 months to withdraw it, according to the "Withdrawal Limits" section.

Looks like PayPal puts most of the burden on commercial transactions, where they charge 3.5% domestic, and another 1.5% for international.  So maybe 5% of $300k?

"PayPal Checkout   3.49% + fixed fee"

"Additional percentage-based fee for international commercial transactions
All Commercial Transactions - (excluding American Express Payments)   1.50%"

https://www.paypal.com/us/webapps/mpp/merchant-fees#statement-2

Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on February 05, 2022, 04:45:41 PM
I can't imagine anyone risking sending a large amount with paypal, not only due to the fees but locking accounts for months to 'investigate' the funds etc.  You couldn't pay me to use paypal, their share price has tanked too, they deserve it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 05, 2022, 05:07:42 PM
Not to mention that PayPal transactions and just transactions between funds held within the same institution. It is just PayPal changing the balance from one of their users to another. It isn't sending it from one institution to another which is what the topic of stablecoins was in regards to. It technically isn't a transfer of funds, it is just an accounting change at PayPal where both of the users have accounts with PayPal and both reside on countries where PayPal does business. Stablecoins are allowing individuals transfer funds immediately between completely separate institutions globally. In otherwords, it is an apples to oranges comparison.

PayPal is for peer to peer transactions similar to Venmo, CashApp, Zelle and others like it. But they're all closed systems. Stablecoins are for transferring funds quickly between completely different institutions globally that support those stablecoins.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on February 05, 2022, 05:18:27 PM
Even if you were ultimately forced to convert your unspendable USD to BTC, at whatever exchange rate, the market would be setting the prices in BTC just as it now sets them in USD.
It's not like the price of a loaf of bread would suddenly go from I USD to 1 BTC. In all likelihood it would cost the same in real terms.
. . . .

Eventually, my teacher cousin goes to the the grocery store with his USD and they say, "hey, we only accept purple seashells now. that loaf of bread is worth 1 seashell". He says, "fine, I'll go transfer my shells", but by the time he transfers, he can convert 100USD to one seashell. Last week the grocery store bought a bunch of seashells at 2USD per seashell as did most of the other corporations (how do you think the price got to 100USD per?). While no $ was actually lost here, his net valuation has dropped to 1/50 of what it would have been under USD. [/b][/i]

. . . .

The scenario being discussed here is that of universal adoption of Bitcoin as the currency. Under those circumstances, where does the volatility come from ? Especially 50x / week volatility ! That's a pretty rough week even by today's standards !
Bitcoin's volatility would surely settle in proportion to it's wider adoption. If we approach universality, volatility should approach zero.

Young people of today (the late-adopters) are forced to buy into a highly-inflated property market and, if they have any money left over, have little choice but to buy into a highly-inflated stock market.
Most of us here (the earlier-adopters) have benefited greatly from those highly-inflated property and stock prices. Are we early-adopters stealing from the young late-adopters ? How is this not exactly the same ? I think it's probably worse.

There are some differences, and I would think they're critical. Young people today are not forced to buy real estate. You don't have to own a house to transact or work or eat. It is indeed harder to participate in buying a house in the last few years, but again this isn't a currency issue.
. . . .

I think you misunderstood my point here. I'm not offering Bitcoin as a solution to this problem. I'm simply pointing out that these everyday conventional scenarios have the same early vs late adopter problems that seem to concern you.

And young people are forced to participate in the housing market one way or another, unless they are to live on the street / eternally with parents, etc.

. . . .
If bitcoin becomes the main currency when I'm old and my live savings goes to 1/10 of it's equivalent USD value, then I'm screwed through no fault of my own and with no recourse. My other option to avoid this is to try to guess which coin will come out on top and invest enough of my savings in it to cover me. If I don't do it quick enough, I loose advantage of fair conversion, but if I do it too soon, I've sunk my life's savings into a failing coin.

Assuming a USD-to-Bitcoin transition wouldn't happen in an instant (which seems highly unlikely by any measure) there would be plenty of time for everyone to start making decisions about gradually or completely transferring their wealth.
Some have already started; they might do well but they risk losing everything if the project fails and Bitcoin goes to zero. Some would leave it until the last minute and they would get the safest transfer but probably at the least favourable conversion rate. This is standard risk/reward stuff.

Where does your imagined 90% loss come from ?

If you're the last person on earth to transfer the last USD into Bitcoin you will probably buy it at it's peak price vs USD, let's say 1 USD = n BTC. I'm struggling to imagine why, on that day, that 1 USD loaf of bread would cost anything other than n BTC.
In any case, if a significant price difference did exist, there's a clear arbitrage opportunity for you there !
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Niceday on February 05, 2022, 05:58:12 PM

Where are you getting your numbers from?

paypal.com/ca/webapps/mpp/paypal-fees (http://paypal.com/ca/webapps/mpp/paypal-fees)

Quote
Sending and receiving money

When you send money (initiated from the “Friends and Family” tab of the “Send Money” flow) to, or receive money into your PayPal account from, friends and family without making an underlying commercial transaction (that is, the payment is not for the purchase of goods or services or for making any other commercial transaction), we call that a “personal transaction”.

The rates relating to personal transactions are set out below.

Sending domestic personal transactions
PayPal balance or a bank account - No Fee

Sending international personal transactions
Europe I, Europe II, Northern Europe, and United States - PayPal balance or a bank account   2.99 CAD
Any other market/region - PayPal balance or a bank account   4.99 CAD

So we're talking about (worst possible case) 4.99 vs 2$ . . . of course this comes with the caveat that by the time you buy bitcoin and send it, the person you're sending to receives it, and then they turn it into real money to spend it it 's a lottery if the receiver actually get the value that you wanted to send.  It could very well be worth a higher or a lower amount.

Not really seeing any amazing crypto utility here.

The same paypal link shows that there is a minimum of 4% fee for currency conversion. When you send USD $300k internationally, they'll make a lot of money on the money exchange which in this case is $12,000 + $4.99.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 05, 2022, 06:46:37 PM

Where are you getting your numbers from?

paypal.com/ca/webapps/mpp/paypal-fees (http://paypal.com/ca/webapps/mpp/paypal-fees)

Quote
Sending and receiving money

When you send money (initiated from the “Friends and Family” tab of the “Send Money” flow) to, or receive money into your PayPal account from, friends and family without making an underlying commercial transaction (that is, the payment is not for the purchase of goods or services or for making any other commercial transaction), we call that a “personal transaction”.

The rates relating to personal transactions are set out below.

Sending domestic personal transactions
PayPal balance or a bank account - No Fee

Sending international personal transactions
Europe I, Europe II, Northern Europe, and United States - PayPal balance or a bank account   2.99 CAD
Any other market/region - PayPal balance or a bank account   4.99 CAD

So we're talking about (worst possible case) 4.99 vs 2$ . . . of course this comes with the caveat that by the time you buy bitcoin and send it, the person you're sending to receives it, and then they turn it into real money to spend it it 's a lottery if the receiver actually get the value that you wanted to send.  It could very well be worth a higher or a lower amount.

Not really seeing any amazing crypto utility here.

The same paypal link shows that there is a minimum of 4% fee for currency conversion. When you send USD $300k internationally, they'll make a lot of money on the money exchange which in this case is $12,000 + $4.99.

What's the conversion fee going from real currency to crypto and then back to a real currency?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 05, 2022, 07:32:45 PM
What's the conversion fee going from real currency to crypto and then back to a real currency?

Depends on the exchange, but most rates are pretty competitive between exchanges. Gemini's are anywhere from 0.1-0.35%. The more volume you're doing the lower your fee (sometimes even reaching 0%).

https://www.gemini.com/fees/activetrader-fee-schedule#section-active-trader-fee-schedule (https://www.gemini.com/fees/activetrader-fee-schedule#section-active-trader-fee-schedule)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on February 05, 2022, 11:37:18 PM
@ChpBstrd there are a few flaws I think in your analysis.

1) Any transition to a bitcoin circular economy (if we are to assume it occurs) would not happen cold turkey nor over night. FWIW I don't feel we'll ever be in a solely bitcoin circular economy and FIAT is here to stay. But for the sake of the scenario, if it were to happen, it would be a transitional event. Merchants that choose to accept bitcoin would accept bitcoin along side fiat currencies much like some are doing today.

2) The other flaw in your analysis is that if merchants were to move to only accepting bitcoin as a form of payment, they would only be doing so under the premise that sales in fiat currency have been completely abandoned. If sales in fiat payments are still being made in any meaningful volume, then I don't see them just abandoning it (barring any hyper-inflationary collapse).

3) This means that if fiat sales have been completely abandoned, it is mostly like because people are being paid in bitcoin. So the idea you're making that you'd need to "will be forced to purchase that currency from people who currently own it" is a false premise. We have exchanges today because we're in a fiat world and we're all paid in fiat currency and so that is how you acquire it today. If we were instead in a bitcoin world, that would not be the case. There would be no need for exchanges because bitcoin is what we earn and bitcoin is what we spend. There is a transitory period for sure, but it is not cold turkey and therefore the scenario you present just simply would not exist.

OK, let's take a look at the halfway point in a hypothetical process that takes decades, a point where half of the transactions that used to be done in USD are now done in a particular cryptocurrency, and the other half still occur in USD. The percentage of transactions in cryptocurrency is growing and the percentage in USD is shrinking, and that's how we've arrived at this 50/50 midpoint.

Let's say the particular cryptocurrency that achieves this widespread adoption has a finite number of coins that can possibly be created. We'll pick 21 million as our number.  Meanwhile new USD continue to be minted, and the net effect between bouts of QE and QT is a steady growth of USD money supply, roughly approximating the growth in demand for dollars in the world economy plus a small amount of inflation.

Because USD are growing in supply and the particular cryptocurrency gets more and more rare as more and more people attempt to transact or HODL the currency, the coins per dollar exchange rate is constantly decreasing. The USD slowly loses value to inflation at maybe 3%/year, while the cryptocurrency becomes more and more scarce as more and more people try to transact a finite supply and experiences 10%/year deflation. A loaf of bread that costs either $5 USD or 1/100,000th of a crypto coin on the day when the 50/50 mark occurs would be expected cost $5.15 USD or 1/110,000th of the crypto coin by the end of the year.

On that day, your new employer offers you a choice. You can either be paid your salary as $100k USD per year, or you can be paid your salary as 1/50th of a crypto coin per year. You must decide today. Which do you choose?

Well that's easy. You want your paycheck a year from now to have 10% more purchasing power, not 3% less! Plus, you're locking in 10%/year raises without even asking. You decide to be paid in crypto coin. On your company's books, your salary comes out of the cost of sales made in crypto.

Then a strange thing happens. You are about to take a date out to a restaurant to celebrate your new job, but you realize that by spending part of your new paycheck today, you are giving up 110% of that purchasing power a year from now. In 20 years, today's decision to buy a restaurant meal will have cost you 278% of the purchasing power you spent today. All you have to do to lock in 10% returns forever is cancel your date and stuff the crypto coin into an online wallet.

You realize now that almost no purchase makes financial sense. Additionally, you realize that if you are going to experience 10% gains on anything you save from now on, it makes sense to cut expenses to the bone and save the maximum amount possible. Plus, because the particular crypto coin is going to increase in value at a minimum of 10% forever, you could retire with a safe withdraw rate of 10%, or have a stache 10X your desired level of spending, and never run out of money in perpetuity. You'll go from broke to independently wealthy in about 4-5 years.

You dump your date, sell most of your possessions, and move out of your apartment, renting a bunk bed during night time hours in a slum house bedroom with 10 coworkers who are doing the same thing. You live on the crypto coin equivalent of $300/month, hand washing clothes, eating rice and beans, not having a phone, etc.

The following month, just as swapping an old mattress with your night shift coworker starts to get really old, your company makes an announcement: Sales in crypto coin have plummeted. Apparently, consumers all over the world have made the same choice you made and started to hoard their crypto coins as a surefire investment rather than spend them, and so the company has insufficient revenue in crypto coins that it can use for payroll purposes. They are still profitable in terms of dollar sales, but the forex markets have insufficient supplies of crypto coin (only a couple million total coins still in circulation, and all the rest stored in vaults) so that trading their earnings in USD for crypto coin is prohibitively expensive. The bid/ask spreads are nuts, and for a moment you try to understand the reasoning of any investor trading away a currency that gains 10% a year in exchange for one that loses 3% a year. How much would you ask?

Your employer is offering you a stark choice: Be paid in USD or be laid off. Your company says this is a lot nicer than what other companies are doing - laying off their entire crypto-salaried workforces without notice. They describe a "depression" in the crypto side of their business, but as far as you can tell your crypto investments are doing great!

You fume with anger. A deal was a deal! You almost rage-quit but decide to do some online skimming first. A quick glance on job websites reveals that there are a lot fewer jobs offering compensation in crypto than there were last month. Some have introduced a clause about payment in crypto being tied to the available exchange rate with USD, which would defeat the whole purpose.

As you research further, the news articles are describing a liquidity crisis in the half of the economy that consists of crypto coin exchanges. Everybody is hoarding and nobody is spending. Banks are defaulting on their crypto coin accounts because they can't find counterparties willing to lend to them at reasonable rates (i.e. rates less than the 10% rate of deflation). The unemployment rate among crypto-compensated workers is approaching 45%, and many are being forced to accept jobs paying USD because that's all anyone is willing to spend.

On the bright side, the purchasing power of the coins you saved in the past month has skyrocketed. Your boss puts a sign on his car that says "0.0001 crypto coin buys this car". However, you wonder if this party can continue. Demand for crypto is high now, but the future looks increasingly like one where employees have to accept payment in USD, crypto banking services and loans are not available, and the 50% of the economy conducted in crypto coin permanently shrinks. You ponder something crazy. Maybe you should trade your crypto coins for USD, stocks, or real property now while their value is peaking, because their future doesn't look like 10% appreciation forever any more. You were one of the first people to think of saving 90% of their crypto coin income, so what if everyone else is worrying about the future utility of crypto coin too?
Quote

4) The other flaw in your analysis is that the fiat rich today would suddenly not exist and that simply isn't true. So the idea that we'd all be working for the bitcoin rich suddenly doesn't make sense either. The number of early adopter bitcoiners that will become rich from bitcoin becoming mainstream pales in comparison to the number of fiat rich in the world today. Those who hold the capital resources today will still hold it under a new bitcoin economy. The executives of all the top companies will still be there under a bitcoin economy. A transition of the money being used wouldn't change that. Certainly there will be a few new rich people in the world, but there are new rich people all the time in the world. I've mentioned some of the good that could come from bitcoin being used around the world and I personally believe that good would outweigh a small percentage of new rich people coming about (as if that's a bad thing anyway).

I don't see a problem in terms of staking a claim that appreciates, wealth inequality, loss of value for people holding mattresses full of government fiat currency, or there being enough wealth in the world to buy every circa-2018 cryptocurrency HODLer a lambo. The problem is that the interests of people who are rich in terms of USD do not align with the interests of people who hold some cryptocurrency and want those USD-rich people to give them their USD.

Any scenario where there are enough cryptocurrency units in circulation that they are available for daily transactions necessarily involves the rest of us trading something of value (labor, USD, property?) for cryptocurrency units we do not currently own so that we can have spending money or business working capital.

You might say that such a transfer is zero-net because I'm just converting value between formats, not creating or destroying it. No forex trader would accept this argument. If I trade USD for British Pound, and the USD appreciates against the Pound, the loss for me is very real, and the enrichment of my counterparty is as well.

If a cryptocurrency took off, and business owners were required to pay the price of accepting it or lose business (as happened with credit cards), and consumers were incentivized to use is (as also happened with credit cards), then there would need to be some value-added factor making the cost of change worth it. In the case of credit cards, convenience, safety, and airline miles incentivized customers to use them, and the tendency of credit card users to spend more money than cash users incentivized businesses to use them. The credit card companies were enriched at the expense of businesses who paid higher costs and consumers who paid higher prices.

Compare credit cards to cryptocurrency, and note the incentives are reversed. They're less convenient to transact in, less safe to hold in online wallets, and discourage people from spending.
Quote

5) You also talked about how bitcoin could just be copied, but that simply isn't true. How about I run a fiber cable to your house and connect it to a computer I have running that has a website running on it and charge you $70 a month for it and call it the internet. No? Why? Because the internet can't be copied. It is a network effect where people are using the open internet because of everything that has been built up on it (services, websites, economy, etc). The same would be true for bitcoin. There are services, economic activity, software, and the security of the network that simply can't be duplicated. If bitcoin is accepted "everywhere you want to be" and all the trials and tribulations of bitcoin coming into existence and getting to where it is now widely accepted and being earned by workers, those trials and tribulations would be even more cumbersome for any other decentralized digital currency trying to overcome the incumbent. Any reason someone might have for wanting to use another currency could be built onto bitcoin as a secondary layer. It would be extremely difficult to overcome that network effect and duplicate much like it would be difficult (and pointless) to build a new internet when instead you can just build upon the one we have.

Network effects and first-mover advantages are real, but there are also numerous examples of users migrating to a particular format because it was cheaper or better than the incumbent. Microsoft Windows got big because it shipped pre-installed for free on PCs, beating ala carte operating system competitors from IBM, Tandy, etc. Yahoo was the name in search engines until Google came along offering more relevant results. MySpace... Facebook... TikTok. American cars in the 1970s-80s... Asian cars in the 1970s-80s. Large steel mills... mini mills. Encyclopedia Britannica... Wikipedia. The bottom line is that advantages from originality don't last more than a few years in the markets. Inferior products eventually disappear regardless of their brand recognition. The fact that I still can't buy gasoline or hamburgers with Bitcoin over a decade after inception is ominous. That is to say, the "lead" of a currency that is not regularly transacted is nothing.

With that in mind, consider this:
https://www.marketwatch.com/story/move-toward-digital-dollar-gains-steam-as-boston-fed-says-its-prototype-can-handle-1-7-million-transactions-per-second-11643916607 (https://www.marketwatch.com/story/move-toward-digital-dollar-gains-steam-as-boston-fed-says-its-prototype-can-handle-1-7-million-transactions-per-second-11643916607)

Quote
The results are promising for the viability of a digital dollar, as the research produced two separate architectures for a potential U.S. CBDC, with one code base capable of handling 1.7 million transactions per second, according to a white paper released Thursday. That’s more than 2.5 times the number of transactions Visa can handle on its network, according statistics cited by Visa CFO Vasant Prabhu in a recent Barron’s interview.

Furthermore, the vast majority of these transactions were settled in less than two seconds, a tantalizing result for users of the U.S. banking system, which can force customers to wait days before a fund transfers are settled.

That performance is also far superior to popular cryptocurrencies, with the bitcoin network capable of handling just 7 transactions per second and ether just 25,

And consider that the government could just suddenly impose this change upon the economy, vs. the narrative of a cryptocurrency slowly gaining acceptance over the course of decades.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on February 06, 2022, 01:55:43 AM
. . . .
Then a strange thing happens. You are about to take a date out to a restaurant to celebrate your new job, but you realize that by spending part of your new paycheck today, you are giving up 110% of that purchasing power a year from now. In 20 years, today's decision to buy a restaurant meal will have cost you 278% of the purchasing power you spent today. All you have to do to lock in 10% returns forever is cancel your date and stuff the crypto coin into an online wallet.

You realize now that almost no purchase makes financial sense.  Additionally, you realize that if you are going to experience 10% gains on anything you save from now on, it makes sense to cut expenses to the bone and save the maximum amount possible. . . . .
. . . .

Never mind crypto, right now it would make financial sense to postpone spending and:
The idea that everyone, or a significant majority, would cut spending to the bone as described in your fevered tale is ludicrous. It's far more likely that spending would reduce by a moderate amount, ie. the world would become moderately more Mustachian. I'm struggling to see the problem here.

https://www.mrmoneymustache.com/2012/04/09/what-if-everyone-became-frugal/
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on February 06, 2022, 03:57:11 AM

Never mind crypto, right now it would make financial sense to postpone spending and:
  • get next year's even better (deflationary) mobile phone for the same price or less. But people buy phones - a lot of them.
  • get next year's even better (deflationary) laptop (or virtually any tech product) for the same price or less. But people buy laptops and other tech products - a lot of them.
  • save up for that (pseudo-deflationary) fancy car. But people don't - they want it now - screw the 25% APR, the monthly payment is affordable, etc.
The idea that everyone, or a significant majority, would cut spending to the bone as described in your fevered tale is ludicrous. It's far more likely that spending would reduce by a moderate amount, ie. the world would become moderately more Mustachian. I'm struggling to see the problem here.

https://www.mrmoneymustache.com/2012/04/09/what-if-everyone-became-frugal/

What would you expect a deflationary currency to do to debt? Increase the debt burden, yes?

What kinds of entities frequently take on debt? New businesses? Farmers? Do you think fewer new businesses might get started in a deflationary environment? More farmers might declare bankruptcy? Do you think these things might have external impacts on the broader economy? See any room for positive feedback loops, to spiral this system into quite a pickle?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on February 06, 2022, 04:02:56 AM
The idea that everyone, or a significant majority, would cut spending to the bone as described in your fevered tale is ludicrous. It's far more likely that spending would reduce by a moderate amount, ie. the world would become moderately more Mustachian. I'm struggling to see the problem here.

I believe he was being hyperbolic because this conversation is already having issues with understanding each other's points.

The bolded part is laughable in it's absurdity. It's about as silliy as saying that crypto is helping transition to renewables because it uses so much energy.

The problem with the "world becoming more mustachian" in this scenario is that this benefits middle, upper and rich classes far disproportionately than the poor. The poor folks won't have a choice but to spend all of their money, while those with more will have enough disposable income to hoard it. On the face of it, this can be just the cost of doing business, but it flies in the face of all that is proportedly good about crypto (you know, enfranchising the disenfranchised). It just would help the rich become richer.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: blue_green_sparks on February 06, 2022, 10:44:52 AM
Dogecoin operates more like the dollar. 10,000 coins are mined every minute and there is no maximum supply, LOL. I guess if you skillfully work the pump and dump on these "alt coins" like a day trader, you could net a bunch of cash. There has to be a ton of sorry bag holders.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on February 06, 2022, 11:23:38 AM
Never mind crypto, right now it would make financial sense to postpone spending and:
  • get next year's even better (deflationary) mobile phone for the same price or less. But people buy phones - a lot of them.
  • get next year's even better (deflationary) laptop (or virtually any tech product) for the same price or less. But people buy laptops and other tech products - a lot of them.
  • save up for that (pseudo-deflationary) fancy car. But people don't - they want it now - screw the 25% APR, the monthly payment is affordable, etc.
The idea that everyone, or a significant majority, would cut spending to the bone as described in your fevered tale is ludicrous. It's far more likely that spending would reduce by a moderate amount, ie. the world would become moderately more Mustachian. I'm struggling to see the problem here.

https://www.mrmoneymustache.com/2012/04/09/what-if-everyone-became-frugal/

@ChpBstrd was being hyperbolic and perhaps a bit wordy.  I'd summarize it like this:

Bitcoin is deflationary by design, with a maximum number of possible coins.   There are several well  known and well understood economic effects of deflation.   One is that people tend to delay purchases--because things are perceived to be cheaper in the future--which slows down economic activity.   But employers have a different problem.  Deflation means real wages are going up, even as their incomes are going down.  The solution for that is to cut jobs.  Not good.

On the consumer side, the real cost of things like mortgages and car loans are going up, thereby consuming a bigger and bigger share of the household budget.  That leaves less money to spend on consumer goods.  Which means less demand, and the need for fewer workers.  And a similar problem:   In times of deflation, interest rates should be negative.  How do you charge negative interest rates?   Business relies on the availability of reasonably priced credit.  If they can't borrow, that further depresses economic activity. 

There are some cases when deflation is good, like from the result of increased productivity.   This is called the Wal-Mart effect.  But monetary deflation is bad, bad, bad.  You do not want it.  Yet deflation is part of Bitcoin's DNA. 

I hope I don't sound too much like a broken record, but Bitcoin's designers came up with some brilliant tech, but they never stopped to think about how money works.   By design but not purposefully, they crippled Bitcoin's functionality such that it can never be in widespread use as a currency.  Some limited special use cases are possible, of course.

That leaves Bitcoin's sole use as a store of value.  There are some problems, there too. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on February 06, 2022, 12:36:15 PM
Never mind crypto, right now it would make financial sense to postpone spending and:
  • get next year's even better (deflationary) mobile phone for the same price or less. But people buy phones - a lot of them.
  • get next year's even better (deflationary) laptop (or virtually any tech product) for the same price or less. But people buy laptops and other tech products - a lot of them.
  • save up for that (pseudo-deflationary) fancy car. But people don't - they want it now - screw the 25% APR, the monthly payment is affordable, etc.
The idea that everyone, or a significant majority, would cut spending to the bone as described in your fevered tale is ludicrous. It's far more likely that spending would reduce by a moderate amount, ie. the world would become moderately more Mustachian. I'm struggling to see the problem here.

https://www.mrmoneymustache.com/2012/04/09/what-if-everyone-became-frugal/

@ChpBstrd was being hyperbolic and perhaps a bit wordy.  I'd summarize it like this:

Bitcoin is deflationary by design, with a maximum number of possible coins.   

Bitcoin is disinflationary by design. A universally adopted Bitcoin would almost certainly be stable aside from a little "lost coins" deflation.

There are several well known and well understood economic effects of deflation.   One is that people tend to delay purchases--because things are perceived to be cheaper in the future--which slows down economic activity. But employers have a different problem.  Deflation means real wages are going up, even as their incomes are going down.  The solution for that is to cut jobs.  Not good.

Would people really postpone / reduce spending to any great extent in a moderately deflationary world ? My examples above ring true in my experience. In general, people seem to buy the things they want when they want them with little consideration of the future. I would anticipate some reduction in consumer spending in proportion to deflation, but not a drastic collapse.

And, I know it attracted some ridicule, but my general point stands: When did the MMM community start thinking that a reduction in (partially debt-fuelled) consumer spending was a bad thing ?

On the consumer side, the real cost of things like mortgages and car loans are going up, thereby consuming a bigger and bigger share of the household budget.  That leaves less money to spend on consumer goods.  Which means less demand, and the need for fewer workers.  And a similar problem:   In times of deflation, interest rates should be negative.  How do you charge negative interest rates?   Business relies on the availability of reasonably priced credit.  If they can't borrow, that further depresses economic activity.

This is just smoke and mirrors though, isn't it ?
Debt in an inflationary world isn't really cheap. It's cheap to the borrower in immediate terms, but the borrowers gains are funded by society's currency devaluation losses. Inflation seems to privatise the benefits of borrowing and socialise (some of) the costs.

I'm not an economist and I'm not advocating for a deflationary world but some of the assertions about the perils of deflation seem weak / overblown.
Also, most of the arguments seem to assume that a universally-adopted Bitcoin's deflation% would be considerable. I don't see good grounds for that assumption.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on February 06, 2022, 01:17:11 PM
The thing to remember here is that a steady-state economy might sound pretty appealing to someone living in the US or Japan or Western Europe. In the rest of the world, the vast majority of people live in pretty awful poverty and some form of economic growth is the only way out. So killing off capitalism/debt with deflationary currency (and yes, a fixed supply of currency will be deflationary unless you have a falling population/shrinking economy to go with it) is probably not really in the interest of 90% of humans.

Now, you could easily design a currency that stays stable with population, or inflates VERY slowly at whatever rate you choose, or indexes itself to some other variable to achieve whatever desired outcome. But BTC does not do any of those things, and if it was universally used as currency, it would lead to a worldwide economic collapse at some point, most likely, since simply holding onto your BTC rather than lending/spending it would be the ideal way to get richer.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on February 06, 2022, 01:35:58 PM
The thing to remember here is that a steady-state economy might sound pretty appealing to someone living in the US or Japan or Western Europe. In the rest of the world, the vast majority of people live in pretty awful poverty and some form of economic growth is the only way out. So killing off capitalism/debt with deflationary currency (and yes, a fixed supply of currency will be deflationary unless you have a falling population/shrinking economy to go with it) is probably not really in the interest of 90% of humans.

There may be some truth here - not sure. Would a deflationary currency prevent economic growth / kill capitalism ? It's not clear to me that the one necessarily leads to the other.
And, at the same time, isn't much of the developing world currently being crushed by inflation ? Why is that preferable ?


Now, you could easily design a currency that stays stable with population, or inflates VERY slowly at whatever rate you choose, or indexes itself to some other variable to achieve whatever desired outcome. But BTC does not do any of those things, and if it was universally used as currency, it would lead to a worldwide economic collapse at some point, most likely, since simply holding onto your BTC rather than lending/spending it would be the ideal way to get richer.

But do people just want to get richer ? What's the point ?
Or do they want the things that riches can buy ? - which requires spending.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on February 06, 2022, 02:22:09 PM

Bitcoin is disinflationary by design. A universally adopted Bitcoin would almost certainly be stable aside from a little "lost coins" deflation.

How to you get to almost certainly?  Let's say Bitcoin is universally adopted and the world economy grows by 2%.   That means the value of each Bitcoin will go up by 2%.  That is the definition of deflation.   

Would people really postpone / reduce spending to any great extent in a moderately deflationary world ? My examples above ring true in my experience. In general, people seem to buy the things they want when they want them with little consideration of the future. I would anticipate some reduction in consumer spending in proportion to deflation, but not a drastic collapse.

And, I know it attracted some ridicule, but my general point stands: When did the MMM community start thinking that a reduction in (partially debt-fuelled) consumer spending was a bad thing ?

The effect of deflation on consumer spending is well researched and well understood, it isn't hypothetical.   There have been many instances of deflation throughout history.  There is no shortage of case studies.  And note, I'm talking about a secular period of deflation.  There was a short period of deflation in 2015, for example.   But it didn't turn into a deflationary spiral. 

RE: Mustachianism.  I have a couple quibbles with this thesis, but they don't apply to this discussion, so I'll hold off.  But what he's saying is that if people bought less stuff, they save more AND there would be plenty of cheap capital for entrepreneurs to access.  So cheap capital = good.   Deflation = expensive capital.  So deflation isn't part of the Mustachian vision. 

A different part if his thesis is that if people spent less, then they could work fewer hours or fewer years.   But remember, deflation is accompanied by wage cuts and job losses.  Wage cuts and job losses make it harder to save.   So deflation isn't part of the Mustachian vision in that regard either.     

On the consumer side, the real cost of things like mortgages and car loans are going up, thereby consuming a bigger and bigger share of the household budget.  That leaves less money to spend on consumer goods.  Which means less demand, and the need for fewer workers.  And a similar problem:   In times of deflation, interest rates should be negative.  How do you charge negative interest rates?   Business relies on the availability of reasonably priced credit. If they can't borrow, that further depresses economic activity.
This is just smoke and mirrors though, isn't it ?
Debt in an inflationary world isn't really cheap. It's cheap to the borrower in immediate terms, but the borrowers gains are funded by society's currency devaluation losses. Inflation seems to privatise the benefits of borrowing and socialise (some of) the costs.

I'm not an economist and I'm not advocating for a deflationary world but some of the assertions about the perils of deflation seem weak / overblown.
Also, most of the arguments seem to assume that a universally-adopted Bitcoin's deflation% would be considerable. I don't see good grounds for that assumption.

The part in bold is the key:  Reasonably priced credit.   You can have expensive credit in inflationary environments too.  But because of the zero bound on interest rates, real returns can be negative in a deflationary environment.  That tightens yield curves...a lot.   Besides banks, who else lends money?  People like you and me who save money in the form of bonds.   

Another artifact of deflation is the redistribution of wealth from debtor to creditor.  For example, let's say I write you a mortgage at 3%.   We fall into a period of secular -2% inflation (2% deflation).   So now I'm getting richer and you are getting poorer.   But there is another problem, because the underlying collateral is deflating too.   If you default because the mortgage payments became too high, I still might not be made whole by foreclosing.   That combined with the yield curve problem I described above means that banks just don't like to lend money in those conditions.

Again this is not hypothetical.  This is exactly what happened in Japan in the 1990s.   Even though interest rates were at zero, credit markets were incredibly tight.   Since business couldn't borrow money, so they couldn't expand, and so the economy couldn't expand.  It is called "Japan's Lost Decade." 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on February 06, 2022, 02:43:29 PM
There may be some truth here - not sure. Would a deflationary currency prevent economic growth / kill capitalism ? It's not clear to me that the one necessarily leads to the other.
And, at the same time, isn't much of the developing world currently being crushed by inflation ? Why is that preferable ?

It isn't a binary choice.  Much of the developing world have mitigated this risk by pegging their currencies (or actually adopting) stable currencies like the USD or the Euro.  The downside is that they don't have control over their own currencies.  But if they were using Bitcoin they wouldn't have control either. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on February 06, 2022, 04:49:05 PM

But do people just want to get richer ?

Yes. Or, at least enough of them do for it to be a problem.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 06, 2022, 06:59:47 PM
OK, let's take a look at the halfway point in a hypothetical process that takes decades, a point where half of the transactions that used to be done in USD are now done in a particular cryptocurrency, and the other half still occur in USD. The percentage of transactions in cryptocurrency is growing and the percentage in USD is shrinking, and that's how we've arrived at this 50/50 midpoint.

At the end of the day you're attempting to describe your typical deflationary spiral hypothesis. But you're really only taking into account consumer habits when there are so many other factors at play.

Should we really place such a heavy negative emphasis on something that really doesn't have any historical precendent to back it up? No, the Great Depression was not a deflationary spiral and no Japan was not a deflationary spiral either. Almost all periods of temporary deflation were preceded by periods of heavy monetary inflation. In fact, if we look at the 19th century, prices declined throughout the century as a result of large increases in productivity, new inventions, and economies of scale. This results in large increases of wealth expansion for many and now more people were able to afford many luxuries that were often only available to the rich. What appears at the surface as being a deflationary depression was actually a period of great prosperity and wealth expansion.

Your analysis of a deflationary spiral lacks many variables that must be taken into account. They're too often described just like you have described it. But in your scenario, what about the price of goods and what about the supply and production of those goods? What about wages in your example? Why do you assume that humans will always suddenly go against consumerism in all these market dynamics? Why does the expectation of buyers change but not the expectation of sellers (essentially we're all both buyers and sellers). So somehow the same person will hold a future expectation as a buyer but a completely different expectation as a seller? What makes you pick the numbers you pick for your example without also including so many other factors? Is it just to fulfill this wild scenario you have for the doom that a stable monetary supply might perpetrate on our economy?

So let's take a step back and examine some things in a little more detail and not just with a nightmarish (albeit perplexing) lens you cast from the consumer only perspective.

Before we do, I think it is important that we differentiate between monetary inflation and price inflation. Monetary inflation being when the money supply expands and price inflation being when the cost of goods goes up. If you have a small enclosed village with its own economy and everyone produces the same amount of goods every year and the amount of money circulates every year then the price of goods will stay the same and everyone's earnings and profits continue to stay static.

The price of goods inflates when the ratio between money supply and goods increases. If the money supply increases but the amount of goods stays the same, then the price of those goods will go up (price inflation AND monetary inflation). But you can also have monetary inflation without price inflation as there are many inflationary and deflationary forces at play. Increased productivity is a deflationary force (more goods in the market), for example. In otherwords, in a more stable monetary climate, the value of the monetary supply expands alongside GDP.

If we examine your scenario a little closer and look at more variables than just the consumer expectation variable, your scenario will begin to fall apart. Let's assume like you did that half the world economy is now a circular economy with bitcoin and half the world economy is a circular economy with the USD. We have to understand that under such a scenario, goods would be priced separately in both USD and bitcoin. The price of goods would not be a set static price only in USD. This is one mistake you seem to make in your scenario. It looks at things in a similar lens today where USD is our main unit of accounting, but in a world where half of it is a circular economy in bitcoin, the goods will have their own price in bitcoin terms separately from a USD price. That is no different than today how goods have their own prices in the Euro like they do in US dollars. This fact is never addressed in your scenario at all. It assumes that all prices stay relative to the USD price index and that is simply not true.

Wages would also be set separately in a bitcoin circular economy. Today wages are increased to counter act inflation. In a deflationary world wages would not go up over time because you would need wages to counter act an increase in the monetary supply. You might even have wage decreases for new hires over time.

An inflationary money supply hides a lot of the positive impacts that human production has provided for us. This is why we often don't feel the full impact of expansive monetary policy in the price of our goods. We produce goods way more efficiently that we have ever before in all of human existence and yet we work more hours. When there is no monetary inflation that counteracts the deflationary forces of increased productivity, we end up feeling the full force of improved productivity in our economy. While you assume that people who are able to afford a new iPhone will hold off on purchasing said new iPhone (a wild theory that goes against consumerist impulses with no historical precedent) you also fail to acknowledge that many people that could never before afford an iPhone can suddenly afford one and that they may now take advantage of that fact. This is very similar to what took place in the 19th century. The slightly lower cost of goods means more people are entering the market that were not in the market for those goods before. While there are some people that might hold off on making purchases and save more, in such an economic climate there are also many more people who will now enter markets that were not capable of doing so before. This is great because it is not a result of increase money supply so people just think they got a pay raise when they didn't. It is the cost of goods going down because we as humans became more productive and there is no monetary inflation that hides those impacts.

Also, the idea that if money is holding its value then people will be less likely to invest in business is absurd. If businesses are operating on a bitcoin balance sheet and goods are priced in bitcoin, then so are the profits and returns. So there is still incentive in the market to invest in successful businesses here to receive some of those bitcoin dividends!

Finally, with regards to the currency competition aspect in your scenario, I also don't think it plays out the way that you laid out either because again, you left our so many variables. And frankly I think there are so many variables that no one could ever guess how it would actually play out, so it is kind of pointless to debate it. In all likelihood bitcoin goes the way of being a gold equivalent for quite some time and so it really doesn't have much of an impact on the economy. Because most bitcoin would be held as a store of value and thus would have little impact due to a small circulating supply in the market. Heck, in that scenario I would even see it peeling away gold's market share and so any gains made by bitcoin are most likely also gold's losses. 

If there is ever a transition to a wide spread bitcoin circular economy, the you'd have goods being priced in bitcoin terms and along with consumers migrating to bitcoin, you'd also have sellers and producers as well. So it really wouldn't be any different than if you had a country equivalent today that had a very conservative fiscal policy in the world (albiet without borders) and I don't think that would cause too many problems, especially for the US dollar. I could see there being some much smaller countries that would feel some more intense pressure to adopt bitcoin due to local instability though.

Long story short, forgive me if I don't get too worried about deflationary spirals that haven't really happened much in history...especially when we deal with a deep recession every 10 years that is a result of inflationary policies leading to malinvestments across every market.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on February 07, 2022, 10:53:50 AM
The thing to remember here is that a steady-state economy might sound pretty appealing to someone living in the US or Japan or Western Europe. In the rest of the world, the vast majority of people live in pretty awful poverty and some form of economic growth is the only way out. So killing off capitalism/debt with deflationary currency (and yes, a fixed supply of currency will be deflationary unless you have a falling population/shrinking economy to go with it) is probably not really in the interest of 90% of humans.

There may be some truth here - not sure. Would a deflationary currency prevent economic growth / kill capitalism ? It's not clear to me that the one necessarily leads to the other.
And, at the same time, isn't much of the developing world currently being crushed by inflation ? Why is that preferable ?
Yes. Deflation demolishes economic growth when it happens. Read up on the Great Depression and how banks quit making loans, bond markets seized up, and consumers shut down every last bit of spending they could. The Great Depression only relented when the government took actions that spurred inflation.

A much less dramatic deflationary period occurred in Japan in the 1990s. Two "lost decades" of flatlined economic growth trends in one of the world's most sophisticated economies followed.
Quote
Now, you could easily design a currency that stays stable with population, or inflates VERY slowly at whatever rate you choose, or indexes itself to some other variable to achieve whatever desired outcome. But BTC does not do any of those things, and if it was universally used as currency, it would lead to a worldwide economic collapse at some point, most likely, since simply holding onto your BTC rather than lending/spending it would be the ideal way to get richer.

But do people just want to get richer ? What's the point ?
Or do they want the things that riches can buy ? - which requires spending.
Imagine that you are thinking about buying a house that is $500k today, but because of deflation it will probably be worth $490k in one year. Imagine thinking about buying a car model that is $25k today, but you live in a deflationary economy so next year's model will sell for $22k. Imagine you are penciling out a business plan for your new endeavor and you have to factor in a steady decrease in the prices you can charge over time, you have to constantly convince employees to take pay cuts, and you have to find a landlord willing to cut the rent each year to keep your margins afloat. Imagine you are an employee earning $X a year, and you notice that wages for your same job are falling everywhere. Imagine you are a bank with a customer who wants to take out a loan, but (a) you could skip the whole risk of default and still make a good profit by just holding your depositors' cash as it appreciates, and (b) you know this customer will earn fewer and fewer dollars over the course of the loan that could be used to pay back the loan, and (c) you fear a bank run if economic conditions continue to worsen.

All these things happened across the world during the Great Depression. Almost half the banks in the US collapsed. Unemployment was near 25%. Living standards plummeted. That's why deflation is not desirable.

My point with my "wordy" narrative is that a crypto featuring a declining or fixed money supply cannot compete with a slightly inflationary currency because consumers wouldn't spend it, banks wouldn't lend it, employers wouldn't commit to paying people in the future with it, and it wouldn't circulate. People in a dual-currency environment will always prefer to use their inflationary currency, which means Bitcoin will always be a collectible never to see widespread use as an actual currency.

After a decade of Bitcoin, and a scaling up to what we were once told would be the critical mass, the results are in. There's still almost nobody using it for transactions bigger than a publicity stunt. Its primary use case is still getting US dollars out of other people's pockets, even after all these years and hundreds of billions of dollars in development/mining.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 07, 2022, 12:57:38 PM
Imagine wanting the cost of a new car to continue to go up, pricing people out of new cars because wages are sticky. Prices aren't static and they're set by markets. A deflationary monetary supply does not mean that goods will always be cheaper. That depends on supply and demand. If real estate is scarce (which it is), then that does not mean the price of new houses will go down. Value of goods are relative. A stable currency market will just mean that housing prices will remain stable given equal demand/supply of housing. Flooding the markets with large amounts of new cash means that housing costs sky rocket (just look at housing costs at the moment). If you have easy money, why wouldn't you throw it at things at harder to come by (real restate, assets, collectibles, etc). What do you think happens to the price of something that is scarce (housing) being purchased with easy (inflated) money? Having monetary policy skew market prices and flooding markets with extra money that people need to then throw at riskier and riskier endeavours is not the way.

No, the Great Depression was not caused by deflation, as I mentioned in my earlier post. Yes, definitely do read up on the Great Depression. Read up on the credit bubble of the 1920's that preceded the 1929 crash. Read up on the Smoot-Hawley tariffs that exacerbated already strained exports/imports. Read up on the widely understood sentiment shown in the public polls and markets at the time of FDR's policies killing investor confidence. Read about FDR's New Deal policies and how they exacerbated unemployment at the time. If anyone reading about what took place with the Great Depression and comes away with the conclusion of "deflation is bad", then I am questioning their understanding of what actually took place. Blaming the banks collapsing and 25% unemployment on deflation is an amazing rewriting of history.

Never mind the credit bubble in Japan that popped in the early 90's. Ever wonder why these dreaded periods of deflation that people always love to prop up as examples of why deflation is so horrible are always preceded by massive credit bubbles that popped? What goes up always comes down. Never mind the fact that Japan's deflation has always been under 1 percent and that it's economic performance was only outperformed by other developed nations from '92-'97 (GDP per capita).

Look, I am not advocating for deflation of 5%+ being good for the economy. As I said earlier, too much of something is not a good thing. Too much deflation/inflation is not good. My point was relevant in the scenario being that bitcoin is widely used in a circular economy, in which case bitcoin's deflation rate would probably be below 5% at that point (based on coins lost and GDP growth of bitcoin economy). For what it is worth, I don't think bitcoin would make a good monetary base if its volatility frequently is above 5%. But volatility would be greatly tamed in a circular and less speculative economy. In my opinion deflation in today's monetary environment of fast and easy money among many is widely demonised for being something it is not. It is especially surprising how demonised it is here on these Mustachian forums. In my opinion, given an economic climate of 2% deflationary money supply versus 2% inflationary money supply, I would take the former every time.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on February 07, 2022, 12:59:19 PM
I'm curious . . . what sorts of stuff are you buying with your cryptocurrency?

Gray market goods from international sellers that MasterCard doesn't want on their network even if the goods are legal to sell.

Ah.  That makes sense.

Semi-legal to illegal markets seem to have seen the biggest acceptance of crypto as a currency.

I happened to run across this today: CNBC: Bitcoin has become a lifeline for sex workers, like this former nurse who made $1.3 million last year (https://www.cnbc.com/2022/02/05/bitcoin-a-lifeline-for-sex-workers-like-ex-nurse-making-1point3-million.html). Basically, it isn't illegal to sell porn, but banks don't care to be involved. "Her interest kicked off in 2014, which is when she says several vendors, including PayPal, Square Cash, and Venmo, shut down her accounts because of red flags related to sex work."
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 07, 2022, 01:57:12 PM
I'm curious . . . what sorts of stuff are you buying with your cryptocurrency?

Gray market goods from international sellers that MasterCard doesn't want on their network even if the goods are legal to sell.

Ah.  That makes sense.

Semi-legal to illegal markets seem to have seen the biggest acceptance of crypto as a currency.

I happened to run across this today: CNBC: Bitcoin has become a lifeline for sex workers, like this former nurse who made $1.3 million last year (https://www.cnbc.com/2022/02/05/bitcoin-a-lifeline-for-sex-workers-like-ex-nurse-making-1point3-million.html). Basically, it isn't illegal to sell porn, but banks don't care to be involved. "Her interest kicked off in 2014, which is when she says several vendors, including PayPal, Square Cash, and Venmo, shut down her accounts because of red flags related to sex work."

That's a pretty darned good argument!  Definitely a legal industry that is underserved by current banks that would benefit from using crypto for transactions.

It's weird to me that so many banks don't want to be involved with sex workers.  Not sure how that money is any dirtier than the other stuff banks are involved in.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on February 07, 2022, 02:26:51 PM
That's a pretty darned good argument!  Definitely a legal industry that is underserved by current banks that would benefit from using crypto for transactions.

It's weird to me that so many banks don't want to be involved with sex workers.  Not sure how that money is any dirtier than the other stuff banks are involved in.

A quick google says that global porn market was ~$97B in 2014 (https://www.nbcnews.com/business/business-news/things-are-looking-americas-porn-industry-n289431). It isn't going to go away. Either banks can cater to them or they'll find a way to get their money. FWIW that is more than the entire GDP of some states.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DiscoverJupiter on February 07, 2022, 02:58:07 PM
That's a pretty darned good argument!  Definitely a legal industry that is underserved by current banks that would benefit from using crypto for transactions.

It's weird to me that so many banks don't want to be involved with sex workers.  Not sure how that money is any dirtier than the other stuff banks are involved in.

A quick google says that global porn market was ~$97B in 2014 (https://www.nbcnews.com/business/business-news/things-are-looking-americas-porn-industry-n289431). It isn't going to go away. Either banks can cater to them or they'll find a way to get their money. FWIW that is more than the entire GDP of some states.

Yes, the global market. Most companies are not US-based because of the wars the federal government fight against adult workers.

Obama's administration enacted the notorious Operation Choke Point to go after businesses that didn't met their ideals (guns, adult performers), with the idea being to cut them off from the banking system:
https://www.vice.com/en/article/4w74jg/how-the-financial-sector-is-making-life-miserable-for-sex-workers-714 (https://www.vice.com/en/article/4w74jg/how-the-financial-sector-is-making-life-miserable-for-sex-workers-714)

Similarly, the Trump administration went after them during the pandemic by denying them unemployment AND disallowing any business that ever received money via adult-related services from applying/approval of EIDL grants.
https://reason.com/2020/04/01/u-s-sex-workers-and-prurient-businesses-explicitly-excluded-from-covid-19-disaster-loans/ (https://reason.com/2020/04/01/u-s-sex-workers-and-prurient-businesses-explicitly-excluded-from-covid-19-disaster-loans/)


Compare to a two-days matured event where GoFundMe seized funds donated legally to the Canadian truck protest, likely at the behest of the government.

Crypto has a strong use case outside of purely illegal ones. It was designed to overcome governmental and private business pressures, which it is insanely good at. All we need now are for a few to stand up and start offering non-kyc entry and exit points, which I plan to do once my schedule frees up.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on February 08, 2022, 07:00:49 AM
Imagine wanting the cost of a new car to continue to go up, pricing people out of new cars because wages are sticky. Prices aren't static and they're set by markets. A deflationary monetary supply does not mean that goods will always be cheaper. That depends on supply and demand. If real estate is scarce (which it is), then that does not mean the price of new houses will go down. Value of goods are relative. A stable currency market will just mean that housing prices will remain stable given equal demand/supply of housing. Flooding the markets with large amounts of new cash means that housing costs sky rocket (just look at housing costs at the moment). If you have easy money, why wouldn't you throw it at things at harder to come by (real restate, assets, collectibles, etc). What do you think happens to the price of something that is scarce (housing) being purchased with easy (inflated) money? Having monetary policy skew market prices and flooding markets with extra money that people need to then throw at riskier and riskier endeavours is not the way.

No, the Great Depression was not caused by deflation, as I mentioned in my earlier post. Yes, definitely do read up on the Great Depression. Read up on the credit bubble of the 1920's that preceded the 1929 crash. Read up on the Smoot-Hawley tariffs that exacerbated already strained exports/imports. Read up on the widely understood sentiment shown in the public polls and markets at the time of FDR's policies killing investor confidence. Read about FDR's New Deal policies and how they exacerbated unemployment at the time. If anyone reading about what took place with the Great Depression and comes away with the conclusion of "deflation is bad", then I am questioning their understanding of what actually took place. Blaming the banks collapsing and 25% unemployment on deflation is an amazing rewriting of history.

Never mind the credit bubble in Japan that popped in the early 90's. Ever wonder why these dreaded periods of deflation that people always love to prop up as examples of why deflation is so horrible are always preceded by massive credit bubbles that popped? What goes up always comes down. Never mind the fact that Japan's deflation has always been under 1 percent and that it's economic performance was only outperformed by other developed nations from '92-'97 (GDP per capita).

Look, I am not advocating for deflation of 5%+ being good for the economy. As I said earlier, too much of something is not a good thing. Too much deflation/inflation is not good. My point was relevant in the scenario being that bitcoin is widely used in a circular economy, in which case bitcoin's deflation rate would probably be below 5% at that point (based on coins lost and GDP growth of bitcoin economy). For what it is worth, I don't think bitcoin would make a good monetary base if its volatility frequently is above 5%. But volatility would be greatly tamed in a circular and less speculative economy. In my opinion deflation in today's monetary environment of fast and easy money among many is widely demonised for being something it is not. It is especially surprising how demonised it is here on these Mustachian forums. In my opinion, given an economic climate of 2% deflationary money supply versus 2% inflationary money supply, I would take the former every time.

I suspect we'd wind up agreeing on most things, but a significant piece of the Great Depression puzzle that I don't see you mentioning here is the gold standard. If I believe that the gold standard was a problem in the 1930s, why should I be unafraid of a "Bitcoin Standard" in the near future?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on February 08, 2022, 08:08:50 AM
Even if you were ultimately forced to convert your unspendable USD to BTC, at whatever exchange rate, the market would be setting the prices in BTC just as it now sets them in USD.
It's not like the price of a loaf of bread would suddenly go from I USD to 1 BTC. In all likelihood it would cost the same in real terms.
. . . .

Eventually, my teacher cousin goes to the the grocery store with his USD and they say, "hey, we only accept purple seashells now. that loaf of bread is worth 1 seashell". He says, "fine, I'll go transfer my shells", but by the time he transfers, he can convert 100USD to one seashell. Last week the grocery store bought a bunch of seashells at 2USD per seashell as did most of the other corporations (how do you think the price got to 100USD per?). While no $ was actually lost here, his net valuation has dropped to 1/50 of what it would have been under USD. [/b][/i]

. . . .

The scenario being discussed here is that of universal adoption of Bitcoin as the currency. Under those circumstances, where does the volatility come from ? Especially 50x / week volatility ! That's a pretty rough week even by today's standards !
Bitcoin's volatility would surely settle in proportion to it's wider adoption. If we approach universality, volatility should approach zero.

The metaphor was not meant to accurately depict timescales or prices. It was simply to demonstrate in simple terms how the transfer of wealth happens.

If the economy switches (slowly or quickly) from USD to Bitcoin, there is a very real possibility - and I say probability - that it will do so in a way that rewards corporations and early adopters and penalizes the general public. If national or global finances even HINT at crypto becoming king, then you can bet your rear end that large financial organizations will make sure that they are not left in the dust. There will be structural systems planned and executed so that they are not the greater fools, and lots of opportunity to work the system in a way that does this.

Shell or Kroger or Comcast or Lowes will higher teams of financial experts to devise policy that isn't possible for the lay CNC machinist in Detroit to come close to replicating on an individual level.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 08, 2022, 08:11:57 AM
I suspect we'd wind up agreeing on most things, but a significant piece of the Great Depression puzzle that I don't see you mentioning here is the gold standard. If I believe that the gold standard was a problem in the 1930s, why should I be unafraid of a "Bitcoin Standard" in the near future?

Contrary to popular belief, the monetary environment under the gold standard was not a deflationary environment. Bastardization between the relationship of the US dollar and gold reserves aside, the average annual money supply growth between 1879-1913 (gold standard) was 6.1% versus 5.7% in post-war US between 1946-1979. The production of gold sky-rocketed during that time frame. So anyone that hold's the "gold standard" as a reason for why "deflation is bad" isn't actually even using monetary deflation in their example.

The thing about bitcoin is it is completely predictable and stable. You can predict what the money supply will be 10, 20, 50 years into the future. One of the biggest detriments to a healthy market is poorly aligned expectations and uncertainty about what the future economic climate and monetary policies will be. Central banks tinkering with the money supply creates massive uncertainty in markets. Even in a perpetually inflationary environment, you can have that same uneasiness in spending mentioned earlier due to that uncertainty. If inflation is lower than expected, that can cause the same impacts on spending as heavy deflationary environments are said to cause due to that uncertainty. If inflation is expected to continue to fall and rates are expected to fall with it, why not hold off on purchasing that new house and see if you can get a better rate in the future?

Most of the problems with market instabilities, malinvestments, recessions, and market crashes leading to unemployment have much more to do with an unstable money supply and market uncertainties than it does with the specific rate of inflation/deflation. Inflation or deflation of 4% isn't inherently a bad thing. It is a bad thing when you have no idea when it is coming and markets are tepid about any fluctuations or tampering. Being unable to plan or adjust for future expectations appropriately is hugely detrimental to a healthy market. With bitcoin, it isn't so much that it is deflationary (its supply is actually inflationary until ~2140), but more about the fact that it is predictable and therefore is something the markets can depend on.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on February 08, 2022, 10:24:57 AM
Prices aren't static and they're set by markets. A deflationary monetary supply does not mean that goods will always be cheaper. That depends on supply and demand. ... If real estate is scarce (which it is), then that does not mean the price of new houses will go down. Value of goods are relative. A stable currency market will just mean that housing prices will remain stable given equal demand/supply of housing.
Flooding the markets with large amounts of new cash means that housing costs sky rocket (just look at housing costs at the moment). If you have easy money, why wouldn't you throw it at things at harder to come by (real restate, assets, collectibles, etc). What do you think happens to the price of something that is scarce (housing) being purchased with easy (inflated) money? Having monetary policy skew market prices and flooding markets with extra money that people need to then throw at riskier and riskier endeavours is not the way.
Wait a minute... in the first excerpt, you're saying that having a fixed supply / deflationary currency would not necessarily affect prices because prices are more about supply and demand. In the second excerpt, you're attributing rising asset prices to an increasing supply of US dollars. Which is it?
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No, the Great Depression was not caused by deflation, as I mentioned in my earlier post. ... Blaming the banks collapsing and 25% unemployment on deflation is an amazing rewriting of history.
I'm not sure if you're arguing that deflation was an effect and not a cause of the GD or if you're arguing that deflation was not even a problem at the time. I'll address both positions, using only the most uncontroversial and universally-accepted accounts of the GD. 

If you were a land owning farmer like millions of other Americans in the late 1920's and 1930's, you might take out loans each year that were paid back when the harvest was sold. If you were a manufacturer, you took out loans to buy equipment and hire workers, whose outputs were then used to pay back the loan. There were other business models whose growth depends on debt, but we'll focus on these big ones.

When the US government reduced the velocity of money through higher interest rates, tax hikes, tariffs, spending cuts, etc. and banks stopped lending, the result was falling prices - deflation. If you were a farmer or a manufacturer and you borrowed $100k that you intended to pay back when you sold your outputs for, let's say, $110k, then falling prices might mean your outputs could only be sold for $95k and therefore you defaulted on the loan. This is exactly why the banks stopped lending, why the banks started failing, and why there were runs on the banks. Now the farmers who remained solvent couldn't get loans any more (if their land had not been foreclosed) and the manufacturers were laying off workers. Idle fields and factories were the result, and deflation was the cause. This is why even well-run businesses went under during the GD. People's houses lost value because no buyers could get a mortgage, a situation that would repeat in 2008.

In the strictly supply-and-demand world envisioned by Andrew Mellon and Herbert Hoover, the collapse of supply they were witnessing / encouraging would offset the deflation and produce inflation because goods were becoming more "scarce". That didn't happen. Instead deflation fed on itself as banks, businesses, and consumers all scrambled to unload inventory and get ahold of scarce dollars, which made dollars even more scarce.
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Never mind the credit bubble in Japan that popped in the early 90's. Ever wonder why these dreaded periods of deflation that people always love to prop up as examples of why deflation is so horrible are always preceded by massive credit bubbles that popped?
The burden of debt suddenly increases when deflation occurs. E.g. the real interest rate on your 5% car loan suddenly becomes 8% when the inflation rate is -3%. If you are a business, deflation reduces your margins as you are forced to cut prices while at the same time increasing the real burden of your debts. More importantly, as your customers and suppliers go bankrupt, your revenues evaporate, which is why even profitable, debt-free businesses get wiped out by deflation.

Under normal economic growth conditions, the amount of debt being used by businesses and consumers naturally increases. E.g. if we go from selling 20M cars to selling 30M cars, there will be more auto debt in the world. But this also means any downturn necessarily looks like a bubble popping, e.g. 2008. But then of course the trend recovers and nobody calls that a bubble until it ratchets down again on the next downturn. The key Econ 101 insight is that an increase in debt is a form of money supply, and when people and banks are suddenly focused on de-leveraging rather than spending it pulls monetary velocity down.
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Look, I am not advocating for deflation of 5%+ being good for the economy. As I said earlier, too much of something is not a good thing. Too much deflation/inflation is not good. My point was relevant in the scenario being that bitcoin is widely used in a circular economy, in which case bitcoin's deflation rate would probably be below 5% at that point (based on coins lost and GDP growth of bitcoin economy). For what it is worth, I don't think bitcoin would make a good monetary base if its volatility frequently is above 5%. But volatility would be greatly tamed in a circular and less speculative economy. In my opinion deflation in today's monetary environment of fast and easy money among many is widely demonised for being something it is not. It is especially surprising how demonised it is here on these Mustachian forums. In my opinion, given an economic climate of 2% deflationary money supply versus 2% inflationary money supply, I would take the former every time.
When I was younger I spent some time with people who lived through times of 2% deflation. One story was that you'd open a can of beans in the morning and eat a third of them for breakfast. You'd eat another third for lunch, and the last third for dinner. People were hand-sewing clothing for their children from the burlap packaging for flour. These conditions were not directly caused by a credit bubble in the stock market that maybe 2% of the population was invested in at the time; they were caused by the collapse of businesses and farms. The thing that killed otherwise well-run factories, banks, and farms was deflation. A collapse in money supply is the linking factor between faraway credit bubbles with a farmer or small business going bankrupt. Experience shows that deflation is self-reinforcing, and if you don't increase money supply to offset this effect, you get a spiral.

Could a strong economy theoretically coexist with deflation? What would that look like? If inflation was -4%, would -1% be a fair mortgage rate? You'd be paid a little to take on the debt, even as the house lost value at a much faster pace? At some point the house would be worth less than the mortgage, so no bank would lend to you on those terms. Similarly, a factory making widgets they sell for 4% less each year would have a hard time paying off its debts, using debt to expand operations, or convincing its employees to take pay cuts year after year. People thinking about being landlords would build a spreadsheet that shows the burden of the debt increasing each year, and their rents decreasing each year. In a nutshell, a lot of basic things we take for granted would stop working if inflation went upside down.

The survivors of the GD would have happily traded places with someone living in a time of inflation. Lucky for you, you don't get to trade places. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 08, 2022, 01:06:14 PM
Wait a minute... in the first excerpt, you're saying that having a fixed supply / deflationary currency would not necessarily affect prices because prices are more about supply and demand. In the second excerpt, you're attributing rising asset prices to an increasing supply of US dollars. Which is it?

Read what I wrote again. Nothing there was contradictory at all. Markets determine what the price of goods are and monetary supply can influence how much money people are willing to throw at goods in those markets. But there are a lot of other factors outside of monetary supply that influences the price of goods. Like I said, you can have an inflationary/deflationary money supply and have the price of goods still go in either direction in the markets of those goods. I was very specific to say monetary inflation/deflation so as not to get that confused with price inflation/deflation (ie, CPI). Case in point, with an inflationary monetary supply the cost of computers still goes down because the deflationary effects of new technology overcomes the effects of more money in circulation. Vice versa, you can still have the cost of valuable assets go up with a contracting money supply.

I feel like some of the confusion between you and I is in the differentiation between an expanding or contracting money supply (monetary inflation/deflation) and the price of goods going up or down (price inflation/deflation) as measured by something like the CPI. So I just want to make sure we're both on the same page there. If I fail to differentiate between the two, I apologize, but I try to make it a point.

I'm not sure if you're arguing that deflation was an effect and not a cause of the GD or if you're arguing that deflation was not even a problem at the time. I'll address both positions, using only the most uncontroversial and universally-accepted accounts of the GD.

What do you mean you're not sure what I was arguing? I said it right there in the sentence you quoted. "The Great Depression was not caused by deflation." Then you go on to not even address or counter the exact point I made in your post. The great market crash of the stock market in 1929 was absolutely not caused by deflation unless you're going to ignore everything that led up to that point in time. As I mentioned in my post there were a lot of interventions throughout the entire Great Depression and many of them did more harm than good. Deflation during that time period (a period where interest rates also dropped) did not help things either. What do you expect to happen after a massive stock market speculative bubble bursts and then in an attempt to correct that a massive contraction in the money supply takes place? That is like getting in a car accident after driving too fast and blaming your brakes for not stopping in time.

I feel like there is a disconnect between what I am arguing (stable monetary policy and deflation is not inherently bad) versus the point you're trying to argue that the Great Depression experienced heavy deflation, therefore deflation is bad. My argument isn't that deflation didn't make a bad situation worse during the depression. There are so many other things that also made what should've been a minor recession even worse. But I am arguing that the Great Depression was not caused by deflation and also that deflation is not inherently a bad thing (like so many today make it out to be). Like I said before, too much of something is not good and this goes for both an expanding and contracting money supply. It sounds like you're using debt deflation impacts as an argument against monetary deflation and I don't think that is a valid argument.

People's houses lost value because no buyers could get a mortgage, a situation that would repeat in 2008.

Not true. People's houses lost value because the prices of their homes were massively over-valued. Again, another case of a massive speculative bubble. The fact that people couldn't get a mortgage is quite literally the opposite of what happened. Everyone was given a mortgage. A bubble like that will eventually pop which is then what results in the pricing crash of houses.

You can't look at the downside of these bubbles and lay blame on the after debt deflation effects. To avoid such economic catastrophes in the first place we should be avoiding the bubbles all together. No doubt that there is pain felt in deflation after a bubble pops (ie, Great Depression and Great Recession). My argument was never being made there. But I can say empathically that deflation was not the cause of those bubbles and given your stance that deflation causes people to not want to spent money on anything, then I am not sure how you could argue that deflation would cause a bubble. The fact that you consider the housing bubble "normal economic growth" is quite the spin, in my opinion.

When I was younger I spent some time with people who lived through times of 2% deflation.

Where was this?

Again, in all of your conjured scenarios you give, it seems like you always are looking at things from a consumer that perpetually decides to never buy anything and sells all of their belongings and I refuse to believe that would ever take place in a stable economy and I can't think of any historical examples of that. And if prices do fall because of a lack of demand because consumers are expecting further price drops, what about sellers? Wouldn't sellers drop prices quicker in an attempt to sell before their competitors. Why wouldn't consumers meet them to market under such a case? If a death spiral were to actually happen, why wouldn't wages follow? If every transaction is a buyer meeting a seller, then under a scenario where everyone is selling their possessions to buy back later, doesn't that mean someone is buying? Doesn't demand pick up the lower a price get in a stable economy? If producers are also expecting lower future costs, like buyers, don't they also adjust their prices so that they can expect to still produce a profit? What are people doing with all this money they're not spending. If a bitcoin economy consists of consumers, producers, and sellers, then investing in a business will still yield favorable returns denominated in that bitcoin. If investing is still taking place, then future productivity gains are still to be had. If future productivity gains can still exist then receiving a loan denominated in bitcoin could still fuel that expansion.

At the end of the day, if I am looking to buy a $20,000 car, I'm probably not going to hold off on that purchase just because I think I might be able to get it next year for $19,600 instead.

The point about bitcoin is that it isn't linked to debt as much as fiat monetary policy is. Debt is what largely fuels monetary policy today. Whether it is bonds, QE buybacks, reserve requirements, etc. These are all debt related instruments in tuning what the overall monetary policy is. That wouldn't necessarily be the case in a bitcoin economy. A bitcoin economy would largely decouple money and debt and so you'd have a much more temperate economic climate. Instead of massive amounts of debt fueling economic expansion and then experiencing the resulting bubble burst, you'd have debt allocated only where necessary and saving money would become much more normal. This is very similar to what MMM described in his post here:

https://www.mrmoneymustache.com/2012/04/09/what-if-everyone-became-frugal/ (https://www.mrmoneymustache.com/2012/04/09/what-if-everyone-became-frugal/)

But even in a bitcoin economy there are no certainties. You could still have massive amounts of credit expansion. Especially if a majority of people hold bitcoin with custodians and those custodians loan with fractional reserves. The benefits of bitcoin provide no guarantees there. Governments could still practice quantitative easing during economic turmoil, but that QE would need to be funded through taxation rather than money printing which could be politically difficult. It could certainly play a role as a check on government spending.

There are absolutely a lot of questions as to what would take place and no one even fully understands economic outcomes in our world due to its complexity. But it is my opinion that monetary deflation is a bogey monster that has taken a lot of blame for things that it had nothing to do with and fails to get credit for other things. Having a hard rule of thumb that monetary deflation is always bad in a complex subject like economics is a poor stance to take and it surprises me there aren't more Mustachians agreeing on that. And I've yet to see an example of a deflationary spiral that wasn't preceded by a massive bubble. Humans just are consumerist by nature, given the chance.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on February 08, 2022, 01:10:46 PM
People will absolutely hold off on buying something if they think it'll be a few hundred bucks cheaper next year. And if even just a few do that, the demand/price drops even more, which leads to...

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: EchoStache on February 08, 2022, 01:43:34 PM
The Motely Fool recently purchased $5 million of Bitcoin
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 08, 2022, 01:44:38 PM
The Motely Fool recently purchased $5 million of Bitcoin

Hard to imagine a worse condemnation of the future of Bitcoin.  :P
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 08, 2022, 02:34:56 PM
People will absolutely hold off on buying something if they think it'll be a few hundred bucks cheaper next year. And if even just a few do that, the demand/price drops even more, which leads to...

-W

A lower price simply opens the market to more buyers for new cars at a lower price. People that couldn't afford them can now do so. So demand doesn't necessarily drop. There might be some that opt to save instead, but consumerist instincts don't just halt. Any measurable increase in savings is offset by a larger market of potential buyers that all have consumerist lifestyles.

If wages fell, then that would offset the drop in prices. Wages are sticky though, so would you rather have wages sticky gaining purchasing power or wages sticky losing purchasing power over time? How much economic damage has been done due to the latter?

The decreasing cost of technology simply opened up the world to everyone being able to afford technology their grandparents could only dream of affording. At the end of the day, people have needs that need to be met and those purchases are never postponed and people also love cool stuff, so those purchases are almost never postponed either. I would love to see the world become more frugal and perhaps a deflationary economy could help induce that mildly, but human nature is inherently consumerist at heart.

Again, too much monetary inflation/deflation one way or the other is bad. But bitcoin has a stable, and thus predictable, supply schedule. That's a good thing as I believe a lot of economic hardships have been caused by faulty expectations and manipulation of the monetary supply throughout history. I'll ask again, are there any examples in history of a deflationary spiral that weren't preceded by a massive bubble that popped? I'm honestly curious here.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on February 08, 2022, 03:38:55 PM
I guess we can find out, once BTC actually is used as currency on any meaningful scale. Which will be never, so we'll never know.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on February 09, 2022, 12:44:56 PM
Like I said, you can have an inflationary/deflationary money supply and have the price of goods still go in either direction in the markets of those goods. I was very specific to say monetary inflation/deflation so as not to get that confused with price inflation/deflation (ie, CPI).
I see what you mean. Economists usually refer to "monetary inflation/deflation" as the "money supply" (and specifically M1 or M2 as measured at different points) to avoid confusion with inflation, which is defined as an increase in the average price of a large selection of goods over time.

You are correct that there are lots of factors disconnecting changes in money supply from changes in the inflation rate, which is why money supply has gone up so fast in recent decades without an equal-sized spike in inflation. For example, a lot of the dollars that have been produced ended up being exchanged for products from Asian manufacturers, who then put the dollars into US treasuries. It makes one wonder what would have happened if the money supply had been inflexible, such as if we were on a gold standard or if the design of our currency prohibited expansion of the money supply.

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"The Great Depression was not caused by deflation." ... The great market crash of the stock market in 1929 was absolutely not caused by deflation unless you're going to ignore everything that led up to that point in time. As I mentioned in my post there were a lot of interventions throughout the entire Great Depression and many of them did more harm than good. Deflation during that time period (a period where interest rates also dropped) did not help things either. What do you expect to happen after a massive stock market speculative bubble bursts and then in an attempt to correct that a massive contraction in the money supply takes place?
If you want to say deflation was a way-down-the-line effect of a speculative bubble bursting, and not something that caused stock market losses to morph into the GD, the question remains: what did the stock market crash that involved a tiny minority of people who were invested in stocks at the time have to do with the price a farmer in Indiana could get for their corn, or a manufacturing plant's ability to borrow money for an expansion, or a small hometown bank's ability to write mortgages, or average wages across an entire country of mostly non-investors? How did some wealthy speculators in New York City losing some money lead to formerly profitable businesses shutting down and consumers clamping down on all spending? What does the price of shares in the stock market have to do with aggregate demand?

We could go back to first causes and debate preceding conditions that were established a century earlier, the gold standard, etc. but the stock market crash of October '29 would have been shrugged off and forgotten about by most people had it not affected the real economy. Once deflation was allowed to take hold - for all the government policy mistakes you cited - that's what turned a stock market correction into a GD. The money supply was allowed to contract and deflation took hold.

We had an almost identical setup to 1929 in 2008/09, the government responded in the exact opposite way, and as a result we look back on those days as a buying opportunity, not a generational disaster. In 1987, the stock market crashed 22.6% in one day, compared to the 23% loss on 10/28/29 and 10/29/29 combined. Somehow these massive losses did not lead to a 2nd GD, at a time when a much larger percentage of Americans were exposed to the markets. Government actions to prop up banks and prevent deflation had a lot to do with that.

I'd say bursting bubbles can start a process of money supply contraction, but as long as government can expand the supply of money in response, it turns out all right. It turned out all right in 2020, 2009, 1987, and previous 25%+ corrections for exactly this reason. Few people have ever heard of the Kennedy Slide of 1962, for example. But as the GD started the government could not / would not expand money supply, and allowed a deflationary spiral to occur.
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I am arguing that the Great Depression was not caused by deflation and also that deflation is not inherently a bad thing (like so many today make it out to be).
Don't take my word for it that deflation demolishes economies. Here are a wide range of legitimate sources describing the problem more succinctly than I can. All these diverse sources agree with the consensus in economics that deflation is some bad juju:

https://www.economicshelp.org/blog/978/economics/definition-of-deflation/ (https://www.economicshelp.org/blog/978/economics/definition-of-deflation/)
https://www.cbsnews.com/news/explainer-why-is-deflation-so-harmful/ (https://www.cbsnews.com/news/explainer-why-is-deflation-so-harmful/)
https://www.frbsf.org/education/publications/doctor-econ/2003/may/deflation-risks/ (https://www.frbsf.org/education/publications/doctor-econ/2003/may/deflation-risks/)
https://www.investopedia.com/articles/personal-finance/030915/why-deflation-bad-economy.asp (https://www.investopedia.com/articles/personal-finance/030915/why-deflation-bad-economy.asp)

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People's houses lost value because no buyers could get a mortgage, a situation that would repeat in 2008.

Not true. People's houses lost value because the prices of their homes were massively over-valued. Again, another case of a massive speculative bubble. The fact that people couldn't get a mortgage is quite literally the opposite of what happened. Everyone was given a mortgage. A bubble like that will eventually pop which is then what results in the pricing crash of houses.
Were home values in a massive speculative bubble in 1929? Did they go back into a speculative bubble when they recovered in 1940 and continued zooming up from there?

If home values in 2007 were a speculative bubble, were they a speculative bubble again in 2012 when prices returned to their 2007 levels and continued zooming up from there?

Another view of a deflationary economy:

"Between 1929 and 1933, construction of residential property fell 95 percent. Repair expenditures decreased from $50 million to $500,000. In 1932 between 250–275,000 people lost their homes to foreclosure. In comparison, 68,000 homes suffered foreclosure in 1926. By 1933 foreclosures reached the appalling rate of more than a thousand each day. Housing values dropped by approximately 35 percent. A house, worth $6,000 before the Depression, was worth approximately $3,900 in 1932. " Source: https://www.encyclopedia.com/education/news-and-education-magazines/housing-1929-1941 (https://www.encyclopedia.com/education/news-and-education-magazines/housing-1929-1941)

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When I was younger I spent some time with people who lived through times of 2% deflation.
Where was this?

Again, in all of your conjured scenarios you give, it seems like you always are looking at things from a consumer that perpetually decides to never buy anything and sells all of their belongings and I refuse to believe that would ever take place in a stable economy and I can't think of any historical examples of that. And if prices do fall because of a lack of demand because consumers are expecting further price drops, what about sellers? Wouldn't sellers drop prices quicker in an attempt to sell before their competitors. Why wouldn't consumers meet them to market under such a case? If a death spiral were to actually happen, why wouldn't wages follow?
This was in the United States, based on conversations I had with numerous family members, neighbors, and acquaintances that lived through the GD. They all told me the same story, which agreed with the accounts in history and economics textbooks I would read later. There are documentaries, statistics, contemporary accounts, etc. and everything tells the same story. The effects of deflation during the GD are not fake news or spin, it was well documented, and led to an economic consensus that deflation is public enemy #1.

Yes, people were selling all their belongings, refusing to buy things they wanted no matter how cheap these things got, putting cardboard in their shoes when the soles wore through, and yes, wages were falling at the same time. That's the consistent story told by the statistics, the textbooks, the economists, and the survivors.

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If a bitcoin economy consists of consumers, producers, and sellers, then investing in a business will still yield favorable returns denominated in that bitcoin. If investing is still taking place, then future productivity gains are still to be had. If future productivity gains can still exist then receiving a loan denominated in bitcoin could still fuel that expansion.

At the end of the day, if I am looking to buy a $20,000 car, I'm probably not going to hold off on that purchase just because I think I might be able to get it next year for $19,600 instead.
On a supply-demand curve, each incremental price increase reduces the number of buyers. The marginal buyer is the one who is barely willing to buy at $X, and will walk away from the deal at $X+$1. So yes, some percentage of people will keep their beater car for another year if car prices are falling, or even if they are not rising. Car dealerships spend billions of dollars yelling in ads about how there is a temporary "liquidation event" to convince people that prices have fallen and will likely be higher in the future if they "miss out on these deals". They're going after marginal consumers who are very much on the fence.

When we flip this logic around in a deflationary economy, and consumers start to expect that prices will be lower the longer they wait, then there's a lot less incentive to buy today. Consumers are essentially getting paid for delaying their purchase. Marginal buyers will continue driving their beater car for another few months or make repair-instead-of-replace decisions in exchange for future savings. Some people who want a car will essentially be paid to go without for some period of time. The longer they hold out, the lower the price gets.

The spiral happens when consumers' wages start falling at the same time (recall that every one of our expenses is someone else's revenue). Suddenly, consumers lost as much purchasing power as they were going to save on the new car. The absolute worst thing they could do in this situation is to buy the car, which is depreciating more rapidly than usual, and try to pay for it with their future wages, which are decreasing. The optimal strategy in an deflationary economy is to not buy, because you'll soon need your falling wages for rent, bills, and other prices that are contractually set or don't immediately fall with deflation. 

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The point about bitcoin is that it isn't linked to debt as much as fiat monetary policy is. Debt is what largely fuels monetary policy today. Whether it is bonds, QE buybacks, reserve requirements, etc. These are all debt related instruments in tuning what the overall monetary policy is. That wouldn't necessarily be the case in a bitcoin economy. A bitcoin economy would largely decouple money and debt and so you'd have a much more temperate economic climate. Instead of massive amounts of debt fueling economic expansion and then experiencing the resulting bubble burst, you'd have debt allocated only where necessary and saving money would become much more normal. ...

But even in a bitcoin economy there are no certainties. You could still have massive amounts of credit expansion. Especially if a majority of people hold bitcoin with custodians and those custodians loan with fractional reserves. The benefits of bitcoin provide no guarantees there. Governments could still practice quantitative easing during economic turmoil, but that QE would need to be funded through taxation rather than money printing which could be politically difficult. It could certainly play a role as a check on government spending.

I think in a bitcoin economy, if one could ever exist, there's no technical reason other than deflation why banks couldn't continue to make loans, stocks couldn't continue to be bought on margin, governments couldn't go into debt, and speculative bubbles couldn't form.

Even today in the dollar economy, a fixed number of dollars (e.g. your paycheck) is counted as an asset both by you and by the person who borrowed money from your bank to start a business (the same money that was your paycheck) and purchased a bunch of inventory from another business (whose assets track back to your paycheck) which becomes another person's paycheck. The average speed at which dollars are being transacted in this way is referred to as monetary velocity, and velocity is a key component of inflation/deflation. Faster velocity = consumers are desperate to get goods and services, so growth and inflation occur. Slower velocity = consumers are desperate to hoard cash, so economic decline and disinflation occur.

In today's dollar economy, it would be very easy to curtail lending if we wanted to. The government can raise bank reserve requirements, remove dollars from the economy through asset sales, raise interest rates, raise margin requirements, raise the requirements for subsidized mortgages, change the tax deductibility of interest, or increase bank regulation. The issue is that we the voters don't want to curtail lending (or cut government spending) because these actions reduce economic growth and raise unemployment. Switching to bitcoin wouldn't give us any new tools and if a deleveraged economy was the goal we aren't using the tools we have. In a crisis, funding QE with taxes would be an expansionary act paid for with a contractionary act.

I had these exact same discussions with gold bugs ten years ago. They often advocate a return to the gold standard like we had during the GD to reduce distortions in the economy that they attributed to government money-printing. In their minds, a fixed supply of money in the world would lead to 0% inflation but somehow not ever tip into deflation, would force the government to balance its budget (a policy voters have been rejecting for decades), and not result in any other distortions such as a large % of GDP being allocated to extracting the last bits of gold from the Earth's crust.

Oh, and in that scenario of course the collector coins they bought from people running Fox News commercials would be each be worth millions. When asked how they would handle the GD, their responses were right out of Herbert Hoover and Andrew Mellon's playbook. When I'd point this out, they'd wave away the critique and say this time would be different because GOLD. Um... maybe the consensus of tens of thousands of economists, investors, and business people is wrong or maybe goldbugs got conned by crackpot social media theories, information bubble hype, and marketing.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 09, 2022, 03:59:32 PM
It makes one wonder what would have happened if the money supply had been inflexible, such as if we were on a gold standard or if the design of our currency prohibited expansion of the money supply.

Well generally you wouldn't have massive bubbles to begin without without easy money and easy credit available. Also, with larger cash reserves across the economy, the economy has an easier time absorbing shock during rough periods. Contrast that when everything is built up on credit. When things crash, they crash hard and no one has cash reserves to be able to absorb any shock. It ends up being a cascade of failures. One bank failure leads to another.


If you want to say deflation was a way-down-the-line effect of a speculative bubble bursting, and not something that caused stock market losses to morph into the GD, the question remains: what did the stock market crash that involved a tiny minority of people who were invested in stocks at the time have to do with the price a farmer in Indiana could get for their corn, or a manufacturing plant's ability to borrow money for an expansion, or a small hometown bank's ability to write mortgages, or average wages across an entire country of mostly non-investors? How did some wealthy speculators in New York City losing some money lead to formerly profitable businesses shutting down and consumers clamping down on all spending? What does the price of shares in the stock market have to do with aggregate demand?

It wasn't just a stock market crash. It wasn't just wealthy Wall Street speculators that lost money in the market crash. Consumers also lost a great deal of wealth in the crash. Furthermore, one-third of banks failed directly proceeding the cash. The reserve requirements of the banks at the time was only 10%. Loans that couldn't be repaid caused banks to fail and an ensuing bank run to occur. Even if you had no money in the stock market doesn't mean you weren't impacted. There was also a massive drought at the time from the Dust Bowl. It was quite the cluster of events. So yes, I stand by the statement that deflation was absolutely not the cause of the great depression. Any time you build up an fragile economy built on easy credit and loose money, it is bound to crash and crash hard. Calling the resulting deflation that was a result of this massive bubble crash of a fragile economy a cause is a twisting of order of events for sure.

Don't take my word for it that deflation demolishes economies.

I'm not going to appeal to authority in this regard. There are plenty of economists that continue to debate both side of our argument here to this day.


If home values in 2007 were a speculative bubble, were they a speculative bubble again in 2012 when prices returned to their 2007 levels and continued zooming up from there?

No, they were a bubble because people who wouldn't ever be able to normally afford the homes they were buying were given "free" money in the form of sub-prime mortgage and the entire housing market was built up on fragile credit. The price/value of a home is arbitrary and just what the market decides. What makes it a bubble is that there was just easy money being pumped into the economy in the form of these bad loans. It was bound to crash. Again, another case of a massive bubble popping. And you know what took place following that crash? A minor period of deflation. Are you going to blame deflation for all the woes of the 2008 recession as well? And yes, the government had to step in here and prop the market up once again. I fail to see why you consider that a benefit? It is just another band-aid on top of a broken system. A system that just enriches the few that can easily ride out such crashes time and time again and enrich themselves during a fire sale while all the people that don't have cash reserves suffer through stagnant wages, unemployment, and more inflation future inflation because the economy takes on more and more debt.

This was in the United States

I'll ask again, are there any examples in history of a deflationary spiral that weren't preceded by a massive bubble that popped? I'm honestly curious here.

I quite literally asked for examples of deflation that weren't preceded by a massive bubble that popped and your example in response was once again the Great Depression.

I think in a bitcoin economy, if one could ever exist, there's no technical reason other than deflation why banks couldn't continue to make loans, stocks couldn't continue to be bought on margin, governments couldn't go into debt, and speculative bubbles couldn't form.

I fully agree and that was never a point I made. If fact I mentioned a couple times that these things would still be true under a bitcoin economy. Just because bitcoin is used in the economy doesn't mean there won't be crazy speculators looking at the next Gamestop to gamble their money on. Like I said, people love to gamble! Along those same lines, I'm not sure how you argue that there could still be bubbles under deflationary money supply but also say that people wouldn't be spending their money. Either people love to spend money and exhibit their natural consumerist tendencies (which I agree with), or they don't and we all plummet toward the inevitable deflationary spiral. Which is it? Whenever you provide your hypothetical scenarios, it is always following the former path to doom and gloom.

But a deflationary environment does mean there are more cash reserves on hand and bank reserve requirements would be much higher and therefore any speculative bubble crash would be much more tame and the economy would have an easier time absorbing such shocks. Debt wouldn't be as easy to come by and so the economy would absolutely grow slower, people would save money more, and the booms and busts that we see today would be fewer and further between and not as steep. It would be an economy that would look...how do I say...more Mustachian!

I had these exact same discussions with gold bugs ten years ago. They often advocate a return to the gold standard like we had during the GD to reduce distortions in the economy that they attributed to government money-printing. In their minds, a fixed supply of money in the world would lead to 0% inflation but somehow not ever tip into deflation, would force the government to balance its budget (a policy voters have been rejecting for decades), and not result in any other distortions such as a large % of GDP being allocated to extracting the last bits of gold from the Earth's crust.

I'm not a gold bug by any means. I don't own any. I even mentioned earlier in this post that the "gold standard" era was not even a deflationary era (6.1% monetary expansion versus 5.7% in the proceeding post-war era). But I absolutely am someone who thinks our economy should not be built on easy credit, the money supply should be less expansionary, people should save more money and work less hours, and if possible, the people should be able to have access to a global currency that no corporation or government can censor them from. If that's bitcoin, then so be it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on February 09, 2022, 09:30:14 PM
@lifeanon269 you're saying that you want an economy where people/corporations/governments are discouraged from using debt, because "easy money" necessarily leads to speculative bubbles which lead to recessions/depressions. A currency system that forces deflation upon the economy is your preferred solution to accomplish this, because deflation discourages people from going into debt. Fair summary?

I mentioned many other ways to reduce the amount of debt used by people/corporations/governments that would not necessarily involve deflation - higher reserve ratios for banks, removing government backing for mortgages, higher margin requirements, higher federal funds rates, reducing the tax deductibility of interest, etc. Wouldn't these things be easier or more likely to implement than a new world currency that has major speed, security, scalability, and energy consumption challenges? Wouldn't these tweaks to the existing system also be safer than wandering into deflation-land, just in case you're wrong, the economists are right, and deflation does actually reduce aggregate demand?

If you want to reduce consumer, corporate, and government debt why don't these ideas excite you?

May I suggest that the reason we don't have these easy-to-implement policies already is because people don't want them?

Consumers and corporations could always voluntarily de-leverage, but they don't. If consumers de-leveraged, they would have a lower standard of living. For example, in a world where debt is hard to get or service, one might rent for 20 years while saving up the entire purchase price of a house, or work 20 years to save 4 years of college tuition or enough money to start a business. This is the way it is in many countries, and their residents very much wish they could get a faster start on their life goals. If corporations de-leveraged, their shareholders would have a lower Return On Equity. Governments could de-leverage but almost every time someone runs for office on a platform of higher taxes and lower spending, they lose. Voters have consistently rejected deficit scolds and balanced budget amendment ideas for decades now.

So the point of proposing a "hard money" currency like gold or limited-supply crypto is to bypass the will of the people consuming goods and services, running their own corporations, or voting, and to force them to manage their affairs in a different way than they would choose for themselves.

I'm not going to appeal to "freedum!" or cry "socialism!" here because there are lots of rules in our economy designed to protect people from themselves, protect bystanders, and restrict economic choices. Not all of these restrictions are bad ideas either.

Instead I'll argue that most individuals and investors in corporations are very interested in maximizing their outcomes and not losing their money. The people making the decisions have skin in the game and motivation. A brutal evolutionary process ensures that the ones who tend to make good choices become a bigger part of the economy, and vice versa.

The benefit of all this is living in a society where economic growth is optimized, though at the cost of an occasional recession that erases a couple years of gains. How bad was the Great Financial Crisis? At the lowest point, Q2 2009, Real GDP dropped to levels not seen since... a whopping three and a half years earlier! That's all! Real GDP completely recovered just 5 quarters later (Source: https://fred.stlouisfed.org/series/GDPC1 (https://fred.stlouisfed.org/series/GDPC1) ). That's not a strong case for experimenting with a permanently deflationary system. If that's as bad as it gets, our back is not exactly against the wall. Growth is the story and the blips are distractions.

Also I'll argue that if most people clearly don't want lending restrictions, then why should we believe they would accept a currency that would impose lending restrictions? E.g. If banks would lend you 80% of a home's value in dollars, but only 40% in bitcoin, which currency would you use to buy your home? Most buyers can't afford a 60% down payment, which means it's probably pointless for the seller to even list a price in bitcoin. Similarly, if a politician says we will make the transition to a bitcoin economy, but taxes will have to go up because we no longer print fiat currency and can no longer borrow as much scarce bitcoin, then that politician would lose the election to an opponent saying let's go back to the dollar standard and pass both a tax cut and a spending bill at the same time. People simply don't want a de-leveraged, deflationary economy or else they'd have already made it happen.

So a deflationary bitcoin economy is a non-starter. Why not just advocate for a tighter monetary policy in the dollar economy, using the existing, tried-and-true levers of control? Maybe also consider tighter bank regulation like reinstating the Glass-Stegal Act?

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There are plenty of economists that continue to debate both side of our argument here to this day.

The only "economists" I can think of who don't think deflation is a problem are maybe adherents to the old Austrian school or Marxists. "Austrian economists," who are usually neither professional economists nor from Austria, make a living writing blog posts and making YouTube videos about how economic collapse is nigh, and have been saying those kind of things for decades as economic growth and living standards have marched forward. They have not revised their position after decades of being wrong, so they're more like a literary genre or cult rather than a serious field of study. Lots of gold bugs fell into this trap, and because gold yields nothing they must work as social media influencers until the day of rapture when all the fiat money goes poof and they get rich. Then there are the Marxists, whose real-world economic track record speaks for itself and whose perspective is that a capitalistic economy must be destroyed rather than improved upon, so it's probably irrelevant for our question anyway. I'd love to learn about any examples you can find of professional economists working in academe, government, or industry as economists who aren't from one of these two ideological camps and who do not think deflation is a Very Bad Thing. This isn't an appeal to authority, it's an appeal to expertise.   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on February 10, 2022, 06:58:02 AM
@ChpBstrd , thank you for a series of excellent arguments.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 10, 2022, 07:19:18 AM
If you want to reduce consumer, corporate, and government debt why don't these ideas excite you?

They do. Where did I ever say they didn't? I fully support many of those things. I support higher reserve requirements for banks or how about we at least have any reserve requirement for banks considering the fact that there isn't any currently? I support higher interest rates, and many of the other policies you listed and more. Not sure why you assume otherwise.

May I suggest that the reason we don't have these easy-to-implement policies already is because people don't want them?

Absolutely people don't want them. Because, as I said, people are inherently consumerist in nature. I find it odd that in one breath you argue that people would horde money in a deflationary stable economy leading to a never-ending death spiral, but then next you're seemingly admitting that people love spending. The thing about deflation is that it doesn't prevent people from spending money now like I feel like you're claiming. What your prior deflationary spiral hysterics were claiming is that people would voluntarily not spend for the sake of saving money. My claim was that we have absolutely zero historical precedent nor sociological evidence that would ever actually happen. And despite my numerous requests, you've never actually presented real world examples of such a deflationary spiral as you've described.

Our economy is structured around a debt-based system. I am in no way disagreeing that there wouldn't be pain if there ever were a transition from an inflationary and debt fuel economy to a deflationary one. It would be unavoidable. I absolutely agree that any politician that were to suggest such a thing would be committing political suicide. That's painfully obviously and that is a big reason why we continue down the ever-growing debt cycle. It is why economists today agree deflation is bad because of the fact that it would crush our current economy. Deflation would be nothing but pain given they way our economy is currently fueled. Politicians and economists know this and that is why deflation is always considered bad. It is also bad geo-politically. No nation is going to voluntarily induce austerity measures when other competing nations injecting economic steroids through monetary policy. Any politician that does enforce austerity measures is immediately voted out. I'm in no disagreement with you there.

I definitely recommend this article on monetary policy over the last century by Lyn Alden, a well respected macro-economist.

https://www.lynalden.com/fiscal-and-monetary-policy/ (https://www.lynalden.com/fiscal-and-monetary-policy/)

Game theory goes both ways though. While economists and politicians around the world continue to push unsustainable debt fueled growth leading to more and more currency collapses, citizens will voluntarily find an alternative in the aftermath.

EDIT: Adding a link to this short video that mentions some of the same ideas that I've talked about:

https://www.youtube.com/watch?v=avLhoBIE9qk (https://www.youtube.com/watch?v=avLhoBIE9qk)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on February 10, 2022, 07:39:28 AM
@ChpBstrd , thank you for a series of excellent arguments.

And, for the sake of balance . . .  :-)

@lifeanon269 , thank you for a series of excellent arguments.


A good discussion - following with interest.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on February 10, 2022, 02:42:32 PM
As a certifiable Cheap Bastard(R), I definitely agree that most people spend too much and save too little. Those people might disagree and consider my life to be pitifully frugal. Oh well. My portfolio grows and supports me thanks to their dedication to work until 65 or 70 and their tendency to spend everything they earn at the businesses I own. It's like they are serfs paying taxes to me, their nobility.

Unlike the Middle Ages, only a tiny percentage of today's economy is about producing bare necessities like food, shelter, toilet paper, utilities, shoes, medical care, etc, and the majority is about luxuries such as cars, entertainment, electronics, fashion, restaurants, airlines, vacations, boats, decor, etc. 200 years ago, almost everyone was employed making bare necessities, but industrialization reduced the amount of workers required to produce just about anything. Fortunately, the rest of the population found work making non-essentials.

One person's spending is always another person's paycheck. So if we did something to reduce people's spending/borrowing on stupid stuff in an effort to make them save more, we'd be putting a lot of people out of work, especially those in the massive retail, food service, consumer discretionary, or service sectors. What good would it do, in the aggregate, if the average American saved 20% of their pay, but the unemployment rate was 10-15% like it is normally in Europe. What good would it do for corporations to be debt-free if that slowed down their ability to grow? How would a nation full of such savers invest, when their corporations' prospects are so bleak and there are so few bonds available to buy?

Given the choice, would we accept a decade of GDP growth at a 0.5% slower pace than otherwise would have happened if that could allow us to avoid a -3.5% severe recession somewhere in that decade? American consumers, corporate boards, and voters have consistently chosen to accept more volatility in exchange for more growth.

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No nation is going to voluntarily induce austerity measures when other competing nations injecting economic steroids through monetary policy. Any politician that does enforce austerity measures is immediately voted out.

So which of the following will happen?

a) People will refuse to use bitcoin as a currency because it will force austerity upon them, or
b) Austerity sneaks in the back door under the guise of changing currencies, and nobody notices? 

I suppose we could say (b) will happen but nobody will be able to stop the momentum. That's problematic at the microeconomic level, such as for the home buyer who cannot get a 20% equity mortgage in a deflationary currency, or the corporation that still has the option to borrow in dollars, etc. All these problems with deflationary crypto push people back into inflationary dollars one transaction at a time.

It's not up to me which currency my serfs choose to use, but what they want to do is take out 7-year loans on third-row SUVs and put trips to Disney on credit cards. If bitcoin makes those things prohibitively expensive, they'll consume with dollars.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dreadmoose on February 10, 2022, 03:48:48 PM
Umm in case anyone believes the above... Lyn Alden is not a well respected macro-economist but an engineer with no formal economics training that appears to have pivoted to shilling bitcoin as an alternative investment.

No disrespect to engineers but it looks a lot from her self-written bios that she's "done her own research" on economics... and landed on Bitcoin.

Let's try someone without an agenda to learn from if we're going to start pointing to data sources to read up on.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 10, 2022, 04:10:18 PM
One person's spending is always another person's paycheck. So if we did something to reduce people's spending/borrowing on stupid stuff in an effort to make them save more, we'd be putting a lot of people out of work, especially those in the massive retail, food service, consumer discretionary, or service sectors. What good would it do, in the aggregate, if the average American saved 20% of their pay, but the unemployment rate was 10-15% like it is normally in Europe. What good would it do for corporations to be debt-free if that slowed down their ability to grow? How would a nation full of such savers invest, when their corporations' prospects are so bleak and there are so few bonds available to buy?

What good does it do for society that we produce so much stupid stuff? It doesn't make anyone happier that we have so much stupid stuff. It destroys our environment. "GDP go up" for the sake of "GDP go up" is a silly way to measure economic success in our world and I really think we need to think differently there.

https://www.mrmoneymustache.com/2012/04/09/what-if-everyone-became-frugal/ (https://www.mrmoneymustache.com/2012/04/09/what-if-everyone-became-frugal/)

It may seem idealistic given the current state of our debt fueled society and with debt-to-GDP ratios at excessive levels, but I do think in the long run society will be better for it. If we didn't spend so much money on so much stupid stuff, yes that does mean that the economy wouldn't grow so fast, but so what? That also means that people wouldn't need to work so much and they'd save more and could retire earlier. The environment would benefit. We'd become healthier mentally without feeling the constant need to declutter our lives of all this unnecessary stuff.

Given the choice, would we accept a decade of GDP growth at a 0.5% slower pace than otherwise would have happened if that could allow us to avoid a -3.5% severe recession somewhere in that decade? American consumers, corporate boards, and voters have consistently chosen to accept more volatility in exchange for more growth.

I think first and foremost we need to be having more conversations (like this one) about how our economy works and why it is so unsustainable. I think if people understood the trade-offs and understood the benefits that could come from a more frugal and deflationary society/economy, then I think we could make a transition that would be less of a shock to people. If instead we continue to treat deflation as a bogey man and continue thinking that GDP is the end all be all measure of a successful society, then yes, any transition to a deflationary and frugal economy will be met with pain. If society transitions gradually however and more and more people begin to understand the benefits, then I think it is possible to get there without so much pain. After all, it seems the older you get in your later years, you don't spend as much. So if we can just teach our younger generations about frugality, then I think it can be a generational transition that gets everyone "in sync". ...Wishful thinking, I know!

So which of the following will happen?

a) People will refuse to use bitcoin as a currency because it will force austerity upon them, or
b) Austerity sneaks in the back door under the guise of changing currencies, and nobody notices? 

I suppose we could say (b) will happen but nobody will be able to stop the momentum. That's problematic at the microeconomic level, such as for the home buyer who cannot get a 20% equity mortgage in a deflationary currency, or the corporation that still has the option to borrow in dollars, etc. All these problems with deflationary crypto push people back into inflationary dollars one transaction at a time.

I'm glad we can agree that people are habitual spenders. No doubt that taking the consumer out of consumerists is nigh impossible.

I don't think bitcoin forces austerity on anyone. At the end of the day it is a voluntary system (unless government forces it on people). The only thing that would force austerity on people is the resultant crashes that come from unsustainable growth. At some point there needs to be a reckoning that puts a check out our current monetary policies around the world. The number of nations currently experiencing currency and debt distress is at some very concerning levels. The US, given its economic status in the world can ride out some turbulence, but not so for many countries in the world at the moment. Covid absolutely didn't help matters. Austerity will be forced on a lot of people, but it won't be because of bitcoin.

It's not up to me which currency my serfs choose to use, but what they want to do is take out 7-year loans on third-row SUVs and put trips to Disney on credit cards. If bitcoin makes those things prohibitively expensive, they'll consume with dollars.

But if things continually get cheaper in a deflationary world and the price of goods isn't artificially inflated and we're actually able to reap the benefits of a more productive economy, then maybe people won't need to take out so many loans to afford a new car.

Umm in case anyone believes the above... Lyn Alden is not a well respected macro-economist but an engineer with no formal economics training that appears to have pivoted to shilling bitcoin as an alternative investment.

No disrespect to engineers but it looks a lot from her self-written bios that she's "done her own research" on economics... and landed on Bitcoin.

Let's try someone without an agenda to learn from if we're going to start pointing to data sources to read up on.

Not sure why the hate for Lyn Alden. She actually is well respected among macro-economists. If you listen to MacroVoices at all, she's had many conversations with other well respected macro-economists and she definitely knows her stuff and is very well researched. Rather than push ad hominems as a means of discrediting, let's stick to debating actual content.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DiscoverJupiter on February 10, 2022, 05:28:39 PM
Btc vs. government case study may soon be commencing. This will set the precedence for the government-resistant talking points for crypto.
https://www.zerohedge.com/political/ontario-premier-orders-givesendgo-freeze-funds-anti-mandate-protesters (https://www.zerohedge.com/political/ontario-premier-orders-givesendgo-freeze-funds-anti-mandate-protesters)

I believe it will come out as the winner, but it will be interesting to see how many new IRS audits take place in the US (and whatever is the Canadian equivalent) for those that donated btc to this cause without first washing through a privacy-oriented coin or non-centralized tumbler.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on February 10, 2022, 09:52:04 PM
What good does it do for society that we produce so much stupid stuff? It doesn't make anyone happier that we have so much stupid stuff. It destroys our environment. "GDP go up" for the sake of "GDP go up" is a silly way to measure economic success in our world and I really think we need to think differently there.
An economist might say that without so much stuff available to buy, people would not be motivated to work as hard as they do or take the risks inherent with starting businesses. Also, with more variety in the things we can buy, we're more likely to find things that are a "perfect fit" for our needs and interests so we're more likely to spend money rather than hoard it. Our spending = someone's paycheck. This is part of the story of how economic growth accelerates itself. The process has been economically sustained for a couple hundred years.

Now, in an ecological sense, you have a point. But I think a lot of the ecological damage is a result of cultural norms about the sort of things we should want to buy. In the U.S. people are motivated to work hard so that they can own a big house full of unused rooms with a big lawn they pay someone else to mow and a V8 powered crew cab pickup truck that is used to commute to work in a manly way. This is essentially status-seeking through conformity. I can imagine another culture where everyone wants the most fashionable clothes, to live on the highest floor of a building, to have exotic bonsai trees, and to manage fancy snail terrariums to impress their friends. The things-to-want in this imaginary culture are no less useless than the things we're supposed to want in today's U.S. culture, but they are a lot less ecologically damaging.

The point of this comparison is to show the non-essential things we learn to want are culturally determined, not inherently valuable. A couple of generations from now people might not want the things people want today. Look at how attitudes about cars shifted between the era of teenage baby boomers and gen Z. There's hope on the ecological front, even if economic growth continues forever. One thing I like about MMM is that he face punches people for conforming to the culture, and points out more intrinsically valuable things we should want, like more time with our kids or less stress.

Quote
I don't think bitcoin forces austerity on anyone. At the end of the day it is a voluntary system (unless government forces it on people). The only thing that would force austerity on people is the resultant crashes that come from unsustainable growth. At some point there needs to be a reckoning that puts a check out our current monetary policies around the world. The number of nations currently experiencing currency and debt distress is at some very concerning levels. The US, given its economic status in the world can ride out some turbulence, but not so for many countries in the world at the moment. Covid absolutely didn't help matters. Austerity will be forced on a lot of people, but it won't be because of bitcoin.
I think the world you describe where debt is much harder to obtain would reduce consumption, as you hope it would, but that reduced aggregate demand is essentially the definition of a recession/depression. All the businesses that currently sell things on credit would sell less things if they didn't offer credit. Otherwise there'd be no incentive for them to take the risk of extending loans to customers. If those business models no longer worked, neither would many of those employees, and the demand shock would be felt further down the line by suppliers, manufacturers, transporters, manufacturers, and resource extractors.

It comes down to every payment by one person being another person's paycheck. So yes, any change in the system that forced deflation would reduce lending, and reduced lending would reduce aggregate demand. Reduced AD = recession and higher unemployment.

What supports the assumption that economic growth cannot go on for the foreseeable future? The world economy and living standards have been growing for centuries, and if anything this growth is accelerating. Meanwhile, most of the world still lives in poverty. Most kids still don't get the equivalent of a US high school education. An unimaginable fortune in talent and intelligence is still wasting away in economic backwaters every day, but less and less so every day. Meanwhile, science and technology are expanding our knowledge at a pace that keeps speeding up. War has been in decline for centuries (Steven Pinker makes a good case with piles of data in The Better Angels of Our Nature). GDP growth, and especially GDP per capita growth, matters a lot when it comes to putting shoes on barefoot children and giving families the jobs they need to sent those kids to school. It's not just ever-more-expensive sugar drinks from Starbucks; it's life-vs-death somewhere down the supply chain.

Quote
It's not up to me which currency my serfs choose to use, but what they want to do is take out 7-year loans on third-row SUVs and put trips to Disney on credit cards. If bitcoin makes those things prohibitively expensive, they'll consume with dollars.

But if things continually get cheaper in a deflationary world and the price of goods isn't artificially inflated and we're actually able to reap the benefits of a more productive economy, then maybe people won't need to take out so many loans to afford a new car.
You don't reap the benefits if your wages fall alongside the price of goods. I.e. if other people are paying cheaper and cheaper prices for the goods you produce, then your paycheck gets smaller and smaller. In an industrial economy, deflation looks more like layoffs because a business' sales cannot cover the salaries of employees. If you think you might be next in the unemployment line, the sensible thing to do is hoard cash and hold off on the new car. When everybody reacts that way, it's a depression.

Btc vs. government case study may soon be commencing. This will set the precedence for the government-resistant talking points for crypto.
https://www.zerohedge.com/political/ontario-premier-orders-givesendgo-freeze-funds-anti-mandate-protesters (https://www.zerohedge.com/political/ontario-premier-orders-givesendgo-freeze-funds-anti-mandate-protesters)

I believe it will come out as the winner, but it will be interesting to see how many new IRS audits take place in the US (and whatever is the Canadian equivalent) for those that donated btc to this cause without first washing through a privacy-oriented coin or non-centralized tumbler.

Dude. Zerohedge?
Really?
Zero? Hedge?
LOL. https://adfontesmedia.com gives them a reliability score of 24 and a bias score of 16 which puts them in the "some reliability issues and extremism" category. I think that's being very generous. The site doesn't appeal to anyone not suffering from paranoia.

WRT the sometimes-stated claim that the source doesn't matter and we should evaluate all messages with equal respect, that's a proven way to end up misinformed. A politically motivated hack making up facts is a hack. A social media influencer is an attention-getter selling ads. And financial advisors writing scare articles to get subscribers or sell front-loaded hedge fund shares are shills. Stuff doesn't just appear on the internet at random, with no agenda driving it and nobody spending something to put it there. The source matters big time if you're going to accept any word they say as a fact.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DiscoverJupiter on February 11, 2022, 11:19:59 AM
Dude. Zerohedge?
Really?
Zero? Hedge?
LOL. https://adfontesmedia.com gives them a reliability score of 24 and a bias score of 16 which puts them in the "some reliability issues and extremism" category. I think that's being very generous. The site doesn't appeal to anyone not suffering from paranoia.

WRT the sometimes-stated claim that the source doesn't matter and we should evaluate all messages with equal respect, that's a proven way to end up misinformed. A politically motivated hack making up facts is a hack. A social media influencer is an attention-getter selling ads. And financial advisors writing scare articles to get subscribers or sell front-loaded hedge fund shares are shills. Stuff doesn't just appear on the internet at random, with no agenda driving it and nobody spending something to put it there. The source matters big time if you're going to accept any word they say as a fact.


I quite enjoy ZeroHedge because the comments are sassy. But here is a more mainstream article saying the same thing:
https://www.washingtonexaminer.com/news/ontario-court-freezes-crowdsourced-donations-to-freedom-convoy (https://www.washingtonexaminer.com/news/ontario-court-freezes-crowdsourced-donations-to-freedom-convoy)

The message is the same: government attempts to freeze legally donated funds because they don't like how the money is being spent. Crypto is a product which advertises resistance to government censorship through collusion with the financial gatekeepers.

Givesendgo claims Canada has no jurisdiction over them so the battle may not be fully fought, but the courts are trying wholeheartedly to freeze the assets, so we may get a true showdown proving the oft-touted crypto use case.
https://ottawa.citynews.ca/local-news/givesendgo-alleges-canada-has-no-jurisdiction-over-truck-convoy-fundraising-after-ontario-government-freezes-access-5053122 (https://ottawa.citynews.ca/local-news/givesendgo-alleges-canada-has-no-jurisdiction-over-truck-convoy-fundraising-after-ontario-government-freezes-access-5053122)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on February 11, 2022, 11:49:53 AM
Dude. Zerohedge?
Really?
Zero? Hedge?
LOL. https://adfontesmedia.com gives them a reliability score of 24 and a bias score of 16 which puts them in the "some reliability issues and extremism" category. I think that's being very generous. The site doesn't appeal to anyone not suffering from paranoia.

WRT the sometimes-stated claim that the source doesn't matter and we should evaluate all messages with equal respect, that's a proven way to end up misinformed. A politically motivated hack making up facts is a hack. A social media influencer is an attention-getter selling ads. And financial advisors writing scare articles to get subscribers or sell front-loaded hedge fund shares are shills. Stuff doesn't just appear on the internet at random, with no agenda driving it and nobody spending something to put it there. The source matters big time if you're going to accept any word they say as a fact.


I quite enjoy ZeroHedge because the comments are sassy. But here is a more mainstream article saying the same thing:
https://www.washingtonexaminer.com/news/ontario-court-freezes-crowdsourced-donations-to-freedom-convoy (https://www.washingtonexaminer.com/news/ontario-court-freezes-crowdsourced-donations-to-freedom-convoy)

The message is the same: government attempts to freeze legally donated funds because they don't like how the money is being spent. Crypto is a product which advertises resistance to government censorship through collusion with the financial gatekeepers.

Givesendgo claims Canada has no jurisdiction over them so the battle may not be fully fought, but the courts are trying wholeheartedly to freeze the assets, so we may get a true showdown proving the oft-touted crypto use case.
https://ottawa.citynews.ca/local-news/givesendgo-alleges-canada-has-no-jurisdiction-over-truck-convoy-fundraising-after-ontario-government-freezes-access-5053122 (https://ottawa.citynews.ca/local-news/givesendgo-alleges-canada-has-no-jurisdiction-over-truck-convoy-fundraising-after-ontario-government-freezes-access-5053122)

That I can agree with. Governments* are at least treating crypto as a form of currency when it comes to law enforcement, which negates much of the benefit. It's no different than if I was arrested laundering Mexican Pesos, except that there is a neat electronic record of all my transactions that can be subpoenaed. I'd be genuinely shocked if the CIA/FBI was collecting all our emails but not watching all the crypto ledgers.

So there's the worst of both worlds: It's not an anonymous system free of government influence AND it can't be used as a currency to buy anything.

*the ones that haven't outright banned crypto.

Sorry if I was harsh about zero hedge. I just think the concept of MMM face punches has to extend to the information economy and not just purchases.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 11, 2022, 12:07:04 PM
Dude. Zerohedge?
Really?
Zero? Hedge?
LOL. https://adfontesmedia.com gives them a reliability score of 24 and a bias score of 16 which puts them in the "some reliability issues and extremism" category. I think that's being very generous. The site doesn't appeal to anyone not suffering from paranoia.

WRT the sometimes-stated claim that the source doesn't matter and we should evaluate all messages with equal respect, that's a proven way to end up misinformed. A politically motivated hack making up facts is a hack. A social media influencer is an attention-getter selling ads. And financial advisors writing scare articles to get subscribers or sell front-loaded hedge fund shares are shills. Stuff doesn't just appear on the internet at random, with no agenda driving it and nobody spending something to put it there. The source matters big time if you're going to accept any word they say as a fact.


I quite enjoy ZeroHedge because the comments are sassy. But here is a more mainstream article saying the same thing:
https://www.washingtonexaminer.com/news/ontario-court-freezes-crowdsourced-donations-to-freedom-convoy (https://www.washingtonexaminer.com/news/ontario-court-freezes-crowdsourced-donations-to-freedom-convoy)

The message is the same: government attempts to freeze legally donated funds because they don't like how the money is being spent. Crypto is a product which advertises resistance to government censorship through collusion with the financial gatekeepers.

Givesendgo claims Canada has no jurisdiction over them so the battle may not be fully fought, but the courts are trying wholeheartedly to freeze the assets, so we may get a true showdown proving the oft-touted crypto use case.
https://ottawa.citynews.ca/local-news/givesendgo-alleges-canada-has-no-jurisdiction-over-truck-convoy-fundraising-after-ontario-government-freezes-access-5053122 (https://ottawa.citynews.ca/local-news/givesendgo-alleges-canada-has-no-jurisdiction-over-truck-convoy-fundraising-after-ontario-government-freezes-access-5053122)

That I can agree with. Governments* are at least treating crypto as a form of currency when it comes to law enforcement, which negates much of the benefit. It's no different than if I was arrested laundering Mexican Pesos, except that there is a neat electronic record of all my transactions that can be subpoenaed. I'd be genuinely shocked if the CIA/FBI was collecting all our emails but not watching all the crypto ledgers.

So there's the worst of both worlds: It's not an anonymous system free of government influence AND it can't be used as a currency to buy anything.

*the ones that haven't outright banned crypto.

Sorry if I was harsh about zero hedge. I just think the concept of MMM face punches has to extend to the information economy and not just purchases.

I guess the question in the case you've linked is, "Should a democratically elected government be able to prevent international funding from going people with a stated goal of overturning the results of a fair election?"

If the answer comes up 'no' due to crypto, I think that will have some pretty grave implications for the world.  And any government watching that scenario unfold would do well to immediately making holding and using cryptocurrency illegal.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DiscoverJupiter on February 11, 2022, 12:57:16 PM
I'd be genuinely shocked if the CIA/FBI was collecting all our emails but not watching all the crypto ledgers.

So there's the worst of both worlds: It's not an anonymous system free of government influence AND it can't be used as a currency to buy anything.

*the ones that haven't outright banned crypto.

The government is definitely watching every ledger. It would surprise me if the nsa isn't compiling rainbow tables of btc private-public key pairs. Yes, space of all keys is probably too vast to rainbow them all, but if you can get even 0.1% of the space, you still capture many transaction authority since crypto ownership is defined only though knowledge of the private key.

And it is no secret. There are many private companies which exist solely to sell information related to the identities of the wallet-holders of crypto transactions, typically with government customers.

Which is why peer to peer purchases are important, same with non-kyc escrow services such as localmonero and localbitcoin.

If you're going to use crypto for more than just holding and day trading, such as purchases, be sure to rinse it through tumbling services without central authorities, get it from peer-to-peer cash transactions in which you make sure not to have your personal tracking device on you while wearing reflectacles, use a privacy-oriented ones exclusively, or mine it. Practice superior opsec without mistakes indefinitely or be prepared for your eventual unmasking.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on February 11, 2022, 01:07:50 PM
I'd be genuinely shocked if the CIA/FBI was collecting all our emails but not watching all the crypto ledgers.

So there's the worst of both worlds: It's not an anonymous system free of government influence AND it can't be used as a currency to buy anything.

*the ones that haven't outright banned crypto.

The government is definitely watching every ledger. It would surprise me if the nsa isn't compiling rainbow tables of btc private-public key pairs. Yes, space of all keys is probably too vast to rainbow them all, but if you can get even 0.1% of the space, you still capture many transaction authority since crypto ownership is defined only though knowledge of the private key.

And it is no secret. There are many private companies which exist solely to sell information related to the identities of the wallet-holders of crypto transactions, typically with government customers.

Which is why peer to peer purchases are important, same with non-kyc escrow services such as localmonero and localbitcoin.

If you're going to use crypto for more than just holding and day trading, such as purchases, be sure to rinse it through tumbling services without central authorities, get it from peer-to-peer cash transactions in which you make sure not to have your personal tracking device on you while wearing reflectacles, use a privacy-oriented ones exclusively, or mine it. Practice superior opsec without mistakes indefinitely or be prepared for your eventual unmasking.

Or the ultimate clandestine trade: the paper $100 bill.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DiscoverJupiter on February 11, 2022, 01:25:18 PM

I guess the question in the case you've linked is, "Should a democratically elected government be able to prevent international funding from going people with a stated goal of overturning the results of a fair election?"

If the answer comes up 'no' due to crypto, I think that will have some pretty grave implications for the world.  And any government watching that scenario unfold would do well to immediately making holding and using cryptocurrency illegal.

Governments have interest optimizing for themselves. Should governments be able to inhibit free trade? That's an interesting question.

Regardless of the moral/ethical stance, I think an appropriate counter question would ask whether governments can effectively prohibit free trade under any pretense? After all, if the US tells me that I can't trade with Iran, I could still find a way. I could find a business in Turkey to serve as the escrow partner. My government would be none-the-wiser as to with whom I'm ultimately transacting, and all it costs me is the escrow markup.

Crypto has a similar function in governmental circumvention, but it specifically tackles the unregulated finance aspect of my deals. I believe it can be outlawed; pens are plenty. But the government cannot undiscover math. You can't stop mining operations... it's just computation. Good luck proving in court someone is crypto mining and not performing a massive, distributed deep learning training session when they run fde on every disk and use https, funneling coms through the onion, and have instant kill switches to power everything off when someone so much as breaches the property to clear ram. Metadata analysis will be the only vector of attack, and even then they'll just funnel traffic over non-standard ports to non US based syncing servers.

Math is forever, just like death.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DiscoverJupiter on February 11, 2022, 01:31:05 PM
Or the ultimate clandestine trade: the paper $100 bill.

Cash is and always will be the GOAT.

Though the government actively tries to combat it via unconstitutional laws such as civil asset forfeiture. The TSA will, for example, call LE on you if they notice you have a large pile of cash in your carry-on because they get a tipster kickback from civil asset forfeiture seizures. Countries in the EU have made it illegal to use cash in moderate sums for purchases. Governments want the ability to track everything.

The benefit of crypto is you can have a fully encrypted wallet on a mundane, small storage device, with a perfect replication elsewhere so that if the gov wants to seize it, all they got was a $1 piece of hardware. Much easier to smuggle or get past prying eyes... though cryptos haven't yet solved the track everything problem unless the user is extremely diligent in their every move.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on February 11, 2022, 01:46:43 PM
India showed how easily cash can be sidelined.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on February 11, 2022, 01:50:40 PM
Which is why peer to peer purchases are important, same with non-kyc escrow services such as localmonero and localbitcoin.

If you're going to use crypto for more than just holding and day trading, such as purchases, be sure to rinse it through tumbling services without central authorities, get it from peer-to-peer cash transactions in which you make sure not to have your personal tracking device on you while wearing reflectacles, use a privacy-oriented ones exclusively, or mine it. Practice superior opsec without mistakes indefinitely or be prepared for your eventual unmasking.

I'm getting some serious Poe's Law vibes here.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 11, 2022, 01:51:00 PM
Should governments be able to inhibit free trade? That's an interesting question.

No it's not an interesting question at all.  The answer is a resounding 'yes'.  Government intervention in free trade is why we don't have slavery.  It's why Joe down the street can't buy a nuclear weapon.  Every government in existence places inhibitions on free trade because unrestricted free trade results in an anarchical state that is anathema to modern society.



Regardless of the moral/ethical stance, I think an appropriate counter question would ask whether governments can effectively prohibit free trade under any pretense? After all, if the US tells me that I can't trade with Iran, I could still find a way. I could find a business in Turkey to serve as the escrow partner. My government would be none-the-wiser as to with whom I'm ultimately transacting, and all it costs me is the escrow markup.

Crypto has a similar function in governmental circumvention, but it specifically tackles the unregulated finance aspect of my deals. I believe it can be outlawed; pens are plenty. But the government cannot undiscover math. You can't stop mining operations... it's just computation. Good luck proving in court someone is crypto mining and not performing a massive, distributed deep learning training session when they run fde on every disk and use https, funneling coms through the onion, and have instant kill switches to power everything off when someone so much as breaches the property to clear ram. Metadata analysis will be the only vector of attack, and even then they'll just funnel traffic over non-standard ports to non US based syncing servers.

Sure.  There are always people happy to break the law.  But I suspect that a lot fewer people would use crypto if being caught with it came with mandatory jail time.  They don't have to monitor every computer, just enough of them to catch people now and again for this to be a good deterrent.

"Number go up" stops working if enough people become disinterested in the platform - and that's the only real reason to own crypto at the moment.  If I held a lot of bitcoin or ethereum, I'd be concerned about my crypto becoming illegal.


Math is forever, just like death.

lol
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on February 11, 2022, 04:40:16 PM
but that reduced aggregate demand is essentially the definition of a recession/depression.

...hence my earlier statement about society needing to look beyond using GDP as a measure of economic success.

"Beyond GDP: The Need for New Measures of Progress"
https://www.bu.edu/pardee/files/documents/PP-004-GDP.pdf (https://www.bu.edu/pardee/files/documents/PP-004-GDP.pdf)

You don't reap the benefits if your wages fall alongside the price of goods. I.e. if other people are paying cheaper and cheaper prices for the goods you produce, then your paycheck gets smaller and smaller. In an industrial economy, deflation looks more like layoffs because a business' sales cannot cover the salaries of employees. If you think you might be next in the unemployment line, the sensible thing to do is hoard cash and hold off on the new car. When everybody reacts that way, it's a depression.

That's not true. Lower prices due to productivity gains don't mean lower wages. Yes, monetary contraction can lead to lower wages, but productivity gains don't. Productivity gains yield better profits for businesses and thus shouldn't result is lower wages. It just means the company is more efficient at producing a good and possibly even receiving better profit margins through R&D ROI. That's a good thing for societal progress. So you have falling prices due to monetary contraction, but you also have falling prices due to productivity gains. Those are additive together and since only one of those also result in lower wages consumers benefit from falling prices of goods in relation to their wages.

The problem with our inflationary monetary policies is that they target a specific price inflation range. This means that if the price of a basket of goods falls by a large margin because of big innovation and production efficiency, it just gives more fuel for the central bankers to inflate the monetary supply, governments to run large deficits, and banks issue more debt, all for the sake of pushing GDP ever higher propped up on easy money and debt. Therefore the citizens never see those actual productivity gains in the price of their goods. It is masked by the incessant need to push economic growth at all costs. Meanwhile everyone just assumes the costs of their goods are flat in relation to their wages without realizing that productivity has shot through the roof and everyone is still working the same hours for the same wage/price ratio. It is lunacy.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DiscoverJupiter on February 15, 2022, 09:26:17 AM
No it's not an interesting question at all.  The answer is a resounding 'yes'.  Government intervention in free trade is why we don't have slavery.  It's why Joe down the street can't buy a nuclear weapon.  Every government in existence places inhibitions on free trade because unrestricted free trade results in an anarchical state that is anathema to modern society.

Fair enough. I should have been more precise. I wrote "fair trade", but I should have written, "voluntary trade with no negative externalities". Thusly, I don't believe the government has any business limiting private contracts between individuals when no harm is committed to a third party. Prostitution, drug trade, etc. should not be limited by the government as those are voluntary and harm no other third party. Slavery, murders for hire, are voluntary but not between all parties, and there is clear harm to non-consenting third parties.

I would argue that 2A currently provides the capacity for individuals to own nuclear weapons as it is an arm. If we, as a society, want to change that, we will need to ammend the constitution.

We need not devolve into total anarchy. But we must ensure that the government's role is limited to that of private contract enforcement among voluntary transactions, and only those powers otherwise enumerated to it in Article 1 Section 8 of the constitution.


Sure.  There are always people happy to break the law.  But I suspect that a lot fewer people would use crypto if being caught with it came with mandatory jail time.  They don't have to monitor every computer, just enough of them to catch people now and again for this to be a good deterrent.

"Number go up" stops working if enough people become disinterested in the platform - and that's the only real reason to own crypto at the moment.  If I held a lot of bitcoin or ethereum, I'd be concerned about my crypto becoming illegal.

This is a good point. I sometimes forget people follow the law and don't take my stance of "follow if convenient".

Plus we have exciting new developments! Canada just announced that it has extended its laundering and terrorism laws to include crypto and crowdfunding in response to people using crypto to donate to the Honking.

The real question to follow: will the government be able to stop it? Will this detour people from donating with it?

I, for one, will be making plain kyc purchases of some today and then funneling it through to the Honking efforts in the least covert way possible to see if people have decided to comply with these new laws.

That said, I do not generally hold large crypto allocations for mostly the reasons you listed. The downside risk due to demand fallout or reclassification under the law outweighs its carry upside for me. I get it and out strategically depending on what upcoming transactions need to be made with it. Also note I have yet to make any legal purchases of a good and/or service with it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 15, 2022, 09:59:47 AM
No it's not an interesting question at all.  The answer is a resounding 'yes'.  Government intervention in free trade is why we don't have slavery.  It's why Joe down the street can't buy a nuclear weapon.  Every government in existence places inhibitions on free trade because unrestricted free trade results in an anarchical state that is anathema to modern society.

Fair enough. I should have been more precise. I wrote "fair trade", but I should have written, "voluntary trade with no negative externalities".

Interesting.  To me, preventing any negative externalities would probably result in significant government overreach.

For example, given that exhaust from cars and trucks kill 53,000 people in the US alone each year (https://qz.com/135509/more-americans-die-from-car-pollution-than-car-accidents/#:~:text=A%20new%20study%20from%20MIT,of%20automobiles%2C%20to%20nearly%20100%2C000. (https://qz.com/135509/more-americans-die-from-car-pollution-than-car-accidents/#:~:text=A%20new%20study%20from%20MIT,of%20automobiles%2C%20to%20nearly%20100%2C000.)) . . . it would have to be illegal to purchase or sell a vehicle.  That is obviously and example of voluntary trade with serious negative externalities.

Your statement would appear to require the cessation of any sale of automobiles.  Was that your intent?


Prostitution, drug trade, etc. should not be limited by the government as those are voluntary and harm no other third party.

Generally I agree with you, but there are a few corner cases where limits make sense to me.  Take children for example:

If a child prostitute volunteers is that OK, or , should this be a legally limited action?
If a child wants to use his/her allowance to save up and buy some crack cocaine, should this be a legally limited action?


Slavery, murders for hire, are voluntary but not between all parties, and there is clear harm to non-consenting third parties.

Where do you draw the line with harm to third parties?  The exhaust from cars kills tens of thousands of people in the US each year.  That's clear harm to non-consenting third parties.

What about noise?  If I decide I don't like you, and stand outside your house with an air horn blasted straight at your window all night long so that you can't sleep, would you consider that do be doing you harm?  What if I did it day after day, and week after week?

I'm asking because you seem to have indicated support for a group of people doing just that . . . with little apparent care for non-consenting third parties:
I, for one, will be making plain kyc purchases of some today and then funneling it through to the Honking efforts in the least covert way possible to see if people have decided to comply with these new laws.

So I'm confused.  How much does harm done to a non-consenting third party really matter to your philosophy?


I would argue that 2A currently provides the capacity for individuals to own nuclear weapons as it is an arm. If we, as a society, want to change that, we will need to ammend the constitution.

Fortunately, the laws of the US don't agree with this fringe opinion.  They very clearly prohibit it in no uncertain terms and no constitutional amendment was required:
https://www.law.cornell.edu/uscode/text/18/831 (https://www.law.cornell.edu/uscode/text/18/831)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on February 15, 2022, 10:53:23 AM
I would argue that 2A currently provides the capacity for individuals to own nuclear weapons as it is an arm. If we, as a society, want to change that, we will need to ammend the constitution.

Fortunately, the laws of the US don't agree with this fringe opinion.  They very clearly prohibit it in no uncertain terms and no constitutional amendment was required:
https://www.law.cornell.edu/uscode/text/18/831 (https://www.law.cornell.edu/uscode/text/18/831)

I completely missed that in my first perusal of the recent comments.

DiscoverJupiter- that is a perplexing position to take. There are so many follow up questions that I don't even know where to start.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DiscoverJupiter on February 15, 2022, 11:54:58 AM
Fortunately, the laws of the US don't agree with this fringe opinion.  They very clearly prohibit it in no uncertain terms and no constitutional amendment was required:
https://www.law.cornell.edu/uscode/text/18/831 (https://www.law.cornell.edu/uscode/text/18/831)

It seems most of the clauses in that law are covered by two important clauses, here excerpted from (a)(1):
Quote
(A) thereby knowingly causes the death of or serious bodily injury to any person or substantial damage to property or to the environment; or
(B) circumstances exist, or have been represented to the defendant to exist, that are likely to cause the death or serious bodily injury to any person, or substantial damage to property or to the environment;
[\quote]

(2) non-violent theft
(3) international transport
(4) & (5) violent theft
(5) coercion/blackmailing
(6) direct harm
(8) & (9) expansions of the above

The only thing that may prevent someone from owning radioactive material, it seems, is the "without lawful authority" clause in (1), but even that is subject to the use of such material to cause death or serious bodily harm.

While one use of a nuclear weapon is death and bodily harm, certainly, it's not the only use. I can find a rational argument that would consider a home-owned nuclear weapon (so long as the material was sourced lawfully and never put anyone in danger) could be lawful when subject to these constraints.  Primarily that weapons are not themselves threats to bodily risk and death, but rather their use ill-intently is.  Perhaps this person has a nuclear weapon in case they need to strap it to a rocket to blow up an asteroid.


Interesting.  To me, preventing any negative externalities would probably result in significant government overreach.

For example, given that exhaust from cars and trucks kill 53,000 people in the US alone each year (https://qz.com/135509/more-americans-die-from-car-pollution-than-car-accidents/#:~:text=A%20new%20study%20from%20MIT,of%20automobiles%2C%20to%20nearly%20100%2C000. (https://qz.com/135509/more-americans-die-from-car-pollution-than-car-accidents/#:~:text=A%20new%20study%20from%20MIT,of%20automobiles%2C%20to%20nearly%20100%2C000.)) . . . it would have to be illegal to purchase or sell a vehicle.  That is obviously and example of voluntary trade with serious negative externalities.

Your statement would appear to require the cessation of any sale of automobiles.  Was that your intent?

My intent was to state that the role of the government is to enforce private contracts.  The government is the arbitrator of what constitutes negative externalizes and gets to exercise that right when there is a claimant with standing.  But a grievance must exist to bring the matter to the courts.

In the case of prostitution, any harmed third party is welcome to bring suit against those that transacted.  In the case of child prostitution, child drug purchasing, or any other child-related standing, we have historically deferred to our recognition of cognition.  Currently laws are set so that children are minors when under 18 years of age.  Therefore any private contract with a child under 18 is not valid unless approved by a parent or guardian.  The obvious question that follows is: if a parent consents to their child providing sexual favors and the child voluntarily participates, should that be permissible?

Regarding vehicle emissions, I would state that if the negative externality is quantifiable, then perhaps we should consider exactly such laws as vehicle prohibition.  This seems to be the idea behind carbon offsets, etc. in the business world.  It is not outside the realm of possibility, but - again - there would have to be some quantifiable harm present such that a lawsuit could be successfully argued and won.  Perhaps we don't outlaw vehicles right now because no one vehicle can be attributed to the direct harm of another individual via emissions alone.


Where do you draw the line with harm to third parties?  The exhaust from cars kills tens of thousands of people in the US each year.  That's clear harm to non-consenting third parties.

What about noise?  If I decide I don't like you, and stand outside your house with an air horn blasted straight at your window all night long so that you can't sleep, would you consider that do be doing you harm?  What if I did it day after day, and week after week?

I'm asking because you seem to have indicated support for a group of people doing just that . . . with little apparent care for non-consenting third parties:
I, for one, will be making plain kyc purchases of some today and then funneling it through to the Honking efforts in the least covert way possible to see if people have decided to comply with these new laws.
[\quote]

I don't draw the line. I expect the government to, and their legislative actions should be fashioned as a preventative against flooding the court system with private claims.

When a law is enacted, it should be because there has been a scenario with quantifiable harm envisioned or having occurred.  The point of the law is to make it clear that such actions do necessarily[\i] coexist with quantifiable harm in all instances, and therefore you cannot do these things because, whether you realize it or not, there is harm.

I expect all laws to stand up to a challenge that quantifies what that harm is, and any law which cannot, I simply ignore.

Regarding the specific example of the truck protest, I do not have a problem if these people are arrested for breaking laws.  That is their aim.  Their goal is to break laws in such a fashion as to be a nuisance to society to bolster awareness and support for their claims.

We all play this game.  Murder is illegal, but obviously you can still do it. It's just that we have established a contract between the individual and society such that if you wish to murder someone you will have to spend the rest of your life in jail (or possibly be murdered yourself).  We can call it wrong, immoral, etc. but at the end of the day it is just the contractual payment for an action you wished to take.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: jnw on February 15, 2022, 12:01:53 PM
I really don't like that crypto is so destructive to the environment.  We are turning the earth inside out for virtual assets.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 15, 2022, 01:22:57 PM
Fortunately, the laws of the US don't agree with this fringe opinion.  They very clearly prohibit it in no uncertain terms and no constitutional amendment was required:
https://www.law.cornell.edu/uscode/text/18/831 (https://www.law.cornell.edu/uscode/text/18/831)

It seems most of the clauses in that law are covered by two important clauses, here excerpted from (a)(1):
Quote
(A) thereby knowingly causes the death of or serious bodily injury to any person or substantial damage to property or to the environment; or
(B) circumstances exist, or have been represented to the defendant to exist, that are likely to cause the death or serious bodily injury to any person, or substantial damage to property or to the environment;
[\quote]

(2) non-violent theft
(3) international transport
(4) & (5) violent theft
(5) coercion/blackmailing
(6) direct harm
(8) & (9) expansions of the above

The only thing that may prevent someone from owning radioactive material, it seems, is the "without lawful authority" clause in (1), but even that is subject to the use of such material to cause death or serious bodily harm.

While one use of a nuclear weapon is death and bodily harm, certainly, it's not the only use. I can find a rational argument that would consider a home-owned nuclear weapon (so long as the material was sourced lawfully and never put anyone in danger) could be lawful when subject to these constraints.  Primarily that weapons are not themselves threats to bodily risk and death, but rather their use ill-intently is.  Perhaps this person has a nuclear weapon in case they need to strap it to a rocket to blow up an asteroid.

I fully support your right to hold these fringe opinions, but am also quite glad that the law has interpreted them to be ridiculous and dangerous.


Interesting.  To me, preventing any negative externalities would probably result in significant government overreach.

For example, given that exhaust from cars and trucks kill 53,000 people in the US alone each year (https://qz.com/135509/more-americans-die-from-car-pollution-than-car-accidents/#:~:text=A%20new%20study%20from%20MIT,of%20automobiles%2C%20to%20nearly%20100%2C000. (https://qz.com/135509/more-americans-die-from-car-pollution-than-car-accidents/#:~:text=A%20new%20study%20from%20MIT,of%20automobiles%2C%20to%20nearly%20100%2C000.)) . . . it would have to be illegal to purchase or sell a vehicle.  That is obviously and example of voluntary trade with serious negative externalities.

Your statement would appear to require the cessation of any sale of automobiles.  Was that your intent?

My intent was to state that the role of the government is to enforce private contracts.  The government is the arbitrator of what constitutes negative externalizes and gets to exercise that right when there is a claimant with standing.  But a grievance must exist to bring the matter to the courts.

Regarding vehicle emissions, I would state that if the negative externality is quantifiable, then perhaps we should consider exactly such laws as vehicle prohibition.  This seems to be the idea behind carbon offsets, etc. in the business world.  It is not outside the realm of possibility, but - again - there would have to be some quantifiable harm present such that a lawsuit could be successfully argued and won.  Perhaps we don't outlaw vehicles right now because no one vehicle can be attributed to the direct harm of another individual via emissions alone.

Death seems pretty quantifiable.  Indeed, I just did quantify it pretty clearly for you . . . about 53,000 a year are caused by the particulate matter put into the air by cars and trucks.

There is mention of 'carbon offsets'.  I'm not sure how something similar would apply to this case.  Few people would accept a small cash payout in exchange for their death or the death of a loved one, so it could never effectively address the problem.

Then there is discussion that because it would be difficult to sue a single individual for deaths caused by their use of a vehicle that nothing at all should be done about the tens of thousands of dead due to negative externalities.  If negative externalities can only be prosecuted when they can be tied to an individual beyond a reasonable doubt, it leads to some rather obvious problems:

I have five rifles.  I load four of them with blanks and one of them with a real bullet.  I randomly distribute them to a group of five people who all point them and shoot at your child.  The child is killed by the one real bullet.  I take all the guns back and melt them down.  Nobody can ever prove who fired the killing shot, therefore no crime was committed in the murder of your child, right?

What you're describing appears to be a system of governance rife with internal inconsistencies that would prevent it from functioning well in reality.



In the case of prostitution, any harmed third party is welcome to bring suit against those that transacted.  In the case of child prostitution, child drug purchasing, or any other child-related standing, we have historically deferred to our recognition of cognition.  Currently laws are set so that children are minors when under 18 years of age.  Therefore any private contract with a child under 18 is not valid unless approved by a parent or guardian.  The obvious question that follows is: if a parent consents to their child providing sexual favors and the child voluntarily participates, should that be permissible?

Let's explore this a bit too.

In our society a child below the age of consent is considered incapable of having consent - so parents are responsible for those choices.  So kids can't consent to sex with pedophiles.  I think we're both on the same page thus far.  But in my preferred system, government laws exist that prevent pedophiles from raping children regardless of parental consent.  In your preferred system it sounds like the parent can choose who their minor child has sex with (and the kids wishes don't matter, as they're below the age of consent).  Is this a correct understanding?

But you also missed my question about children and buying drugs.  All drugs are legal in the preferred system you described.  A child can walk to a store and buy some candy if they want to in our society.  So can a child also walk to a store and buy some heroin or crack cocaine in the society you're envisioning?  Why, or why not?



Where do you draw the line with harm to third parties?  The exhaust from cars kills tens of thousands of people in the US each year.  That's clear harm to non-consenting third parties.

What about noise?  If I decide I don't like you, and stand outside your house with an air horn blasted straight at your window all night long so that you can't sleep, would you consider that do be doing you harm?  What if I did it day after day, and week after week?

I'm asking because you seem to have indicated support for a group of people doing just that . . . with little apparent care for non-consenting third parties:
I, for one, will be making plain kyc purchases of some today and then funneling it through to the Honking efforts in the least covert way possible to see if people have decided to comply with these new laws.

I don't draw the line.

Yes you do.  You already said that you ignore what the government says when it's not convenient to you:
Quote
I sometimes forget people follow the law and don't take my stance of "follow if convenient".

So the government's laws don't really matter then, right?  You're taking things into your own hands anyway - so only the actions of the individual matter.  The original question posed is therefore the correct one to ask . . . "where do you draw the line?"


Regarding the specific example of the truck protest, I do not have a problem if these people are arrested for breaking laws.

So lemme get this straight.  You believe in a system of government that prevents people from hurting innocent third parties . . . but you're funneling money to people who are actively hurting innocent third parties.  But you also don't care if the people you're supporting get arrested for breaking the law?

Is there some logic for this inconsistency in word and deed?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DaKini on February 16, 2022, 04:53:32 AM
I find this discussion very interesting.
However it would be cool if some mod would split it off - we disgressed waaaay to far from the OP
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on February 17, 2022, 06:50:40 AM
I will admit, the fact that Robert Kiyosaki is back in the news touting Bitcoin definitely is making me think I should not own it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: goodmoneygoodlife on February 17, 2022, 08:09:37 AM
Of course this is a great idea. You enjoy the benefits of reverse-black swan risk (i.e. most of the time you lose money, and have a long tail chance of gaining massive amounts of money) with very limited downside.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: EchoStache on February 18, 2022, 04:39:29 AM
On the topic of crypto, I thought it rather interesting that The Motley Fool recently(last month?) purchased $5,000,000 in BTC as part of their investment portfolio.

Also of note, Warren Buffet/Berkshire Hathaway just bought $1,000,000,000 of stock in a South American bank that *may or may not have some association with crypto currencies?*
https://www.yahoo.com/video/warren-buffett-invests-1b-bitcoin-011723509.html (https://www.yahoo.com/video/warren-buffett-invests-1b-bitcoin-011723509.html)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on February 18, 2022, 06:34:23 AM
$BRK is a public company, so we know that $1 billion is very small relative to other stakes they have.

Do we have any guess as to the size of the Motley fool company?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on February 18, 2022, 07:12:50 AM
Not sure I'd read too much into the Motley Fool purchase . . . they've been calling for a crash that hasn't happened in the Toronto housing market every year for just about thirty years now.  :P
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on February 18, 2022, 12:55:43 PM
Also of note, Warren Buffet/Berkshire Hathaway just bought $1,000,000,000 of stock in a South American crypto bank
https://www.yahoo.com/video/warren-buffett-invests-1b-bitcoin-011723509.html (https://www.yahoo.com/video/warren-buffett-invests-1b-bitcoin-011723509.html)

Crypto friendly bank. It's a bank. Deals primarily in fiat, focused on 100% digital banking products. Has some really good options for those who don't have access to regional banks. Crypto isn't even listed in articles describing the company.

That headline is somewhat misleading, and your summary of the headline is like a bad version of phone tag, wherein important bits of info get dropped at every stage.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on February 19, 2022, 02:22:07 AM
Not sure I'd read too much into the Motley Fool purchase . . . they've been calling for a crash that hasn't happened in the Toronto housing market every year for just about thirty years now.  :P
First I've heard of their house picking service... I've signed up for their US based stock advisor and rule breakers, both with good track records.
https://investorjunkie.com/reviews/motley-fool/
https://www.wallstreetsurvivor.com/motley-fool-stock-picks-2021/
https://www.modestmoney.com/motley-fool-review/
Title: Re: What do you think of adding a low% of crypto allocation
Post by: EchoStache on February 19, 2022, 07:42:48 AM
Also of note, Warren Buffet/Berkshire Hathaway just bought $1,000,000,000 of stock in a South American crypto bank bank that *may or may not have some association with crypto currencies?*
https://www.yahoo.com/video/warren-buffett-invests-1b-bitcoin-011723509.html (https://www.yahoo.com/video/warren-buffett-invests-1b-bitcoin-011723509.html)

Crypto friendly bank. It's a bank. Deals primarily in fiat, focused on 100% digital banking products. Has some really good options for those who don't have access to regional banks. Crypto isn't even listed in articles describing the company.

That headline is somewhat misleading, and your summary of the headline is like a bad version of phone tag, wherein important bits of info get dropped at every stage.

Edited
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on February 19, 2022, 08:19:57 AM
Also of note, Warren Buffet/Berkshire Hathaway just bought $1,000,000,000 of stock in a South American crypto bank bank that *may or may not have some association with crypto currencies?*
https://www.yahoo.com/video/warren-buffett-invests-1b-bitcoin-011723509.html (https://www.yahoo.com/video/warren-buffett-invests-1b-bitcoin-011723509.html)

Crypto friendly bank. It's a bank. Deals primarily in fiat, focused on 100% digital banking products. Has some really good options for those who don't have access to regional banks. Crypto isn't even listed in articles describing the company.

That headline is somewhat misleading, and your summary of the headline is like a bad version of phone tag, wherein important bits of info get dropped at every stage.

Edited

Lol, touché
Title: Re: What do you think of adding a low% of crypto allocation
Post by: vand on February 24, 2022, 03:04:07 AM
Digital Gold, folks.... ^_^ ^_^ ^_^
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on March 26, 2022, 07:29:36 AM
Running a few backtests on portfolio visualizer, here are the stats using SPY and GBTC from year 2016 to now

100% SPY has 17% yearly returns and 19.4% maximum drawdown
98% SPY and 2% GBTC has 23% yearly returns and 19.8% max drawdown (note: portfolio is rebalanced annually)
95% SPY and 5% GBTC has 30% returns and 20.4% max drawdown

Wow, just 5% of the GBTC and we can see wonders with our returns (75% higher) and only 1% more drawdown

Having a huge allocation to Crypto can be dicey but just adding a small percent and annually rebalancing seems a great strategy to enhance returns. What are your thoughts on this?

Original post was on September 6th, 2021 and bitcoin was trading at $52,656.

Now 6.5 months later, Bitcoin is $44,403, which is a 15% decrease.

I understand that Bitcoin doesn't represent all crypto, but I need to provide numbers for something.

During this same time, my leveraged real estate went up around 10% and I'm increasing rents by 10% for my annual leases. I do self-manage and it requires about 200 hours/year of my time with me performing some repairs that I like to do. I hire out the stuff that I don't like to do.

How much time do you spend "researching" crypto trends? Some people claim to be experts because they consumed massive amounts of information for the past 6 months. That doesn't seem passive to me.

I do not have any fear of missing out on crypto. 

Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on March 26, 2022, 08:19:42 AM
During this same time, my leveraged real estate went up around 10% and I'm increasing rents by 10% for my annual leases. I do self-manage and it requires about 200 hours/year of my time with me performing some repairs that I like to do. I hire out the stuff that I don't like to do.

How much time do you spend "researching" crypto trends? Some people claim to be experts because they consumed massive amounts of information for the past 6 months. That doesn't seem passive to me.

In terms of "passiveness" there is no comparison.

My very modest amount of bitcoin required some education when I first got interested in 2013 (just like learning any new thing, I imagine you did a fair bit of reading and talking with people to figure out the legalities of being a landlord and learning by doing for the maintenance you do yourself). Since then the entirely of the time I've had to spend to maintain that ownership was figuring out how to extract my private keys from my wallet on the very old laptop I used in 2013 and transferring them to a new one. Let's say that took two hours.

So 120 minutes/9 years = 13 minutes year vs your estimate of 12,000 minutes a year for real estate. That's close to a 1000x difference in passitivity. Which I'm pretty sure is not a word but it should be. 

There are plenty of other differences between real estate and bitcoin. Really it's an apples to oranges comparison. But you specifically brought up which is more active or passive so I wanted to speak to that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on March 28, 2022, 01:48:38 PM
During this same time, my leveraged real estate went up around 10% and I'm increasing rents by 10% for my annual leases. I do self-manage and it requires about 200 hours/year of my time with me performing some repairs that I like to do. I hire out the stuff that I don't like to do.

How much time do you spend "researching" crypto trends? Some people claim to be experts because they consumed massive amounts of information for the past 6 months. That doesn't seem passive to me.

In terms of "passiveness" there is no comparison.

My very modest amount of bitcoin required some education when I first got interested in 2013 (just like learning any new thing, I imagine you did a fair bit of reading and talking with people to figure out the legalities of being a landlord and learning by doing for the maintenance you do yourself). Since then the entirely of the time I've had to spend to maintain that ownership was figuring out how to extract my private keys from my wallet on the very old laptop I used in 2013 and transferring them to a new one. Let's say that took two hours.

So 120 minutes/9 years = 13 minutes year vs your estimate of 12,000 minutes a year for real estate. That's close to a 1000x difference in passitivity. Which I'm pretty sure is not a word but it should be. 

There are plenty of other differences between real estate and bitcoin. Really it's an apples to oranges comparison. But you specifically brought up which is more active or passive so I wanted to speak to that.

Good points. A couple other things to consider.

1) Because bitcoin is so volatile, there is a larger market for media on speculating on future price. The typical bitcoin investor is going to spend more time clicking on articles and listening to podcasts and speculate on future price.

2) Time spent on investment should be weighted by dollar amount invested. If you are investing 10K in bitcoin, but spend 50 hours/year (1 hour/week) on reading articles, you are spending 1 hour/year for each $200 invested.

I probably consume 1.5 hours/week of media related to real estate. I like to listen to a bigger pockets podcast during a workout. I probably average 1-2 each week. However, I have 2.35 million invested in real estate. If I add my 200 hours + 75 hours for podcasts, it's 275 hours/year. I average 1 hour of time for every $8,545 invested. I'm 40 times more efficient with my time allocated to investments.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Log on March 28, 2022, 02:12:51 PM
I was initially skeptical/ignorant of Crypto for quite a while. I listen to a particular rich-white-guy's podcast who occasionally gets into Crypto (or "Web3" as the evangelists like to call it in order to invoke the FOMO of something as influential as Web2) and so I started to learn more about it and try to open my minds to any real, value-producing implications of the space. I've tried to be really open-minded about what alternative use-cases NFTs might create beyond being receipts with links to JPEGs.

I've come back around to thinking it's all just a massive pump-and-dump scheme. The billionaires and multi-millionaires and Instagram influencers with no moral compass can whip up a furor about a new currency or a new drop of NFTs and walk away with their money while the common rube gets nothing. These entirely fabricated hypothetical futures of widespread adoption of Bitcoin or Web3 applications lend some air of legitimacy to the whole thing while the billionaires laugh their way to the bank. The whole space is owned and manipulated by the oligarchs of the world. It started with pumping up new currencies, but then the supply of gullible chumps who hadn't already been burned started to run dry so they needed to start actually presenting real "uses" of Web3, to tap into that artificial sense of legitimacy, so the NFT craze started. Now they're on to these scammy NFT games. Zuck is trying to get a head start on hyping up the applications of NFTs for the Metaverse.

None of these things do anything. Web3 is a giant lie to get gullible people to keep falling for the same old scam dressed up with new "applications." Every single person who evangelizes about Crypto and Web3 application directly profits off of new people "entering the space." People will believe whatever they're told if they stand to make money off of believing it. I would say most Crypto enthusiasts who aren't 1) immoral billionaires/hundred-millionaires or 2) gullible idiots, are just people who 3) started by just buying some "just in case," and then got whipped up into more and more of a frenzy about it as they stood to gain more financially from other people believing in it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on March 28, 2022, 02:16:25 PM
I'm curious if I'm the only one who believes Bitcoin can both go +200% and -100%?

For those certain that crypto will fail, why not buy "put options" on Coinbase stock (COIN)?

For example, 2024-01-19 PUT $80 would cost around $980/contract.  If Coinbase hits zero, that PUT option is worth $80/share x 100 shares = $8,000.  That's how I would play the cynical view of crypto: +7163% return if crypto crashes in 22 months, and -100% return if it doesn't.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on March 28, 2022, 03:08:46 PM
I'm curious if I'm the only one who believes Bitcoin can both go +200% and -100%?

For those certain that crypto will fail, why not buy "put options" on Coinbase stock (COIN)?

For example, 2024-01-19 PUT $80 would cost around $980/contract.  If Coinbase hits zero, that PUT option is worth $80/share x 100 shares = $8,000.  That's how I would play the cynical view of crypto: +7163% return if crypto crashes in 22 months, and -100% return if it doesn't.

I'll agree with you; it could go either way. However I have enough random things to worry about in the management of my portfolios that are outside my realm of control. Adding a variable about how long an irrational market can remain irrational would do me little good. It doesn't hedge interest rate increases, offset market risks elsewhere in my portfolio, generate a stream of reliable income, or raise my SWR.

This gets us back to theory: We could simply take our portfolios to a casino roulette table, but what we'd prefer is to set up our portfolios so that chance is a minor factor. We'd prefer to tie our outcomes to highly certain outcomes, such as the long-term growth of the world economy, rather than random outcomes like the roll of a roulette ball, the fortunes of one speculative company, or the continuation of an investment bubble. Reducing uncertainty is the point.

This brings up another point, as an addendum to what @Log said: There will always be more internet content published to promote scams, bubbles, conspiracy theories, and superstitions than debunking these ideas. The people promoting the ideas feel they have an incentive to work hard to spread their ideas, while the debunkers are merely performing a public service on a volunteer basis. Thus the promoters will inevitably outwork the debunkers, and the factually wrong ideas will amass more content (evidence?) in their favor than the reality-based worldview of the debunkers. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on March 28, 2022, 04:13:08 PM
For those certain that crypto will fail, why not buy "put options" on Coinbase stock (COIN)?

The market can stay irrational longer than I can remain liquid.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on March 28, 2022, 04:47:55 PM
During this same time, my leveraged real estate went up around 10% and I'm increasing rents by 10% for my annual leases. I do self-manage and it requires about 200 hours/year of my time with me performing some repairs that I like to do. I hire out the stuff that I don't like to do.

How much time do you spend "researching" crypto trends? Some people claim to be experts because they consumed massive amounts of information for the past 6 months. That doesn't seem passive to me.

In terms of "passiveness" there is no comparison.

My very modest amount of bitcoin required some education when I first got interested in 2013 (just like learning any new thing, I imagine you did a fair bit of reading and talking with people to figure out the legalities of being a landlord and learning by doing for the maintenance you do yourself). Since then the entirely of the time I've had to spend to maintain that ownership was figuring out how to extract my private keys from my wallet on the very old laptop I used in 2013 and transferring them to a new one. Let's say that took two hours.

So 120 minutes/9 years = 13 minutes year vs your estimate of 12,000 minutes a year for real estate. That's close to a 1000x difference in passitivity. Which I'm pretty sure is not a word but it should be. 

There are plenty of other differences between real estate and bitcoin. Really it's an apples to oranges comparison. But you specifically brought up which is more active or passive so I wanted to speak to that.

Good points. A couple other things to consider.

1) Because bitcoin is so volatile, there is a larger market for media on speculating on future price. The typical bitcoin investor is going to spend more time clicking on articles and listening to podcasts and speculate on future price.

2) Time spent on investment should be weighted by dollar amount invested. If you are investing 10K in bitcoin, but spend 50 hours/year (1 hour/week) on reading articles, you are spending 1 hour/year for each $200 invested.

I probably consume 1.5 hours/week of media related to real estate. I like to listen to a bigger pockets podcast during a workout. I probably average 1-2 each week. However, I have 2.35 million invested in real estate. If I add my 200 hours + 75 hours for podcasts, it's 275 hours/year. I average 1 hour of time for every $8,545 invested. I'm 40 times more efficient with my time allocated to investments.

I can only speak to my personal experience but I certainly don't spend anywhere close to an hour a week reading about bitcoin. Basically just the unfortunate compulsion to click the title this thread every so often when it pops up on the "new replies to your posts" page and the occasional slashdot summary when I happen to be reading that page to procrastinate at work anyway.

More importantly, none of even that trivial amount of time spent reading about bitcoin influences my ability to own bitcoin or the returns or losses from doing so. Any time I spend reading about it is charitably time spent on a hobby and less charitably a symptom of poor time management.

I'd have just as much bitcoin and its price in dollar terms would increase (or decrease) just as much, even if I were hit by a bus and in a coma for the next decade.  And that would be equally true if I owned $200 of bitcoin or $200M of bitcoin.

Again, you can disagree or agree with the idea that it makes sense to own bitcoin, but the simple act of owning it is a remarkably passive one.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on March 29, 2022, 06:23:50 AM
I think building enduring value requires mastering the space of available investments well enough to understand where that enduring value will lie, and mastering myself well enough that I can follow through on a years-long plan.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on March 29, 2022, 07:03:52 AM
For those certain that crypto will fail, why not buy "put options" on Coinbase stock (COIN)?
The market can stay irrational longer than I can remain liquid.
Note that "put options" gives the holder the option, but not the requirement, to sell shares at the given price.  No additional liquidity is required.

I'm mostly exploring the idea that people who dislike crypto will not put money behind their idea.  There's a certainty that crypto is wrong, but not a certainty to invest against it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on March 29, 2022, 07:20:12 AM
This gets us back to theory: We could simply take our portfolios to a casino roulette table, but what we'd prefer is to set up our portfolios so that chance is a minor factor. We'd prefer to tie our outcomes to highly certain outcomes, such as the long-term growth of the world economy, rather than random outcomes like the roll of a roulette ball, the fortunes of one speculative company, or the continuation of an investment bubble. Reducing uncertainty is the point.
Per the thread title, "a low % of crypto allocation" is adding some crypto.  It is not "simply take our portfolios to a casino roulette table".  You're creating a false choice of 100% or 0% of your portfolio - you can choose 5% crypto.  Further, it's well known casinos profit of the money that comes in, leaving the average gambler poorer.  Bitcoin has provided a profit to early buyers who sold later - there's no casino taking more than half the profits away.


This brings up another point, as an addendum to what @Log said: There will always be more internet content published to promote scams, bubbles, conspiracy theories, and superstitions than debunking these ideas. The people promoting the ideas feel they have an incentive to work hard to spread their ideas, while the debunkers are merely performing a public service on a volunteer basis. Thus the promoters will inevitably outwork the debunkers, and the factually wrong ideas will amass more content (evidence?) in their favor than the reality-based worldview of the debunkers.
I guess I need to stop replying to you because of things like this, where you cite numerous irrelevant things.  Do I need to refute each one?  Bitcoin is not a superstition - it's something we can see in the blockchain data.  It's not a conspiracy theory - there's nothing secret about it: you can view 100% of the data and 100% of the code running it.  Which is why it wouldn't be a scam, because revealing 100% of the data and 100% of the code is not how scams work.

People have bought Bitcoin, and later paid someone else using Bitcoin.  I've done it - I've paid for VPN service with Bitcoin.  So to claim it's not based in reality is another false point, and I'm not sure I see the value in "debunking" every thing you say.  If evidence is valuable, where is your evidence for anything other than a bubble?

Maybe it's a bubble - but why not just dicuss that, instead of all kinds of clearly irrelevant examples?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on March 29, 2022, 08:44:32 AM
During this same time, my leveraged real estate went up around 10% and I'm increasing rents by 10% for my annual leases. I do self-manage and it requires about 200 hours/year of my time with me performing some repairs that I like to do. I hire out the stuff that I don't like to do.

How much time do you spend "researching" crypto trends? Some people claim to be experts because they consumed massive amounts of information for the past 6 months. That doesn't seem passive to me.

In terms of "passiveness" there is no comparison.

My very modest amount of bitcoin required some education when I first got interested in 2013 (just like learning any new thing, I imagine you did a fair bit of reading and talking with people to figure out the legalities of being a landlord and learning by doing for the maintenance you do yourself). Since then the entirely of the time I've had to spend to maintain that ownership was figuring out how to extract my private keys from my wallet on the very old laptop I used in 2013 and transferring them to a new one. Let's say that took two hours.

So 120 minutes/9 years = 13 minutes year vs your estimate of 12,000 minutes a year for real estate. That's close to a 1000x difference in passitivity. Which I'm pretty sure is not a word but it should be. 

There are plenty of other differences between real estate and bitcoin. Really it's an apples to oranges comparison. But you specifically brought up which is more active or passive so I wanted to speak to that.

Good points. A couple other things to consider.

1) Because bitcoin is so volatile, there is a larger market for media on speculating on future price. The typical bitcoin investor is going to spend more time clicking on articles and listening to podcasts and speculate on future price.

2) Time spent on investment should be weighted by dollar amount invested. If you are investing 10K in bitcoin, but spend 50 hours/year (1 hour/week) on reading articles, you are spending 1 hour/year for each $200 invested.

I probably consume 1.5 hours/week of media related to real estate. I like to listen to a bigger pockets podcast during a workout. I probably average 1-2 each week. However, I have 2.35 million invested in real estate. If I add my 200 hours + 75 hours for podcasts, it's 275 hours/year. I average 1 hour of time for every $8,545 invested. I'm 40 times more efficient with my time allocated to investments.

Is "time spent researching" a relevant measure in passive investing ? I might be fascinated by stock market movements and spend every waking hour following the ups and downs of the SP500, but so long as I leave my investments alone (or just keep DCAing if in accumulation phase) and I'm not trying to beat the market, I'm a passive investor.

What's your motivation for your real estate research ? If you feel a need to devote some time to keeping up with the latest news etc., that sounds like "work" - and that time is a cost. If you're genuinely interested and enjoy learning about the topic, that's more like "fun" time - so why worry about the time spent ? - it's zero-cost - up to a point, the more the better.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on March 29, 2022, 08:50:46 AM
I had a friend who was searching for a new tenant for his rental property a few years ago. He and his wife were interviewing a potential tenant, and it turned out that--in addition to a career in finance--she also had a part time gig as a Carolina Panthers cheerleader. She looked amazing.

My friend--who is a tinkerer and finds plenty of excuses to perform maintenance tasks at the rental property--was disappointed when his wife decided to pass on this particular prospect. "[if we rent to her,] You will be over at that house all the time," she told him.

So--just as there are people who love following investing (including crypto-), I imagine there are people who own/manage rental property and find those types of tasks fun.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on March 29, 2022, 09:41:43 AM
I had a friend who was searching for a new tenant for his rental property a few years ago. He and his wife were interviewing a potential tenant, and it turned out that--in addition to a career in finance--she also had a part time gig as a Carolina Panthers cheerleader. She looked amazing.

My friend--who is a tinkerer and finds plenty of excuses to perform maintenance tasks at the rental property--was disappointed when his wife decided to pass on this particular prospect. "[if we rent to her,] You will be over at that house all the time," she told him.

So--just as there are people who love following investing (including crypto-), I imagine there are people who own/manage rental property and find those types of tasks fun.

For clarity, we are in full agreement. I wasn't suggesting that real estate = work, and crypto = fun. Either can be either.

My point was simply that whilst "work" probably warrants some accounting, "fun" does not.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Shane on March 29, 2022, 12:49:38 PM
Anyone thinking of buying crypto should listen to Dan Olson's informed thoughts on the subject, first: Line Goes Up - The Problem With NFTs (https://youtu.be/YQ_xWvX1n9g). If you don't already own crypto, keep in mind when listening to the ideas of people who do, that your interests and theirs are, most likely, not aligned.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Scandium on March 29, 2022, 01:08:11 PM
I was initially skeptical/ignorant of Crypto for quite a while. I listen to a particular rich-white-guy's podcast who occasionally gets into Crypto (or "Web3" as the evangelists like to call it in order to invoke the FOMO of something as influential as Web2) and so I started to learn more about it and try to open my minds to any real, value-producing implications of the space. I've tried to be really open-minded about what alternative use-cases NFTs might create beyond being receipts with links to JPEGs.

I've come back around to thinking it's all just a massive pump-and-dump scheme. The billionaires and multi-millionaires and Instagram influencers with no moral compass can whip up a furor about a new currency or a new drop of NFTs and walk away with their money while the common rube gets nothing. These entirely fabricated hypothetical futures of widespread adoption of Bitcoin or Web3 applications lend some air of legitimacy to the whole thing while the billionaires laugh their way to the bank. The whole space is owned and manipulated by the oligarchs of the world. It started with pumping up new currencies, but then the supply of gullible chumps who hadn't already been burned started to run dry so they needed to start actually presenting real "uses" of Web3, to tap into that artificial sense of legitimacy, so the NFT craze started. Now they're on to these scammy NFT games. Zuck is trying to get a head start on hyping up the applications of NFTs for the Metaverse.

None of these things do anything. Web3 is a giant lie to get gullible people to keep falling for the same old scam dressed up with new "applications." Every single person who evangelizes about Crypto and Web3 application directly profits off of new people "entering the space." People will believe whatever they're told if they stand to make money off of believing it. I would say most Crypto enthusiasts who aren't 1) immoral billionaires/hundred-millionaires or 2) gullible idiots, are just people who 3) started by just buying some "just in case," and then got whipped up into more and more of a frenzy about it as they stood to gain more financially from other people believing in it.

For most people (at least the ones that don't fall for cults) the more one read about crypto the more it's obviously a less-than-worthless scam with no redeeming values, unless you're trying to burn the planet down as quickly as possible. It has zero utility beyond criminal activity today, and no serious promise of solving anything in the future. It's just a pump and dump ponzi scheme for some of the most disgusting people; libertarian, tech bro billionaires.
To answer the OP; no more use than "diversifying" into lottery tickets.

https://www.youtube.com/watch?v=u-sNSjS8cq0
Title: Re: What do you think of adding a low% of crypto allocation
Post by: joe189man on March 29, 2022, 01:12:33 PM
Per the thread title, "a low % of crypto allocation" is adding some crypto.  It is not "simply take our portfolios to a casino roulette table".  You're creating a false choice of 100% or 0% of your portfolio - you can choose 5% crypto.  Further, it's well known casinos profit of the money that comes in, leaving the average gambler poorer.  Bitcoin has provided a profit to early buyers who sold later - there's no casino taking more than half the profits away.

i think adding a low % of crypto is ok. i am starting to build a small position, currently the crypto balance is 0.68% of liquid net worth and 0.42% of total net worth. i could see a 5% allocation of LNW being ok, BUT i fully admit i know nothing and could be wrong. NFTs seem like Beanie babies to me other than the niche cases of die hard fans getting access or exclusive content from their favorite artists and bands, staying away from those. Crypto could easily be a ponzi scheme, we will see.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on March 29, 2022, 01:28:06 PM
I've switched one thing about my small percent crypto allocation - I'm now favoring ETH over BTC  (roughly 67% / 33%).  I hold both, I just think more new coins and the like are launched from ETH... it's working on ETH 2.0 reducing it's environmental footprint.. etc.  BTC is doing none of that, and you hear people talking more about "digital gold" and less about solving transaction problems.  To me, crypto has to be able to do something to be interesting - to have a future potential which may or may not work out.


Anyone considering buy crypto probably ought to listen to Dan Olson's thoughts on the subject, first: Line Goes Up - The Problem With NFTs (https://youtu.be/YQ_xWvX1n9g).
IMHO, NFTs != crypto
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on March 29, 2022, 01:40:29 PM
I've switched one thing about my small percent crypto allocation - I'm now favoring ETH over BTC  (roughly 67% / 33%).  I hold both, I just think more new coins and the like are launched from ETH... it's working on ETH 2.0 reducing it's environmental footprint.. etc.  BTC is doing none of that, and you hear people talking more about "digital gold" and less about solving transaction problems.  To me, crypto has to be able to do something to be interesting - to have a future potential which may or may not work out.


Anyone considering buy crypto probably ought to listen to Dan Olson's thoughts on the subject, first: Line Goes Up - The Problem With NFTs (https://youtu.be/YQ_xWvX1n9g).
IMHO, NFTs != crypto

I'm guessing you haven't watched the video? The first 2/3 of it are his abbreviated version of history leading to NFTs, which are inherently entangled with crypto. If you are into crypto and haven't watched it, it is good to watch, if just to expose yourself to counterarguments. I find the video very compelling, whether or not that is confirmation bias I cannot tell.

NFT's and Crypto are entangled in the blockchain magic that have a distinct "don't look behind the curtain" vibe. A "too good to be true" issue that just seems like trading something bad for something worse.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Scandium on March 29, 2022, 02:10:38 PM
I've switched one thing about my small percent crypto allocation - I'm now favoring ETH over BTC  (roughly 67% / 33%).  I hold both, I just think more new coins and the like are launched from ETH... it's working on ETH 2.0 reducing it's environmental footprint.. etc.  BTC is doing none of that, and you hear people talking more about "digital gold" and less about solving transaction problems.  To me, crypto has to be able to do something to be interesting - to have a future potential which may or may not work out.


Anyone considering buy crypto probably ought to listen to Dan Olson's thoughts on the subject, first: Line Goes Up - The Problem With NFTs (https://youtu.be/YQ_xWvX1n9g).
IMHO, NFTs != crypto

I'm guessing you haven't watched the video? The first 2/3 of it are his abbreviated version of history leading to NFTs, which are inherently entangled with crypto. If you are into crypto and haven't watched it, it is good to watch, if just to expose yourself to counterarguments. I find the video very compelling, whether or not that is confirmation bias I cannot tell.

NFT's and Crypto are entangled in the blockchain magic that have a distinct "don't look behind the curtain" vibe. A "too good to be true" issue that just seems like trading something bad for something worse.

Exactly this, that video is fantastic. NFTs are just the next step for the major backers of crypto-scams to drive more hard cash into crypto so they can keep pumping it and cash out. The two are inextricably linked. People saying NFTs are dumb, but still boosting equally useless crypto coins is hilarious.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on March 29, 2022, 08:18:34 PM
Note that "put options" gives the holder the option, but not the requirement, to sell shares at the given price.  No additional liquidity is required.

I'm mostly exploring the idea that people who dislike crypto will not put money behind their idea.  There's a certainty that crypto is wrong, but not a certainty to invest against it.

I'm reasonably certain crypto will not succeed, but I have no method to estimate what the price will be one year or ten years from now.  Crypto prices are based solely on enthusiasm and who knows how long the enthusiasm will last?  Stocks have an enterprise value, and I can make a reasonable estimate what future returns are likely to be. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BeanCounter on March 30, 2022, 07:09:17 AM
I was initially skeptical/ignorant of Crypto for quite a while. I listen to a particular rich-white-guy's podcast who occasionally gets into Crypto (or "Web3" as the evangelists like to call it in order to invoke the FOMO of something as influential as Web2) and so I started to learn more about it and try to open my minds to any real, value-producing implications of the space. I've tried to be really open-minded about what alternative use-cases NFTs might create beyond being receipts with links to JPEGs.

I've come back around to thinking it's all just a massive pump-and-dump scheme. The billionaires and multi-millionaires and Instagram influencers with no moral compass can whip up a furor about a new currency or a new drop of NFTs and walk away with their money while the common rube gets nothing. These entirely fabricated hypothetical futures of widespread adoption of Bitcoin or Web3 applications lend some air of legitimacy to the whole thing while the billionaires laugh their way to the bank. The whole space is owned and manipulated by the oligarchs of the world. It started with pumping up new currencies, but then the supply of gullible chumps who hadn't already been burned started to run dry so they needed to start actually presenting real "uses" of Web3, to tap into that artificial sense of legitimacy, so the NFT craze started. Now they're on to these scammy NFT games. Zuck is trying to get a head start on hyping up the applications of NFTs for the Metaverse.

None of these things do anything. Web3 is a giant lie to get gullible people to keep falling for the same old scam dressed up with new "applications." Every single person who evangelizes about Crypto and Web3 application directly profits off of new people "entering the space." People will believe whatever they're told if they stand to make money off of believing it. I would say most Crypto enthusiasts who aren't 1) immoral billionaires/hundred-millionaires or 2) gullible idiots, are just people who 3) started by just buying some "just in case," and then got whipped up into more and more of a frenzy about it as they stood to gain more financially from other people believing in it.

For most people (at least the ones that don't fall for cults) the more one read about crypto the more it's obviously a less-than-worthless scam with no redeeming values, unless you're trying to burn the planet down as quickly as possible. It has zero utility beyond criminal activity today, and no serious promise of solving anything in the future. It's just a pump and dump ponzi scheme for some of the most disgusting people; libertarian, tech bro billionaires.
To answer the OP; no more use than "diversifying" into lottery tickets.

https://www.youtube.com/watch?v=u-sNSjS8cq0

^^^ THIS
That video is great. The part where he explains that it is simply a "bigger fools scam" is spot on. I can't understand why others don't see it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: SpaceCow on March 30, 2022, 08:59:24 AM
I "rebalanced" my crypto allocation last week. I sold about 70% of my ETH, leaving me with 5.7 leftover or about $19,000 at todays prices. This is still a high allocation (13%) given my low net worth, but it is much less than before. Reading this thread wore down my faith-based belief in crypto. I simply can't come up with a good reason to hold a bunch of money in crypto now. There are so many "buy at whatever price and never sell" types in crypto. I'll happily take the $50,000 gain that I've locked in.

The whole "using your lottery winnings to keep buying tickets" argument did me in.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Scandium on March 30, 2022, 09:17:16 AM
I was initially skeptical/ignorant of Crypto for quite a while. I listen to a particular rich-white-guy's podcast who occasionally gets into Crypto (or "Web3" as the evangelists like to call it in order to invoke the FOMO of something as influential as Web2) and so I started to learn more about it and try to open my minds to any real, value-producing implications of the space. I've tried to be really open-minded about what alternative use-cases NFTs might create beyond being receipts with links to JPEGs.

I've come back around to thinking it's all just a massive pump-and-dump scheme. The billionaires and multi-millionaires and Instagram influencers with no moral compass can whip up a furor about a new currency or a new drop of NFTs and walk away with their money while the common rube gets nothing. These entirely fabricated hypothetical futures of widespread adoption of Bitcoin or Web3 applications lend some air of legitimacy to the whole thing while the billionaires laugh their way to the bank. The whole space is owned and manipulated by the oligarchs of the world. It started with pumping up new currencies, but then the supply of gullible chumps who hadn't already been burned started to run dry so they needed to start actually presenting real "uses" of Web3, to tap into that artificial sense of legitimacy, so the NFT craze started. Now they're on to these scammy NFT games. Zuck is trying to get a head start on hyping up the applications of NFTs for the Metaverse.

None of these things do anything. Web3 is a giant lie to get gullible people to keep falling for the same old scam dressed up with new "applications." Every single person who evangelizes about Crypto and Web3 application directly profits off of new people "entering the space." People will believe whatever they're told if they stand to make money off of believing it. I would say most Crypto enthusiasts who aren't 1) immoral billionaires/hundred-millionaires or 2) gullible idiots, are just people who 3) started by just buying some "just in case," and then got whipped up into more and more of a frenzy about it as they stood to gain more financially from other people believing in it.

For most people (at least the ones that don't fall for cults) the more one read about crypto the more it's obviously a less-than-worthless scam with no redeeming values, unless you're trying to burn the planet down as quickly as possible. It has zero utility beyond criminal activity today, and no serious promise of solving anything in the future. It's just a pump and dump ponzi scheme for some of the most disgusting people; libertarian, tech bro billionaires.
To answer the OP; no more use than "diversifying" into lottery tickets.

https://www.youtube.com/watch?v=u-sNSjS8cq0

^^^ THIS
That video is great. The part where he explains that it is simply a "bigger fools scam" is spot on. I can't understand why others don't see it.
They are either so dumb they don't see it (this is a lot of people), or they do see it and believe they can be the "lesser fool" and scam themselves rich.

It's no accident there's a lot of crossover between crypto folks and arrogant, overconfident, toxic masculinity tech bro/libertarian culture
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on March 30, 2022, 09:25:20 AM
I've switched one thing about my small percent crypto allocation - I'm now favoring ETH over BTC  (roughly 67% / 33%).  I hold both, I just think more new coins and the like are launched from ETH... it's working on ETH 2.0 reducing it's environmental footprint.. etc.  BTC is doing none of that, and you hear people talking more about "digital gold" and less about solving transaction problems.  To me, crypto has to be able to do something to be interesting - to have a future potential which may or may not work out.


Anyone considering buy crypto probably ought to listen to Dan Olson's thoughts on the subject, first: Line Goes Up - The Problem With NFTs (https://youtu.be/YQ_xWvX1n9g).
IMHO, NFTs != crypto
I'm guessing you haven't watched the video? The first 2/3 of it are his abbreviated version of history leading to NFTs, which are inherently entangled with crypto. If you are into crypto and haven't watched it, it is good to watch, if just to expose yourself to counterarguments. I find the video very compelling, whether or not that is confirmation bias I cannot tell.

NFT's and Crypto are entangled in the blockchain magic that have a distinct "don't look behind the curtain" vibe. A "too good to be true" issue that just seems like trading something bad for something worse.
I prefer to avoid YouTube as a form of research.

Crypto existed for years before NFTs existed.  They are not "entangled", because Bitcoin has existed, and can exist, without NFTs.  That is why I commented "NFTs != crypto".

Blockchains are not "magic", they are computer code that anyone can view.
https://github.com/bitcoin/bitcoin

You could lose 100% of the money you spend investing in crypto.  It could be a bubble.  Most people hate it.  None of that says "too good to be true" to me.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on March 30, 2022, 09:57:13 AM
I prefer to avoid YouTube as a form of research.

Crypto existed for years before NFTs existed.  They are not "entangled", because Bitcoin has existed, and can exist, without NFTs.  That is why I commented "NFTs != crypto".

Your response exposes a lot.

We all know what blockchains are in this thread, btw


Edit: my comment was a bit rude. The magic that I'm talking about isn't in how blockchains work. The magic is that a secure, public, immutable ledger is proposed to be an unquestionable solution to many large global problems. That's not to say that the problems aren't real (although some of them aren't) or that blockchain is a technical black box. It's saying that it is perhaps prudent to thoroughly question its proposed and/or actual utility for things like money, public records, and the current system. The proposed goals are questionable in and of themselves, and the actual functionality is even messier.

Criticizing crypto isn't the same as approving of the current baking system, etcetera.

the video is well sourced and documented, btw

Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on March 30, 2022, 10:13:01 AM
I prefer to avoid YouTube as a form of research.

Crypto existed for years before NFTs existed.  They are not "entangled", because Bitcoin has existed, and can exist, without NFTs.  That is why I commented "NFTs != crypto".
Your response exposes a lot.
I think your lack of response says more than the specifics I gave.


We all know what blockchains are in this thread, btw
Which is it : Are blockchains "magic" or do you understand what blockchains are?

NFT's and Crypto are entangled in the blockchain magic that have a distinct "don't look behind the curtain" vibe. A "too good to be true" issue that just seems like trading something bad for something worse.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on March 30, 2022, 10:23:19 AM
I prefer to avoid YouTube as a form of research.

Crypto existed for years before NFTs existed.  They are not "entangled", because Bitcoin has existed, and can exist, without NFTs.  That is why I commented "NFTs != crypto".
Your response exposes a lot.
I think your lack of response says more than the specifics I gave.


We all know what blockchains are in this thread, btw
Which is it : Are blockchains "magic" or do you understand what blockchains are?

NFT's and Crypto are entangled in the blockchain magic that have a distinct "don't look behind the curtain" vibe. A "too good to be true" issue that just seems like trading something bad for something worse.

See my above edit for further explanation (I realized it was vague on many levels). I know how blockchains work, we can get into that if you want. 

It would be much easier to have this conversation if you had actual criticisms of the video rather than theoretical ones.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Shane on March 30, 2022, 10:24:37 AM
I've switched one thing about my small percent crypto allocation - I'm now favoring ETH over BTC  (roughly 67% / 33%).  I hold both, I just think more new coins and the like are launched from ETH... it's working on ETH 2.0 reducing it's environmental footprint.. etc.  BTC is doing none of that, and you hear people talking more about "digital gold" and less about solving transaction problems.  To me, crypto has to be able to do something to be interesting - to have a future potential which may or may not work out.


Anyone considering buy crypto probably ought to listen to Dan Olson's thoughts on the subject, first: Line Goes Up - The Problem With NFTs (https://youtu.be/YQ_xWvX1n9g).
IMHO, NFTs != crypto
I'm guessing you haven't watched the video? The first 2/3 of it are his abbreviated version of history leading to NFTs, which are inherently entangled with crypto. If you are into crypto and haven't watched it, it is good to watch, if just to expose yourself to counterarguments. I find the video very compelling, whether or not that is confirmation bias I cannot tell.

NFT's and Crypto are entangled in the blockchain magic that have a distinct "don't look behind the curtain" vibe. A "too good to be true" issue that just seems like trading something bad for something worse.
I prefer to avoid YouTube as a form of research.

Crypto existed for years before NFTs existed.  They are not "entangled", because Bitcoin has existed, and can exist, without NFTs.  That is why I commented "NFTs != crypto".

Blockchains are not "magic", they are computer code that anyone can view.
https://github.com/bitcoin/bitcoin

You could lose 100% of the money you spend investing in crypto.  It could be a bubble.  Most people hate it.  None of that says "too good to be true" to me.

So, if Dan's video essay, clearly outlining the underlying some of the underlying issues with both crypto and nfts, were on a different platform, something besides YT, then it would be okay to include in your 'research', but since it is on YT, you won't listen? Uh, okay. I guess.

Also, referring to buying into crypto as "investing" seems like a stretch. Kind of like saying, "You could lose 100% of the money you spend 'investing' in black at the roulette table." There's really no difference between buying crypto and Lotto tickets or playing slots.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: jnw on March 30, 2022, 04:06:48 PM
Buffet said trading crypto was like trading tulips. Munger says its like trading turds.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Shane on March 31, 2022, 05:24:52 AM
Tech leaders are delusional if they think Web3 will give power back to the people. (https://amp.cnn.com/cnn/2022/03/29/perspectives/scott-galloway-web3/index.html?fbclid=IwAR2ClHneUCQ7JGWBrPSb7N4W0eC25uWR-eeVnm4qRGxn376iHASDWywGoyg)

Quote
This so-called decentralization of power out of the hands of a few has, in fact, been a recentralization of power into the hands of even fewer. Take Bitcoin, for example. The top 2% of account addresses own 95% of the more than $800 billion supply of Bitcoin. Even worse, these crypto projects are becoming more centralized as the market matures. When Ethereum launched seven years ago, insiders controlled just 15%. But more recently, Web3 projects have launched with insider ownership of 30% to 40%. The new guard also looks older and more guardian than the old guard. Specifically, these are dudes from Stanford or Harvard who serve under the delusion they are giving the power back to the people while accidentally making billions. Every member of Forbes' 2021 crypto-billionaires list is a man. A third of them attended Stanford or Harvard. What could go wrong? Out of the 12 men on the list, only one isn't White.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on March 31, 2022, 06:32:03 AM
You could lose 100% of the money you spend investing in crypto.  It could be a bubble.  Most people hate it.  None of that says "too good to be true" to me.
Also, referring to buying into crypto as "investing" seems like a stretch. Kind of like saying, "You could lose 100% of the money you spend 'investing' in black at the roulette table." There's really no difference between buying crypto and Lotto tickets or playing slots.
Buying crypto is not "investing", I was wrong to use that term.  I usually try to use terms like "speculation" and "price increases" to accomodate the possibility crypto is a bubble, but I slipped up that time.  I believe Bitcoin's price could change by a multiple, and I think both 3x and 0x are possible.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on March 31, 2022, 07:15:54 AM
Tech leaders are delusional if they think Web3 will give power back to the people. (https://amp.cnn.com/cnn/2022/03/29/perspectives/scott-galloway-web3/index.html?fbclid=IwAR2ClHneUCQ7JGWBrPSb7N4W0eC25uWR-eeVnm4qRGxn376iHASDWywGoyg)

Quote
This so-called decentralization of power out of the hands of a few has, in fact, been a recentralization of power into the hands of even fewer. Take Bitcoin, for example. The top 2% of account addresses own 95% of the more than $800 billion supply of Bitcoin. Even worse, these crypto projects are becoming more centralized as the market matures. When Ethereum launched seven years ago, insiders controlled just 15%. But more recently, Web3 projects have launched with insider ownership of 30% to 40%. The new guard also looks older and more guardian than the old guard. Specifically, these are dudes from Stanford or Harvard who serve under the delusion they are giving the power back to the people while accidentally making billions. Every member of Forbes' 2021 crypto-billionaires list is a man. A third of them attended Stanford or Harvard. What could go wrong? Out of the 12 men on the list, only one isn't White.

What the enthusiasts don't recognize is an actual implementation the cryptocurrency dream would be as dystopian a world as the old communist bloc - or a modern version of feudalism. Control over the economy would steadily accumulate in a few hands, and these oligarchs would be our feudal lords. As the ones with all the power, they could tilt the rules of the currencies to engineer permanent deflation - a state where their wealth increases automatically and the price of labor steadily declines. Various currency forks would be used in an Orwellian way to give people false hope and stimulate them to work, but in the end nothing would change. Accumulating wealth would be near-impossible for the working / peasant class as the economic value of labor would keep falling faster than people could save up assets. Real assets and property would steadily come under oligarchic control using ultra-cheap margin loans backed by enormous crypto portfolios. This is serfdom.

And if you ever questioned the fairness of all this, your digital assets would be seized, your account blacklisted, and all the people economically adjacent to you would be investigated using the blockchain. Resistors could be deprived of the ability to earn anything, deprived even of the ability to receive gifts or charity.

What the people in our dollar-based economy complaining about $5/gal gasoline and difficult money transfers don't understand is that inflation and barriers to the transfer of financial information are the only things preventing such a feudal/communistic dystopia from occurring. Inflation forces the investment of assets in productive endeavors, which at least spreads wealth even if it creates temporary concentrations of wealth. Deflation, on the other hand, is the granting of economic power to people who hold vast amounts of currency without any economic benefit being produced, and it is also a cheapening of the purchasing power we get in exchange for our labor. A lack of universal financial transparency offers you one of the last forms of semi-privacy still in existence, and deprives the politically powerful of many ways they could coerce you. The most wasteful, costly, and non-transparent currency format of all - physical paper notes - serves as a sort of safety net so that people can anonymously support persecuted activists, political opponents, etc. and prevent them from actually starving when the political apparatus says they are no longer allowed to hold accounts. Today, we dread recessions because they inconvenience us, but we fail to recognize that recessions increase wealth equality by knocking down the net worth of the wealthy a lot more than the non-wealthy (e.g. a business owner whose company has to close three branches at a cost of $3M loses a lot more than a worker who is unemployed 6 months at a cost of $30k). In a world without recessions to knock down the wealthy, oligarchic wealth would accumulate generation after generation until such people had an insurmountable amount of power over the rest of us.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on March 31, 2022, 08:01:19 AM
Tech leaders are delusional if they think Web3 will give power back to the people. (https://amp.cnn.com/cnn/2022/03/29/perspectives/scott-galloway-web3/index.html?fbclid=IwAR2ClHneUCQ7JGWBrPSb7N4W0eC25uWR-eeVnm4qRGxn376iHASDWywGoyg)

Quote
This so-called decentralization of power out of the hands of a few has, in fact, been a recentralization of power into the hands of even fewer. Take Bitcoin, for example. The top 2% of account addresses own 95% of the more than $800 billion supply of Bitcoin. Even worse, these crypto projects are becoming more centralized as the market matures. When Ethereum launched seven years ago, insiders controlled just 15%. But more recently, Web3 projects have launched with insider ownership of 30% to 40%. The new guard also looks older and more guardian than the old guard. Specifically, these are dudes from Stanford or Harvard who serve under the delusion they are giving the power back to the people while accidentally making billions. Every member of Forbes' 2021 crypto-billionaires list is a man. A third of them attended Stanford or Harvard. What could go wrong? Out of the 12 men on the list, only one isn't White.
Control over the economy would steadily accumulate in a few hands, and these oligarchs would be our feudal lords.

 Today, we dread recessions because they inconvenience us, but we fail to recognize that recessions increase wealth equality by knocking down the net worth of the wealthy a lot more than the non-wealthy (e.g. a business owner whose company has to close three branches at a cost of $3M loses a lot more than a worker who is unemployed 6 months at a cost of $30k). In a world without recessions to knock down the wealthy, oligarchic wealth would accumulate generation after generation until such people had an insurmountable amount of power over the rest of us.

I think you've mostly got this right in arguing against a deflationary monetary base, but I do think we need to account for the fact that the average household who misses out on half a year of labor income is in danger of serious privation, i.e. lacking access to basic necessities, while the business owner that you describe can smooth consumption over the business cycle and never confront that same urgency of want.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on March 31, 2022, 08:44:13 AM
Tech leaders are delusional if they think Web3 will give power back to the people. (https://amp.cnn.com/cnn/2022/03/29/perspectives/scott-galloway-web3/index.html?fbclid=IwAR2ClHneUCQ7JGWBrPSb7N4W0eC25uWR-eeVnm4qRGxn376iHASDWywGoyg)

Quote
This so-called decentralization of power out of the hands of a few has, in fact, been a recentralization of power into the hands of even fewer. Take Bitcoin, for example. The top 2% of account addresses own 95% of the more than $800 billion supply of Bitcoin. Even worse, these crypto projects are becoming more centralized as the market matures. When Ethereum launched seven years ago, insiders controlled just 15%. But more recently, Web3 projects have launched with insider ownership of 30% to 40%. The new guard also looks older and more guardian than the old guard. Specifically, these are dudes from Stanford or Harvard who serve under the delusion they are giving the power back to the people while accidentally making billions. Every member of Forbes' 2021 crypto-billionaires list is a man. A third of them attended Stanford or Harvard. What could go wrong? Out of the 12 men on the list, only one isn't White.
Control over the economy would steadily accumulate in a few hands, and these oligarchs would be our feudal lords.

 Today, we dread recessions because they inconvenience us, but we fail to recognize that recessions increase wealth equality by knocking down the net worth of the wealthy a lot more than the non-wealthy (e.g. a business owner whose company has to close three branches at a cost of $3M loses a lot more than a worker who is unemployed 6 months at a cost of $30k). In a world without recessions to knock down the wealthy, oligarchic wealth would accumulate generation after generation until such people had an insurmountable amount of power over the rest of us.

I think you've mostly got this right in arguing against a deflationary monetary base, but I do think we need to account for the fact that the average household who misses out on half a year of labor income is in danger of serious privation, i.e. lacking access to basic necessities, while the business owner that you describe can smooth consumption over the business cycle and never confront that same urgency of want.
Yes, from a humanitarian perspective the laborer has it worse. But from a power perspective, the laborer is gaining back a little bit of ground relative to the rich business owner. The business owner remains more powerful after the recession, but their lead has decreased.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on March 31, 2022, 09:28:44 AM
Theoretically, this is very appealing.

It doesn't match what feels like the narrative of the 2020 crisis, which was that those who were ahead largely stayed farther ahead, as asset prices rebounded quickly.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 03, 2022, 01:57:21 PM
So, if Dan's video essay, clearly outlining the underlying some of the underlying issues with both crypto and nfts, were on a different platform, something besides YT, then it would be okay to include in your 'research', but since it is on YT, you won't listen? Uh, okay. I guess.
I wouldn't call a 2 hour and 20 min video an "essay", when that's longer than watching a marathon.  Are you trying to mock my 'research' by putting in quotes?  I wonder how you would even know what that is.


I'm guessing you haven't watched the video? The first 2/3 of it are his abbreviated version of history leading to NFTs, which are inherently entangled with crypto.
I think you're saying the first 1 hour and 45 minutes of that video does not talk about NFTs, even though that's the title of the 2 hour and 20 minute video.  But you have found people who like it, so maybe it's worthwhile for you to create a separate thread about NFTs.


... that video is fantastic. NFTs are just the next step for the major backers of crypto-scams to drive more hard cash into crypto ...
NFTs could be another topic for a different thread.  If you view crypto as a scam, where is the scam for Bitcoin?  All code and transactions are available to download for free - it's 100% transparent.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Shane on April 03, 2022, 02:18:32 PM
NFTs could be another topic for a different thread.  If you view crypto as a scam, where is the scam for Bitcoin?  All code and transactions are available to download for free - it's 100% transparent.

Quote
This so-called decentralization of power out of the hands of a few has, in fact, been a recentralization of power into the hands of even fewer. Take Bitcoin, for example. The top 2% of account addresses own 95% of the more than $800 billion supply of Bitcoin. Even worse, these crypto projects are becoming more centralized as the market matures. When Ethereum launched seven years ago, insiders controlled just 15%. But more recently, Web3 projects have launched with insider ownership of 30% to 40%. The new guard also looks older and more guardian than the old guard. Specifically, these are dudes from Stanford or Harvard who serve under the delusion they are giving the power back to the people while accidentally making billions. Every member of Forbes' 2021 crypto-billionaires list is a man. A third of them attended Stanford or Harvard. What could go wrong? Out of the 12 men on the list, only one isn't White.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 03, 2022, 03:03:12 PM
where is the scam for Bitcoin?  All code and transactions are available to download for free - it's 100% transparent.
The top 2% of account addresses own 95% of the more than $800 billion supply of Bitcoin. Even worse, these crypto projects are becoming more centralized as the market matures ... Every member of Forbes' 2021 crypto-billionaires list is a man.
How many of those account addresses are crypto exchanges?  Trading on a bitcoin exchange shouldn't be classified as over-centralization.  It's certainly not treated that way when retail investors participate on stock market exchanges.
https://coinmarketcap.com/rankings/exchanges/

Is lack of diversity the main shortcoming of crypto?  Because it's not that specific - every former President of the United States is a man, as well.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on April 03, 2022, 03:47:20 PM
I'm guessing you haven't watched the video? The first 2/3 of it are his abbreviated version of history leading to NFTs, which are inherently entangled with crypto.
NFTs could be another topic for a different thread.  If you view crypto as a scam, where is the scam for Bitcoin?  All code and transactions are available to download for free - it's 100% transparent.

This is all in the video. Again, I don't have a problem with you not watching it, but I have a hard time with you criticizing it without even being able to summarize it (much less having watched it). You're not presenting very good faith conversation here.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on April 03, 2022, 03:58:40 PM
Hahahahahah this guy ^^^^
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Shane on April 03, 2022, 09:10:07 PM
where is the scam for Bitcoin?  All code and transactions are available to download for free - it's 100% transparent.
The top 2% of account addresses own 95% of the more than $800 billion supply of Bitcoin. Even worse, these crypto projects are becoming more centralized as the market matures ... Every member of Forbes' 2021 crypto-billionaires list is a man.
How many of those account addresses are crypto exchanges?  Trading on a bitcoin exchange shouldn't be classified as over-centralization.  It's certainly not treated that way when retail investors participate on stock market exchanges.
https://coinmarketcap.com/rankings/exchanges/

Is lack of diversity the main shortcoming of crypto?  Because it's not that specific - every former President of the United States is a man, as well.

No, the shortcoming of crypto is that it's literally a scam. Early adopters get rich by convincing suckas who come along later to add a "low% of crypto" to their portfolios. Anyone who already owns crypto is NOT a reliable source of unbiased information about crypto.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on April 04, 2022, 06:18:46 AM
You may have this right. But if Bitcoin were only a scam, I don't know how to interpret all the early adopters doing things like buying pizza for a slug of Bitcoin that would ultimately be worth many multiples of that pizza just a few years later.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Shane on April 04, 2022, 06:35:53 AM
You may have this right. But if Bitcoin were only a scam, I don't know how to interpret all the early adopters doing things like buying pizza for a slug of Bitcoin that would ultimately be worth many multiples of that pizza just a few years later.

Marketing?

People who already own Bitcoin have a strong incentive to push the narrative that it has some practical, useful applications, e.g., that it can be used to buy pizza at Dominos. That's why it hurt when Elon stopped accepting them as payment for Teslas. NFTs are another attempt to come up with something, anything, that crypto can be used to purchase because, in reality, there isn't much, aside from, maybe, illegal drugs on the darkweb.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on April 04, 2022, 06:36:23 AM
So let me get this straight, when I pay my bills every month and buy stock ETFs with my crypto defi yield, that's a scam?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Shane on April 04, 2022, 06:46:59 AM
It's like Amway. As long as there's a steady stream of suckas willing to buy in to the fantasy that crypto has some real value, everything works fine and early adopters keep on getting richer and richer. At some point, though, you're going to run out of suckas, or some event will pull back the curtain and make it obvious to everyone that the emperor has no clothes.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on April 04, 2022, 06:49:04 AM
It's like Amway. As long as there's a steady stream of suckas willing to buy in to the fantasy that crypto has some real value, everything works fine and early adopters keep on getting richer and richer. At some point, though, you're going to run out of suckas, or some event will pull back the curtain and make it obvious to everyone that the emperor has no clothes.

So early adopters are going to get richer and richer?  Thank you sir I appreciate your help.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BeanCounter on April 04, 2022, 06:53:03 AM
So let me get this straight, when I pay my bills every month and buy stock ETFs with my crypto defi yield, that's a scam?

It works until it doesn't work. Take the Beanie Baby craze. If you bought and sold them at a profit in the early 90s when there was a market of collectors that were willing to pay a premium to get one then you could use the profit to pay your bills. But now the market is dried up and anyone who has a Beanie Baby can't sell for a profit to pay their bills.

The scam is that the only value crypto has is if other people WANT it. If/when that dries up you have no more defi yield to pay your bills.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on April 04, 2022, 06:57:15 AM
So let me get this straight, when I pay my bills every month and buy stock ETFs with my crypto defi yield, that's a scam?

It works until it doesn't work. Take the Beanie Baby craze. If you bought and sold them at a profit in the early 90s when there was a market of collectors that were willing to pay a premium to get one then you could use the profit to pay your bills. But now the market is dried up and anyone who has a Beanie Baby can't sell for a profit to pay their bills.

The scam is that the only value crypto has is if other people WANT it. If/when that dries up you have no more defi yield to pay your bills.

And if my aunt had wheels she'd be a bike.  I don't deal in 'ifs' I deal in the here and now.  Crypto defi literally prints money and I like money.  I guess people that don't like money should avoid it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on April 04, 2022, 07:27:12 AM
Yep! Best not to think too deeply about where that “printed” money is coming from.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on April 04, 2022, 07:34:09 AM
Yep! Best not to think too deeply about where that “printed” money is coming from.

It comes out of thin air, remarkably similar to where printed fiat money is coming from.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 04, 2022, 08:03:34 AM
I'm guessing you haven't watched the video? The first 2/3 of it are his abbreviated version of history leading to NFTs, which are inherently entangled with crypto.
NFTs could be another topic for a different thread.  If you view crypto as a scam, where is the scam for Bitcoin?  All code and transactions are available to download for free - it's 100% transparent.
This is all in the video. Again, I don't have a problem with you not watching it, but I have a hard time with you criticizing it without even being able to summarize it (much less having watched it). You're not presenting very good faith conversation here.
This is a thread about crypto, not about a 2.3 hour video.  When I ask for evidence that Bitcoin is a scam, I don't need to watch the video.  You need to present evidence of your claim that Bitcoin is a scam.  If you want to talk about the video, why not start another thread.  This thread is about crypto.


where is the scam for Bitcoin?  All code and transactions are available to download for free - it's 100% transparent.
No, the shortcoming of crypto is that it's literally a scam. Early adopters get rich by convincing suckas who come along later to add a "low% of crypto" to their portfolios. Anyone who already owns crypto is NOT a reliable source of unbiased information about crypto.
You insinuate the person posting the thread is one of the "Early adopters" who created a thread about "low% of crypto".  But this thread was created 6 months ago, while Bitcoin has been around for a decade.  Do you have evidence this thread's author is seeking to "get rich by convincing suckas"?  I would hope before insulting someone you would have researched that.

Do you trust US economists, even though they hold US dollars?  Because someone who already owns it can't be a source of reliable information, right?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on April 04, 2022, 09:04:10 AM
So let me get this straight, when I pay my bills every month and buy stock ETFs with my crypto defi yield, that's a scam?

It works until it doesn't work. Take the Beanie Baby craze. If you bought and sold them at a profit in the early 90s when there was a market of collectors that were willing to pay a premium to get one then you could use the profit to pay your bills. But now the market is dried up and anyone who has a Beanie Baby can't sell for a profit to pay their bills.

The scam is that the only value crypto has is if other people WANT it. If/when that dries up you have no more defi yield to pay your bills.

And if my aunt had wheels she'd be a bike.  I don't deal in 'ifs' I deal in the here and now.  Crypto defi literally prints money and I like money.  I guess people that don't like money should avoid it.

Somebody put a pin in this conversation. Someday it will be as awesome to read as the original defensive rationales of the people noting their dividend checks from Bernie Madoff. If it was a scam, why am I receiving small dividends and why was I able to take out and put back in $1000?

where is the scam for Bitcoin?  All code and transactions are available to download for free - it's 100% transparent.

Pets.com and tulip bulbs were also 100% transparent about their earnings, losses, and flowering potential. People still piled into the craze, and encouraged all their soon-to-be-former friends to do the same because deep down they feared the music would stop when the holders stopped recruiting new people to the fad.

Perhaps if crypto had some hidden potential we didn't know about, such as when small-cap companies become merger targets, or when earnings surprises to the upside occur, then we could explain the craze as the pursuit of option value. However, these digital/symbolic "assets" have already revealed about 100% of their possible utility in a dozen years of non-adoption as an actual currency or as a hedge against anything. Aside from a few firms willing to barter in crypto (at the USD equivalent price, and they immediately convert it, while milking the exchange for free publicity) there are no successfully demonstrated applications besides the investment fad application. The money laundering application is looking like a failure, based on many recent arrests. It is becoming increasingly doubtful that some "killer app" is going to come along and unlock the value proponents have been talking about for a long time, leading to Bitcoin or whatever becoming a real currency. In what year is this revolution supposed to occur?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Shane on April 04, 2022, 09:20:51 AM
I'm guessing you haven't watched the video? The first 2/3 of it are his abbreviated version of history leading to NFTs, which are inherently entangled with crypto.
NFTs could be another topic for a different thread.  If you view crypto as a scam, where is the scam for Bitcoin?  All code and transactions are available to download for free - it's 100% transparent.
This is all in the video. Again, I don't have a problem with you not watching it, but I have a hard time with you criticizing it without even being able to summarize it (much less having watched it). You're not presenting very good faith conversation here.
This is a thread about crypto, not about a 2.3 hour video.  When I ask for evidence that Bitcoin is a scam, I don't need to watch the video.  You need to present evidence of your claim that Bitcoin is a scam.  If you want to talk about the video, why not start another thread.  This thread is about crypto.


where is the scam for Bitcoin?  All code and transactions are available to download for free - it's 100% transparent.
No, the shortcoming of crypto is that it's literally a scam. Early adopters get rich by convincing suckas who come along later to add a "low% of crypto" to their portfolios. Anyone who already owns crypto is NOT a reliable source of unbiased information about crypto.
You insinuate the person posting the thread is one of the "Early adopters" who created a thread about "low% of crypto".  But this thread was created 6 months ago, while Bitcoin has been around for a decade.  Do you have evidence this thread's author is seeking to "get rich by convincing suckas"?  I would hope before insulting someone you would have researched that.

Do you trust US economists, even though they hold US dollars?  Because someone who already owns it can't be a source of reliable information, right?

Not 'insinuating' anything about anyone. Don't claim to know anything about OP's reasons for starting this thread. In an anonymous online forum, it's impossible to know, for sure, any individual's motivations for posting anything. You don't need to watch the whole 2+ hour long video (https://youtu.be/YQ_xWvX1n9g) to understand what Dan's saying. For any of us to try to write out even one of Dan's arguments would end up being 50 pages long and nobody would read it. In 15 minutes you could easily ffw through the video and get a quick idea of what you think. Your complete refusal to even consider doing that is pretty telling. It makes it seem like you're not honestly engaging in a conversation here. Like I said, people who already own crypto are incentivized to keep on pushing the belief that the king's new wardrobe is amazing and punishing anyone who expresses even a little bit of skepticism.

If all you're interested in is Bitcoin, that's fine. Dan's take on Bitcoin is only 11 minutes long. If you can't even be bothered to spend 11 minutes of your time and make an informed response, then this 'conversation' seems like a waste of time.

Quote
Written and performed by Dan Olson

Crowdfunding: https://www.patreon.com/foldablehuman
Twitter: https://twitter.com/FoldableHuman
00:00:00 Preface
00:01:12 0. In 2008 The Economy Collapsed
00:07:09 1. Bitcoin
00:18:18 2. Ethereum
00:24:34 3. The Machine
00:39:07 4. NFTs Exist To Get You To Buy Crypto
00:57:54 5. The Unbearable Cringe Of Crypto
01:11:46 6. A Self-Organizing High Control Group
01:16:57 7. Crypto Reality
01:25:36 8. There Is No Privacy On The Chain
01:32:52 9. If This "Looks Like Scam" Then Every NFT Room I'm In Looks Like Scam LOL
01:38:29 10. Play To Earn Exists To Get You To Buy Crypto
01:46:39 11. We're All Gonna Make It And By "We" I Mean "Us" Not You
01:56:08 12. DAOs Exist To Get You To Buy Crypto
02:13:21 13. I Know It's Rigged, But It's The Only Game In Town
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on April 04, 2022, 12:49:03 PM
Damn. That video is pretty persuasive.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Scandium on April 04, 2022, 01:05:11 PM
So let me get this straight, when I pay my bills every month and buy stock ETFs with my crypto defi yield, that's a scam?

What is "defi yield"?
Are you earning interest or something on crypto? If so how..? Or are you just selling for increased price?

In any case that's not in any way an argument against the claim that crypto has zero inherent value, and no plausible current or future useful applications (that aren't already solved faster, cheaper, safer, and easier with current technology, and without burning the a small town's worth of annual energy to buy some LSD).

Your argument is basically "people are still piling in, lines goes up, therefore crypto is good"? At the moment that's not really wrong. Some here are just saying there is no rational for this to continue. When will this end nobody knows..
So are you in the group that know it's worthless, but want to cash in as much as possible, or do you think it has some future/value?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on April 04, 2022, 03:27:54 PM
So let me get this straight, when I pay my bills every month and buy stock ETFs with my crypto defi yield, that's a scam?

What is "defi yield"?
Are you earning interest or something on crypto? If so how..? Or are you just selling for increased price?

In any case that's not in any way an argument against the claim that crypto has zero inherent value

I have no dog in this fight, but yes, defi yield is interest, not just selling for increased price. Here's the first result from Googling defi yield - a site that defines it and gives dozens of examples updated yearly.  https://defirate.com/lend/

As someone who doesn't care one way or the other but appreciates fairness, to me the above paragraph seems to show a plausible argument against the claim that crypto has zero inherent value.

I think to sustain the argument that crypto has zero inherent value, you would have to claim that none of the interest is "real" unless converted into dollars or other fiat, and that eventually the conversions will fail because in the future, people won't pay dollars for crypto. But then you have to claim that fiat has inherent value, which it doesn't. Like crypto, it's valuable because people think it's valuable.

In each case, since the value isn't inherent, the only proof of value is behavior. "Dollars are backed by the US economy" isn't strictly true, it's a matter of faith backed by a structure that allows us to believe. I am willing to accept the possibility that crypto's strutcture is less likely to retain such faith, but that's a guess; neither fiat money nor crypto has the sort of inherent value that food or houses do.


Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on April 04, 2022, 03:42:37 PM
So let me get this straight, when I pay my bills every month and buy stock ETFs with my crypto defi yield, that's a scam?

What is "defi yield"?
Are you earning interest or something on crypto? If so how..? Or are you just selling for increased price?

In any case that's not in any way an argument against the claim that crypto has zero inherent value, and no plausible current or future useful applications (that aren't already solved faster, cheaper, safer, and easier with current technology, and without burning the a small town's worth of annual energy to buy some LSD).

Your argument is basically "people are still piling in, lines goes up, therefore crypto is good"? At the moment that's not really wrong. Some here are just saying there is no rational for this to continue. When will this end nobody knows..
So are you in the group that know it's worthless, but want to cash in as much as possible, or do you think it has some future/value?

I just like money so I don't really care about these petty arguments about tulip bulbs and beanie babies and any other stupid comparisons.  15 months ago I had 8k in crypto and now my pf is over 300k, plus it's paid all my bills and paid off my margin loan countless times so I can keep buying stocks.  Do I think its 'worthless'?  That's just stupid, Bitcoin has been trading on exchanges for over decade, there are millions of transactions per day and it's currently valued at ~$46000 per coin.  Very clearly it isn't worthless, it's just a matter of what it is worth at any given moment according to supply and demand.

Yes defi is 'earning interest' or yield on crypto and some of the yields on offer are extremely high.  I'll give you a tip, just because you don't know about something, doesn't make it unlikely or untrue.  It's amazing how crypto sceptics talk with such certainty, like they are somehow experts in this space which they have never participated in and haven't bothered to learn anything about. This thread is full of them and honestly I can't be bothered responding 99% of the time, I just load up this thread every now and then to have a chuckle at the ignorance and then go back to grinding out my money.
The world is changing very fast and a lot of people set in their ways are being left behind and they don't even know it.  You don't want to be the taxi company when uber come to your town.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Scandium on April 04, 2022, 05:50:00 PM


So let me get this straight, when I pay my bills every month and buy stock ETFs with my crypto defi yield, that's a scam?

What is "defi yield"?
Are you earning interest or something on crypto? If so how..? Or are you just selling for increased price?

In any case that's not in any way an argument against the claim that crypto has zero inherent value, and no plausible current or future useful applications (that aren't already solved faster, cheaper, safer, and easier with current technology, and without burning the a small town's worth of annual energy to buy some LSD).

Your argument is basically "people are still piling in, lines goes up, therefore crypto is good"? At the moment that's not really wrong. Some here are just saying there is no rational for this to continue. When will this end nobody knows..
So are you in the group that know it's worthless, but want to cash in as much as possible, or do you think it has some future/value?

I just like money so I don't really care about these petty arguments about tulip bulbs and beanie babies and any other stupid comparisons.  15 months ago I had 8k in crypto and now my pf is over 300k, plus it's paid all my bills and paid off my margin loan countless times so I can keep buying stocks.  Do I think its 'worthless'?  That's just stupid, Bitcoin has been trading on exchanges for over decade, there are millions of transactions per day and it's currently valued at ~$46000 per coin.  Very clearly it isn't worthless, it's just a matter of what it is worth at any given moment according to supply and demand.

Yes defi is 'earning interest' or yield on crypto and some of the yields on offer are extremely high.  I'll give you a tip, just because you don't know about something, doesn't make it unlikely or untrue.  It's amazing how crypto sceptics talk with such certainty, like they are somehow experts in this space which they have never participated in and haven't bothered to learn anything about. This thread is full of them and honestly I can't be bothered responding 99% of the time, I just load up this thread every now and then to have a chuckle at the ignorance and then go back to grinding out my money.
The world is changing very fast and a lot of people set in their ways are being left behind and they don't even know it.  You don't want to be the taxi company when uber come to your town.

Kind of funny accusing "skeptics" of not arguing in good faith when you refuse to answer a pretty simple, legitimate question.

I never claimed to be an expert on anything. I asked what the yield was from, which you answered. Though just because someone is willing to pay you to borrow crypto doesn't really give it utility.. Well it does to you, but not in any broader sense, it could still be a fad.

That's why I asked. Your "utility" of crypto seems to be "line goes up"? which yes is (mostly, sort of) true. See the video further up.. I can't dispute this, but I don't consider that a use. It's gambling. Novelty purchases also aren't really interesting. If I can also do it in usd then I don't need crypto do I?

USD has not inherent value, but I can get paid in it, buy food, and (most important?) pay taxes with it. Without any exchange. No crypto can do this, and it is there is no plausible reason why it would in the future. It's awful at doing all of those things (again see above videos), it would be a nightmare on so many levels.

And even if there was a "switch" to 100% crypto in the future how would this work? And which crypto?! Would the 95% of us who aren't hodlers just become poor? Would we be locked out of the economy? Or if my USD just switched to crypto at a set price what's the point of buying in now? Just trying to understand.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on April 04, 2022, 06:11:18 PM
The scam is that the only value crypto has is if other people WANT it.

There's a legitimate debate to be had about whether or not bitcoin (or other cryptos) are likely to retain value in the long term or not.

But it always amuses me how many of the -- logically correct and irrefutable -- arguments against bitcoin people are excited to discover and deploy actually apply to any form of money at all.

Yes, crypto only has value if other people want it. I completely agree.
Renminbi only have value so long as other people want it. That's why you can directly exchange them for goods and services in Fujian (where people want them), but not in Huntsville, Alabama (where people don't want them).
Dollars only have value so long as some else wants them.
Gold only has value so long as some else wants it.

Again, that's not to argue that it makes sense to own cryptocurrencies. Just that (some) of the arguments against doing so seem to be from people starting to discover for the first time that the idea of money, all money, is imaginary. And that any form of money that only works when enough of us buy into it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on April 04, 2022, 06:32:40 PM
And even if there was a "switch" to 100% crypto in the future how would this work? And which crypto?! Would the 95% of us who aren't hodlers just become poor? Would we be locked out of the economy? Or if my USD just switched to crypto at a set price what's the point of buying in now? Just trying to understand.

Who cares?  I absolutely do not care about any of this.  I just like making money and I'm not going to forgo hundreds of thousands of dollars in income just to represent an ideology of not believing in crypto. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: bacchi on April 04, 2022, 06:57:12 PM
And even if there was a "switch" to 100% crypto in the future how would this work? And which crypto?! Would the 95% of us who aren't hodlers just become poor? Would we be locked out of the economy? Or if my USD just switched to crypto at a set price what's the point of buying in now? Just trying to understand.

Who cares?  I absolutely do not care about any of this.  I just like making money and I'm not going to forgo hundreds of thousands of dollars in income just to represent an ideology of not believing in crypto.

Have you started hangin' with Elon yet?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on April 04, 2022, 07:29:23 PM
And even if there was a "switch" to 100% crypto in the future how would this work? And which crypto?! Would the 95% of us who aren't hodlers just become poor? Would we be locked out of the economy? Or if my USD just switched to crypto at a set price what's the point of buying in now? Just trying to understand.

Who cares?  I absolutely do not care about any of this.  I just like making money and I'm not going to forgo hundreds of thousands of dollars in income just to represent an ideology of not believing in crypto.

Have you started hangin' with Elon yet?

Just remember, you're the smart one.  I'm the dumb one right?  You're the real genius.  All the people making money in crypto and defi are the dumb ones.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Scandium on April 04, 2022, 07:41:56 PM
And even if there was a "switch" to 100% crypto in the future how would this work? And which crypto?! Would the 95% of us who aren't hodlers just become poor? Would we be locked out of the economy? Or if my USD just switched to crypto at a set price what's the point of buying in now? Just trying to understand.

Who cares?  I absolutely do not care about any of this.  I just like making money and I'm not going to forgo hundreds of thousands of dollars in income just to represent an ideology of not believing in crypto.
My mistake, I foolishly thought there could be an actual debate here, and get some questions answered. Nevermind then!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on April 04, 2022, 07:55:46 PM
And even if there was a "switch" to 100% crypto in the future how would this work? And which crypto?! Would the 95% of us who aren't hodlers just become poor? Would we be locked out of the economy? Or if my USD just switched to crypto at a set price what's the point of buying in now? Just trying to understand.

Who cares?  I absolutely do not care about any of this.  I just like making money and I'm not going to forgo hundreds of thousands of dollars in income just to represent an ideology of not believing in crypto.
My mistake, I foolishly thought there could be an actual debate here, and get some questions answered. Nevermind then!

Why would I want to waste time and emotional energy debating crypto on this of all forums?  It would be like debating with a brick wall.

I could give you a 5 page dissertation on defi investing and even making money on USD$ pegged stablecoin assets that aren't even effected by the direction of the crypto markets.  But about the most intelligent responses I would receive are 'herp-a-derp ponzi scheme' 'herpaderp tulip bulbs' beanie babies' etc.  Just not worth it all and I honestly do not care if normies invest in crypto or not.  I do not even recommend that they even try, leave it to the people who just enjoy numbers/finance and are tech minded enough, they will eventually seek it out for themselves if they are that way inclined.  I don't lead horses to water and I don't care if they drink.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: bacchi on April 04, 2022, 07:59:25 PM
And even if there was a "switch" to 100% crypto in the future how would this work? And which crypto?! Would the 95% of us who aren't hodlers just become poor? Would we be locked out of the economy? Or if my USD just switched to crypto at a set price what's the point of buying in now? Just trying to understand.

Who cares?  I absolutely do not care about any of this.  I just like making money and I'm not going to forgo hundreds of thousands of dollars in income just to represent an ideology of not believing in crypto.
My mistake, I foolishly thought there could be an actual debate here, and get some questions answered. Nevermind then!

Why would I want to waste time and emotional energy debating crypto on this of all forums?  It would be like debating with a brick wall.

Yet here you are, wasting time and emotional energy. Confused? I am.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on April 04, 2022, 08:04:37 PM
And even if there was a "switch" to 100% crypto in the future how would this work? And which crypto?! Would the 95% of us who aren't hodlers just become poor? Would we be locked out of the economy? Or if my USD just switched to crypto at a set price what's the point of buying in now? Just trying to understand.

Who cares?  I absolutely do not care about any of this.  I just like making money and I'm not going to forgo hundreds of thousands of dollars in income just to represent an ideology of not believing in crypto.
My mistake, I foolishly thought there could be an actual debate here, and get some questions answered. Nevermind then!

Why would I want to waste time and emotional energy debating crypto on this of all forums?  It would be like debating with a brick wall.

Yet here you are, wasting time and emotional energy. Confused? I am.

You're right, I've said enough.  I'll check back in a few months and see what laughably ignorant posts have appeared in the mean time.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 05, 2022, 04:33:29 AM
where is the scam for Bitcoin?  All code and transactions are available to download for free - it's 100% transparent.
Pets.com and tulip bulbs were also 100% transparent about their earnings, losses, and flowering potential. People still piled into the craze, and encouraged all their soon-to-be-former friends to do the same because deep down they feared the music would stop when the holders stopped recruiting new people to the fad.
Another poster claimed Bitcoin was a scam, but you're talking about bubbles.
https://en.wikipedia.org/wiki/Dot-com_bubble
https://www.investopedia.com/terms/d/dutch_tulip_bulb_market_bubble.asp
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Scandium on April 05, 2022, 04:35:06 AM
And even if there was a "switch" to 100% crypto in the future how would this work? And which crypto?! Would the 95% of us who aren't hodlers just become poor? Would we be locked out of the economy? Or if my USD just switched to crypto at a set price what's the point of buying in now? Just trying to understand.

Who cares?  I absolutely do not care about any of this.  I just like making money and I'm not going to forgo hundreds of thousands of dollars in income just to represent an ideology of not believing in crypto.
My mistake, I foolishly thought there could be an actual debate here, and get some questions answered. Nevermind then!

Why would I want to waste time and emotional energy debating crypto on this of all forums?  It would be like debating with a brick wall.

I could give you a 5 page dissertation on defi investing and even making money on USD$ pegged stablecoin assets that aren't even effected by the direction of the crypto markets.  But about the most intelligent responses I would receive are 'herp-a-derp ponzi scheme' 'herpaderp tulip bulbs' beanie babies' etc.  Just not worth it all and I honestly do not care if normies invest in crypto or not.  I do not even recommend that they even try, leave it to the people who just enjoy numbers/finance and are tech minded enough, they will eventually seek it out for themselves if they are that way inclined.  I don't lead horses to water and I don't care if they drink.
But I didn't ask for an essay on the mechanics of crypto. I just asked if you think crypto has a future mass adoption practical use, a problem it's solving, and what that is? Because yes without that it just looks like a ponzi scheme.. Yet you simply keep saying how you're too good to answer anything
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 05, 2022, 04:45:33 AM
So let me get this straight, when I pay my bills every month and buy stock ETFs with my crypto defi yield, that's a scam?
It works until it doesn't work. Take the Beanie Baby craze. If you bought and sold them at a profit in the early 90s when there was a market of collectors that were willing to pay a premium to get one then you could use the profit to pay your bills. But now the market is dried up and anyone who has a Beanie Baby can't sell for a profit to pay their bills.

The scam is that the only value crypto has is if other people WANT it. If/when that dries up you have no more defi yield to pay your bills.
But that isn't the definition of "scam", which is "a fraudulent or deceptive act or operation" according to Meriam Webster.
https://www.merriam-webster.com/dictionary/scam

If you search for "Beanie Baby bubble", you'll see that's a more fitting description.  If you view crypto as a bubble, I'd agree it could be a speculative bubble that may collapse or continue.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Shane on April 05, 2022, 06:34:01 AM
Crypto is a bigger fool scam (https://youtu.be/YQ_xWvX1n9g?t=2230).

Quote
The whole thing operates by buying worthless assets, believing that you will later be able to sell them to a bigger fool. The entire structure of cryptocurrencies, at their basic level of operation, is designed to deliver the greatest rewards to the earliest adopters, regardless of whether you're talking about proof of work or proof of stake. This is inherent to their being.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on April 05, 2022, 06:55:59 AM
where is the scam for Bitcoin?  All code and transactions are available to download for free - it's 100% transparent.
Pets.com and tulip bulbs were also 100% transparent about their earnings, losses, and flowering potential. People still piled into the craze, and encouraged all their soon-to-be-former friends to do the same because deep down they feared the music would stop when the holders stopped recruiting new people to the fad.
Another poster claimed Bitcoin was a scam, but you're talking about bubbles.
https://en.wikipedia.org/wiki/Dot-com_bubble
https://www.investopedia.com/terms/d/dutch_tulip_bulb_market_bubble.asp
But what if an investment bubble had people spending millions of USD to promote it, then the insiders quietly selling their inflated assets to the new entrants the marketing brought in, or maybe forked the code to leave behind most of the other investors while the brand name goes on in some way, and then the insiders move on to their next exciting project, repeating the process? What if all these "exchanges" that kept being set up somehow by many of these same insiders couldn't hire the same competent people your bank and brokerage use to secure their systems, and couldn't even buy off-the-shelf security, and they just kept getting hacked in mysterious ways and explaining to all their customers that all their super secure blockchain-recorded 100% transparent cryptocoins were no longer theirs? What if the number of hacks in this particular type of website were so pervasive that the mysterious and not-promoted insiders started to look suspicious?

At what point does a bubble transition into a scam? Or is it better to think of an investment bubble being the core event, and a thousand scams surrounding it, feeding off the self-selected gullible?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Scandium on April 05, 2022, 08:40:24 AM
So let me get this straight, when I pay my bills every month and buy stock ETFs with my crypto defi yield, that's a scam?
It works until it doesn't work. Take the Beanie Baby craze. If you bought and sold them at a profit in the early 90s when there was a market of collectors that were willing to pay a premium to get one then you could use the profit to pay your bills. But now the market is dried up and anyone who has a Beanie Baby can't sell for a profit to pay their bills.

The scam is that the only value crypto has is if other people WANT it. If/when that dries up you have no more defi yield to pay your bills.
But that isn't the definition of "scam", which is "a fraudulent or deceptive act or operation" according to Meriam Webster.
https://www.merriam-webster.com/dictionary/scam

If you search for "Beanie Baby bubble", you'll see that's a more fitting description.  If you view crypto as a bubble, I'd agree it could be a speculative bubble that may collapse or continue.

But then at least you got a Beanie baby, or a tulip bulb.. The bubble part was the belief that it would increase in value, but there was still an undelaying asset. Worth at least something >0. The problem was just the value inflated above that. I don't think the beanie babies analogy is correct for BTC, because it's worse than that

Crypto is a non-physical, virtual... "thing", representing noting in the real world, and apart from selling to someone else has zero value. And has no plausible reason it would have any in the future. It has ONLY the promise that it will be worth more in the future, it is quite literally nothing without that. People spending money to pump something that has zero (or negative) value to get others to buy in, because FOMO? Sounds pretty scammy to me.. Is it strictly, legally so? I don't really care, and think that's beside the point.

In the video you refuse to watch he goes over several instances of crypto creators getting friends to buy in early, selling to themselves back and forth, giving away tokens, or pumping their own product to create the appearance of demand to lure more people in.

And don't say "so is USD, GBP, EUR!". Crucially those are accepted by the governments as a valid representation of labor or goods, and acceptable for tax payments. Crypto does not do that, and there is no reason why it will in the future. (and even if the EU or something went fully crypto in the future it would be one they made themselves, so buying in now is pointless).

Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 05, 2022, 08:56:46 AM
where is the scam for Bitcoin?  All code and transactions are available to download for free - it's 100% transparent.
Early adopters get rich by convincing suckas who come along later to add a "low% of crypto" to their portfolios.
You insinuate the person posting the thread is one of the "Early adopters" who created a thread about "low% of crypto".  But this thread was created 6 months ago, while Bitcoin has been around for a decade.  Do you have evidence this thread's author is seeking to "get rich by convincing suckas"?  I would hope before insulting someone you would have researched that.
Not 'insinuating' anything about anyone. Don't claim to know anything about OP's reasons for starting this thread. In an anonymous online forum, it's impossible to know, for sure, any individual's motivations for posting anything.
[/quote]
Then why did you quote the thread title?  Putting the thread title in a sentence about "convincing suckas" seems very much a comment on the thread.

Early adopters get rich by convincing suckas who come along later to add a "low% of crypto" to their portfolios.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on April 05, 2022, 09:12:18 AM
For those fellow "ignorant crypto sceptics [sic]", The NYTimes has a pretty excellent interview with Dan Olson titled "A Viral Case Against Crypto, Explored" https://www.nytimes.com/2022/04/05/opinion/ezra-klein-podcast-dan-olson.html
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on April 05, 2022, 09:20:21 AM
The scam is that the only value crypto has is if other people WANT it.

There's a legitimate debate to be had about whether or not bitcoin (or other cryptos) are likely to retain value in the long term or not.

But it always amuses me how many of the -- logically correct and irrefutable -- arguments against bitcoin people are excited to discover and deploy actually apply to any form of money at all.

Yes, crypto only has value if other people want it. I completely agree.
Renminbi only have value so long as other people want it. That's why you can directly exchange them for goods and services in Fujian (where people want them), but not in Huntsville, Alabama (where people don't want them).
Dollars only have value so long as some else wants them.

So far so good, but I think it's important to draw a very important distinction: nobody wants dollars *because they expect their value to increase*. They want dollars because they know they can be used to buy food, televisions, gas, lamp shades, coffee beans, and even pay their taxes!

Gold only has value so long as some else wants it.

Again, there's an important distinction: people don't just want gold because they expect the price to go up. People want gold because it's broadly used in manufacturing, jewelry, etc. And yes, there is a sizable speculation market around it, too. But, at a minimum, there is some very real-world value there.

Again, that's not to argue that it makes sense to own cryptocurrencies. Just that (some) of the arguments against doing so seem to be from people starting to discover for the first time that the idea of money, all money, is imaginary. And that any form of money that only works when enough of us buy into it.

So no. I think trying to "both sides" this is flawed. Bitcoin is not a currency—it is not used to buy anything in any meaningful degree, virtually nothing is priced in Bitcoin, etc. People buy Bitcoin with the expectation that they'll be able to sell it for more money later. Not because there's value added by economic productivity. They're expecting the price to go up because more people will buy it because they, too, will expect the price to go up.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 05, 2022, 09:31:11 AM

But then at least you got a Beanie baby, or a tulip bulb.. The bubble part was the belief that it would increase in value, but there was still an undelaying asset. Worth at least something >0. The problem was just the value inflated above that. I don't think the beanie babies analogy is correct for BTC, because it's worse than that

Crypto is a non-physical, virtual... "thing", representing noting in the real world, and apart from selling to someone else has zero value. And has no plausible reason it would have any in the future. It has ONLY the promise that it will be worth more in the future, it is quite literally nothing without that. People spending money to pump something that has zero (or negative) value to get others to buy in, because FOMO? Sounds pretty scammy to me.. Is it strictly, legally so? I don't really care, and think that's beside the point.

In the video you refuse to watch he goes over several instances of crypto creators getting friends to buy in early, selling to themselves back and forth, giving away tokens, or pumping their own product to create the appearance of demand to lure more people in.

And don't say "so is USD, GBP, EUR!". Crucially those are accepted by the governments as a valid representation of labor or goods, and acceptable for tax payments. Crypto does not do that, and there is no reason why it will in the future. (and even if the EU or something went fully crypto in the future it would be one they made themselves, so buying in now is pointless).

Can't believe I am putting myself back in this threat again, but I'm bored at the moment, so here goes...

There are plenty of things in this world that are not physical that people value, would you not agree? Just because something isn't physical, doesn't mean it can't have value. I would think that's a pretty obvious and factual statement.

Furthermore, in reality, bitcoin isn't just a virtual asset. It is a computer network that has real-world assets that secure the network and keep it operational. People value a lot of computer networks in the information age. What we value in those might not be tangible, but the systems that keep them functional certainly are. Bitcoin is a digital ledger and it would be difficult to operate a ledger if it didn't have a means of accounting. And if it needs to be truly decentralized, that means of account must be contained within the system itself and not resort to any external source measure of accounting. The fact that there is a "virtual" measure of accounting shouldn't distract from the very real system that it is as that is where its value is actually derived from...the decentralize system of computing that ensures bitcoin's security worldwide.

As you can read from my many previous points, I'm not going to argue that there hasn't been a slew of scams and fraud within the crypto-currency space. That just comes with the territory of any new technology (happened with internet companies during the .COM boom too). Hype and hopium leads people to latch onto that buzz and scammers will use that buzz to draw in victims. That's not a new tale in human history.

That doesn't mean that bitcoin, which is unfortunately associated with the rest of the industry, is a fraud and can't have value among people.

At the end of the day, bitcoin can, does, and will provide value to people. Traditional financial systems that are centralized can and have failed people. Whether it is because of geopolitical turmoil, discrimination, monetary policy, war, economic costs, availability/access, speed, business hours, borders, etc. The list goes on. There are a whole host of reasons that traditional financial systems can't and don't serve many people around the world. Bitcoin obviously won't fill the void in many cases, but in many cases it also will. And in those many cases bitcoin will serve the needs of those people as a financial tool of last resort. That means bitcoin will have value and be serving a need to those people because nothing else will or can. These are just facts. You can only call instances of this taking place around the world "outliers" for so long before you appear to be in outright denial.

So if bitcoin, being a worldwide decentralized and neutral financial network serves the needs of a growing group of people worldwide, how can you make the claim that it has no value? Just because you don't find value in it? No doubt that speculation drives the majority of bitcoin's price movements. That's not the argument here. But to make the claim that bitcoin has no value just because it isn't physical is a complete departure from reality.

I have no idea what its price will be tomorrow. I don't make predictions like that. But given everything that is taking place in the world at the moment, it seems pretty fitting that something like bitcoin came along at the same time. I can only imagine that the number of people finding a use case for bitcoin in their lives will continue to grow.

You can only make the beanie babies and tulip argument so many times before you start to lose credibility on the matter.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on April 05, 2022, 09:50:46 AM
Furthermore, in reality, bitcoin isn't just a virtual asset. It is a computer network that has real-world assets that secure the network and keep it operational. People value a lot of computer networks in the information age. What we value in those might not be tangible, but the systems that keep them functional certainly are. Bitcoin is a digital ledger and it would be difficult to operate a ledger if it didn't have a means of accounting. And if it needs to be truly decentralized, that means of account must be contained within the system itself and not resort to any external source measure of accounting. The fact that there is a "virtual" measure of accounting shouldn't distract from the very real system that it is as that is where its value is actually derived from...the decentralize system of computing that ensures bitcoin's security worldwide.

This virtual measure of accounting is a huge problem for bitcoin though.  It's extremely costly from an energy consumption and hardware perspective . . . and these costs are entirely paid for by speculation right now.  It has a great potential to collapse if/when this speculation runs out.

Bitcoin is like a beanie baby that requires an army of bearded network administrators toiling endlessly in their server farms to exist.  Right now, they're happy to keep toiling for pay in beanie babies because 'number go up'.  The assumption that this will be the case forever seems like a risky one to make though.  And if these network admins stop what they're doing, bitcoin collapses - any utility it could offer ends.  The blockchain seems like a tremendous unacknowledged weakness being touted as strength.


At the end of the day, bitcoin can, does, and will provide value to people. Traditional financial systems that are centralized can and have failed people. Whether it is because of geopolitical turmoil, discrimination, monetary policy, war, economic costs, availability/access, speed, business hours, borders, etc. The list goes on. There are a whole host of reasons that traditional financial systems can't and don't serve many people around the world. Bitcoin obviously won't fill the void in many cases, but in many cases it also will. And in those many cases bitcoin will serve the needs of those people as a financial tool of last resort. That means bitcoin will have value and be serving a need to those people because nothing else will or can. These are just facts. You can only call instances of this taking place around the world "outliers" for so long before you appear to be in outright denial.

So if bitcoin, being a worldwide decentralized and neutral financial network serves the needs of a growing group of people worldwide, how can you make the claim that it has no value? Just because you don't find value in it? No doubt that speculation drives the majority of bitcoin's price movements. That's not the argument here. But to make the claim that bitcoin has no value just because it isn't physical is a complete departure from reality.

It's certain that Putin is moving his massive wealth around using crypto.  We appear to differ in our view of how great it is that he's able to circumvent traditional financial systems - and thus has less incentive to stop the genocide he's involved in.  Giant win for bitcoin / loss for humanity.  Tack it on to the best use cases for the stuff, along with human trafficking, illegal drug trade, hacking ransom payouts, and hiring hitmen.  Seems to be a common theme when discussing crypto - and part of why I'd consider it to be of minimal real value.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on April 05, 2022, 10:00:21 AM
Can't believe I am putting myself back in this threat again, but I'm bored at the moment, so here goes...

There are plenty of things in this world that are not physical that people value, would you not agree? Just because something isn't physical, doesn't mean it can't have value. I would think that's a pretty obvious and factual statement.

Sure. Facebook has value. But it's important to be able to understand and explain that value. Facebook has value because it has billions of active users that Facebook is able to "sell" to advertisers, who expect some portion of these users to purchase their products or services. That is valuable to marketers.

Just because some intangible things have value does not mean all intangible things have value. I opened a new Excel spreadsheet. It function perfectly fine as a ledger. It is ~intangible. And it is worth approximately $0.

Furthermore, in reality, bitcoin isn't just a virtual asset. It is a computer network that has real-world assets that secure the network and keep it operational. People value a lot of computer networks in the information age.

Again, just because some networks have value (e.g., Visa) does not mean all networks have value. Limewire is a massive decentralized network, for example. It's not worth a hill of beans.

What we value in those might not be tangible, but the systems that keep them functional certainly are. Bitcoin is a digital ledger and it would be difficult to operate a ledger if it didn't have a means of accounting. And if it needs to be truly decentralized, that means of account must be contained within the system itself and not resort to any external source measure of accounting. The fact that there is a "virtual" measure of accounting shouldn't distract from the very real system that it is as that is where its value is actually derived from...the decentralize system of computing that ensures bitcoin's security worldwide.

It's unclear why that's valuable, and even if it is, how that relates to a Bitcoin (as an alleged asset/currency/??) being valuable.

As you can read from my many previous points, I'm not going to argue that there hasn't been a slew of scams and fraud within the crypto-currency space. That just comes with the territory of any new technology (happened with internet companies during the .COM boom too). Hype and hopium leads people to latch onto that buzz and scammers will use that buzz to draw in victims. That's not a new tale in human history.

I think this is inaccurate. Bitcoin (and crypto, generally) isn't wrought with fraud because it's a new technology. It's wrought with fraud because its reason for existing is to bypass laws and regulations. Where there is lack of accountability, there is going to be fraud. This isn't just a coincidental "new technology!" whoopsies. This is by design.

That doesn't mean that bitcoin, which is unfortunately associated with the rest of the industry, is a fraud and can't have value among people.

What is the value? "Decentralization", itself, is not value.

At the end of the day, bitcoin can, does, and will provide value to people. Traditional financial systems that are centralized can and have failed people. Whether it is because of geopolitical turmoil, discrimination, monetary policy, war, economic costs, availability/access, speed, business hours, borders, etc. The list goes on. There are a whole host of reasons that traditional financial systems can't and don't serve many people around the world. Bitcoin obviously won't fill the void in many cases, but in many cases it also will. And in those many cases bitcoin will serve the needs of those people as a financial tool of last resort. That means bitcoin will have value and be serving a need to those people because nothing else will or can. These are just facts. You can only call instances of this taking place around the world "outliers" for so long before you appear to be in outright denial.

Yes! The traditional financial system has a great number of massive problems. It has failed countless people, and will continue to do so. An alternative to this system isn't, by default, "better", by virtue of just being different. You have to ask why those problems exist, and how they can be solved. Throwing out centuries of lessons, and going back to digital wildcat banking is very obviously not the solution to any of these problems. These problems all exist because of a lack of accountability. Removing the anemic systems of account that exist is only going to inflame these problems you outline.

So if bitcoin, being a worldwide decentralized and neutral financial network serves the needs of a growing group of people worldwide, how can you make the claim that it has no value? Just because you don't find value in it? No doubt that speculation drives the majority of bitcoin's price movements. That's not the argument here. But to make the claim that bitcoin has no value just because it isn't physical is a complete departure from reality.
Firstly, Bitcoin is not neutral. It has a deep philosophy that it is explicitly designed around.

Secondly, if your argument is that there is value, I think the onus is on you to explain it. What is the value? How is it better than alternatives?

I have no idea what its price will be tomorrow. I don't make predictions like that. But given everything that is taking place in the world at the moment, it seems pretty fitting that something like bitcoin came along at the same time. I can only imagine that the number of people finding a use case for bitcoin in their lives will continue to grow.

You can only make the beanie babies and tulip argument so many times before you start to lose credibility on the matter.

What is the "everything that is taking place in the world at the moment" that is eased by buying Bitcoin?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 05, 2022, 10:12:50 AM
This virtual measure of accounting is a huge problem for bitcoin though.  It's extremely costly from an energy consumption and hardware perspective . . . and these costs are entirely paid for by speculation right now.  It has a great potential to collapse if/when this speculation runs out.

Bitcoin is like a beanie baby that requires an army of bearded network administrators toiling endlessly in their server farms to exist.  Right now, they're happy to keep toiling for pay in beanie babies because 'number go up'.  The assumption that this will be the case forever seems like a risky one to make though.  And if these network admins stop what they're doing, bitcoin collapses - any utility it could offer ends.  The blockchain seems like a tremendous unacknowledged weakness being touted as strength.

This is a fundamental misunderstanding of how bitcoin functions.

Yes, bitcoin uses a lot of energy at the moment. The beginning of bitcoin's life is essentially the minting phase of bitcoin in order to get more bitcoin into circulation. This phase of its life is only temporary though. Unless its price goes up exponentially forever (not possible), then the mining incentives change from being "minting" based, to economic utility based. Once the block reward subsidy diminishes and transaction fees become the brunt of mining incentives, bitcoin actually becomes extremely energy efficient in that regard. If bitcoin is still using a lot of energy at that point, it will be energy used as a direct result of economic activity. No different than the energy expenditures of our financial world today, except it will be much more transparent and much more energy efficient. If there isn't much economic activity in bitcoin by that point, then incentives to mine will come down, the difficulty adjustment will adjust like it always does, and bitcoin will use much less energy as a result. It would seem like disservice to discount bitcoin for its early energy use while ignoring the potential it could serve in the future. Bitcoin will not collapse in either of this scenarios because of this however like you insinuate. If the Chinese mining migration was any demonstration, bitcoin has a large tolerance for hashrate changes.

There was a decent article that was just written about bitcoin's energy use that I felt was one of the rarer and more fair/unbiased opinions. I think it is a good read:
https://www.forbes.com/sites/martinrivers/2022/04/03/is-bitcoin-really-that-bad-for-the-environment/ (https://www.forbes.com/sites/martinrivers/2022/04/03/is-bitcoin-really-that-bad-for-the-environment/)



It's certain that Putin is moving his massive wealth around using crypto.  We appear to differ in our view of how great it is that he's able to circumvent traditional financial systems - and thus has less incentive to stop the genocide he's involved in.  Giant win for bitcoin / loss for humanity.  Tack it on to the best use cases for the stuff, along with human trafficking, illegal drug trade, hacking ransom payouts, and hiring hitmen.  Seems to be a common theme when discussing crypto - and part of why I'd consider it to be of minimal real value.

Ahhh, claims of certainty without much evidence. Parroting the common trope that it is loved by druglords all over the world is tiring and frankly there just aren't make national security experts that would agree with you there. It is actually almost a certainty that Putin isn't using bitcoin for his vast wealth. There just simply isn't the liquidity in the market yet for that kind of wealth.

https://www.nbcnews.com/tech/crypto/bitcoin-putins-economic-savior-s-unlikely-experts-say-rcna17724 (https://www.nbcnews.com/tech/crypto/bitcoin-putins-economic-savior-s-unlikely-experts-say-rcna17724)
https://casebitcoin.com/story/former-cia-director-finds-bitcoins-use-in-illicit-finance-to-b (https://casebitcoin.com/story/former-cia-director-finds-bitcoins-use-in-illicit-finance-to-b)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Scandium on April 05, 2022, 10:29:00 AM
There are plenty of things in this world that are not physical that people value, would you not agree? Just because something isn't physical, doesn't mean it can't have value. I would think that's a pretty obvious and factual statement.
I'm curious now; like what? And notice I didn't just say virtual, but also has no utility! What are examples of things that are entirely virtual, which represents nothing in the real world (e.g. as USD, or stocks), and has zero function or use (like mp3s, videos).
I can think of clothes for your character in Fortnite etc? I guess? But the character gets clothes they wouldn't otherwise, so I think it's dumb, but it's a "use".
Virtual casino chips? It let's you play and win more..
Please help me out.

Furthermore, in reality, bitcoin isn't just a virtual asset. It is a computer network that has real-world assets that secure the network and keep it operational. People value a lot of computer networks in the information age. What we value in those might not be tangible, but the systems that keep them functional certainly are. Bitcoin is a digital ledger and it would be difficult to operate a ledger if it didn't have a means of accounting. And if it needs to be truly decentralized, that means of account must be contained within the system itself and not resort to any external source measure of accounting. The fact that there is a "virtual" measure of accounting shouldn't distract from the very real system that it is as that is where its value is actually derived from...the decentralize system of computing that ensures bitcoin's security worldwide.
this is a bit of mumbo, that just says "BTC exists, it's a computer network". Well duh. Says nothing about why it should have value. All those other networks exists and are maintained because they DO SOMETHING. Netflix exists because it shows movies. Wikipedia store and show info etc. BTC doesn't "do" anything.

At the end of the day, bitcoin can, does, and will provide value to people. Traditional financial systems that are centralized can and have failed people. Whether it is because of geopolitical turmoil, discrimination, monetary policy, war, economic costs, availability/access, speed, business hours, borders, etc. The list goes on. There are a whole host of reasons that traditional financial systems can't and don't serve many people around the world. Bitcoin obviously won't fill the void in many cases, but in many cases it also will. And in those many cases bitcoin will serve the needs of those people as a financial tool of last resort. That means bitcoin will have value and be serving a need to those people because nothing else will or can. These are just facts. You can only call instances of this taking place around the world "outliers" for so long before you appear to be in outright denial.

So if bitcoin, being a worldwide decentralized and neutral financial network serves the needs of a growing group of people worldwide, how can you make the claim that it has no value? Just because you don't find value in it? No doubt that speculation drives the majority of bitcoin's price movements. That's not the argument here. But to make the claim that bitcoin has no value just because it isn't physical is a complete departure from reality.
I think others have addressed this, and the videos posted above go into it too. This fake concern for poor people from scumbag crypto-bros who have never given a shit about anyone before is quite hilarious. And regardless, it's solving a real problem, with a stupid solution. (and btw; since every transaction is open on the blockchain, wouldn't a repressive government just monitor all transactions inside the country, then lock people up as soon as they do anything with crypto? The total openness seems like a major issue in this scenario)
And thirdly (?): no, I don't see how this applies to me. Even assuming that, a relatively small number of people, can use crypto to flee war or whatever, why is that a reason why everyone else living comfortably in the west (i.e. pretty much everyone here for example, 99% of reddit etc) should use crypto?? Ok, if I think there will a war here I'll buy some crypto? Why would I then hold it if I live in a stable county?

You can only make the beanie babies and tulip argument so many times before you start to lose credibility on the matter.

Well I rejected those comparisons for crypto, because I think it has less value. At least you can grow a tulip, even if you overpaid by 40 ducats for it. With crypto you only get to pay thousands of dollars say you burned down some rainforest..
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on April 05, 2022, 10:48:53 AM
The scam is that the only value crypto has is if other people WANT it.

There's a legitimate debate to be had about whether or not bitcoin (or other cryptos) are likely to retain value in the long term or not.

But it always amuses me how many of the -- logically correct and irrefutable -- arguments against bitcoin people are excited to discover and deploy actually apply to any form of money at all.

Yes, crypto only has value if other people want it. I completely agree.
Renminbi only have value so long as other people want it. That's why you can directly exchange them for goods and services in Fujian (where people want them), but not in Huntsville, Alabama (where people don't want them).
Dollars only have value so long as some else wants them.

So far so good, but I think it's important to draw a very important distinction: nobody wants dollars *because they expect their value to increase*. They want dollars because they know they can be used to buy food, televisions, gas, lamp shades, coffee beans, and even pay their taxes!

Gold only has value so long as some else wants it.

Again, there's an important distinction: people don't just want gold because they expect the price to go up. People want gold because it's broadly used in manufacturing, jewelry, etc. And yes, there is a sizable speculation market around it, too. But, at a minimum, there is some very real-world value there.

Again, that's not to argue that it makes sense to own cryptocurrencies. Just that (some) of the arguments against doing so seem to be from people starting to discover for the first time that the idea of money, all money, is imaginary. And that any form of money that only works when enough of us buy into it.

So no. I think trying to "both sides" this is flawed. Bitcoin is not a currency—it is not used to buy anything in any meaningful degree, virtually nothing is priced in Bitcoin, etc. People buy Bitcoin with the expectation that they'll be able to sell it for more money later. Not because there's value added by economic productivity. They're expecting the price to go up because more people will buy it because they, too, will expect the price to go up.

It sounds like we're in agreement about the actual facts of the matter: lots of things have value only because other people want to have them, and all those things lose their value if other people stop wanting them. The statement "The scam is that the only value crypto has is if other people WANT it." is a completely valid one and I don't think anyone is arguing otherwise. But if a person is using that statement as their argument against cryptocurrency without applying it to all those other things that also have value only because other people want them it's clear they haven't thought through the implications of that statement.

Now you clearly don't like crypto and are making a different argument that the scam is that people (which people? all people? some people?) who own it are doing so only because they expect other people to value it more in the future than that do today. But that's not what the original poster said.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 05, 2022, 11:04:43 AM
Sure. Facebook has value. But it's important to be able to understand and explain that value. Facebook has value because it has billions of active users that Facebook is able to "sell" to advertisers, who expect some portion of these users to purchase their products or services. That is valuable to marketers.

Just because some intangible things have value does not mean all intangible things have value. I opened a new Excel spreadsheet. It function perfectly fine as a ledger. It is ~intangible. And it is worth approximately $0.

I feel you're completely misunderstanding value here. Sure, Facebook has value to investors because they can sell "eyes" to marketers and develop a business model off of it. But there is more in this world than value to just investors. Step back and away from the world of economics for a moment. Facebook also didn't always have advertisements. Did the people using Facebook prior to advertisements not value Facebook for what it was? You're being shortsighted in your analysis here.

You're also introducing a strawman argument here that I never made. I never argued that "all" intangible things have value. I simply argued that things that are intangible can have value as well as bringing up the real truth that bitcoin is not strictly an "intangible" idea.


Again, just because some networks have value (e.g., Visa) does not mean all networks have value. Limewire is a massive decentralized network, for example. It's not worth a hill of beans.

Another strawman argument.


It's unclear why that's valuable, and even if it is, how that relates to a Bitcoin (as an alleged asset/currency/??) being valuable.

It is unclear to many people that have a vast array of trustworthy financial services at their disposal because of very real financial privilege they enjoy.

I think this is inaccurate. Bitcoin (and crypto, generally) isn't wrought with fraud because it's a new technology. It's wrought with fraud because its reason for existing is to bypass laws and regulations. Where there is lack of accountability, there is going to be fraud. This isn't just a coincidental "new technology!" whoopsies. This is by design.

The lack of accountability comes from it being a new industry with governance that was slow to follow. There have been countless cases recently of law enforcement agencies cracking down on fraudulent activity in the space. Whether that is securities violations, theft, investment scams, etc. If there is a lack of accountability, it most certainly has to do more with the fact that LE and regulations were slow on the uptake. As I showed in my previous post, the claims of illicit activity in the space are almost always greatly exaggerated and to say that the space is unregulated is also wildly off base.

What is the value? "Decentralization", itself, is not value.

That's part of it. People will find various use cases for it which means its value could be derived in different ways to different people. Some people might find value in it for being able to raise funds for a cause against tyranny. Some people might find value in it because they can monetize their content easier. Some people might find value in it as means to store their wealth outside of the debasement of their local currency. Some people might find value in it as a means of remittance to their family across borders. Some people might find value in it because it is a cheaper means of e-commerce exchange. Some people might find value in it simply because it is more accessible.

Who are we to judge why these people would find value in such a thing? I am certainly not going to go to someone and chastise them for using something that they find value in simply because I don't. If someone is enjoying some classical music that I might find boring, do I chastise them for their taste in music?

Yes! The traditional financial system has a great number of massive problems. It has failed countless people, and will continue to do so. An alternative to this system isn't, by default, "better", by virtue of just being different. You have to ask why those problems exist, and how they can be solved. Throwing out centuries of lessons, and going back to digital wildcat banking is very obviously not the solution to any of these problems. These problems all exist because of a lack of accountability. Removing the anemic systems of account that exist is only going to inflame these problems you outline.

Many of these problems are inherent to their design that can't fundamentally be resolved without a completely different design. Centralization is a part of it. Humans are not infallible creatures. Any system that leaves humans in a position of power to make broad decisions that impact millions of people is bound to have catastrophic failures and/or corruption throughout. Our world inherently has governing borders as well. So any system that is inherently tied to those borders will always fail to serve and compete with a system that isn't bound by them. For what it is worth, for a vast majority of human history humans did not have currencies that were managed and issued by centralized authorities. The fiat currency experiment and modern monetary theory is actually relatively new and we're just coming to terms with what that means.

Firstly, Bitcoin is not neutral. It has a deep philosophy that it is explicitly designed around.

What does this even mean??

What is the "everything that is taking place in the world at the moment" that is eased by buying Bitcoin?

Vast amounts of currency debasement and record levels of inflation. Currency collapses in many places around the world. Over 2 billion people world-wide are experiencing double digit inflation. Financial censorship is rampant. Look at how mild-mannered Canada pushed authoritarian financial censorship on its citizens. I don't agree with the truckers' cause, but I am not biased enough to be blind to what took place and how wrong it was. This is a common across across the globe as more than half of the world lives under an authoritarian government. With a growing number of governments looking to implement CBDC's, it doesn't take a conspiracy theorist to realize how bad of a turn that could take for financial freedoms. CBDC's are a quick route to privacy invasions, surveillance, censorship, discrimination, and oppression. Look at China's own currency they're developing and some of the things they're planning to do. Things like making the currency have an expiration to force people to spend the money they worked hard to do. Negative interest rates and the push to get rid of physical cash will push a lot of people into digital accounts they don't want or can't afford to be in. Monetary policies of today really have become another means of taxation without representation. Why issue a new tax when you can just debase the currency to the point where government debt becomes negligible. Wars that cause millions to become refugees and climate crises to come that will cause even more refugees forcing people to leave behind their entire wealth.

I know I just spewed a lot out there and it wasn't meant to come off crazy sounding, but if you're ignoring much of this that is taking place around the world, then it is likely the main reason for that is because you're just privileged enough to not be impacted or bothered by it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on April 05, 2022, 11:47:34 AM
If Bitcoin is meant to protect people against inflation, why has it fallen in price by 1/3 during a six month period when (in US) inflation has been highest?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 05, 2022, 11:59:39 AM
If Bitcoin is meant to protect people against inflation, why has it fallen in price by 1/3 during a six month period when (in US) inflation has been highest?

Because you're only looking at things from the perspective of your own experience and not realizing that there is a world beyond the US...

Venezuela, Sudan, Lebanon, Syria, Suriname, Zimbabwe, Argentina, Turkey, Iran, Ethiopia, Russia, etc. So many countries experiencing inflation well beyond what we're experiencing in the US. It is very difficult to flood in other stores of value across borders at times when they're needed the most to give citizens of these places an option for their wealth. But bitcoin being both digital and decentralized globally can allow it to fill voids where other currencies may fail to reach.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on April 05, 2022, 12:17:30 PM
I feel you're completely misunderstanding value here. Sure, Facebook has value to investors because they can sell "eyes" to marketers and develop a business model off of it. But there is more in this world than value to just investors. Step back and away from the world of economics for a moment. Facebook also didn't always have advertisements. Did the people using Facebook prior to advertisements not value Facebook for what it was? You're being shortsighted in your analysis here.

Ah, ok. So your argument here kind of hinges on conflating two meanings of "value". You're using "value" in the end-user case. In this definition, Limewire is tremendously valuable, though no money changes hands. But you're using this to suggest Bitcoin's price is based in reality, if I'm understanding your argument correctly. Please correct me if I'm wrong.

It is unclear to many people that have a vast array of trustworthy financial services at their disposal because of very real financial privilege they enjoy.

I know this type of thing gets trotted around in crypto circles all the time. But frankly, it stinks. Crypto enthusiasts didn't care about helping the poor until they were convinced it was an opportunity for shilling crypto. They didn't care about governments seizing assets of the vulnerable until it recently happened to a bunch of white supremecists, and figured Bitcoin could help. They didn't care about payment infrastructures denying access to sex workers, but were at the forefronts of making sure funding for bigoted hate-groups weren't cut off.

Crypto was not designed to address the problems of the unprivileged. To reiterate, the sole purpose of its existence is to skirt laws and regulations. Through that, yes, it can skirt the laws and regulations of corrupt nations and financial systems, too. Maybe those are good use-cases? Valuable? Sure. But I think it's important to acknowledge what that means. Anarchy is certainly a better system of (non)-government than the very worst systems of government. But it's not something that we should really be striving towards.

The lack of accountability comes from it being a new industry with governance that was slow to follow. There have been countless cases recently of law enforcement agencies cracking down on fraudulent activity in the space. Whether that is securities violations, theft, investment scams, etc. If there is a lack of accountability, it most certainly has to do more with the fact that LE and regulations were slow on the uptake. As I showed in my previous post, the claims of illicit activity in the space are almost always greatly exaggerated and to say that the space is unregulated is also wildly off base.

Noooooo. No. There *is* regulation coming, sure. But it's only enforceable at the exchange level. Again—and this is important to understand—the only point of crypto's existence—and the reason for its massive deliberate inefficiency—is to bypass law and regulation. Any benefit or value ultimately stems from this fact.

That's part of it. People will find various use cases for it which means its value could be derived in different ways to different people. Some people might find value in it for being able to raise funds for a cause against tyranny. Some people might find value in it because they can monetize their content easier. Some people might find value in it as means to store their wealth outside of the debasement of their local currency. Some people might find value in it as a means of remittance to their family across borders. Some people might find value in it because it is a cheaper means of e-commerce exchange. Some people might find value in it simply because it is more accessible.

Every example here is either: a case of breaking the law or is flatly inaccurate. It is never cheaper to do e-commerce with Bitcoin than with a legal existing payment system like Visa. It is only cheaper if you're doing something illegal. Again, maybe there are cases where this is perfectly moral, and a "good thing". But it's important to acknowledge that you're advocating for allowing anyone who wants to to punch a hole into the legal system to do what they want. Yes, this can be people sending remittances back to their families. But via the same mechanisms, it can just as easily be used for payments to kidnappers or sex traffickers. It can be for funding terrorism. It can be for sending money to nations with widespread international sanctions...

Who are we to judge why these people would find value in such a thing? I am certainly not going to go to someone and chastise them for using something that they find value in simply because I don't. If someone is enjoying some classical music that I might find boring, do I chastise them for their taste in music?

I understand why you'd say such a thing. But... think about what you're suggesting. It's plain ol' ugly nihilism. "Who's to say what's good or bad? What does anything even mean or matter?". We have laws. If you're truly an anarchist and/or nihilist... that's fine and good, and you're being completely consistent. We don't need to debate any more. But if you aren't an anarchist or a nihilist, it may be worth thinking through the ramifications of what cryptocurrencies were designed to do.

Many of these problems are inherent to their design that can't fundamentally be resolved without a completely different design. Centralization is a part of it. Humans are not infallible creatures. Any system that leaves humans in a position of power to make broad decisions that impact millions of people is bound to have catastrophic failures and/or corruption throughout.

Wait... who do you think is in a position of power when it comes to cryptocurrencies?

Firstly, Bitcoin is not neutral. It has a deep philosophy that it is explicitly designed around.

What does this even mean??

I think it's lost on many why Bitcoin was developed, and the philosophies that back many of the decisions made in its design.

No technology is neutral. It has human opinions, biases, ideas baked into it. Sometimes technology's effects are un-neutral by design, sometimes by happenstance. Bitcoin is designed around pretty extreme libertarian ideas. I do not agree with these ideas, and I think many crypto enthusiasts also would not agree with these ideas. I think they're—excuse the offensive language, but it's a useful term—useful idiots perpetuating libertarian ideals.

Vast amounts of currency debasement and record levels of inflation. Currency collapses in many places around the world. Over 2 billion people world-wide are experiencing double digit inflation.

Cool. Bitcoin's YoY inflation is around 30%. So... that's clearly not it...

Financial censorship is rampant. Look at how mild-mannered Canada pushed authoritarian financial censorship on its citizens.
Yep! It's problematic. I'm with you—I think the trucker's cause was gross. And the government's response was also gross. I hope those in the government are held to account, and systems are put into place to prevent that from re-occurring. I do not think the solution is to throw out the entire legal system, and embrace unregulated wildcat private banks.


<...snip>
I know I just spewed a lot out there and it wasn't meant to come off crazy sounding, but if you're ignoring much of this that is taking place around the world, then it is likely the main reason for that is because you're just privileged enough to not be impacted or bothered by it.

Yea, again the "privileged" thing. I addressed that a few paragraphs up. I think that's a cynical talking point Alex Gladstein started, and it spread like wildfire. It's the same sleazy strategy as "NFT's are enabling artists!", ignoring the fact that the people saying this directly benefit from artists spending money to "mint" NFT's to try to sell them. It's grift all the way down, as I see it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 05, 2022, 12:22:40 PM
It's certain that Putin is moving his massive wealth around using crypto.
Do you have evidence Putin has even 80% of his wealth in crypto?

In the Panama papers, I recall a violinist had staggering sums of money moving through his offshore accounts.  Makes no sense, until you know he is close friends with Putin.  More recently, I saw a news story mention that these superyachts owned by Russian elites also have opaque offshore ownership.  From past evidence, Putin hides his wealth in offshore companies with people he trusts.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on April 05, 2022, 01:03:14 PM
It's certain that Putin is moving his massive wealth around using crypto.
Do you have evidence Putin has even 80% of his wealth in crypto?

In the Panama papers, I recall a violinist had staggering sums of money moving through his offshore accounts.  Makes no sense, until you know he is close friends with Putin.  More recently, I saw a news story mention that these superyachts owned by Russian elites also have opaque offshore ownership.  From past evidence, Putin hides his wealth in offshore companies with people he trusts.

Nope . . . no evidence at all that Putin is using cryptocurrency.

But he has huge sums of money to move around, can't do it through financial institutions, and wants to hide the movement from others.  Based on everything pro-crypto people have been telling me, this is the perfect use case for crypto, and he'd be stupid not to be using it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on April 05, 2022, 01:12:06 PM
Well I rejected those comparisons for crypto, because I think it has less value. At least you can grow a tulip, even if you overpaid by 40 ducats for it. With crypto you only get to pay thousands of dollars say you burned down some rainforest..

Less value to you maybe.   But the person buying the Bitcoin believes it has value. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 05, 2022, 01:30:20 PM
But you're using this to suggest Bitcoin's price is based in reality, if I'm understanding your argument correctly. Please correct me if I'm wrong.

I never brought up price at all. This was my original statement that you responded to:

Quote
There are plenty of things in this world that are not physical that people value, would you not agree? Just because something isn't physical, doesn't mean it can't have value. I would think that's a pretty obvious and factual statement.

Price is secondary to something having value, wouldn't you agree? In fact, there is proof to this by the fact that bitcoin circulated for several years before it ever even had a US dollar denominated price. People still valued it prior to that though. They wouldn't have worked so hard on it if they didn't feel it had value to them and that it couldn't also serve some value to others in the future.

I know this type of thing gets trotted around in crypto circles all the time. But frankly, it stinks. Crypto enthusiasts didn't care about helping the poor until they were convinced it was an opportunity for shilling crypto. They didn't care about governments seizing assets of the vulnerable until it recently happened to a bunch of white supremecists, and figured Bitcoin could help. They didn't care about payment infrastructures denying access to sex workers, but were at the forefronts of making sure funding for bigoted hate-groups weren't cut off.

Noooooo. No. There *is* regulation coming, sure. But it's only enforceable at the exchange level. Again—and this is important to understand—the only point of crypto's existence—and the reason for its massive deliberate inefficiency—is to bypass law and regulation. Any benefit or value ultimately stems from this fact.

No, there is quite a bit of regulation in the industry. But that is besides the point. The original claim was about a lack of accountability in the space. But accountability falls on humans. Furthermore, no one in their right mind looks for accountability within the places you're seeking accountability from. That would be quite the idealistic fantasy to ever expect organizations and systems to always hold themselves accountable for everything they do. Do we expect oil companies to hold themselves accountable for their oil spills? Do we expect financial institutions to hold themselves accountable for all the billions in money laundering they help commit? Did we expect the tobacco industry to hold themselves accountable for all the toxic substances they put in their products? The truth is no one in their right mind expects industries to hold themselves accountable, so why are you starting now with the crypto-currency industry?

In reality, accountability falls on our systems of governance and if we ever expect scams in the cryptocurrency industry to subside and for humans to change their behavior in that space, then we must look to our governments, legislative bodies, and law enforcement agencies to hold scammers and fraudsters accountable for their actions.

Every example here is either: a case of breaking the law or is flatly inaccurate. It is never cheaper to do e-commerce with Bitcoin than with a legal existing payment system like Visa. It is only cheaper if you're doing something illegal. Again, maybe there are cases where this is perfectly moral, and a "good thing". But it's important to acknowledge that you're advocating for allowing anyone who wants to to punch a hole into the legal system to do what they want. Yes, this can be people sending remittances back to their families. But via the same mechanisms, it can just as easily be used for payments to kidnappers or sex traffickers. It can be for funding terrorism. It can be for sending money to nations with widespread international sanctions...

Ohhhh, man. OK well tell me you haven't ever used bitcoin without telling me you haven't used bitcoin. Or maybe you haven't used a number of various financial services that requires moving any substantial amount of funds. I had to send a wire transfer the other month to pay off a loan and it cost me $50 and took over a day to fully settle and I had to fill out clunky forms to get it processed. And that is supposedly one of our faster forms of moving large sums of money. I had another bitcoin collateralized loan I had as a temporary move to make a cash offer on a house and was able to move hundreds of thousands of bitcoin within minutes for less than a dollar.

I run a bitcoin Lightning network node that settles thousands of dollars for people that is real economic activity. Over the last year it settled about $62,000 in transactions and I collected about $1.60 in fees for that. That was over the course of about 600 transactions. So do the math on that and that's about an average of $100 per transactions for an average fee of about $0.0026 per transaction. I'm sorry, but "legal" VISA which generally charges somewhere between 2-3% or so in fees is several orders of magnitude more expensive. Your continued posturing that simply using bitcoin is somehow "illegal" is off-putting.


I understand why you'd say such a thing. But... think about what you're suggesting. It's plain ol' ugly nihilism. "Who's to say what's good or bad? What does anything even mean or matter?". We have laws. If you're truly an anarchist and/or nihilist... that's fine and good, and you're being completely consistent. We don't need to debate any more. But if you aren't an anarchist or a nihilist, it may be worth thinking through the ramifications of what cryptocurrencies were designed to do.

Ya, sorry, but that isn't nihilism. That's actually almost the polar opposite of nihilism. Nihilism is the idea that values are baseless and meaningless and life is essentially meaningless. What I am saying here is that peoples' personal values, regardless of what I think of them, still have value to them personally! Nothing I say can change that. That's the exact opposite of what you're claiming I said here.

Wait... who do you think is in a position of power when it comes to cryptocurrencies?

Huh? Read that again maybe? I am not sure what you're asking here and why and I think there might have been a misinterpretation.

I think it's lost on many why Bitcoin was developed, and the philosophies that back many of the decisions made in its design.

No technology is neutral. It has human opinions, biases, ideas baked into it. Bitcoin is designed around pretty extreme libertarian ideas. I do not agree with these ideas, and I think many crypto enthusiasts also would not agree with these ideas. I think they're—excuse the offensive language, but it's a useful term—useful idiots perpetuating libertarian ideals.

I would argue that bitcoin is one of the more bipartisan subjects these days. You'll find people on "both sides of the aisle" both completely for bitcoin and completely against it. Just look at some of the votes and amendments that have come and gone on capital hill and it is one of the rare cases that you'll have a subject these days that isn't split evenly down party lines. And I'll stand by the argument that bitcoin the technology is neutral regardless of whatever beliefs its progenitors might have held. It is actually rather refreshing to see nowadays and I think it is important that we can share our differing opinions on various subjects without denigrating our fellow humans as less than such because of the beliefs they may hold.

Cool. Bitcoin's YoY inflation is around 30%. So... that's clearly not it...

How do you figure that? It's monetary inflation is about 1.6% annually. 18.7 million circulating supply in April of last year and 19 million as of today. That equals about a 1.6% increase in monetary supply.

Yea, again the "privileged" thing. I addressed that a few paragraphs up. I think that's a cynical talking point Alex Gladstein started, and it spread like wildfire. It's the same sleazy strategy as "NFT's are enabling artists!", ignoring the fact that the people saying this directly benefit from artists spending money to "mint" NFT's to try to sell them. It's grift all the way down, as I see it.

NFTs are dumb and really aren't anything new either. You're not going to find me arguing in favor of NFTs here. They're not decentralized and they're just latching onto the hype of decentralization to sell "art" on centralized platforms that we've long been able to do prior. The art itself, which is where the NFT gets its value, is not decentralized and we don't have good scalable systems for decentralizing art. So for as long as the art isn't decentralized, then it remains pointless to try and decentralize any token that is supposed to represent it. If the art disappears, then the value of the NFT disappears as well. Maybe that problem will be solved in the future.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 05, 2022, 01:33:48 PM
It's certain that Putin is moving his massive wealth around using crypto.
Do you have evidence Putin has even 80% of his wealth in crypto?

In the Panama papers, I recall a violinist had staggering sums of money moving through his offshore accounts.  Makes no sense, until you know he is close friends with Putin.  More recently, I saw a news story mention that these superyachts owned by Russian elites also have opaque offshore ownership.  From past evidence, Putin hides his wealth in offshore companies with people he trusts.
Nope . . . no evidence at all that Putin is using cryptocurrency.

But he has huge sums of money to move around, can't do it through financial institutions, and wants to hide the movement from others.  Based on everything pro-crypto people have been telling me, this is the perfect use case for crypto, and he'd be stupid not to be using it.
Well, regardless if that's true, it was worth it for your joke (in another part of the forum) about the $2 billion in crypto moving around.  While Bitcoin accounts are created anonymously, transactions between accounts record the exact time, date and amount.  It's not the perfect solution to hiding money transfers.

There's also a giant loophole in Russian sanctions: their most profitable industry continues untouched as they sell oil & gas to Europe.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on April 05, 2022, 02:02:30 PM
I know this type of thing gets trotted around in crypto circles all the time. But frankly, it stinks. Crypto enthusiasts didn't care about helping the poor until they were convinced it was an opportunity for shilling crypto. They didn't care about governments seizing assets of the vulnerable until it recently happened to a bunch of white supremecists, and figured Bitcoin could help. They didn't care about payment infrastructures denying access to sex workers, but were at the forefronts of making sure funding for bigoted hate-groups weren't cut off.

Noooooo. No. There *is* regulation coming, sure. But it's only enforceable at the exchange level. Again—and this is important to understand—the only point of crypto's existence—and the reason for its massive deliberate inefficiency—is to bypass law and regulation. Any benefit or value ultimately stems from this fact.

No, there is quite a bit of regulation in the industry. But that is besides the point. The original claim was about a lack of accountability in the space. But accountability falls on humans. Furthermore, no one in their right mind looks for accountability within the places you're seeking accountability from. That would be quite the idealistic fantasy to ever expect organizations and systems to always hold themselves accountable for everything they do. Do we expect oil companies to hold themselves accountable for their oil spills? Do we expect financial institutions to hold themselves accountable for all the billions in money laundering they help commit? Did we expect the tobacco industry to hold themselves accountable for all the toxic substances they put in their products? The truth is no one in their right mind expects industries to hold themselves accountable, so why are you starting now with the crypto-currency industry?

In reality, accountability falls on our systems of governance and if we ever expect scams in the cryptocurrency industry to subside and for humans to change their behavior in that space, then we must look to our governments, legislative bodies, and law enforcement agencies to hold scammers and fraudsters accountable for their actions.

You missed my point completely, but I think we're very close to agreeing here. Yes! Accountability comes from the outside. That's a little thing we call: law! We have law. We have systems that maintain and enforce laws. And I want to turn up the volume to 11 here and reiterate for the nth time: crypto's reason for existing is to bypass those laws!.

Every example here is either: a case of breaking the law or is flatly inaccurate. It is never cheaper to do e-commerce with Bitcoin than with a legal existing payment system like Visa. It is only cheaper if you're doing something illegal. Again, maybe there are cases where this is perfectly moral, and a "good thing". But it's important to acknowledge that you're advocating for allowing anyone who wants to to punch a hole into the legal system to do what they want. Yes, this can be people sending remittances back to their families. But via the same mechanisms, it can just as easily be used for payments to kidnappers or sex traffickers. It can be for funding terrorism. It can be for sending money to nations with widespread international sanctions...

Ohhhh, man. OK well tell me you haven't ever used bitcoin without telling me you haven't used bitcoin. Or maybe you haven't used a number of various financial services that requires moving any substantial amount of funds. I had to send a wire transfer the other month to pay off a loan and it cost me $50 and took over a day to fully settle. And that is supposedly one of our faster forms of moving large sums of money. I had another bitcoin collateralized loan I had as a temporary move to make a cash offer on a house and was able to move hundreds of thousands of bitcoin within minutes for less than a dollar.

I run a bitcoin Lightning network node that settles thousands of dollars for people that is real economic activity. Over the last year it settled about $62,000 in transactions and I collected about $1.60 in fees for that. That was over the course of about 600 transactions. So do the math on that and that's about an average of $100 per transactions for an average fee of about $0.0026 per transaction. I'm sorry, but VISA which generally charges somewhere between 2-3% or so in fees is several orders of magnitude more expensive.

Oh boy... Lightning network is a centralization scheme that completely obviates the entire point of Bitcoin. To be frank, I don't think you have a great understand the systems you're dealing with or the reason things are the way they are.

Let me pose another question: If blockchain technology would allow Visa and Mastercard and banks to be more efficient, and save money, why aren't they using it? They've had over 10 years—are they just that slow to adapt? Or is there another reason, do you imagine?

I understand why you'd say such a thing. But... think about what you're suggesting. It's plain ol' ugly nihilism. "Who's to say what's good or bad? What does anything even mean or matter?". We have laws. If you're truly an anarchist and/or nihilist... that's fine and good, and you're being completely consistent. We don't need to debate any more. But if you aren't an anarchist or a nihilist, it may be worth thinking through the ramifications of what cryptocurrencies were designed to do.

Ya, sorry, but that isn't nihilism. That's actually almost the polar opposite of nihilism. Nihilism is the idea that values are baseless and meaningless and life is essentially meaningless. What I am saying here is that peoples' personal values, regardless of what I think of them, still have value to them personally! Nothing I say can change that. That's the exact opposite of what you're claiming I said here.

... lol. I'm sensing a pattern of difficulty thinking of second-order effects here. Having 0 opinion on other people's values is.... nihilism. "Some people value cannibalism. Who am I to say if that's not valuable?".

Wait... who do you think is in a position of power when it comes to cryptocurrencies?

Huh? Read that again maybe? I am not sure what you're asking here and why and I think there might have been a misinterpretation.

You stated: "Any system that leaves humans in a position of power to make broad decisions that impact millions of people is bound to have catastrophic failures and/or corruption throughout." Are you suggesting that humans are not in a position of power w/r/t Bitcoin? If that's not your point, what is?

I think it's lost on many why Bitcoin was developed, and the philosophies that back many of the decisions made in its design.

No technology is neutral. It has human opinions, biases, ideas baked into it. Bitcoin is designed around pretty extreme libertarian ideas. I do not agree with these ideas, and I think many crypto enthusiasts also would not agree with these ideas. I think they're—excuse the offensive language, but it's a useful term—useful idiots perpetuating libertarian ideals.

I would argue that bitcoin is one of the more bipartisan subjects these days. You'll find people on "both sides of the aisle" both completely for bitcoin and completely against it. Just look at some of the votes and amendments that have come and gone on capital hill and it is one of the rare cases that you'll have a subject these days that isn't split evenly down party lines. And I'll stand by the argument that bitcoin the technology is neutral regardless of whatever beliefs its progenitors might have held. It is actually rather refreshing to see nowadays and I think it is important that we can share our differing opinions on various subjects without denigrating our fellow humans as less than such because of the beliefs they may hold.

As always, yes, "both sides" have crypto proponents. But it's very skewed. For instance, in 2021, 7 representatives in Congress traded crypto. 6 were Republicans. This is disingenuous to pretend it's "bipartisan" or "neutral". It's absolutely not neutral as....once again: its entire purpose is to circumvent government regulation. Which party has, for at least 50 years, been touting regulation as evil?

Here's a Slate article talking about the partisan nature of Bitcoin in the US legislature: https://slate.com/technology/2022/01/crypto-bitcoin-republicans-josh-mandel.html

Cool. Bitcoin's YoY inflation is around 30%. So... that's clearly not it...

How do you figure that? It's monetary inflation is about 1.6% annually. 18.7 million circulating supply in April of last year and 19 million as of today. That equals about a 1.6% increase in monetary supply.

What in the world? That is not how inflation is defined. Inflation in the reduction in purchasing power. In the last year, the purchasing power of 1 Bitcoin has dropped about 30%.

This is a bit of an aside: but this is exactly what I'm talking about when I say crypto helps spread Libertarian ideals. This idea that an expanding monetary base is problematic is Libertarian. I'm guessing you learned this bizarro definition of inflation via your interest in cryptocurrencies, and not from an Economics class or textbook.

Yea, again the "privileged" thing. I addressed that a few paragraphs up. I think that's a cynical talking point Alex Gladstein started, and it spread like wildfire. It's the same sleazy strategy as "NFT's are enabling artists!", ignoring the fact that the people saying this directly benefit from artists spending money to "mint" NFT's to try to sell them. It's grift all the way down, as I see it.

NFTs are dumb and really aren't anything new either. You're not going to find me arguing in favor of NFTs here. They're not decentralized and they're just latching onto the hype of decentralization to sell "art" on centralized platforms that we've long been able to do prior. The art itself, which is where the NFT gets its value, is not decentralized and we don't have good scalable systems for decentralizing art. So for as long as the art isn't decentralized, then it remains pointless to try and decentralize any token that is supposed to represent it. If the art disappears, then the value of the NFT disappears as well. Maybe that problem will be solved in the future.

Yea, we agree. My point was: it's very common in the Crypto community to cynically advocate for things that sound good, as if they're helping less-privileged people. Artists, as a group, tend to struggle quite a bit. The whole NFT thing really exploited artists for profit. The talking point that crypto helps the "financially unprivileged" is, similarly, little more than a con. These people do not care about the poor. They care about their bags being inflated.

You see similar "up is down" rhetoric with Bitcoiners talking about the impact on climate change. "Bitcoin is a battery", "it incentivizes renewable energy", etc. These are just lies, plain and simple.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on April 05, 2022, 02:15:52 PM
How do you figure that? It's monetary inflation is about 1.6% annually. 18.7 million circulating supply in April of last year and 19 million as of today. That equals about a 1.6% increase in monetary supply.

But each Bitcoin is less valuable than it was a year ago.  A basket of goods today purchased with Bitcoin would be about 25% smaller than the same basket of goods purchased with Bitcoin a year ago.   That's hyperinflation territory.   From a strictly inflation standpoint, you would have been better off keeping your money rubles during that same time period. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 05, 2022, 03:06:47 PM
Oh boy... Lightning network is a centralization scheme that completely obviates the entire point of Bitcoin. To be frank, I don't think you have a great understand the systems you're dealing with or the reason things are the way they are.

Let me pose another question: If blockchain technology would allow Visa and Mastercard and banks to be more efficient, and save money, why aren't they using it? They've had over 10 years—are they just that slow to adapt? Or is there another reason, do you imagine?

Oooof. OK, we can get as technical here as you want as I feel it would expose some things being said. I all for getting technical but I feel it would be off topic to do so. No, lightning is not a "centralization scheme". I'd love for you to elaborate on that. Whether node channels will eventually gravitate toward central points remains to be seen. But the fact that I can create a node completely outside of any centrality remains and I can avoid any node's channels I so chose. As with any economy there will always be major players in the space that many individuals use (Amazon for example), but that doesn't mean that the overall network is centralized. At no point in actively using the lightning network or conducting a lightning transaction are you ever not in possession of the keys to your bitcoin (as long as you're not using a custodial service). That's a fact. Decentralization is a spectrum after all. To say that the lightning network does away with the decentralization benefits of bitcoin ignores this fact. Broadcast networks (like bitcoin) inherently don't scale, so there will always be some trade-offs at play if you are looking to scale things beyond what is capable with a fully decentralized public blockchain like bitcoin.

Lightning transactions ARE bitcoin transactions. There is fundamentally no difference between a raw lightning transaction and a raw bitcoin transaction. Bitcoin scripts are what enables lightning transactions to take place securely off-chain. The ability to use bitcoin scripting and opcodes like CheckSequenceVerify to allow for revocation and time locks means that you can conduct transactions with the full security of the bitcoin blockchain/network with instant settlement between parties without requiring a confirmation on each transaction.

You criticize me for "not understand[sic] the systems you're dealing with" and then follow that up with a question pondering why VISA and Mastercard aren't using blockchains? For real? The entire reason to use a blockchain is to remove trust from a system. That's it. To remove trust, you must remain decentralized as much as possible. VISA and Mastercard are legal corporate entities that inherently rely upon trust to exist. There is absolutely nothing to gain by them using a blockchain in any of the systems they operate. No, blockchains will not revolutionize shipping, voting, lending, real estate, etc. All these things that are often touted as being the next thing blockchains will revolutionize inherently require trust to exist and have some form of centralization exhibited upon them. So no, VISA and Mastercard have nothing to gain from blockchains and if they come out saying they're dabbling it in, it is almost certainly just for marketing buzz.


... lol. I'm sensing a pattern of difficulty thinking of second-order effects here. Having 0 opinion on other people's values is.... nihilism. "Some people value cannibalism. Who am I to say if that's not valuable?".

Read what I wrote again. I am not having zero opinion on their values. If someone is a cannibal, I will absolutely have an opinion on that. I am a vegan, I have an opinion people eating meat all the time, lol. Here is what I said once more, please read carefully:

Quote
What I am saying here is that peoples' personal values, regardless of what I think of them, still have value to them personally! Nothing I say can change that.

What I said is that my opinion toward's someone else's value won't change how they value what they value. If someone is cannibal and they value being a cannibal, my opinion of their supposed value won't change the fact that they value being a cannibal. That's not nihilism. The fact that you regularly insinuate the legality of even just using bitcoin tells me you hold quite the contempt for it. I do wonder why. If someone finds value in using it for their own personal reasons, who are you to say they don't value it without knowing their personal circumstance? That is what you do when you say that bitcoin has no value. You're claiming that all the people the world over that are using bitcoin, all for their own personal reasons, don't value it or somehow don't understand it enough to even know why it is that they don't value it like you say they should. To me, that almost sounds more nihilistic than anything that has come out of my mouth in this thread, that's for sure.

You stated: "Any system that leaves humans in a position of power to make broad decisions that impact millions of people is bound to have catastrophic failures and/or corruption throughout." Are you suggesting that humans are not in a position of power w/r/t Bitcoin? If that's not your point, what is?

I would say that no central authority, individual human, or organization is in power over bitcoin. That's kind of the entire point of it.

Quote
What in the world? That is not how inflation is defined. Inflation in the reduction in purchasing power. In the last year, the purchasing power of 1 Bitcoin has dropped about 30%.

Your comment was in reply to my remark about currency debasement. There is monetary inflation and there is price inflation. Monetary inflation brings about price inflation (more money chasing goods). With bitcoin we know what its monetary policy is and will be in the future. As far as your comment on a 30% decrease in purchasing power with bitcoin, you're once again looking at things from your own personal perspective and not placing yourself in other peoples' shoes around the world. Price inflation is relative to the goods you're looking to buy with the currency you're going to use to by them. My original comment was in regards to all the countries around the world experiencing crippling inflation levels and that trend I don't think will reverse in the future. There will be more Venezuelas and Lebanons in the future and if you think bitcoin's price history will have a discouraging effect on people looking to escape those dystopian nightmares, you're being naive.

Not to mention the fact that the YoY number for bitcoin is extremely shortsighted given how volatile bitcoin is. Bitcoin's YoY return ignores the fact that bitcoin was trading below what it is today for as much time during that time frame than it was trading above. This isn't like your typical YoY price inflation number for any other fiat currency where it only ever goes up. Not to mention the fact that if you're looking to escape your country's debased currency as a means of livelihood, the bitcoin you're holding in the short term isn't exposed to those YoY numbers and if you're holding bitcoin as a longer term store of value you're probably looking at a longer term than just 1 year.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on April 05, 2022, 04:40:51 PM
Oh boy... Lightning network is a centralization scheme that completely obviates the entire point of Bitcoin. To be frank, I don't think you have a great understand the systems you're dealing with or the reason things are the way they are.

Let me pose another question: If blockchain technology would allow Visa and Mastercard and banks to be more efficient, and save money, why aren't they using it? They've had over 10 years—are they just that slow to adapt? Or is there another reason, do you imagine?

Oooof. OK, we can get as technical here as you want as I feel it would expose some things being said. I all for getting technical but I feel it would be off topic to do so. No, lightning is not a "centralization scheme". I'd love for you to elaborate on that. Whether node channels will eventually gravitate toward central points remains to be seen. But the fact that I can create a node completely outside of any centrality remains and I can avoid any node's channels I so chose. As with any economy there will always be major players in the space that many individuals use (Amazon for example), but that doesn't mean that the overall network is centralized. At no point in actively using the lightning network or conducting a lightning transaction are you ever not in possession of the keys to your bitcoin (as long as you're not using a custodial service). That's a fact. Decentralization is a spectrum after all. To say that the lightning network does away with the decentralization benefits of bitcoin ignores this fact. Broadcast networks (like bitcoin) inherently don't scale, so there will always be some trade-offs at play if you are looking to scale things beyond what is capable with a fully decentralized public blockchain like bitcoin.

Lightning transactions ARE bitcoin transactions. There is fundamentally no difference between a raw lightning transaction and a raw bitcoin transaction. Bitcoin scripts are what enables lightning transactions to take place securely off-chain. The ability to use bitcoin scripting and opcodes like CheckSequenceVerify to allow for revocation and time locks means that you can conduct transactions with the full security of the bitcoin blockchain/network with instant settlement between parties without requiring a confirmation on each transaction.

You criticize me for "not understand[sic] the systems you're dealing with" and then follow that up with a question pondering why VISA and Mastercard aren't using blockchains? For real? The entire reason to use a blockchain is to remove trust from a system. That's it. To remove trust, you must remain decentralized as much as possible. VISA and Mastercard are legal corporate entities that inherently rely upon trust to exist. There is absolutely nothing to gain by them using a blockchain in any of the systems they operate. No, blockchains will not revolutionize shipping, voting, lending, real estate, etc. All these things that are often touted as being the next thing blockchains will revolutionize inherently require trust to exist and have some form of centralization exhibited upon them. So no, VISA and Mastercard have nothing to gain from blockchains and if they come out saying they're dabbling it in, it is almost certainly just for marketing buzz.

Look, man. I have a CS degree, and have been a professional software engineer for 15 years. I'm happy to get technical :) Thus far, I don't think it's necessary. As you state: decentralization is a spectrum. The more decentralized something is, the less efficient it is. Lightning adds centralization to the scheme to alleviate some pains of decentralization. I don't think any additional techno-babble is necessary here. Lightning is more centralized that vanilla Bitcoin. It also requires: opening the channel and closing the channel, for which Bitcoin's astronomical fees are still present. You also must trust the lightning network itself, which is susceptible to myriad of attack vectors, including forced expiration of transactions, fraudulently closing the channel while the counterparty is offline, and so on.

Let's continue with this Visa/Mastercard thing. Trust. Bitcoin is designed to not need trust (in governments, in laws, in financial systems). This design necessarily makes it less efficient than systems that can rely on trust. This is precisely my point: Bitcoin cannot beat a definitionally more efficient system on cost. The examples you've given haven't been clear enough for me to point at why they're absurd, but I can know with complete confidence that they are not apples-to-apples comparisons the same way I know an 18-wheeler will require more energy to go the same distance as a Toyota Prius, regardless of the distances involved. It's just physics. Bitcoin is colossally inefficient by design. It is literally thousands of times less efficient than traditional alternatives.
... lol. I'm sensing a pattern of difficulty thinking of second-order effects here. Having 0 opinion on other people's values is.... nihilism. "Some people value cannibalism. Who am I to say if that's not valuable?".

Read what I wrote again. I am not having zero opinion on their values. If someone is a cannibal, I will absolutely have an opinion on that. I am a vegan, I have an opinion people eating meat all the time, lol. Here is what I said once more, please read carefully:

Quote
What I am saying here is that peoples' personal values, regardless of what I think of them, still have value to them personally! Nothing I say can change that.

What I said is that my opinion toward's someone else's value won't change how they value what they value. If someone is cannibal and they value being a cannibal, my opinion of their supposed value won't change the fact that they value being a cannibal. That's not nihilism. The fact that you regularly insinuate the legality of even just using bitcoin tells me you hold quite the contempt for it. I do wonder why. If someone finds value in using it for their own personal reasons, who are you to say they don't value it without knowing their personal circumstance? That is what you do when you say that bitcoin has no value. You're claiming that all the people the world over that are using bitcoin, all for their own personal reasons, don't value it or somehow don't understand it enough to even know why it is that they don't value it like you say they should. To me, that almost sounds more nihilistic than anything that has come out of my mouth in this thread, that's for sure.
Ayyy, fellow vegan high-five :)

I don't recall saying such a thing? Correct me if I'm wrong. Sure—people value things that I don't. I don't find that particularly insightful or interesting, to be honest. What is interesting is our opinions on why these things are valuable. I'm asking you to explain what you find valuable about Bitcoin. I haven't heard a particularly coherent answer, yet.

And re: my contempt. Yes. Like I have contempt for cannibalism or gold bullion commercials, I have contempt for Bitcoin. I think it's harmful and runs counter to virtually everything I believe in: accountability, democracy, environmental responsibility, the common good, equity, etc.

You stated: "Any system that leaves humans in a position of power to make broad decisions that impact millions of people is bound to have catastrophic failures and/or corruption throughout." Are you suggesting that humans are not in a position of power w/r/t Bitcoin? If that's not your point, what is?

I would say that no central authority, individual human, or organization is in power over bitcoin. That's kind of the entire point of it.

Miners. Developers. They're a hell of a lot more human and a hell of a lot more centralized than you're letting on... And getting more so centralized by the day.

Quote
What in the world? That is not how inflation is defined. Inflation in the reduction in purchasing power. In the last year, the purchasing power of 1 Bitcoin has dropped about 30%.

Your comment was in reply to my remark about currency debasement....

C'mon man. We can all read the thread and see what you said. But let's beat this dead horse: You said: "Vast amounts of currency debasement and record levels of inflation. Currency collapses in many places around the world. Over 2 billion people world-wide are experiencing double digit inflation"

debasement and record levels of inflation... experiencing double digit inflation. Moving along...

There is monetary inflation and there is price inflation. Monetary inflation brings about price inflation (more money chasing goods).

It can. But it doesn't necessarily. This is quacky Libertarian economics. In a sufficiently growing economy, the monetary base can increase and simultaneously experience deflation.

With bitcoin we know what its monetary policy is and will be in the future.

A few points:
1. No. You don't. Developers can change these rules at any time, so long as there's sufficient agreement.
2. Why is this a good thing? This, too, is Libertarian economics talk. Virtually all economists would tell you: having a monetary policy that responds to change is strictly superior to one that is static. There's a reason no modern economy is still on the gold standard. And when it's been tried in recent history, it's been catastrophic.

As far as your comment on a 30% decrease in purchasing power with bitcoin, you're once again looking at things from your own personal perspective and not placing yourself in other peoples' shoes around the world. Price inflation is relative to the goods you're looking to buy with the currency you're going to use to by them. My original comment was in regards to all the countries around the world experiencing crippling inflation levels and that trend I don't think will reverse in the future. There will be more Venezuelas and Lebanons in the future and if you think bitcoin's price history will have a discouraging effect on people looking to escape those dystopian nightmares, you're being naive.

You're the one suggesting Bitcoin somehow solves the problems in Venezuela or Lebanon. I do not think you understand the problems in Venezuela or Lebanon. Once again, you're regurgitating talking points you've heard in crypto circles. You did not arrive at these things out of genuine concern for the people of Venezuela or the people of Lebanon. You arrived at this after reading some Bitcoin Magazine article or some such nonsense.

Let's look at the shining city on the hill for Bitcoiners: El Salvador. Bitcoin is their national currency! What's happening? How's that going? Bitcoiners' favorite Dictator, Bukele, just suspended human rights protections in El Salvador. Even in this hellscape, 86% of businesses report having never conducted a single transaction in bitcoin.

I don't think I'm the one being naive.

Not to mention the fact that the YoY number for bitcoin is extremely shortsighted given how volatile bitcoin is. Bitcoin's YoY return ignores the fact that bitcoin was trading below what it is today for as much time during that time frame than it was trading above. This isn't like your typical YoY price inflation number for any other fiat currency where it only ever goes up.

Ah, yes! Volatility! The attribute most sought after in "stores of value" and "currencies".

Not to mention the fact that if you're looking to escape your country's debased currency as a means of livelihood, the bitcoin you're holding in the short term isn't exposed to those YoY numbers and if you're holding bitcoin as a longer term store of value you're probably looking at a longer term than just 1 year.

Dude! Bitcoin just went down like 8% yesterday! As you said: it is massively volatile. Holding it short term is still a massive risk exposure, often much worse than the shitty currencies you're poo-pooing.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 05, 2022, 07:05:58 PM
Lightning adds centralization to the scheme to alleviate some pains of decentralization. I don't think any additional techno-babble is necessary here. Lightning is more centralized that vanilla Bitcoin.

At the very least, regardless of whether you spout "techno-babble", you could explain why you think it is a "centralization scheme that completely obviates the entire point of Bitcoin". So far all you have done is make the claim without any reasoning explained to back up your point whatsoever.

It also requires: opening the channel and closing the channel, for which Bitcoin's astronomical fees are still present. You also must trust the lightning network itself, which is susceptible to myriad of attack vectors, including forced expiration of transactions, fraudulently closing the channel while the counterparty is offline, and so on.

Yup, Lightning requires opening a channel. But there are also options like channel factories that will allow for new channels to be created or closed in the same way that lightning transactions are without requiring on-chain transactions. What do you mean you must trust the lightning network? Can you elaborate on that further? I'm not claiming that there are no attack vectors possible. But it is important to understand what the word "trust" means and I don't think it is being used appropriately here. Also, as I specifically said previously, lightning network is an active network and if you're going to use it, you must be present for it. So yes, this means that you must either always be online with your channels (or at least online frequently enough to watch your channels with the csv_delay you set for your channel peers) or use a watchtower that can watch your channels for you. There is a huge risk in attempting to close a channel fraudulently. Even if your peer has been offline for some duration like you say, you never know a forced channel close is being watched by someone. If you get caught trying to close a channel fraudulently, then you risk losing all the funds in the channel as a penalty by your peer.

The examples you've given haven't been clear enough for me to point at why they're absurd, but I can know with complete confidence that they are not apples-to-apples comparisons

I gave you my real-world numbers for my actual lightning node that I have been hosting for over 3 years now. I am not sure why you assume they're "absurd". The numbers are absolutely real and if you actually used the lightning network yourself and hosted a node yourself, you'd have a similar experience. It seems odd that you're claiming something with complete confidence for something that you obviously have not used.

I think it's harmful and runs counter to virtually everything I believe in: accountability, democracy, environmental responsibility, the common good, equity, etc.

The strange thing is that I feel it exemplifies all of those things.

Bitcoin is accountable in the sense that it is 100% transparent and 100% auditable. That lends itself well when it comes to accountability. It is hard to hold a system accountable if there is no transparency in how it operates and you can't audit what it does. I think there will need to be human accountability that comes from governance and legislation, but bitcoin itself is absolutely accountable. Contrast that with our central bankers of today that aren't even elected officials in most instances. Central bankers are almost never held accountable for poor policy that is put in place.

Bitcoin exemplifies democracy in the truest sense. Democracy literally means "rule by the people" and that is what bitcoin does. It is a network operated by the people and anyone can participate it. Again, contrast that with central banking that is ruled by nepotistic politicians and bureaucrats.

I've already spoke earlier to its environmental impacts. At the end of the day everything we do has an energy cost. Every output in our economy consumes energy to produce and operate. Bitcoin is no different and I spoke earlier about how it would be foolish to write off bitcoin because of its early life energy costs during its production phase without acknowledging its future efficiencies that could be gained. In the grand scheme of things, bitcoin's climate impact will be negligible and if there is any future efficiencies to be gained from it (which I believe there are), then I think it is worthwhile to pursue. Bitcoin, after all, is agnostic to the type of energy it consumes.

I think bitcoin also speaks to the common good. Our current KYC/AML regulations do the opposite of just that. They punish the common good through enacting massive surveillance and privacy violating regulations all to try and punish an extremely small minority that commit crimes. KYC/AML law is widely regarded as being complete failures at what they set out to do. Not only do they violate our personal freedoms, but they also fail to actually catch a vast majority of money laundering crime (less than 1%). Bitcoin fights back for those freedoms with the acknowledgement that there might be a small percentage of people that utilize it in their crimes.
https://www.emerald.com/insight/content/doi/10.1108/JFC-08-2017-0071/full/html (https://www.emerald.com/insight/content/doi/10.1108/JFC-08-2017-0071/full/html)
https://www.forbes.com/sites/haileylennon/2021/01/19/the-false-narrative-of-bitcoins-role-in-illicit-activity/ (https://www.forbes.com/sites/haileylennon/2021/01/19/the-false-narrative-of-bitcoins-role-in-illicit-activity/)

I also feel bitcoin is in the pursuit of equity. Bitcoin does not discriminate against who you are. It doesn't matter what your race, gender, ethnicity, nationality, religion, sexual orientation, education level, or political party is, you can still use bitcoin. Bitcoin will not redline you.



Miners. Developers. They're a hell of a lot more human and a hell of a lot more centralized than you're letting on... And getting more so centralized by the day.

That last part is factually false. Mining has been getting more decentralized over the last several years and there are now more developers actively developing with bitcoin than ever before. I agree they are human, but bitcoin as a decentralized governance system takes away a lot of the governance risk you'd have compared with a centralized organization.

C'mon man. We can all read the thread and see what you said. But let's beat this dead horse: You said: "Vast amounts of currency debasement and record levels of inflation. Currency collapses in many places around the world. Over 2 billion people world-wide are experiencing double digit inflation"

debasement and record levels of inflation... experiencing double digit inflation. Moving along...

My point still stands and a cherry-picked statement with a YoY exchange rate is hardly refuting of the points I laid out. One search for "bitcoin" and the name of any of the countries I've mentioned and you'll find examples of citizens who've lost the trust in their native currencies and have decided that bitcoin is where they can put their wealth instead.


It can. But it doesn't necessarily. This is quacky Libertarian economics. In a sufficiently growing economy, the monetary base can increase and simultaneously experience deflation.

I agree. I've already had this discussion with ChpBstrd and that lasted for several pages, so I doubt there will be anything new brought up on this topic, but if you'd like you can read the discussion we had on it. It started around page 20. I agree that other deflationary pressures (technology, savings, aging population, etc) can mask the impacts of inflationary monetary policy, but they in no way diminish its impacts. No matter what, its impacts are felt through the economy regardless of whether the price of goods rises. I didn't mean to imply that monetary inflation always yields price inflation, so I apologize for the miscommunication there.

A few points:
1. No. You don't. Developers can change these rules at any time, so long as there's sufficient agreement.
2. Why is this a good thing? This, too, is Libertarian economics talk. Virtually all economists would tell you: having a monetary policy that responds to change is strictly superior to one that is static. There's a reason no modern economy is still on the gold standard. And when it's been tried in recent history, it's been catastrophic.

I would argue that the uncertainty brought about by fiscal policy and the current modern monetary theory of running deficits in exchange for currency debasement is far more damaging to the economy than a stable currency supply ever would be. You, like ChpBstrd, make the claim that when it's been tried it was catastrophic and yet neither he nor you will provide examples of a deflationary spiral from a rigid monetary base that was not preceded by a crashing bubble.

You did not arrive at these things out of genuine concern for the people of Venezuela or the people of Lebanon. You arrived at this after reading some Bitcoin Magazine article or some such nonsense.

If I am to engage with honest debate with you, I expect there to be a certain level of civility. Insinuating anything about how I arrived that the beliefs I hold when you know little about me is hardly in the best spirits here. You can debate me and the remarks I've made on their own merit as they stand here without the generalizations of however you may see others who may hold similar views as my own. In reality, I think you'd find that I am quite the mash of beliefs as are most people when you get to know them.

Let's look at the shining city on the hill for Bitcoiners: El Salvador. Bitcoin is their national currency! What's happening? How's that going? Bitcoiners' favorite Dictator, Bukele, just suspended human rights protections in El Salvador. Even in this hellscape, 86% of businesses report having never conducted a single transaction in bitcoin.

You won't find me courting dictators like Bukele at all. I even think forcing businesses to accept bitcoin as a currency is bad policy all the same as it is bad policy to force business to accept any other form of currency. That being said, I don't think the statistic you laid out is hardly the negative stat you think it is; with 14% of business having accepted bitcoin after only a year in without any prior infrastructure in place.

Dude! Bitcoin just went down like 8% yesterday! As you said: it is massively volatile. Holding it short term is still a massive risk exposure, often much worse than the shitty currencies you're poo-pooing.

It can be volatile, but that being said it is an uncertain volatility. When you're in a currency collapse like Venezuela, Lebanon, Zimbabwe, Turkey, etc. you're faced with a feeling of certain of collapse. When the currency is debased beyond any means of recovery, people will lose trust in it and will flee that feeling of certain loss into something like bitcoin even with its uncertain volatility. As I said, price inflation is relative to the region of goods you're in and we can often even see the price of bitcoin rise independent from global markets in these regions facing currency collapse as bitcoin liquidity struggles to meet the increased demand. You don't need to take my word for it though, the increased usage of bitcoin in these regions stands as evidence on its own regardless of how you feel about it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on April 05, 2022, 09:49:29 PM
Lightning adds centralization to the scheme to alleviate some pains of decentralization. I don't think any additional techno-babble is necessary here. Lightning is more centralized that vanilla Bitcoin.

At the very least, regardless of whether you spout "techno-babble", you could explain why you think it is a "centralization scheme that completely obviates the entire point of Bitcoin". So far all you have done is make the claim without any reasoning explained to back up your point whatsoever.

The lightning network’s efficiency is a direct result of the centralization of its hubs. This isn’t particularly interesting or even novel. It’s just network topology in action. I’m confused why this is contentious? This centralization obviates the point of Bitcoin’s decentralized design because it adds risk for censorship, invasion-of-privacy, etc.

It also requires: opening the channel and closing the channel, for which Bitcoin's astronomical fees are still present. You also must trust the lightning network itself, which is susceptible to myriad of attack vectors, including forced expiration of transactions, fraudulently closing the channel while the counterparty is offline, and so on.

Yup, Lightning requires opening a channel. But there are also options like channel factories that will allow for new channels to be created or closed in the same way that lightning transactions are without requiring on-chain transactions. What do you mean you must trust the lightning network? Can you elaborate on that further?

Sure. Again, centralization is the reason LN is as efficient as it is. The more centralized LN is, the more you must trust the operators of the big LN hubs.

I'm not claiming that there are no attack vectors possible. But it is important to understand what the word "trust" means and I don't think it is being used appropriately here.

Sure. Let’s define it. In this context, I understand “trust”. In the context of Bitcoin, users do not need to trust the payment system. Bad actors (miners) cannot change order-of-transactions, block transactions, etc. because it would be too costly to do so (thanks to PoW).

My point is, on the LN, bad actors can—and do—absolutely do these things.


The examples you've given haven't been clear enough for me to point at why they're absurd, but I can know with complete confidence that they are not apples-to-apples comparisons

I gave you my real-world numbers for my actual lightning node that I have been hosting for over 3 years now. I am not sure why you assume they're "absurd". The numbers are absolutely real and if you actually used the lightning network yourself and hosted a node yourself, you'd have a similar experience. It seems odd that you're claiming something with complete confidence for something that you obviously have not used.

You gave numbers. But it’s not clear the full picture. And again, I understand the mechanisms at play well enough to know what you’re suggesting is just not realistic. Again, I don’t need to know the details of a semi truck’s route to know that a Prius  will always do it by burning less gas. I add more detail on this below…

I think it's harmful and runs counter to virtually everything I believe in: accountability, democracy, environmental responsibility, the common good, equity, etc.

The strange thing is that I feel it exemplifies all of those things.

Bitcoin is accountable in the sense that it is 100% transparent and 100% auditable.

Perhaps your definition of accountable differs from mine. Who holds people accountable? How’s that “100% transparency” working for people who lost all their money in the Quadriga CX scandal? Who’s being held accountable there? How about the $625M Axie Infinity heist? It’s fully transparent! Should be easy to solve, right? How’s that going? Who’s being held to account?

That lends itself well when it comes to accountability. It is hard to hold a system accountable if there is no transparency in how it operates and you can't audit what it does. I think there will need to be human accountability that comes from governance and legislation, but bitcoin itself is absolutely accountable. Contrast that with our central bankers of today that aren't even elected officials in most instances. Central bankers are almost never held accountable for poor policy that is put in place.

If this is what you want, why not advocate for widespread Merkle trees? They’re 100% transparent, auditable, and all that, too! And thousands of times more efficient. No. You’re arguing for public Blockchains, which bypass governments—the very invention of humankind to enforce laws. Law and elections are pretty much our only tools for accountability. Bitcoin is designed to bypass these very things.

Bitcoin exemplifies democracy in the truest sense. Democracy literally means "rule by the people" and that is what bitcoin does. It is a network operated by the people and anyone can participate it. Again, contrast that with central banking that is ruled by nepotistic politicians and bureaucrats.
Ohhh my. Who do you think is mining Bitcoins? The poor? Or the already-ultra-wealthy, who can afford millions of dollars of mining equipment, facilities, electric bills, etc? What about Proof of Stake? That is even more transparently a scheme where the already-wealthy are granted the most votes.

Democracy is 1 person 1 vote. Bitcoin couldn’t be further from that ideal.

I've already spoke earlier to its environmental impacts. At the end of the day everything we do has an energy cost. Every output in our economy consumes energy to produce and operate. Bitcoin is no different and I spoke earlier about how it would be foolish to write off bitcoin because of its early life energy costs during its production phase without acknowledging its future efficiencies that could be gained. In the grand scheme of things, bitcoin's climate impact will be negligible and if there is any future efficiencies to be gained from it (which I believe there are), then I think it is worthwhile to pursue. Bitcoin, after all, is agnostic to the type of energy it consumes.

This argument just pains me. It’s incredibly dismissive of the colossal waste in the system. “Everybody exhales CO2, and my tire fire factory is no different!! LOL And one day, it may be more efficient, just you wait!” It’s a bad argument, man. Bitcoin is thousands of times less efficient than existing payment systems. Are its use-cases (which I maintain are already also detrimental) worth that? I think that’s a tough argument to make.

But the energy-use is only part of the equation. The other is: e-waste from discarded/broken ASIC mining equipment, video cards, servers, etc. A single Bitcoin transaction is responsible for nearly 300 grams of e-waste—that’s about 2 iPhones. Bitcoin alone produces more ewaste than the entire country of Germany, a nation of 83 Million.

I think bitcoin also speaks to the common good. Our current KYC/AML regulations do the opposite of just that. They punish the common good through enacting massive surveillance and privacy violating regulations all to try and punish an extremely small minority that commit crimes. KYC/AML law is widely regarded as being complete failures at what they set out to do. Not only do they violate our personal freedoms, but they also fail to actually catch a vast majority of money laundering crime (less than 1%). Bitcoin fights back for those freedoms with the acknowledgement that there might be a small percentage of people that utilize it in their crimes.
https://www.emerald.com/insight/content/doi/10.1108/JFC-08-2017-0071/full/html (https://www.emerald.com/insight/content/doi/10.1108/JFC-08-2017-0071/full/html)
https://www.forbes.com/sites/haileylennon/2021/01/19/the-false-narrative-of-bitcoins-role-in-illicit-activity/ (https://www.forbes.com/sites/haileylennon/2021/01/19/the-false-narrative-of-bitcoins-role-in-illicit-activity/)

It sounds like your definition of “common good” differs from mine. Common good, commonwealth, general good, etc. I mean this in the sense of having a society—a community—that protects people from “the minority that commits crimes”. Common good means: elected governments enforcing laws and regulations for the good of the many. Once again, you’re perfectly reciting Libertarian/anarchist “FREEDOM!” talking points. This is the antithesis of what Common good means.



I also feel bitcoin is in the pursuit of equity. Bitcoin does not discriminate against who you are. It doesn't matter what your race, gender, ethnicity, nationality, religion, sexual orientation, education level, or political party is, you can still use bitcoin. Bitcoin will not redline you.

Another libertarian line. The US Dollar didn’t redline anyone, either. Banks did. And we held them to account via the political process. That is now illegal thanks to that accountability.

Trying to deliberately “decentralize” a human system only serves to push its power structures into deniable, unaccountable territory.

Miners. Developers. They're a hell of a lot more human and a hell of a lot more centralized than you're letting on... And getting more so centralized by the day.

That last part is factually false. Mining has been getting more decentralized over the last several years and there are now more developers actively developing with bitcoin than ever before. I agree they are human, but bitcoin as a decentralized governance system takes away a lot of the governance risk you'd have compared with a centralized organization.

Last year, a single coal mine in China flooded, and Bitcoin’s hash rate dropped to the tune of 35%. Just 0.1% of miners control half of all mining capacity (source: https://fortune.com/2021/10/26/bitcoin-mining-capacity-ownership-concentration-top-investors-nber-study/ ) Additionally, there are very few manufacturers of ASICS, which is yet another source of centralization.

Do you have a source showing mining getting more decentralized in the last several years?

C'mon man. We can all read the thread and see what you said. But let's beat this dead horse: You said: "Vast amounts of currency debasement and record levels of inflation. Currency collapses in many places around the world. Over 2 billion people world-wide are experiencing double digit inflation"

debasement and record levels of inflation... experiencing double digit inflation. Moving along...

My point still stands and a cherry-picked statement with a YoY exchange rate is hardly refuting of the points I laid out. One search for "bitcoin" and the name of any of the countries I've mentioned and you'll find examples of citizens who've lost the trust in their native currencies and have decided that bitcoin is where they can put their wealth instead.

Cool research! Try doing the same with USD instead of Bitcoin ;-)

You did not arrive at these things out of genuine concern for the people of Venezuela or the people of Lebanon. You arrived at this after reading some Bitcoin Magazine article or some such nonsense.

If I am to engage with honest debate with you, I expect there to be a certain level of civility. Insinuating anything about how I arrived that the beliefs I hold when you know little about me is hardly in the best spirits here. You can debate me and the remarks I've made on their own merit as they stand here without the generalizations of however you may see others who may hold similar views as my own. In reality, I think you'd find that I am quite the mash of beliefs as are most people when you get to know them.

Sorry, I’m not trying to disparage you. Maybe it’s a coincidence that you’re talking about the same few countries every other Bitcoin enthusiast I’ve listened to brings up. Were you interested in the problems in Venezuela and Lebanon before you got interested in cryptocurrency?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: erjkism on April 06, 2022, 05:41:09 AM
"What do you think of adding a low% of crypto allocation"

Why ask this to a forum where 90+% of the people here have been completely wrong and missed the entire crypto wave?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on April 06, 2022, 07:04:49 AM
"What do you think of adding a low% of crypto allocation"

Why ask this to a forum where 90+% of the people here have been completely wrong and missed the entire crypto wave?
...as measured by buying crypto in mid-2020 and selling it for USD in April or November 2021. Had you instead bought crypto in November 2021 and sold today, you'd have lost a third of your USD in 5 months.

And that's IF you we fortunate enough not to have been a victim in one of 11 crypto exchange hacks perpetrated in that timeframe worth undisclosed hundreds of millions of USD, which would have moved your losses up to 100% with no recourse.

The point is, it's not exactly a "wave" that could have benefited everyone taking that advice at every time.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on April 06, 2022, 07:09:53 AM
Nice to see some good discussion on this again.

It would be better if we could get away from the underlying assumption that every pro-crypto person is either a greedy scammer or a gullible victim of said scammers, and is motivated purely by selfish interest and fuck everyone/everything else.

It's a fairly safe bet that most on this forum generally share similar Mustachian values - and I think we'd all agree that Mustachians are, by and large, good people with good intentions. A few of us have an interest in crypto too . . .
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on April 06, 2022, 07:11:14 AM
"What do you think of adding a low% of crypto allocation"

Why ask this to a forum where 90+% of the people here have been completely wrong and missed the entire crypto wave?

Missed it ? Do you think it's all over ?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 06, 2022, 07:40:22 AM
And that's IF you we fortunate enough not to have been a victim in one of 11 crypto exchange hacks perpetrated in that timeframe worth undisclosed hundreds of millions of USD, which would have moved your losses up to 100% with no recourse.
Actually 2022 q1 overshadows those figures, with an 8x increase in hacking that has brought losses in the past 3 months to $1.2 billion.
https://techcrunch.com/2022/04/04/q1-crypto-losses-spike-695-on-year-following-massive-hacks/

Because of the +700% increase, it's safe to assume prior hacks were a fraction of the prior quarter, but call it $2.5 billion total.  The market caps of BTC and ETH are $1.25 trillion, or 500x greater.  Using these rough numbers, is it fair to estimate 99.8% of crypto has been safe from hacks?

And even in those hacking numbers, a lot of it is ransomware.  It's someone's computer getting hacked, and to pay the ransom they must send crypto.  Those ransomware cases are not really a risk for investors, so much as Bitcoin is everywhere hackers want you to be.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 06, 2022, 07:55:12 AM
The lightning network?s efficiency is a direct result of the centralization of its hubs. This isn?t particularly interesting or even novel. It?s just network topology in action. I?m confused why this is contentious? This centralization obviates the point of Bitcoin?s decentralized design because it adds risk for censorship, invasion-of-privacy, etc.

Sure. Again, centralization is the reason LN is as efficient as it is. The more centralized LN is, the more you must trust the operators of the big LN hubs.

My point is, on the LN, bad actors can?and do?absolutely do these things.

I asked you to explain your reasoning for believing that Lightning is a centralizing force with bitcoin and, through three paragraphs, all you literally did is regurgitate the same baseless claim that lightning is centralized without any actual reasoning. Lightning is not centralizing one bit. One analysis of the topology if LN and you'd immediately see this. If you ran your own node, you'd also see this clear as day. Try rebalancing a channel and you'd see your node calculate hundreds of possible routes a payment could take from one channel of yours to another. Don't like one of the routes it could take? Fine, block that node and it will just take a different path. It is a mesh network through and through and to insinuate that it is a hub and spoke topology makes it clear that you don't have any experience using the technology.


Sure. Let?s define it. In this context, I understand ?trust?. In the context of Bitcoin, users do not need to trust the payment system. Bad actors (miners) cannot change order-of-transactions, block transactions, etc. because it would be too costly to do so (thanks to PoW).

To put it more succinctly, trust is the need to place confidence into someone else that they'll do the right thing and can be relied upon. As I said, with lightning, you are always in complete control of your bitcoin keys at all times. Raw lightning transactions are quite literally raw bitcoin transactions. If you're an active participant of the lightning network, you do not need to place any trust into other lightning node operators at all. That's completely contrary to your earlier claim that you need to trust other node operators. Onion routing provides privacy similar to the Tor network. Even if I had a direct channel with a peer and I make a LN payment directly to that peer, they don't know if the payment truly came from my node or if it was routing from other peers on the network. Sure, there might be some form of Sybil type attack similar to like what can take place on the Tor network, but doing so would take a great deal of capital unlike the negligible costs associated with Tor. So again, there is no trust that you must place into the network to route transactions on it. No one has the keys to your funds at any time and no one can force you to route payments through them. There are thousands of possible routes across the network with no clear centralized hubs.

Earlier you claimed I was just spouting some B.S. I read in a magazine and I took offense to that. But when you quite literally spout off a common talking point but don't actually back it up with either real-world facts or at the very least some simple reasoning beyond that talking point, it really makes me wonder who the one is that is just regurgitating talking points they heard once or twice.


You gave numbers. But it?s not clear the full picture. And again, I understand the mechanisms at play well enough to know what you?re suggesting is just not realistic. Again, I don?t need to know the details of a semi truck?s route to know that a Prius  will always do it by burning less gas. I add more detail on this below?

Yes, I gave you real-world numbers and they are not anomalous whatsoever. What do you continue to insinuate that they are not realistic? Especially considering you've never used the technology before? You say you don't need to know the details of it all to understand it, but quite simply if you knew the details of it all you'd understand why it is realistic. Simply put, by allowing the consolidation of transactions into a single on-chain channel fund, you can now spread the costs of the on-chain fee across hundreds of transactions. So if the channel open on-chain transaction cost you $1 and you have 100 lightning transactions take place over that channel, then that $1 fee cost can be spread across all those off-chain transactions. It is a simple efficiency to understand and I am not sure why you contend my numbers. Would you like me to offer you up some screenshots of the data from my lightning node? Not sure what more you'd like as proof. I suppose simply because it runs counter to your narrative, it just must be false!! Instead you continue to offer up some strange analogy between a semi-truck and a Prius.


Ohhh my. Who do you think is mining Bitcoins? The poor? Or the already-ultra-wealthy, who can afford millions of dollars of mining equipment, facilities, electric bills, etc? What about Proof of Stake? That is even more transparently a scheme where the already-wealthy are granted the most votes.

You don't need millions of dollars in mining equipment to mine bitcoin. I sold my bitcoin miner for $200 on ebay. You can find cheap miners all over the place. The big mining operations all use the same bitcoin miners in their operations at scale. It isn't like the big operators are using different types of miners than small operations. If you can mine with 1000 big coin miners, you can mine with one of those same machines given the same electricity costs. And yes, there are instances of people in these nations with unstable currencies opting to mine bitcoin.

I agree proof-of-stake is really just more of the same (people with power/money with the control). As I said, I debate the merits of bitcoin and so let's just stick with that.

Democracy is 1 person 1 vote. Bitcoin couldn?t be further from that ideal.

The US is not one person one vote, does that make it not a democracy?

This argument just pains me. It?s incredibly dismissive of the colossal waste in the system. ?Everybody exhales CO2, and my tire fire factory is no different!! LOL And one day, it may be more efficient, just you wait!? It?s a bad argument, man. Bitcoin is thousands of times less efficient than existing payment systems. Are its use-cases (which I maintain are already also detrimental) worth that? I think that?s a tough argument to make.

But the energy-use is only part of the equation. The other is: e-waste from discarded/broken ASIC mining equipment, video cards, servers, etc. A single Bitcoin transaction is responsible for nearly 300 grams of e-waste?that?s about 2 iPhones. Bitcoin alone produces more ewaste than the entire country of Germany, a nation of 83 Million.

The climate scientist Michael Mann said that no one is without "carbon sin". It is an acknowledgement that everyone contributes to climate change through our actions in some fashion. Who has a lower carbon footprint, the carnivore that doesn't ever fly? The vegan who drives a pickup truck? The couple with no kids, but travels the world? The push from the fossil fuel industry to put the burden onto individual action is a deliberate effort to shift the narrative and blame onto others and away from them. At the end of the day fossil fuels are to blame for climate change and we must shift away from using fossil fuels as a means of energy production. I often see this immense outrage over bitcoin's energy use from people who eat meat or drive big trucks and it is really just a bunch of virtue signaling. It lacks the calmed reasoning that realizes that bitcoin's emissions is the tiniest fraction of a percent of our world's carbon emissions and energy production. Yes, bitcoin does use a lot of energy, but so do a lot of things we use. Cloths dryers in the US alone use as much energy as bitcoin. Phantom energy loss from power adapters use as much energy loss as bitcoin does. You don't hear any outrage about the energy use of those things though. At the end of the day we just need to make sure that the energy we're using is for things humans find useful. So ultimately that is where the disagreement and outrage comes from when it comes to bitcoin. The people outraged over bitcoin's emissions and not the meat on their plate is simply because they're outraged over bitcoin and not the meat they enjoy. All the while it distracts from the real issue which is fossil fuels.

Yes, e-waste is a concern as it is with all computing industries and bitcoin's computing life-cycle with ASIC has been increasing over the last few years. There is also reason to believe Moore's law is slowing down, so I don't think the e-waste issue is any different for bitcoin than it is for other computing industries. Your analysis of "transaction per e-waste" is also a tired talking point that completely misunderstands how bitcoin works. Equating things on a per-transaction basis is a misunderstanding of how it functions as on-chain transactions are settlements and bitcoin doesn't scale on a strictly transactional basis. In otherwords, there is no correlation to the amount of e-waste or energy consumed to how many transactions are processed. A single bitcoin transaction can also equal hundreds/thousands/millions of individual point of sale transactions.

Last year, a single coal mine in China flooded, and Bitcoin?s hash rate dropped to the tune of 35%. Just 0.1% of miners control half of all mining capacity (source: https://fortune.com/2021/10/26/bitcoin-mining-capacity-ownership-concentration-top-investors-nber-study/ ) Additionally, there are very few manufacturers of ASICS, which is yet another source of centralization.

Do you have a source showing mining getting more decentralized in the last several years?

Bitcoin's hashrate didn't fall that much because of a single coal mine. It fell that much because China shutdown and put a ban on coal mining across the country. If anything, it shows the resiliency of the bitcoin network to not even be phased by a massive drop in mining power.

Missed in your Forbes article with NBER research was the fact that those 0.01% of miners consists of 50-60 mining entities that make up that percentage. This is just the make up you get when you have thousands of people and corporations around the world that are mining bitcoin. You have a long tail of thousands of individual miners mining bitcoin with corporations that have large amounts of hash rate making up the top percentages. But those top percentages on their own have been continuing to get more decentralized on their own as proof to the fact that there are over 50-60 mining corporations in that small top percentage alone. In 2015 there were only about 20 mining companies that made up an even much larger percentage of the hashrate pie. Many of these new bitcoin mining companies are new within just the last few years with companies like Stronghold Digital Mining, Riot Blockchain, Bitdeer, Foundry Digital, etc and have moved a lot of their operations to the US.

That's for mining entities, but even the mining pools have become more decentralized compared to what it looked like in say 2015. In 2015 there were just 3 mining pools with over 50% of the hashrate with several entities controlling over 20% of the hashrate alone. Today there isn't a single mining pool that controls over 20% of the hashrate and there are 6 mining pools that have between 10-20% of the hashrate. One look at the historical breakdown of the mining pool trends over time and you can clearly see it becomes more and more distributed as time goes on. So I am afraid your claim that mining has become more centralized as time went on fails to even the slightest scrutiny.

https://btc.com/stats/pool?percent_mode=latest#pool-history (https://btc.com/stats/pool?percent_mode=latest#pool-history)



Sorry, I?m not trying to disparage you. Maybe it?s a coincidence that you?re talking about the same few countries every other Bitcoin enthusiast I?ve listened to brings up. Were you interested in the problems in Venezuela and Lebanon before you got interested in cryptocurrency?

"I'm sorry for disparaging you...but before I go, let me disparage you one last time by calling into question the source of your empathy."

Oh, please. Save it. Trying to insinuate that I have no empathy for others and the only reason I care about any one else's plight is because of bitcoin is insulting. As I said, the main reason I am vegan is because I have empathy for others. Even if it being vegan didn't save animals, I would still be vegan because of the horrible work conditions that humans are forced into in the meat industry. People in hardships in other countries have always empathized with and I've always made it a point to help out where I can. Whether it is refugees from geopolitical turmoil, or villages like those in Ecuador destroy by Chevron's carelessness, Uyghur muslims being concentrated and killed in China...to say I don't care about any of those things going on and the only reason I might care for others is because of my interest in bitcoin is extremely disrepectful and frankly I am done debating you because all your arguments are either complete logical fallacies, ill-researched talking points, or insulting name calls.

Cheers.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on April 06, 2022, 09:21:05 AM
The climate scientist Michael Mann said that no one is without "carbon sin". It is an acknowledgement that everyone contributes to climate change through our actions in some fashion. Who has a lower carbon footprint, the carnivore that doesn't ever fly? The vegan who drives a pickup truck? The couple with no kids, but travels the world? The push from the fossil fuel industry to put the burden onto individual action is a deliberate effort to shift the narrative and blame onto others and away from them. At the end of the day fossil fuels are to blame for climate change and we must shift away from using fossil fuels as a means of energy production. I often see this immense outrage over bitcoin's energy use from people who eat meat or drive big trucks and it is really just a bunch of virtue signaling. It lacks the calmed reasoning that realizes that bitcoin's emissions is the tiniest fraction of a percent of our world's carbon emissions and energy production. Yes, bitcoin does use a lot of energy, but so do a lot of things we use. Cloths dryers in the US alone use as much energy as bitcoin. Phantom energy loss from power adapters use as much energy loss as bitcoin does. You don't hear any outrage about the energy use of those things though. At the end of the day we just need to make sure that the energy we're using is for things humans find useful. So ultimately that is where the disagreement and outrage comes from when it comes to bitcoin. The people outraged over bitcoin's emissions and not the meat on their plate is simply because they're outraged over bitcoin and not the meat they enjoy. All the while it distracts from the real issue which is fossil fuels.

This paragraph puts a stake in it for me, the kind of thorough philosophy salad that seems to follow crypto around that on a geological scale analysis just doesn't pass muster. I get the sentiment, and its easy to straw man the virtue signalers, but from a bird's eye view it just comes across as fingerprinting and whattaboutism. I could talk all day about why it rubs me the wrong way.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Scandium on April 06, 2022, 09:34:21 AM
...

As usual this devolve into technical minutia about crypto mechanics, which I find pretty dull. Some invest because "line goes up", ok sure. It's a gamble, it might work. It's fair enough. But it doesn't require caring one way or another about crypto being a fad, bubble, ponzi etc. Exit at the right point and it won't matter.

Do you think there is a purpose or utility to crypto? What will it do in the future, that solves an actual problem? So far I've been told a store of wealth for people fleeing war and despots. Ok, sure. But that's a rather miniscule market. Hundreds of millions of people, especially in the west, will never need that. Sending money across borders, between functioning nations, is easy and cheap these days, I do it all the time. No need to do a crypto middle-man, with the associated insecurities and volatility.

So if I don't want to gamble, I don't live in Vuvuzela, I don't do drugs. Why should I have crypto?

For everyday transactions crypto is awful. Slow, insecure, no consumer protections, zero privacy. Not to mention expensive! From what I can tell BTC is only $2 per transaction, ETH is $15, down from $100! So what should we use this for?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on April 06, 2022, 09:57:20 AM
Nice to see some good discussion on this again.

It would be better if we could get away from the underlying assumption that every pro-crypto person is either a greedy scammer or a gullible victim of said scammers, and is motivated purely by selfish interest and fuck everyone/everything else.

It's a fairly safe bet that most on this forum generally share similar Mustachian values - and I think we'd all agree that Mustachians are, by and large, good people with good intentions. A few of us have an interest in crypto too . . .

I heartily agree.   While there is plenty of fraud in the crypto space, Bitcoin is not a fraud or a scam.  When you buy a Bitcoin you get exactly what you expect:  One Bitcoin.   That meets no definition of a fraud or a scam. 

Similarly, it is not useful to assume criminal intent.   The people here who have stated their motives for owning Bitcoin usually point to libertarian principles.  It is entirely fair to take those statements at face value. 

So it comes down to the use case, at least for me.   



Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on April 06, 2022, 10:08:46 AM
Nice to see some good discussion on this again.

It would be better if we could get away from the underlying assumption that every pro-crypto person is either a greedy scammer or a gullible victim of said scammers, and is motivated purely by selfish interest and fuck everyone/everything else.

It's a fairly safe bet that most on this forum generally share similar Mustachian values - and I think we'd all agree that Mustachians are, by and large, good people with good intentions. A few of us have an interest in crypto too . . .

I heartily agree.   While there is plenty of fraud in the crypto space, Bitcoin is not a fraud or a scam.  When you buy a Bitcoin you get exactly what you expect:  One Bitcoin.   That meets no definition of a fraud or a scam.

Similarly, it is not useful to assume criminal intent.   The people here who have stated their motives for owning Bitcoin usually point to libertarian principles.  It is entirely fair to take those statements at face value. 

So it comes down to the use case, at least for me.


I'm not sure the above logic makes sense.  For example:

https://www.cbc.ca/news/canada/british-columbia/pyramid-scheme-victims-win-6-5m-in-b-c-lawsuit-1.2524843 (https://www.cbc.ca/news/canada/british-columbia/pyramid-scheme-victims-win-6-5m-in-b-c-lawsuit-1.2524843)

More than 2000 people purchased memberships for themselves, at $3,200.  They were promised $5,000 for each similar membership they sold once they sold over 20 memberships.  But this pyramid scheme was considered fraud by our courts . . . even though people got exactly what they signed up and paid for.  They got exactly what they should have expected.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Shane on April 06, 2022, 10:44:55 AM
Can't wait to invest in some Will Smith Inu! #diamondhands

Will Smith's slap became crypto. (https://www.washingtonpost.com/technology/2022/04/06/will-smith-oscars-slap-memecoin/)

Title: Re: What do you think of adding a low% of crypto allocation
Post by: Scandium on April 06, 2022, 11:20:46 AM
Can't wait to invest in some Will Smith Inu! #diamondhands

Really? That's the name they went with? No Wild wild west or MIB pun? Fresh prince? no? Nothing? Sheesh, so lame.
Slapcoin? Smackbucks?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on April 06, 2022, 11:38:17 AM
I heartily agree.   While there is plenty of fraud in the crypto space, Bitcoin is not a fraud or a scam.  When you buy a Bitcoin you get exactly what you expect:  One Bitcoin.   That meets no definition of a fraud or a scam.


I'm not sure the above logic makes sense.  For example:

https://www.cbc.ca/news/canada/british-columbia/pyramid-scheme-victims-win-6-5m-in-b-c-lawsuit-1.2524843 (https://www.cbc.ca/news/canada/british-columbia/pyramid-scheme-victims-win-6-5m-in-b-c-lawsuit-1.2524843)

More than 2000 people purchased memberships for themselves, at $3,200.  They were promised $5,000 for each similar membership they sold once they sold over 20 memberships.  But this pyramid scheme was considered fraud by our courts . . . even though people got exactly what they signed up and paid for.  They got exactly what they should have expected.

They didn't get memberships for one, right?  They also expected they would get paid $5000 for every membership they sold after 20.   How do you pay a $5,000 commission on a $3,200 product?   The answer is the early adopters did get the $5K commissions, paid for by later adopters.    This motivated them to sell lots of memberships until the pyramid collapsed. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 06, 2022, 12:39:49 PM
Can't wait to invest in some Will Smith Inu! #diamondhands
Really? That's the name they went with? No Wild wild west or MIB pun? Fresh prince?
I believe Chris Rock had some "fresh prints".
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on April 06, 2022, 12:39:58 PM
I heartily agree.   While there is plenty of fraud in the crypto space, Bitcoin is not a fraud or a scam.  When you buy a Bitcoin you get exactly what you expect:  One Bitcoin.   That meets no definition of a fraud or a scam.


I'm not sure the above logic makes sense.  For example:

https://www.cbc.ca/news/canada/british-columbia/pyramid-scheme-victims-win-6-5m-in-b-c-lawsuit-1.2524843 (https://www.cbc.ca/news/canada/british-columbia/pyramid-scheme-victims-win-6-5m-in-b-c-lawsuit-1.2524843)

More than 2000 people purchased memberships for themselves, at $3,200.  They were promised $5,000 for each similar membership they sold once they sold over 20 memberships.  But this pyramid scheme was considered fraud by our courts . . . even though people got exactly what they signed up and paid for.  They got exactly what they should have expected.

They didn't get memberships for one, right?  They also expected they would get paid $5000 for every membership they sold after 20.   How do you pay a $5,000 commission on a $3,200 product?   The answer is the early adopters did get the $5K commissions, paid for by later adopters.    This motivated them to sell lots of memberships until the pyramid collapsed.

They did get the memberships (valued at 9000$) that were initially purchased.  They also got the 5000$ commission if they met to contractual obligation (which was to sell 20).

The pyramid scheme didn't collapse . . . it's just that late adopters weren't able to sell 20 memberships.

Everyone got exactly what they were sold though.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on April 06, 2022, 02:43:06 PM
They did get the memberships (valued at 9000$) that were initially purchased.  They also got the 5000$ commission if they met to contractual obligation (which was to sell 20).

The pyramid scheme didn't collapse . . . it's just that late adopters weren't able to sell 20 memberships.

Everyone got exactly what they were sold though.

This is incorrect.   The memberships cost $2300.  Having a membership allowed the to sell the $9000 vacation package.   The founder didn't pay out the commissions because he absconded with the money.  That is 100% guaranteed example of fraud. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: erjkism on April 06, 2022, 05:41:00 PM
"What do you think of adding a low% of crypto allocation"

Why ask this to a forum where 90+% of the people here have been completely wrong and missed the entire crypto wave?

Missed it ? Do you think it's all over ?

i think it has a pump or two left
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on April 06, 2022, 07:08:39 PM
Yes, I gave you real-world numbers and they are not anomalous whatsoever. What do you continue to insinuate that they are not realistic? Especially considering you've never used the technology before? You say you don't need to know the details of it all to understand it, but quite simply if you knew the details of it all you'd understand why it is realistic. Simply put, by allowing the consolidation of transactions into a single on-chain channel fund, you can now spread the costs of the on-chain fee across hundreds of transactions. So if the channel open on-chain transaction cost you $1 and you have 100 lightning transactions take place over that channel, then that $1 fee cost can be spread across all those off-chain transactions. It is a simple efficiency to understand and I am not sure why you contend my numbers. Would you like me to offer you up some screenshots of the data from my lightning node? Not sure what more you'd like as proof. I suppose simply because it runs counter to your narrative, it just must be false!! Instead you continue to offer up some strange analogy between a semi-truck and a Prius.

😂 I know you said you’re done with me, and that’s cool. But I want to address this for anyone else interested. This is a common theme among Bitcoiners—ignoring magnitudes. Bitcoin, because of proof-of-work (which should really be called “proof of waste”), is literally millions of times less efficient than traditional financial systems. Lightning improves this for some rather narrow use-cases, but it’s still a horror-show in most practical use-cases. Therefore, you can absolutely conclude given an apples-to-apples scenario, the traditional system has a massive advantage, and will always be cheaper than the crypto one. You suggesting otherwise tells me with virtually total certainty, your example is not an apples-to-apples comparison.

The US is not one person one vote, does that make it not a democracy?

Lol. Yea, again: the US already has plenty of issues, and is far from a great example of a democracy, you’re right! But Bitcoin is again, many many many orders of magnitude worse in this respect. You have this tendency to reduce things to binary thing where imperfection is the same as terribleness. They’re not the same. Imperfection is preferable to terribleness.

The climate scientist Michael Mann said that no one is without "carbon sin". It is an acknowledgement that everyone contributes to climate change through our actions in some fashion. Who has a lower carbon footprint, the carnivore that doesn't ever fly? The vegan who drives a pickup truck? The couple with no kids, but travels the world? The push from the fossil fuel industry to put the burden onto individual action is a deliberate effort to shift the narrative and blame onto others and away from them. At the end of the day fossil fuels are to blame for climate change and we must shift away from using fossil fuels as a means of energy production. I often see this immense outrage over bitcoin's energy use from people who eat meat or drive big trucks and it is really just a bunch of virtue signaling. It lacks the calmed reasoning that realizes that bitcoin's emissions is the tiniest fraction of a percent of our world's carbon emissions and energy production. Yes, bitcoin does use a lot of energy, but so do a lot of things we use. Cloths dryers in the US alone use as much energy as bitcoin. Phantom energy loss from power adapters use as much energy loss as bitcoin does. You don't hear any outrage about the energy use of those things though. At the end of the day we just need to make sure that the energy we're using is for things humans find useful. So ultimately that is where the disagreement and outrage comes from when it comes to bitcoin. The people outraged over bitcoin's emissions and not the meat on their plate is simply because they're outraged over bitcoin and not the meat they enjoy. All the while it distracts from the real issue which is fossil fuels.

Again… Magnitudes matter. Bitcoin is on the order of 2.5 Million times less efficient than Visa. 2.5 Million. This is a far cry from “the truck-driving vegan” vs “the flightless carnivore” comparison, where one of these may have a 50% difference. We’re talking about a  250,000,000,000% difference. Absurd. Putin-level absurd “both-sides” anti-climate propaganda, this is.

Yes, e-waste is a concern as it is with all computing industries and bitcoin's computing life-cycle with ASIC has been increasing over the last few years. There is also reason to believe Moore's law is slowing down, so I don't think the e-waste issue is any different for bitcoin than it is for other computing industries. Your analysis of "transaction per e-waste" is also a tired talking point that completely misunderstands how bitcoin works. Equating things on a per-transaction basis is a misunderstanding of how it functions as on-chain transactions are settlements and bitcoin doesn't scale on a strictly transactional basis. In otherwords, there is no correlation to the amount of e-waste or energy consumed to how many transactions are processed. A single bitcoin transaction can also equal hundreds/thousands/millions of individual point of sale transactions.

FREEBIRRRRD! More both sides malarkey. I’ll say it again: Bitcoin is—BY DESIGN—millions of times less efficient than traditional systems. There is no equivalency here. You pretending otherwise is just silly. And the “it doesn’t matter how many transactions” retort isn’t as clever as Bitcoin proponents seem to think it is.  It’s a financial system built for handling transactions. That there aren’t very many transactions, and the carbon footprint is still as massive as it is isn’t the great defense you think it is.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DaKini on April 06, 2022, 11:59:51 PM
Official Formula 1 NFT Game Shuts Down, Tokens Are Now Practically Worthless
https://kotaku.com/f1-formula-1-one-delta-time-nft-crypto-cursed-shut-down-1848748953


Reminds me of something, what was it again?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 07, 2022, 03:04:07 AM
"Users earn cryptocurrency tokens by walking or running outdoors, which they can use in the game to trade assets or exchange for other currencies to cash out."

"On 20 January, STEPN announced that it raised $5m in seed round financing from technology investors, including Sequoia Capital, Folius Ventures, Solana Capital and Alameda Research."
https://capital.com/stepn-gmt-price-prediction

I really like the concept of crypto currency you earn by walking and running.  It's a way to encourage healthy behavior by adding a game like score to it.

But notice the first Venture Capital (VC) firm in the list: Sequoia Capital is legendary, but I'll quote just one VC investment: "In 1978, Sequoia became one of the first investors in Apple."  That said, most VC investments fail - so that could be the case with STEPN.  It's still noteworthy they invested.
https://en.wikipedia.org/wiki/Sequoia_Capital
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FLBiker on April 07, 2022, 06:47:57 AM
"Users earn cryptocurrency tokens by walking or running outdoors, which they can use in the game to trade assets or exchange for other currencies to cash out."

"On 20 January, STEPN announced that it raised $5m in seed round financing from technology investors, including Sequoia Capital, Folius Ventures, Solana Capital and Alameda Research."
https://capital.com/stepn-gmt-price-prediction

I really like the concept of crypto currency you earn by walking and running.  It's a way to encourage healthy behavior by adding a game like score to it.

Apologies if this is a dumb question, but why would this work?  I mean, what difference does crypto make on this?  If someone came to me and said "I'm building an app that will pay people a dollar per 10000 steps" my response would be "that sounds like a nice way to incentivize good behavior but how will you make any money?".  Switching dollar to a new crypto coin doesn't make a difference (in my limited understanding) as far as the feasibility of this.  What am I missing?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 07, 2022, 07:33:59 AM
"Users earn cryptocurrency tokens by walking or running outdoors, which they can use in the game to trade assets or exchange for other currencies to cash out."

"On 20 January, STEPN announced that it raised $5m in seed round financing from technology investors, including Sequoia Capital, Folius Ventures, Solana Capital and Alameda Research."
https://capital.com/stepn-gmt-price-prediction

I really like the concept of crypto currency you earn by walking and running.  It's a way to encourage healthy behavior by adding a game like score to it.

Apologies if this is a dumb question, but why would this work?  I mean, what difference does crypto make on this?  If someone came to me and said "I'm building an app that will pay people a dollar per 10000 steps" my response would be "that sounds like a nice way to incentivize good behavior but how will you make any money?".  Switching dollar to a new crypto coin doesn't make a difference (in my limited understanding) as far as the feasibility of this.  What am I missing?
If anything, my liking STEPN was more off topic than your question, which brings this back to earnings and relevance to investors.  Here's the short explanation on their "lite paper" (as opposed to deeper dive in their "whitepaper"):
"We take small taxes from in-app activities, such as NFT trading, Shoe-minting and Shoe-rental."
https://stepn.com/litePaper

It's worth noting that media hype is worth something - it's advertising.  When athletes wear Nike brand clothes, that sells more clothes.  Similarly, it's possible for STEPN to create a marketplace and generate credits without crypto, but they do receive an advertising benefit from using crypto in this novel manner.

That same page goes on to explain their goal, which I suspect captured the imagination of VC investors.  As an aside, I suspect nobody cares about what VC means until they do some VC investment themselves?
"We aim to be the leading Web3 Health + Fitness app"
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on April 07, 2022, 08:03:55 AM
"Users earn cryptocurrency tokens by walking or running outdoors, which they can use in the game to trade assets or exchange for other currencies to cash out."

"On 20 January, STEPN announced that it raised $5m in seed round financing from technology investors, including Sequoia Capital, Folius Ventures, Solana Capital and Alameda Research."
https://capital.com/stepn-gmt-price-prediction

I really like the concept of crypto currency you earn by walking and running.  It's a way to encourage healthy behavior by adding a game like score to it.

Apologies if this is a dumb question, but why would this work?  I mean, what difference does crypto make on this?  If someone came to me and said "I'm building an app that will pay people a dollar per 10000 steps" my response would be "that sounds like a nice way to incentivize good behavior but how will you make any money?".  Switching dollar to a new crypto coin doesn't make a difference (in my limited understanding) as far as the feasibility of this.  What am I missing?

You're looking at it wrong.  Obviously there's no money to be made in paying people to walk.  The goal of NFTs is not to implement something that works and make money by profiting after implementation.  That's a boring traditional business model.  Most of these NFT projects work by generating investments for a while, then declaring bankruptcy and quitting.  Profit is created by failing and walking off with the investment capital.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Scandium on April 07, 2022, 09:47:56 AM
"Users earn cryptocurrency tokens by walking or running outdoors, which they can use in the game to trade assets or exchange for other currencies to cash out."

"On 20 January, STEPN announced that it raised $5m in seed round financing from technology investors, including Sequoia Capital, Folius Ventures, Solana Capital and Alameda Research."
https://capital.com/stepn-gmt-price-prediction

I really like the concept of crypto currency you earn by walking and running.  It's a way to encourage healthy behavior by adding a game like score to it.

Apologies if this is a dumb question, but why would this work?  I mean, what difference does crypto make on this?  If someone came to me and said "I'm building an app that will pay people a dollar per 10000 steps" my response would be "that sounds like a nice way to incentivize good behavior but how will you make any money?".  Switching dollar to a new crypto coin doesn't make a difference (in my limited understanding) as far as the feasibility of this.  What am I missing?

Because they can create their own currency out of thin air, therefore they're not "paying" anyone anything in real money. They can use capital to "exchange" some for USD (perhaps with themselves), pay influencers/friends/bots to pump the value of their crypto, sell of tons of it, make a few million in untraceable/unaccountable transactions. Then bail.
Rinse, repeat.

The fact that you have thought about it for 5 sec means it's not for you. As 'line goes up' explains this works on people who are stupid, low social literacy, or both.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on April 07, 2022, 09:59:22 AM
. . . 
Bitcoin is on the order of 2.5 Million times less efficient than Visa. 2.5 Million.
. . .

I assume this mighty number comes from the openly anti-Bitcoin Digiconomist (http://"https://digiconomist.net/bitcoin-energy-consumption") article.

For an alternative openly pro-Bitcoin interpretation, see What Bloomberg Gets Wrong About Bitcoin's Climate Footprint (http://"https://www.coindesk.com/markets/2021/02/08/what-bloomberg-gets-wrong-about-bitcoins-climate-footprint/").

Lots of agendas here and I suggest that scepticism should be liberally applied to both sides of the argument.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 07, 2022, 11:04:49 AM
"Users earn cryptocurrency tokens by walking or running outdoors, which they can use in the game to trade assets or exchange for other currencies to cash out."

"On 20 January, STEPN announced that it raised $5m in seed round financing from technology investors, including Sequoia Capital, Folius Ventures, Solana Capital and Alameda Research."
https://capital.com/stepn-gmt-price-prediction

I really like the concept of crypto currency you earn by walking and running.  It's a way to encourage healthy behavior by adding a game like score to it.

Apologies if this is a dumb question, but why would this work?  I mean, what difference does crypto make on this?  If someone came to me and said "I'm building an app that will pay people a dollar per 10000 steps" my response would be "that sounds like a nice way to incentivize good behavior but how will you make any money?".  Switching dollar to a new crypto coin doesn't make a difference (in my limited understanding) as far as the feasibility of this.  What am I missing?
Because they can create their own currency out of thin air, therefore they're not "paying" anyone anything in real money. They can use capital to "exchange" some for USD (perhaps with themselves), pay influencers/friends/bots to pump the value of their crypto, sell of tons of it, make a few million in untraceable/unaccountable transactions. Then bail.
Rinse, repeat.

The fact that you have thought about it for 5 sec means it's not for you. As 'line goes up' explains this works on people who are stupid, low social literacy, or both.
Earlier I mentioned $2.5 billion in hacked crypto compared to $1.25 trillion in crypto market cap, hinting at just 0.2% being hacked.  Do you think your view balances the 0.2% an 99.8% views, or just focuses on the 0.2% view?

The team participated in a hackathon competition, where they weren't anonymous.  They created a company and attracted VC heavy weight Sequioa Capital, who has over $100 billion in assets and can afford the best lawyers.  How exactly would they defraud their VC investors and get away with it?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Scandium on April 07, 2022, 11:44:55 AM
"Users earn cryptocurrency tokens by walking or running outdoors, which they can use in the game to trade assets or exchange for other currencies to cash out."

"On 20 January, STEPN announced that it raised $5m in seed round financing from technology investors, including Sequoia Capital, Folius Ventures, Solana Capital and Alameda Research."
https://capital.com/stepn-gmt-price-prediction

I really like the concept of crypto currency you earn by walking and running.  It's a way to encourage healthy behavior by adding a game like score to it.

Apologies if this is a dumb question, but why would this work?  I mean, what difference does crypto make on this?  If someone came to me and said "I'm building an app that will pay people a dollar per 10000 steps" my response would be "that sounds like a nice way to incentivize good behavior but how will you make any money?".  Switching dollar to a new crypto coin doesn't make a difference (in my limited understanding) as far as the feasibility of this.  What am I missing?
Because they can create their own currency out of thin air, therefore they're not "paying" anyone anything in real money. They can use capital to "exchange" some for USD (perhaps with themselves), pay influencers/friends/bots to pump the value of their crypto, sell of tons of it, make a few million in untraceable/unaccountable transactions. Then bail.
Rinse, repeat.

The fact that you have thought about it for 5 sec means it's not for you. As 'line goes up' explains this works on people who are stupid, low social literacy, or both.
Earlier I mentioned $2.5 billion in hacked crypto compared to $1.25 trillion in crypto market cap, hinting at just 0.2% being hacked.  Do you think your view balances the 0.2% an 99.8% views, or just focuses on the 0.2% view?

The team participated in a hackathon competition, where they weren't anonymous.  They created a company and attracted VC heavy weight Sequioa Capital, who has over $100 billion in assets and can afford the best lawyers.  How exactly would they defraud their VC investors and get away with it?

uuuh what? I have no idea what the first part means. I'm not balancing or focusing or hacking anything...

There's no oversight or consumer protection in crypto, so it's not strictly 'fraud'. Which of course is why they choose to use it for this scheme!
And they will of course not "defraud" the VCs. Just their marks. Sorry; "customers", or "users"? The VCs will get their money and profit first.

OK, a charitable interpretation is that it's just marketing. Saying crypto these days get attention and money thrown at you. This app of course has no need for crypto, NFT and all that nonsense, but they do it to get funded. It will probably suck, like all other token-bullshit, and shut down pretty quickly. (with a completely borked internal economy with skewed incentives overrun by scammers and middle-men). So yes I'll allow for the possibility the founders are just marketing-savvy and idealistic with a naïve and idiotic idea.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 07, 2022, 04:35:48 PM
Scandium - Your view of STEPN seems to be based on very deep distrust of crypto.  You can probably cite news stories of scams or frauds - but when I compared all money from crypto hacks to all money in crypto, there was about 500x more money in BTC and ETH than in all the hacks of crypto, combined... ever.  So my starting point would be not the number of news stories about crypto, but the overall money going to fraud versus money currently in crypto.  I think, like hacks, it's a very tiny percentage by comparison.

(link from ChpBstd's earlier post, showing $2.4 billion in total hacks of crypto)
https://cryptosec.info/exchange-hacks/

---
My past few posts have links backing up what I'm saying.  I see LateStarter posting a couple links - even more links per sentence than me.  But when you look at posts calling any new crypto coin a fraud or scam... no links.  To me, that suggests some people are sharing their emotional views of crypto, while others are sharing information found outside the forum.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on April 07, 2022, 04:59:16 PM
9.5 years................

Link
https://www.cnbc.com/2022/04/07/thiel-calls-buffett-sociopathic-grandpa-from-omaha-about-bitcoin.html
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on April 07, 2022, 05:06:02 PM
Good people

https://www.opensecrets.org/news/2022/02/peter-thiel-tied-dark-money-group-helping-bankroll-super-pac-spending-on-2022-election/
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on April 07, 2022, 05:08:14 PM
#ibuycryptotohelpdestroydemocracy
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on April 07, 2022, 05:11:01 PM
L
https://www.google.com/amp/s/www.cnbc.com/amp/2019/02/25/warren-buffett-and-bill-gates-the-rich-should-pay-higher-taxes.html
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on April 07, 2022, 05:14:37 PM
https://www.bloomberg.com/news/articles/2021-10-26/dalio-fink-say-they-d-pay-more-tax-if-funds-were-spent-well
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on April 07, 2022, 05:15:49 PM
Mooooooooorrrrreeeee linksssss pleeeasssse
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on April 07, 2022, 05:16:39 PM
https://youtu.be/UN_Gkvat5lM
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on April 07, 2022, 05:22:34 PM
Where you are.

https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

Easy.

What you're suggesting

https://www.visitlasvegas.com/

Where you'll end up.

https://www.businessinsider.com/dutch-farmers-protecting-tulip-fields-from-instagram-users-2019-4
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on April 07, 2022, 05:23:34 PM

(link from ChpBstd's earlier post, showing $2.4 billion in total hacks of crypto)
https://cryptosec.info/exchange-hacks/

Key caveats:
1) That’s only the sum (per that particular site) of exchange hacks where the amount was publicized.
2) The value of a heist was at the time it occurred. E.g. $600M was a larger percentage of bitcoins back in 2014 than if the same amount was lost today.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 07, 2022, 05:36:44 PM
Mooooooooorrrrreeeee linksssss pleeeasssse
The forum rules state "no spam", so I've reported you for spamming.

Quote
5. No spam.
https://forum.mrmoneymustache.com/forum-information-faqs/forum-rules/
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on April 07, 2022, 05:43:47 PM
Good luck with that report.

I'll tag some mods bc of how ridiculous the report is

@FrugalToque
@arebelspy

Almost as ridiculous as the thread. If that's the direction of the forum I'll be glad to be banned again.

MOD NOTE: Yes, eight posts in a row (starting here (https://forum.mrmoneymustache.com/investor-alley/what-do-you-think-of-adding-a-low-of-crypto-allocation/msg3000581/#msg3000581)) is spam. You could easily combine that all into one coherent post. Chill out.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on April 07, 2022, 05:45:29 PM
I thought this was a satire thread like top is in.

My apologies.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on April 07, 2022, 05:49:54 PM
Sorry forgot to provide a link to my beliefs.
https://birdsarentreal.com/
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Scandium on April 07, 2022, 07:30:13 PM
Scandium - Your view of STEPN seems to be based on very deep distrust of crypto.  You can probably cite news stories of scams or frauds - but when I compared all money from crypto hacks to all money in crypto, there was about 500x more money in BTC and ETH than in all the hacks of crypto, combined... ever.  So my starting point would be not the number of news stories about crypto, but the overall money going to fraud versus money currently in crypto.  I think, like hacks, it's a very tiny percentage by comparison.

(link from ChpBstd's earlier post, showing $2.4 billion in total hacks of crypto)
https://cryptosec.info/exchange-hacks/

---
My past few posts have links backing up what I'm saying.  I see LateStarter posting a couple links - even more links per sentence than me.  But when you look at posts calling any new crypto coin a fraud or scam... no links.  To me, that suggests some people are sharing their emotional views of crypto, while others are sharing information found outside the forum.
I'm confused, I said nothing about hacks? And there is no hack involved here?

My view is simply based on the fact of crypto being pointless, especially for a fucking exercise app! So yes, it's either marketing, or a ponzi scheme. There is no other reason to "NFT your step goal bro!". Occams razor, qed.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on April 08, 2022, 02:46:24 AM
Making massive investment returns is 'pointless'?  Isn't this an investment forum?  LMAO you people really do take the cake.  Peace out!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Scandium on April 08, 2022, 06:37:52 AM
Making massive investment returns is 'pointless'?  Isn't this an investment forum?  LMAO you people really do take the cake.  Peace out!
For an exercise app? Yes. The concept of crypto is pointless.
Some people made gains with Madoff for a decade, that doesn't mean it wasn't dumb in the end. Get out at the right time, sure it can "work" for you
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FLBiker on April 08, 2022, 07:03:09 AM
Making massive investment returns is 'pointless'?  Isn't this an investment forum?  LMAO you people really do take the cake.  Peace out!

For me, the value of this forum isn't that it's an investment forum.  There are tons of investment forums out there, with all sorts of strategies, some of which have undoubtedly made way more money than index funds over the last decade or two.  And there are lots of forums (and probably even more that no longer exist) promoting strategies that have lagged index funds.

The value of this forum to me, though, is the reproducibility of the results generally espoused here.  I am 45 years old.  After spending my 20's teaching English in Asia, I started working full-time at 30.  I never earned dramatically high salaries (started out at $40K, am now at $80K).  My wife has typically earned about half of what I have earned, and she took two years off when our daughter was born.  Today, we have over $1.3 million dollars in investments, and with annual expenses of ~$55K, we are effectively financially independent.  Our investment strategy has been extremely simple -- 90/10 stocks/bonds, with my stocks global market cap weighted.  We saved somewhere around 30-50% of our income each year, largely in tax advantaged accounts, while living a conventional middle class lifestyle.

This is certainly not the FASTEST way to reach financial independence, but I do believe it is the fastest way to RELIABLY reach financial independence.  It doesn't require luck, or skill, or specialized knowledge.  For me, that is the real power of the ideas in this community.

I don't care one way or the other about crypto (or gold, or options, or whatever).  If there is a reproducilble strategy of investing in them that will work reliably for decade after decade, I'd be all for it.  I have yet to encounter that strategy, though.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on April 08, 2022, 07:24:14 AM
Making massive investment returns is 'pointless'?  Isn't this an investment forum?  LMAO you people really do take the cake.  Peace out!

For me, the value of this forum isn't that it's an investment forum.  There are tons of investment forums out there, with all sorts of strategies, some of which have undoubtedly made way more money than index funds over the last decade or two.  And there are lots of forums (and probably even more that no longer exist) promoting strategies that have lagged index funds.

The value of this forum to me, though, is the reproducibility of the results generally espoused here.  I am 45 years old.  After spending my 20's teaching English in Asia, I started working full-time at 30.  I never earned dramatically high salaries (started out at $40K, am now at $80K).  My wife has typically earned about half of what I have earned, and she took two years off when our daughter was born.  Today, we have over $1.3 million dollars in investments, and with annual expenses of ~$55K, we are effectively financially independent.  Our investment strategy has been extremely simple -- 90/10 stocks/bonds, with my stocks global market cap weighted.  We saved somewhere around 30-50% of our income each year, largely in tax advantaged accounts, while living a conventional middle class lifestyle.

This is certainly not the FASTEST way to reach financial independence, but I do believe it is the fastest way to RELIABLY reach financial independence.  It doesn't require luck, or skill, or specialized knowledge.  For me, that is the real power of the ideas in this community.

I don't care one way or the other about crypto (or gold, or options, or whatever).  If there is a reproducilble strategy of investing in them that will work reliably for decade after decade, I'd be all for it.  I have yet to encounter that strategy, though.

Good post.  I totally understand your mindset as that's where I started out with my investing as well.  I just didn't see it out for anywhere near as long or as successfully as you have.  What I don't understand in some of these other posters is the absolute hostility and anger they have about a $2T market cap basket of assets.  In my view, to say crypto is 'pointless' or a scam has about as much validity as saying Apple shares are the same.  There is nothing to be proud about in completely missing out on a 2T run up in market cap.  If it's not your cup of tea, no worries, but all these 'I hope it fails and all these con-artists get rekt I just hope it doesn't effect my ETFs too much' posts around here are just pathetic.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on April 08, 2022, 07:28:01 AM
Making massive investment returns is 'pointless'?  Isn't this an investment forum?  LMAO you people really do take the cake.  Peace out!
For an exercise app? Yes. The concept of crypto is pointless.
Some people made gains with Madoff for a decade, that doesn't mean it wasn't dumb in the end. Get out at the right time, sure it can "work" for you
That's the story for every investment bubble. Had one sold pets.com at just the right time in 1999, one would have gotten rich. Enron doubled from 1999 to 2000. And as mentioned, Madoff ran his scam for decades at a time, but regardless of timeframe all these things end in the old turkey chart.
http://stephenkinsella.net/WordPress/wp-content/uploads/2008/08/turkey.jpg (http://stephenkinsella.net/WordPress/wp-content/uploads/2008/08/turkey.jpg)

 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 08, 2022, 08:32:18 AM
That's the story for every investment bubble. Had one sold pets.com at just the right time in 1999, one would have gotten rich. Enron doubled from 1999 to 2000. And as mentioned, Madoff ran his scam for decades at a time, but regardless of timeframe all these things end in the old turkey chart.
http://stephenkinsella.net/WordPress/wp-content/uploads/2008/08/turkey.jpg (http://stephenkinsella.net/WordPress/wp-content/uploads/2008/08/turkey.jpg)

There is a reason why fewer and fewer people with credibility make the claim that bitcoin is going to go to zero after making a parabolic bubble price moves. The reason being is that it has made many parabolic price moves in its lifetime and even after each of those bubbles have burst, it hasn't gone to zero. It is safe to say there has never been another asset that has made numerous parabolic moves through out its life and has gone to zero afterward. None of the examples given that have gone to zero afterward that are often used in comparison with bitcoin (Enron, dot com bust, etc) have had multiple parabolic moves in their lives like bitcoin has. Also, if something has had multiple parabolic moves and survives those bubble bursts, history has shown that it makes it more likely that they'll survive longer term (Apple, Amazon, Tesla, etc).

I think at the very least we can all agree that bitcoin's historical price moves are unlike anything anyone has ever seen from a price perspective. Period. To make claims that bitcoin will not be around following any exuberant parabolic move it makes is just ignoring the reality of the situation outside of the price chart they're so fixated on.

Meanwhile, the bitcoin company Strike just partnered with NCR and Blackhawk, two of the largest point of sale payment companies in the country to bring bitcoin lightning network payments to in-person point of sale merchants (McDonald's, Walmart, CVS, Walgreens, Whole Foods, Kroger, Home Depot, Lowe's, etc). People that really keep telling themselves that bitcoin is just going to go to $0 are delusionally ignoring an unrelenting growth that is happening at the industry and user level and taking place outside of the uncorrelated price movements that are just based on speculative trader moves. I hate to break it to you, but bitcoin isn't going to $0.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 08, 2022, 08:57:04 AM
Scandium - Your view of STEPN seems to be based on very deep distrust of crypto.  You can probably cite news stories of scams or frauds - but when I compared all money from crypto hacks to all money in crypto, there was about 500x more money in BTC and ETH than in all the hacks of crypto, combined... ever.  So my starting point would be not the number of news stories about crypto, but the overall money going to fraud versus money currently in crypto.  I think, like hacks, it's a very tiny percentage by comparison.

(link from ChpBstd's earlier post, showing $2.4 billion in total hacks of crypto)
https://cryptosec.info/exchange-hacks/

---
My past few posts have links backing up what I'm saying.  I see LateStarter posting a couple links - even more links per sentence than me.  But when you look at posts calling any new crypto coin a fraud or scam... no links.  To me, that suggests some people are sharing their emotional views of crypto, while others are sharing information found outside the forum.
I'm confused, I said nothing about hacks? And there is no hack involved here?

My view is simply based on the fact of crypto being pointless, especially for a fucking exercise app! So yes, it's either marketing, or a ponzi scheme. There is no other reason to "NFT your step goal bro!". Occams razor, qed.
You seem to stop reading my posts before I make the main point?

Scandium - Your view of STEPN ... So my starting point would be not the number of news stories about crypto, but the overall money going to fraud versus money currently in crypto.  I think, like hacks, it's a very tiny percentage by comparison.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: Scandium on April 08, 2022, 09:03:29 AM
Good post.  I totally understand your mindset as that's where I started out with my investing as well.  I just didn't see it out for anywhere near as long or as successfully as you have.  What I don't understand in some of these other posters is the absolute hostility and anger they have about a $2T market cap basket of assets.  In my view, to say crypto is 'pointless' or a scam has about as much validity as saying Apple shares are the same.  There is nothing to be proud about in completely missing out on a 2T run up in market cap.  If it's not your cup of tea, no worries, but all these 'I hope it fails and all these con-artists get rekt I just hope it doesn't effect my ETFs too much' posts around here are just pathetic.

I haven't read every post, but I don't see much of this "hostility" or anger towards crypto? People say, and debate, that it's a ponizi scheme, scam, pointless waste etc. That doesn't mean one is angry.. You  seem to take any negativity towards crypto very personally, and reflectively; project that we are emotionally invested in "bringing it down". I for one am not. It's stupid, pointless, and i like to laugh out all the nonsense crypto-broh BS out there.

You also seem to miss the point by constantly bringing up "market cap". Nobody is saying people aren't currently paying lots of money for BTC ETH etc. Nobody is disputing that. By "pointless" I mean it solve no current large scale problem (except the "fleeing dictatorship" edge-case), has no utility as a product, and current iterations have no plausible way to do so in the future. It's value is wholly irrational and (usually manufactured) hype.
The apple stock comparison does not hold up. Some people pay $20k for a handbag made by slave-workers for a few bucks. I think that's pointless and (almost) without value as well, probably a more apt comparison.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on April 08, 2022, 09:07:51 AM
If I create a private company with one employee (me) and no profits or business model at all, but issue one trillion shares . . . then sell a single share (to my mom) for one cent . . . I'm now the owner of a company with a market cap of A BILLION DOLLARS!

Market caps are really fun and easy to use if you want to manipulate/inflate the value of something.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 08, 2022, 09:37:59 AM
If I create a private company with one employee (me) and no profits or business model at all, but issue one trillion shares . . . then sell a single share (to my mom) for one cent . . . I'm now the owner of a company with a market cap of A BILLION DOLLARS!

Market caps are really fun and easy to use if you want to manipulate/inflate the value of something.

Yes, market cap is a pretty meaningless metric for determining how much money is truly supported by a market. Liquidity/market depth is a much better indicator. If an asset has a market cap of $20 billion but only a few million in liquidity or market depth, then the price would crash hard if anyone attempted to get any real value out of the market. That means the value you think you had in that asset evaporates instantly. This is true of all markets. It is why it is pointless to measure a billionaire's usable net worth by the stock holdings they have in a company since they'd never actually be able to cash out all that value without also destroying the value of the company's stock. People thinking that a billionaire with $200B in stock holdings would be able to cash out even a fraction of that don't understand this. What they would need to do is find an OTC buyer that would be willing to by their shares at the market rate so as not to impact the market liquidity.

All these alt-coins that have "billions" in market cap only have a few million in actual liquidity. Anyone that has any substantial money saved up in these alt-coins probably should think twice about how much they actually have saved in them. The other dangerous game with many of these alt-coins is that many of them are pre-mined or corporate controlled which means that these large stake holders can fake a lot of liquidity in the market which makes the market seem like it is larger than it really is.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 08, 2022, 09:44:37 AM
If I create a private company with one employee (me) and no profits or business model at all, but issue one trillion shares . . . then sell a single share (to my mom) for one cent . . . I'm now the owner of a company with a market cap of A BILLION DOLLARS!

Market caps are really fun and easy to use if you want to manipulate/inflate the value of something.
I think we'd agree that's fraud, with buying and selling within your family not really constituting a "market".  So it's not really "market cap" without a market.

Meanwhile, CME runs a Bitcoin futures market.  You can buy & sell on that market, get tax forms, etc.
https://www.cmegroup.com/media-room/press-releases/2017/10/31/cme_group_announceslaunchofbitcoinfutures.html

Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on April 08, 2022, 10:14:19 AM
If I create a private company with one employee (me) and no profits or business model at all, but issue one trillion shares . . . then sell a single share (to my mom) for one cent . . . I'm now the owner of a company with a market cap of A BILLION DOLLARS!

Market caps are really fun and easy to use if you want to manipulate/inflate the value of something.
I think we'd agree that's fraud, with buying and selling within your family not really constituting a "market".  So it's not really "market cap" without a market.

Meanwhile, CME runs a Bitcoin futures market.  You can buy & sell on that market, get tax forms, etc.
https://www.cmegroup.com/media-room/press-releases/2017/10/31/cme_group_announceslaunchofbitcoinfutures.html

It's not fraud if the shares were publicly traded and mom has no insider information about my business other than me owning it.  100% above board.  Market cap is meaningless when it's so easy to fake a market.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on April 08, 2022, 11:42:28 AM
If I create a private company with one employee (me) and no profits or business model at all, but issue one trillion shares . . . then sell a single share (to my mom) for one cent . . . I'm now the owner of a company with a market cap of A BILLION DOLLARS!

Market caps are really fun and easy to use if you want to manipulate/inflate the value of something.

And if next month you hold a share auction in your front yard and mom is willing to pay a nickel for her second share, your company is now a FIVE BILLION DOLLAR company with 500% growth in just one month!!! That's "parabolic"!

Anyone who disagrees with the value and thinks your company is worthless is ignoring the FACT that the company is actually trading at that valuation in an open marketplace.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 08, 2022, 11:53:36 AM
If I create a private company with one employee (me) and no profits or business model at all, but issue one trillion shares . . . then sell a single share (to my mom) for one cent . . . I'm now the owner of a company with a market cap of A BILLION DOLLARS!

Market caps are really fun and easy to use if you want to manipulate/inflate the value of something.
I think we'd agree that's fraud, with buying and selling within your family not really constituting a "market".  So it's not really "market cap" without a market.

Meanwhile, CME runs a Bitcoin futures market.  You can buy & sell on that market, get tax forms, etc.
https://www.cmegroup.com/media-room/press-releases/2017/10/31/cme_group_announceslaunchofbitcoinfutures.html

It's not fraud if the shares were publicly traded and mom has no insider information about my business other than me owning it.  100% above board.  Market cap is meaningless when it's so easy to fake a market.
While I don't know securities law in detail, this view seems laughable to me.  Nobody believes a market with you as the only seller and your mom as the only buyer is an arm's length transaction.  Take that view to a lawyer and make their day.

I know a bit more about IRAs since I studied them recently - and there it's not allowed.  If your IRA (more likely your self-directed IRA) makes a trade specifically with your mom, the IRS will strip it's status as an IRA and force distribution of the entire amount with taxes and penalties (according to IRS code 4975 if I remembered right).
https://www.law.cornell.edu/uscode/text/26/4975
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on April 08, 2022, 12:04:31 PM
If I create a private company with one employee (me) and no profits or business model at all, but issue one trillion shares . . . then sell a single share (to my mom) for one cent . . . I'm now the owner of a company with a market cap of A BILLION DOLLARS!

Market caps are really fun and easy to use if you want to manipulate/inflate the value of something.

And if next month you hold a share auction in your front yard and mom is willing to pay a nickel for her second share, your company is now a FIVE BILLION DOLLAR company with 500% growth in just one month!!! That's "parabolic"!

Anyone who disagrees with the value and thinks your company is worthless is ignoring the FACT that the company is actually trading at that valuation in an open marketplace.

Isn't the person who disagrees with that valuation able to sell it short?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on April 08, 2022, 12:34:38 PM
If I create a private company with one employee (me) and no profits or business model at all, but issue one trillion shares . . . then sell a single share (to my mom) for one cent . . . I'm now the owner of a company with a market cap of A BILLION DOLLARS!

Market caps are really fun and easy to use if you want to manipulate/inflate the value of something.
I think we'd agree that's fraud, with buying and selling within your family not really constituting a "market".  So it's not really "market cap" without a market.

Meanwhile, CME runs a Bitcoin futures market.  You can buy & sell on that market, get tax forms, etc.
https://www.cmegroup.com/media-room/press-releases/2017/10/31/cme_group_announceslaunchofbitcoinfutures.html

It's not fraud if the shares were publicly traded and mom has no insider information about my business other than me owning it.  100% above board.  Market cap is meaningless when it's so easy to fake a market.
While I don't know securities law in detail, this view seems laughable to me.  Nobody believes a market with you as the only seller and your mom as the only buyer is an arm's length transaction.  Take that view to a lawyer and make their day.

I know a bit more about IRAs since I studied them recently - and there it's not allowed.  If your IRA (more likely your self-directed IRA) makes a trade specifically with your mom, the IRS will strip it's status as an IRA and force distribution of the entire amount with taxes and penalties (according to IRS code 4975 if I remembered right).
https://www.law.cornell.edu/uscode/text/26/4975
Take out the mom part, and make it "a random stranger on the internet". Is the point any different?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 08, 2022, 12:36:45 PM
Isn't the person who disagrees with that valuation able to sell it short?

Not necessarily. In order to short the stock you'd have to borrow shares in order to sell them into the market to be able to capitalize on a price drop later. If the mom is the only one that actually owns any shares in this "market", you'd have no means of being able to perform a short sale. Unless you can get your hands on some borrowed stock to be able to short it, then no. But that's where I'd disagree here with the notion that this is an "open marketplace". Because in an open market you'd likely be able to find opportunities to perform an actual short sale.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on April 08, 2022, 01:31:23 PM
Isn't the person who disagrees with that valuation able to sell it short?

Not necessarily. In order to short the stock you'd have to borrow shares in order to sell them into the market to be able to capitalize on a price drop later. If the mom is the only one that actually owns any shares in this "market", you'd have no means of being able to perform a short sale. Unless you can get your hands on some borrowed stock to be able to short it, then no. But that's where I'd disagree here with the notion that this is an "open marketplace". Because in an open market you'd likely be able to find opportunities to perform an actual short sale.

Short selling has always confused me.  There were more than 141% of Gamestop stocks being shorted at one point.  It feels like that couldn't happen if everyone had to borrow a stock to short it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on April 08, 2022, 01:42:11 PM
Meanwhile, the bitcoin company Strike just partnered with NCR and Blackhawk, two of the largest point of sale payment companies in the country to bring bitcoin lightning network payments to in-person point of sale merchants (McDonald's, Walmart, CVS, Walgreens, Whole Foods, Kroger, Home Depot, Lowe's, etc). People that really keep telling themselves that bitcoin is just going to go to $0 are delusionally ignoring an unrelenting growth that is happening at the industry and user level and taking place outside of the uncorrelated price movements that are just based on speculative trader moves. I hate to break it to you, but bitcoin isn't going to $0.

I don't think it is going to zero either.  People own Bitcoin because they like the idea of owning Bitcoin.  As long as people like the idea owning Bitcoin, Bitcoin will have value.  Simple as that.   People who like Bitcoin really like Bitcoin so I think there is a floor there somewhere.   Similarly, if more people like Bitcoin in the future (or like it more) the price will go up.   Not much mystery here in my view.   

I remain skeptical however that there is a meaningful use case for Bitcoin.   For example, what you just wrote above.     If you have the Strike app you can now spend your Bitcoin at Home Depot.  Great!  Except Home Depot receives payment in US Dollars.  All Strike does is make the conversion for you. 

Remember the raison d'etre for Bitcoin is the ability to make trustless transactions.   When you involve Strike and NCR to make the transaction it is no longer trustless.    And if you use Bitcoin, you don't really know from one day to the next or even one hour to the next how much that new Weber pellet smoker is going to cost.   For example, if you were saving up Bitcoin to buy that smoker, the smoker got 20% more expensive over the last six months.  So if there is no price stability and there is no trustless transaction, what is the advantage of using Bitcoin?   

The use case arguments always come down to some version of Bitcoin is great if you live in Venezuela or Iran.  I'll buy that.  But I don't live there.   Most people don't live there.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on April 08, 2022, 02:21:02 PM
. . . 
Bitcoin is on the order of 2.5 Million times less efficient than Visa. 2.5 Million.
. . .

I assume this mighty number comes from the openly anti-Bitcoin Digiconomist (http://"https://digiconomist.net/bitcoin-energy-consumption") article.

For an alternative openly pro-Bitcoin interpretation, see What Bloomberg Gets Wrong About Bitcoin's Climate Footprint (http://"https://www.coindesk.com/markets/2021/02/08/what-bloomberg-gets-wrong-about-bitcoins-climate-footprint/").

Lots of agendas here and I suggest that scepticism should be liberally applied to both sides of the argument.

No. This "both sides" thing is, itself, pretty gross Crypto propaganda. The author of this article is Nic Carter—a venture capitalist with colossal investments in crypto. In traditional journalism, having investments in companies bars you from writing about those companies. That is a conflict of interest. Nic Carter's rebuttal here is pure nonsense. I really encourage people to read it to see the childish mental gymnastics he does to try to sow doubt about actual good journalism.

Editing to actually add some reasons I think Nic Carter's article is nonsense
- Nic is mad at the per-transaction number. Fine. Look at the entire system's footprint. It uses more electricity than the entire country of Argentina. That the per-transaction number is astronomical simply highlights that this huge carbon footprint is for a pretty minimally-used side-hobby for some very niche libertarian computer-nerds. Let's think about this even more. By fairly generous estimations, there are ~80M people who own Bitcoin (only about 400k daily users, but anyway). There are 45 Million people living in Argentina. In other words, 45 Million people live their entire lives (including mining some bitcoin, flying to far away lands, etc.) on less energy than it takes to support a play-thing very casually used by ~70% more people. That is grotesque. Vulgar. Obscene.
- Nic claims that the comparison is unfair, because Bitcoin is a complete network, and Visa relies on banks and settlement systems—whose systems are (allegedly?) not included in the Visa energy calculations. This is hardly true in practice. Virtually every user of Bitcoin uses a Bitcoin exchange, expects to convert it back-and-forth with USD (or their own local currency), etc.
- Nic tries mightily to suggest that oil backs the USD (and somehow not Bitcoin?) There's no coherent explanation why—just lots of hand-wavy thought-terminating nonsense.
- He argues that Bitcoin transactions are of higher value transfers than Visa ones?!?! Computers do not care whether they're sending the binary sequence for $1 or $1B. It's the same cost. This is irrelevant.
- He argues that in the future things will be better because the block rewards will diminish! He then arbitrarily chooses transaction count and a weird $10 fee to make his point. He made those numbers up based on nothing other than making his argument make sense. (Plus, y'know, let's stick to the topic of *today*. CO2 released today is still relevant, Nic)
- He tries to suggest that much of Bitcoin mining uses renewable energy! This. Is. Not. How. Electrical. Grids. Work. Electricity is fungible. Electricity wasted on mining bitcoin is energy that could have been used for something useful elsewhere. Plus, it's just not true (as many of the sources below will show). Bitcoin mining tends to happen most where it's cheapest. Coal tends to be a very cheap source of energy throughout the world. Nic's argument is the financial equivalent of buying a TV with your income tax refund because, hey, it's just your income tax refund! FREE MONEY

In sum, this is a pretty weak argument. For what it's worth here are several more sources for Bitcoin's environmental impact, if you're interested:

https://ieeexplore.ieee.org/document/9385063
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3779720
https://www.sciencedirect.com/science/article/abs/pii/S2214629619305948?via%3Dihub
https://arxiv.org/pdf/2112.01238.pdf
https://ccaf.io/cbeci/index

Aside: I'm a software engineer. I have a Computer Science degree. I'm intimately familiar with code efficiency and how to at least estimate it (SUP BIG O NOTATION?). And I cannot emphasize this strongly enough: traditional financial systems are written in code attempting to be efficient. Bitcoin is purposefully wasteful. The mechanism by which it is secure against malicious miners, is to have them each deliberately waste computational time, guessing numbers, such that it would be too costly to cheat. Each miner is significantly less efficient than something like a Visa network. But remember: there are millions of bitcoin miners. It isn't very difficult to assess the magnitude in difference between Visa and Bitcoin—though people have done very deep investigative work, and found the ~2.5 Million x to be accurate.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on April 08, 2022, 03:42:41 PM
. . . 
Bitcoin is on the order of 2.5 Million times less efficient than Visa. 2.5 Million.
. . .

I assume this mighty number comes from the openly anti-Bitcoin Digiconomist (https://digiconomist.net/bitcoin-energy-consumption) article.

For an alternative openly pro-Bitcoin interpretation, see What Bloomberg Gets Wrong About Bitcoin's Climate Footprint (https://www.coindesk.com/markets/2021/02/08/what-bloomberg-gets-wrong-about-bitcoins-climate-footprint/).

Lots of agendas here and I suggest that scepticism should be liberally applied to both sides of the argument.

No. This "both sides" thing is, itself, pretty gross Crypto propaganda.

Oh please . . . . "my sources are all good and yours are all bad" ?   WTF ??


The author of this article is Nic Carter—a venture capitalist with colossal investments in crypto. In traditional journalism, having investments in companies bars you from writing about those companies. That is a conflict of interest. Nic Carter's rebuttal here is pure nonsense. I really encourage people to read it to see the childish mental gymnastics he does to try to sow doubt about actual good journalism.

Did you miss the bit where I said he's openly pro-Bitcoin and that there are agendas on both sides ?


Here are several more sources for Bitcoin's environmental impact, if you're interested:

https://ieeexplore.ieee.org/document/9385063
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3779720
https://www.sciencedirect.com/science/article/abs/pii/S2214629619305948?via%3Dihub
https://arxiv.org/pdf/2112.01238.pdf
https://ccaf.io/cbeci/index

I'm familiar with the general issue thanks - I was just querying this 2.5 million thing. However, none of these papers seem to make any mention of a Bitcoin / Visa comparison . . . or 2.5 million . . .


Aside: I'm a software engineer. I have a Computer Science degree. I'm intimately familiar with code efficiency and how to at least estimate it (SUP BIG O NOTATION?). And I cannot emphasize this strongly enough: traditional financial systems are written in code attempting to be efficient. Bitcoin is purposefully wasteful. The mechanism by which it is secure against malicious miners, is to have them each deliberately waste computational time, guessing numbers, such that it would be too costly to cheat. Each miner is significantly less efficient than something like a Visa network. But remember: there are millions of bitcoin miners.

Note that I made no claims about Bitcoin efficiency other than suggesting that this 2.5Mx comparison has a whiff of agenda-biased-bullshit about it.


It isn't very difficult to assess the magnitude in difference between Visa and Bitcoin—though people have done very deep investigative work, and found the ~2.5 Million x to be accurate.

Impartial people ? Links / references ? A brief search only found the Digiconimist (https://digiconomist.net/bitcoin-energy-consumption/) article I linked previously     - (and linked poorly - links now fixed!!)

Digiconimist: About:  ". . . . New technologies are rarely perfect, as illustrated by the gigantic environmental impact that the cryptocurrency Bitcoin had (as a result of its mining mechanism). . . . . "

There's your agenda right there in plain view. No impartial analyst would describe themselves or their mission in such blatantly biased terms.


As I said:
Lots of agendas here and I suggest that scepticism should be liberally applied to both sides of the argument.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on April 08, 2022, 05:51:57 PM
Short selling has always confused me.  There were more than 141% of Gamestop stocks being shorted at one point.  It feels like that couldn't happen if everyone had to borrow a stock to short it.

People were borrowing the shares to sell them to people who in turn loaned them to other people to sell them again.

Imagine a company with 1 share.

Person A owns the share.

Person B  borrows the share from Person A and sells it to person C.

Person D borrows the same share from person C and sells it to person E.

Two different people have each borrowed and sold one share of stock so the short interest is 2 and the number of outstanding shares is 1 so 200% of the company's one shares have been shorted. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 08, 2022, 06:26:58 PM
I remain skeptical however that there is a meaningful use case for Bitcoin.   For example, what you just wrote above.     If you have the Strike app you can now spend your Bitcoin at Home Depot.  Great!  Except Home Depot receives payment in US Dollars.  All Strike does is make the conversion for you.

Remember the raison d'etre for Bitcoin is the ability to make trustless transactions.   When you involve Strike and NCR to make the transaction it is no longer trustless.    And if you use Bitcoin, you don't really know from one day to the next or even one hour to the next how much that new Weber pellet smoker is going to cost.   For example, if you were saving up Bitcoin to buy that smoker, the smoker got 20% more expensive over the last six months.  So if there is no price stability and there is no trustless transaction, what is the advantage of using Bitcoin?   

The use case arguments always come down to some version of Bitcoin is great if you live in Venezuela or Iran.  I'll buy that.  But I don't live there.   Most people don't live there.

Let me clarify something because I believe there is some misunderstanding on what Strike is doing here and it is a big part of what makes what Strike is doing so great. Basically Strike is disrupting incumbents that have had almost no competition for over 50 years by replacing them with an open network (Lightning Network/Bitcoin).

I want to clarify, you do not need the Strike app to interact with these merchants. Strike is partnering with NCR and Blackhawk on the point-of-sale (PoS) side to allow merchants to then interact with the Lightning Network for instant settlement. The merchants can choose to receive bitcoin, USD, or any other currency they choose that Strike may support a conversion to. For the customer, since Strike interfaces with the Lightning Network, they just need to use ANY application they so wish that also works over the Lightning Network. The could use their open source wallet like BlueWallet, Breez, Muun, etc. Or they could use a custodial app that interfaces with Lightning like CashApp, or they could use the Strike app itself. The demo that Jack Mallers showed off demonstrated using 3 different wallets to make 3 different purchases. But replacing VISA, Mastercard, Discovercard, etc with an open network, it opens up the customer the option of using an open network to be able to make purchases without needing to have their funds stored with a third-party custodian (an option we've never had digitally before bitcoin). The merchant, they don't really care about the trust-less aspect since they're a legal organization anyway, so working with a trusted third-party vendor like Strike is par for the course. The merchant benefits here by disrupting the incumbents that essentially had a monopoly on PoS payments for an eternity and reap tons of fees from merchants. Strike charges much less fees (due to the lower overhead of using the Lightning Network) and so is a good option for merchants to want to work with.

Open networks almost always win out over closed networks (Internet vs Intranets). Being able to choose what service or app you want to use while being able to instantly integrate with a network/protocol that will interoperate with the rest of the ecosystem is huge. Think internet browsers and how everyone is free to choose the browser they prefer and we can all still browse the same websites. Someone can build a new browser and use it to browse the web. If someone doesn't like the current crop of wallet apps out there, they are free to build a new one and use it instantly to start buying things at these stores. Open networks are terrific and this is what is being built here and it will disrupt the payments industry.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 08, 2022, 06:29:50 PM
Short selling has always confused me.  There were more than 141% of Gamestop stocks being shorted at one point.  It feels like that couldn't happen if everyone had to borrow a stock to short it.

Yes, it is called naked short selling and IMO it should be illegal.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on April 08, 2022, 07:59:44 PM
Short selling has always confused me.  There were more than 141% of Gamestop stocks being shorted at one point.  It feels like that couldn't happen if everyone had to borrow a stock to short it.

Yes, it is called naked short selling and IMO it should be illegal.

Naked short selling already is (usually) illegal. The problem is that it still happens and often isn't punished despite being illegal.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on April 08, 2022, 09:17:06 PM
. . . 
Bitcoin is on the order of 2.5 Million times less efficient than Visa. 2.5 Million.
. . .

I assume this mighty number comes from the openly anti-Bitcoin Digiconomist (https://digiconomist.net/bitcoin-energy-consumption) article.

For an alternative openly pro-Bitcoin interpretation, see What Bloomberg Gets Wrong About Bitcoin's Climate Footprint (https://www.coindesk.com/markets/2021/02/08/what-bloomberg-gets-wrong-about-bitcoins-climate-footprint/).

Lots of agendas here and I suggest that scepticism should be liberally applied to both sides of the argument.

No. This "both sides" thing is, itself, pretty gross Crypto propaganda.

Oh please . . . . "my sources are all good and yours are all bad" ?   WTF ??


The author of this article is Nic Carter—a venture capitalist with colossal investments in crypto. In traditional journalism, having investments in companies bars you from writing about those companies. That is a conflict of interest. Nic Carter's rebuttal here is pure nonsense. I really encourage people to read it to see the childish mental gymnastics he does to try to sow doubt about actual good journalism.

Did you miss the bit where I said he's openly pro-Bitcoin and that there are agendas on both sides ?


Here are several more sources for Bitcoin's environmental impact, if you're interested:

https://ieeexplore.ieee.org/document/9385063
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3779720
https://www.sciencedirect.com/science/article/abs/pii/S2214629619305948?via%3Dihub
https://arxiv.org/pdf/2112.01238.pdf
https://ccaf.io/cbeci/index

I'm familiar with the general issue thanks - I was just querying this 2.5 million thing. However, none of these papers seem to make any mention of a Bitcoin / Visa comparison . . . or 2.5 million . . .


Aside: I'm a software engineer. I have a Computer Science degree. I'm intimately familiar with code efficiency and how to at least estimate it (SUP BIG O NOTATION?). And I cannot emphasize this strongly enough: traditional financial systems are written in code attempting to be efficient. Bitcoin is purposefully wasteful. The mechanism by which it is secure against malicious miners, is to have them each deliberately waste computational time, guessing numbers, such that it would be too costly to cheat. Each miner is significantly less efficient than something like a Visa network. But remember: there are millions of bitcoin miners.

Note that I made no claims about Bitcoin efficiency other than suggesting that this 2.5Mx comparison has a whiff of agenda-biased-bullshit about it.


It isn't very difficult to assess the magnitude in difference between Visa and Bitcoin—though people have done very deep investigative work, and found the ~2.5 Million x to be accurate.

Impartial people ? Links / references ? A brief search only found the Digiconimist (https://digiconomist.net/bitcoin-energy-consumption/) article I linked previously     - (and linked poorly - links now fixed!!)

Digiconimist: About:  ". . . . New technologies are rarely perfect, as illustrated by the gigantic environmental impact that the cryptocurrency Bitcoin had (as a result of its mining mechanism). . . . . "

There's your agenda right there in plain view. No impartial analyst would describe themselves or their mission in such blatantly biased terms.


As I said:
Lots of agendas here and I suggest that scepticism should be liberally applied to both sides of the argument.

“Both sidesism” and this notion that any position taken is biased is really bizarre. These arguments are not equally valid. Critics of Exxon-Mobil for their climate denialism campaigns are not “openly anti-Exxon” with a bias that needs to be countered. And, FWIW, I responded directly to Nic Carter’s article, explaining the flaws in his arguments. I didn’t just dismiss him as biased, though I thought it was worth mentioning he has a massive financial stake in convincing others to buy crypto.

What makes this argument even sillier, to me, is that it’s fairly easy to just do this calculation. Take Bitcoin’s global energy usage. Let’s use the University of Cambridge’s estimates (source: https://ccaf.io/cbeci/index) of 146.2 TWh annually. Bitcoin has around 100M transactions annually (source: https://ycharts.com/indicators/bitcoin_transactions_per_day). That is 1.462MWh per transaction. Visa transactions are estimated to take 1.48Wh. Ok, so maybe Bitcoin is only 1 Million times worse than Visa by this latest “study” we’ve just done. But you probably should just discount this, because I’ve shown myself to be biased against Bitcoin ;-)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 09, 2022, 06:51:01 AM
If I create a private company with one employee (me) and no profits or business model at all, but issue one trillion shares . . . then sell a single share (to my mom) for one cent . . . I'm now the owner of a company with a market cap of A BILLION DOLLARS!

Market caps are really fun and easy to use if you want to manipulate/inflate the value of something.
I think we'd agree that's fraud, with buying and selling within your family not really constituting a "market".  So it's not really "market cap" without a market.

Meanwhile, CME runs a Bitcoin futures market.  You can buy & sell on that market, get tax forms, etc.
https://www.cmegroup.com/media-room/press-releases/2017/10/31/cme_group_announceslaunchofbitcoinfutures.html

It's not fraud if the shares were publicly traded and mom has no insider information about my business other than me owning it.  100% above board.  Market cap is meaningless when it's so easy to fake a market.
While I don't know securities law in detail, this view seems laughable to me.  Nobody believes a market with you as the only seller and your mom as the only buyer is an arm's length transaction.  Take that view to a lawyer and make their day.

I know a bit more about IRAs since I studied them recently - and there it's not allowed.  If your IRA (more likely your self-directed IRA) makes a trade specifically with your mom, the IRS will strip it's status as an IRA and force distribution of the entire amount with taxes and penalties (according to IRS code 4975 if I remembered right).
https://www.law.cornell.edu/uscode/text/26/4975
Take out the mom part, and make it "a random stranger on the internet". Is the point any different?
My original post discussed crypto market caps, and you and GuitarStv turned it into this tangent about trading with someone's mom being a scam.

As an example of crypto markets, take Coinbase.  $800 million USD worth of BTC and ETH were traded in the past 24 hours.  Willing buyers and willing sellers trading on an established exchange - and a publicly listed one on the US stock market (COIN).
https://coinmarketcap.com/exchanges/coinbase-exchange/

For the largest crypto exchanges using the most traded crypto currencies, would you agree market forces determine the price?

Most crypto exchanges do not list most coins.  Scrolling down to the 8,000th crypto coin by volume shows only $100 of 24h volume, which looks like fraud to me.
WARNING: The following link contains scams.  Do not buy anything you see.
https://coinmarketcap.com/?page=81

But you will also see scams in penny stocks on US markets.  Someone accumulates a significant position, hypes the stock to buyers and draws in their money.  Then the "pump and dump" scammer dumps their shares at a profit.

All of which I would summarize by saying there are scams in crypto exchanges and on public US stock markets, but if you look at larger coins and larger companies, that trade volume is not a scam: it's price discovery that determines the market cap of crypto currencies.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on April 09, 2022, 07:31:35 AM
. . . 
Bitcoin is on the order of 2.5 Million times less efficient than Visa. 2.5 Million.
. . .

I assume this mighty number comes from the openly anti-Bitcoin Digiconomist (https://digiconomist.net/bitcoin-energy-consumption) article.

For an alternative openly pro-Bitcoin interpretation, see What Bloomberg Gets Wrong About Bitcoin's Climate Footprint (https://www.coindesk.com/markets/2021/02/08/what-bloomberg-gets-wrong-about-bitcoins-climate-footprint/).

Lots of agendas here and I suggest that scepticism should be liberally applied to both sides of the argument.

No. This "both sides" thing is, itself, pretty gross Crypto propaganda.

Oh please . . . . "my sources are all good and yours are all bad" ?   WTF ??


The author of this article is Nic Carter—a venture capitalist with colossal investments in crypto. In traditional journalism, having investments in companies bars you from writing about those companies. That is a conflict of interest. Nic Carter's rebuttal here is pure nonsense. I really encourage people to read it to see the childish mental gymnastics he does to try to sow doubt about actual good journalism.

Did you miss the bit where I said he's openly pro-Bitcoin and that there are agendas on both sides ?


Here are several more sources for Bitcoin's environmental impact, if you're interested:

https://ieeexplore.ieee.org/document/9385063
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3779720
https://www.sciencedirect.com/science/article/abs/pii/S2214629619305948?via%3Dihub
https://arxiv.org/pdf/2112.01238.pdf
https://ccaf.io/cbeci/index

I'm familiar with the general issue thanks - I was just querying this 2.5 million thing. However, none of these papers seem to make any mention of a Bitcoin / Visa comparison . . . or 2.5 million . . .


Aside: I'm a software engineer. I have a Computer Science degree. I'm intimately familiar with code efficiency and how to at least estimate it (SUP BIG O NOTATION?). And I cannot emphasize this strongly enough: traditional financial systems are written in code attempting to be efficient. Bitcoin is purposefully wasteful. The mechanism by which it is secure against malicious miners, is to have them each deliberately waste computational time, guessing numbers, such that it would be too costly to cheat. Each miner is significantly less efficient than something like a Visa network. But remember: there are millions of bitcoin miners.

Note that I made no claims about Bitcoin efficiency other than suggesting that this 2.5Mx comparison has a whiff of agenda-biased-bullshit about it.


It isn't very difficult to assess the magnitude in difference between Visa and Bitcoin—though people have done very deep investigative work, and found the ~2.5 Million x to be accurate.

Impartial people ? Links / references ? A brief search only found the Digiconimist (https://digiconomist.net/bitcoin-energy-consumption/) article I linked previously     - (and linked poorly - links now fixed!!)

Digiconimist: About:  ". . . . New technologies are rarely perfect, as illustrated by the gigantic environmental impact that the cryptocurrency Bitcoin had (as a result of its mining mechanism). . . . . "

There's your agenda right there in plain view. No impartial analyst would describe themselves or their mission in such blatantly biased terms.


As I said:
Lots of agendas here and I suggest that scepticism should be liberally applied to both sides of the argument.

“Both sidesism” and this notion that any position taken is biased is really bizarre.

That's not what I said. It's perfectly rational to consider the underlying mission of a source when reviewing their statements.
I handle openly pro-Bitcoin Nic Carter's proclamations on the wonders of Bitcoin with caution. I handle openly anti-Bitcoin Digiconimist's proclamations on the evils of Bitcoin with caution.

That doesn't mean all sources are biased. I assume that Cambridge Uni's declared mission relates to solid impartial science and my guess is that they're fairly trustworthy. I'm more inclined to take their findings at face value.

These arguments are not equally valid. Critics of Exxon-Mobil for their climate denialism campaigns are not “openly anti-Exxon” with a bias that needs to be countered.

"openly" is not the issue.

Are you really suggesting that no "critics of Exxon-Mobil for their climate denialism campaigns" are fundamentally "anti-Exxon" and/or anti fossil fuels in general ? You can't be serious - that's ludicrously naive - and quite obviously wrong.
It doesn't mean their arguments are false, but only a fool would ignore the context / underlying mission of the source.

And, FWIW, I responded directly to Nic Carter’s article, explaining the flaws in his arguments. I didn’t just dismiss him as biased, though I thought it was worth mentioning he has a massive financial stake in convincing others to buy crypto.

Yeah, I thought that was worth mentioning too - I also clearly mentioned that he has an agenda.
Notably, you still haven't acknowledged that your number also seems to come from a source with an agenda. Confirmation bias ?

What makes this argument even sillier, to me, is that it’s fairly easy to just do this calculation. Take Bitcoin’s global energy usage. Let’s use the University of Cambridge’s estimates (source: https://ccaf.io/cbeci/index) of 146.2 TWh annually. Bitcoin has around 100M transactions annually (source: https://ycharts.com/indicators/bitcoin_transactions_per_day). That is 1.462MWh per transaction. Visa transactions are estimated to take 1.48Wh. Ok, so maybe Bitcoin is only 1 Million times worse than Visa by this latest “study” we’ve just done. But you probably should just discount this, because I’ve shown myself to be biased against Bitcoin ;-)

Yeah, pulling loosely related numbers together and comparing them as like-for-like equivalents is trivially easy, as you've demonstrated. It might be fun, but it's not science.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 09, 2022, 08:13:19 AM
For those in 2022 that are still not aware, bitcoin transactions are settlement. While transactions in the early days were often 1 to 1 transactions, to keep bitcoin decentralized, bitcoin transactions in the future will be increasingly settlement based and scaled via layers.

This is similar in the way that our current financial system is structured. Central banks are at the top with federal reserve banks settling and issuing cash to other large financial institutions. Those financial institutions become clearing houses for traditional banks and credit unions. Those banks and credit unions integrate with payment networks like VISA and Mastercard and those payment networks handle the point of sale transactions for retail customers. The transactions that are performed at the point of sale, are not settled immediately. This entire system is a debt based payment system where almost all transactional money is fronted and spent as debt. The payment network transactions are then settled to banks much later (which coincidentally creates a charge back risk for all transactions). Those settlements are then aggregated all the way up to the clearing houses and then the reserve banks where networks like SWIFT and Fedwire come into play. Transactions that reserve banks settle, while fewer, are the aggregate of all transactions further below in the hierarchy.

The same is and will continue to be true of bitcoin. Transactions are settlement and what takes place on the blockchain as blocks are confirmed will be transactions that are the aggregate of other types of transactions happening in other layers that are utilizing the security of bitcoin's blockchain for its security. That security is the energy spent by miners that has absolutely no correlation to the actual number of transactions being performed and secured by the bitcoin network. Aggregation can take place through numerous methods. They could take place completely off-chain where security is enforced through bitcoin's scripting language to allow for revocation and penalization of fraudulent breaches of contract. I've previously showed the efficiency of this with my own personal data that is not anomalous in any way. You can also have transactions simply be a batch of numerous payments to many individuals through the use of batching. Most exchanges today batch their withdrawals to many of their customers at once through a single on-chain transaction to save on fees. Here is a transaction that was a payment to 36 individuals, but was done with just a single on-chain transaction:

https://mempool.space/tx/fd33e1c0a4e253338fa20a1e6f450002eeabdeae574e9a4bfde5fb958ee12965 (https://mempool.space/tx/fd33e1c0a4e253338fa20a1e6f450002eeabdeae574e9a4bfde5fb958ee12965)

You can also have assets issued on the bitcoin network through a new design called Taro. This means you can effectively issue a stablecoin backed by the USD to effectively create new payment rails for the US dollar to allow for instant settlement. The settlement of these assets will take place completely off-chain which means you can have billions/trillions in settlement completely uncorrelated to the number of on-chain transactions (utilizing the lightning network). As someone who has worked in Information Security with financial institutions for over 15 years, I can say that instant settlement is something banks are actively seeking as the world's financial needs are rapidly changing around them. My organization just rolled out an implementation of the real time payments network, but even that pails in comparison in volume, uptime, and efficiency to what an open network like bitcoin can do.

https://www.forbes.com/sites/alysekilleen/2022/04/05/new-bitcoin-technology-enables-instant-global-usd-transactions/ (https://www.forbes.com/sites/alysekilleen/2022/04/05/new-bitcoin-technology-enables-instant-global-usd-transactions/)

If you're still calculating energy usage per transaction in 2022, after the numerous times that the metric has been debunked, you're being disingenuous to those whose ear you have. You could have zero transactions in a block and the energy usage won't change. You could have millions of transactions being settled in a single block and the energy usage won't change. The energy being spent is just energy spent to calculate a hash of some block of data and doing that calculation doesn't change based on the number of transactions. Furthermore, the block reward halving is an opposing force against exponential energy use increases. It will force a transition of the bitcoin network from having energy spent based on a fixed sum of bitcoin as reward to energy spent based on the fees the industry of bitcoin is willing to pay to have settlements secured by the bitcoin network. Therefore, within the decade, the energy spent by bitcoin will be a direct result of economic activity and value looking to be processed and secured. This is an efficiency in our current financial structures that we do not have today. There is very little overhead costs in that compared with the massive overhead costs of the banking industry today.

When proponents of bitcoin play "whataboutism" with the banking industry as criticized, it isn't playing a game of logical fallacy. It is an acknowledgement of a dichotomy that our economy must play to. What people criticize the environmental impacts of electric cars and EV drivers say "whatabout" gas cars? They're not just brushing off things that EVs could do better, but acknowledging that they are still better than gas cars when you're faced with a dichotomy in a society that is built around driving and transportation. Economic activity and transactions have to happen in a functioning modern society. In the same way that EVs are an alternative to gas cars and that the environmental costs must be viewed from a comparative lens, bitcoin's future efficiencies must be view from a comparative lens with the legacy financial system. That's not whataboutism, that's just acknowledgement of the dichotomy we're faced with.

If you're someone who has never used bitcoin or any of its scaling technologies and you're just simply parroting elementary calculations of energy/txns, the bias becomes evident and the unwillingness to learn about a technology even more so.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on April 09, 2022, 10:28:02 AM
If you're someone who has never used bitcoin or any of its scaling technologies and you're just simply parroting elementary calculations of energy/txns, the bias becomes evident and the unwillingness to learn about a technology even more so.

My man, not gonna quote the whole thing, but why is this better than current banks?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 09, 2022, 01:28:55 PM
My man, not gonna quote the whole thing, but why is this better than current banks?

Well to be frank, bitcoin isn't going to do away with financial services. Things like lending inherently require trust. The bank has to trust you to pay back a loan and in order for them to be able to assess credit risk, they need your financial background. This relationship requires trust which is why the whole "DeFi" buzz is nonsensical from the start. So there will still be banks that provide financial services like that to people.

Critics will chirp about how bitcoin mining doesn't provide a lot of jobs as if that is a negative. But that's the entire point. There is almost no overhead to bitcoin mining. The fees that are paid for a transaction will be translated almost entirely to electrical costs to confirm a block.

There is so much overhead in our current payments industry and a lot of it has to do with the fact that it is built on an entirely flawed design model. It is build on a pull payment design. So in order to make a payment to someone, you give them all of your financial information and with that information, the recipient is able to pull funds from your account. It could be your credit card information and address info or account and routing numbers to make an ACH transaction. Because of this, every single merchant we interact with ends up becoming a central point of failure for massive amounts of confidential PII/PCI data. This design flaw creates an extremely costly structure that must then be backwardly remedied with security controls, fraud analysis, identity protection, breach insurance, etc. This is a massive amount of overhead that ends up actually increasing the costs of all the goods we buy by some estimates upwards of 10%. All just to make a payment from one party to another. It doesn't have to be this way.

With bitcoin it is, by design, a push payment method. No one has the ability to spend your funds or make a payment with your funds except for you. When you want to pay someone, you push the payment to them. There is no chargeback risk and settlement is instant.

Like said, financial services can and will still be build on top of bitcoin. This is already taking place today. In fact, I just purchased a house last fall. In this competitive real estate market, almost all offers that are accepted are cash offers. A good portion of my liquid wealth (non-equities, etc) is in bitcoin. Bitcoin thankfully is seen as pristine collateral. Unlike say your car as collateral for a loan that can be destroyed in an accident, stolen, lost, and must be repossessed in the event of a default. Bitcoin on the other hand can be transferred immediately to the lender with complete custody and held by them for the duration of the loan. So I was able to receive a loan with some of my bitcoin held as collateral. If I didn't pay back the loan or I defaulted on any payments, then they could liquidate my bitcoin at any time. Because bitcoin can be verified by anyone, I can transfer my bitcoin to any institution willing to lend me money with bitcoin held as collateral. With the loan I was able to put down a full cash offer on the house and then receive a mortgage post-close which then allowed me to pay off the temporary bitcoin loan.

So bitcoin isn't in direct competition with financial services that inherently require trust, just more with the payments and central banking side of things where the trust and design flaws of the system are in direct contrast with how bitcoin functions.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on April 09, 2022, 06:00:31 PM
For those in 2022 that are still not aware, bitcoin transactions are settlement. While transactions in the early days were often 1 to 1 transactions, to keep bitcoin decentralized, bitcoin transactions in the future will be increasingly settlement based and scaled via layers.

This is similar in the way that our current financial system is structured. Central banks are at the top with federal reserve banks settling and issuing cash to other large financial institutions. Those financial institutions become clearing houses for traditional banks and credit unions. Those banks and credit unions integrate with payment networks like VISA and Mastercard and those payment networks handle the point of sale transactions for retail customers. The transactions that are performed at the point of sale, are not settled immediately. This entire system is a debt based payment system where almost all transactional money is fronted and spent as debt. The payment network transactions are then settled to banks much later (which coincidentally creates a charge back risk for all transactions). Those settlements are then aggregated all the way up to the clearing houses and then the reserve banks where networks like SWIFT and Fedwire come into play. Transactions that reserve banks settle, while fewer, are the aggregate of all transactions further below in the hierarchy.

The same is and will continue to be true of bitcoin. Transactions are settlement and what takes place on the blockchain as blocks are confirmed will be transactions that are the aggregate of other types of transactions happening in other layers that are utilizing the security of bitcoin's blockchain for its security. That security is the energy spent by miners that has absolutely no correlation to the actual number of transactions being performed and secured by the bitcoin network. Aggregation can take place through numerous methods. They could take place completely off-chain where security is enforced through bitcoin's scripting language to allow for revocation and penalization of fraudulent breaches of contract. I've previously showed the efficiency of this with my own personal data that is not anomalous in any way. You can also have transactions simply be a batch of numerous payments to many individuals through the use of batching. Most exchanges today batch their withdrawals to many of their customers at once through a single on-chain transaction to save on fees. Here is a transaction that was a payment to 36 individuals, but was done with just a single on-chain transaction:

https://mempool.space/tx/fd33e1c0a4e253338fa20a1e6f450002eeabdeae574e9a4bfde5fb958ee12965 (https://mempool.space/tx/fd33e1c0a4e253338fa20a1e6f450002eeabdeae574e9a4bfde5fb958ee12965)

You can also have assets issued on the bitcoin network through a new design called Taro. This means you can effectively issue a stablecoin backed by the USD to effectively create new payment rails for the US dollar to allow for instant settlement. The settlement of these assets will take place completely off-chain which means you can have billions/trillions in settlement completely uncorrelated to the number of on-chain transactions (utilizing the lightning network). As someone who has worked in Information Security with financial institutions for over 15 years, I can say that instant settlement is something banks are actively seeking as the world's financial needs are rapidly changing around them. My organization just rolled out an implementation of the real time payments network, but even that pails in comparison in volume, uptime, and efficiency to what an open network like bitcoin can do.

https://www.forbes.com/sites/alysekilleen/2022/04/05/new-bitcoin-technology-enables-instant-global-usd-transactions/ (https://www.forbes.com/sites/alysekilleen/2022/04/05/new-bitcoin-technology-enables-instant-global-usd-transactions/)

If you're still calculating energy usage per transaction in 2022, after the numerous times that the metric has been debunked, you're being disingenuous to those whose ear you have. You could have zero transactions in a block and the energy usage won't change. You could have millions of transactions being settled in a single block and the energy usage won't change. The energy being spent is just energy spent to calculate a hash of some block of data and doing that calculation doesn't change based on the number of transactions. Furthermore, the block reward halving is an opposing force against exponential energy use increases. It will force a transition of the bitcoin network from having energy spent based on a fixed sum of bitcoin as reward to energy spent based on the fees the industry of bitcoin is willing to pay to have settlements secured by the bitcoin network. Therefore, within the decade, the energy spent by bitcoin will be a direct result of economic activity and value looking to be processed and secured. This is an efficiency in our current financial structures that we do not have today. There is very little overhead costs in that compared with the massive overhead costs of the banking industry today.

When proponents of bitcoin play "whataboutism" with the banking industry as criticized, it isn't playing a game of logical fallacy. It is an acknowledgement of a dichotomy that our economy must play to. What people criticize the environmental impacts of electric cars and EV drivers say "whatabout" gas cars? They're not just brushing off things that EVs could do better, but acknowledging that they are still better than gas cars when you're faced with a dichotomy in a society that is built around driving and transportation. Economic activity and transactions have to happen in a functioning modern society. In the same way that EVs are an alternative to gas cars and that the environmental costs must be viewed from a comparative lens, bitcoin's future efficiencies must be view from a comparative lens with the legacy financial system. That's not whataboutism, that's just acknowledgement of the dichotomy we're faced with.

If you're someone who has never used bitcoin or any of its scaling technologies and you're just simply parroting elementary calculations of energy/txns, the bias becomes evident and the unwillingness to learn about a technology even more so.

Among crypto skeptics, “But the Lighting Network!” has become a bit of an inside-joke. It’s always pulled out as an excuse one way or another. Let’s factor in lightning transactions! It’s a little tough to find numbers, but we can estimate for order-of-magnitude purposes, anyway. In September 2021, Lightning processed 660k transactions (source: https://www.research.arcane.no/the-state-of-lightning) Let’s be generous, and call it a cool million. And say that was an average month, so 12 million transactions in 2021. Cool, so we’re now ~10% more efficient, so only ~900,000x less efficient than Visa. What else we got? (Bear in mind, this ignores transactions from tumblers, wash trades, etc., which probably *shouldn’t* be counted for this, but are hard to measure)

And if we’re still having problems with the transactions-as-a-denominator thing (I’m puzzled as to why, since it is a system intended to transact in?), but what denominator should we look at? Users? Market Cap? Memes generated? In what angle are we looking at this where the colossal energy needs seem reasonable?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 09, 2022, 08:15:38 PM
Among crypto skeptics, “But the Lighting Network!” has become a bit of an inside-joke. It’s always pulled out as an excuse one way or another. Let’s factor in lightning transactions! It’s a little tough to find numbers, but we can estimate for order-of-magnitude purposes, anyway. In September 2021, Lightning processed 660k transactions (source: https://www.research.arcane.no/the-state-of-lightning) Let’s be generous, and call it a cool million. And say that was an average month, so 12 million transactions in 2021. Cool, so we’re now ~10% more efficient, so only ~900,000x less efficient than Visa. What else we got? (Bear in mind, this ignores transactions from tumblers, wash trades, etc., which probably *shouldn’t* be counted for this, but are hard to measure)

And if we’re still having problems with the transactions-as-a-denominator thing (I’m puzzled as to why, since it is a system intended to transact in?), but what denominator should we look at? Users? Market Cap? Memes generated? In what angle are we looking at this where the colossal energy needs seem reasonable?

It amazes me that you could choose to cite that report and yet still come away with the initiative to post a negative post against bitcoin in comparison to VISA. I mean the very first graphic in the report is a comparison between's VISA txn/sec capabilities (tens of thousands per sec) and the lightning network's capabilities (millions per sec). Something that you previously argued against. It is especially funny that you choose to cite certain things while ignoring other things. Clear cherry-picking. It is a clear indication of bias on your part. For example, earlier you claimed how the lightning network is a centralizing feature for bitcoin, but the report you just linked to says that the lightning network is not inherently centralized and has actually be decreasing in centrality over time.

The fact that you're using numbers based on a nascent network that just 3 years ago had only ~$5M in value in it shows a clear lack unbiased critical thinking to look at what it can actually do based on its capabilities.

As far as transactions go, the lightning network has seen parabolic growth over the last year. Even since this report was created several major exchanges and brokers have since announced support for lightning such as Kraken, CashApp, and BitStamp. While there is no true way to determine how many transactions it is processing (since all transactions are anonymous), the entire point of it is that it scales bitcoin effectively. This report you've now cited runs counter to the many claims against the lightning network you've previously argued. Here are a few points from the report that you've probably decided to overlook because it doesn't fit your narrative:

-Exponential network growth taking place
-28% of channels were private channels (so no data from them)
-Usage is global with significant LN presence in emerging markets
-El Salvador lightning adoption accelerating; estimated 1.4 billion transactions annually by 2030
-Lightning scaling to the tune of hundreds of trillions of transactions possible

As I've said numerous times before, this is bitcoin's cost of capital phase. Bitcoin is being minted and that is what is driving the overall energy usage and growth. Bitcoin that is brought into circulation during this phase will be the only bitcoin that will ever be in circulation. So this is a one-time energy expenditure to kick start a new monetary network that is native to the internet. Since you're intent measuring energy expenditure per "something", since this is the capital production phase for bitcoin I'd propose looking at it from a different lens.

This is a cost of capital phase. Bitcoin is being "minted" into circulation which means that since the vast majority of energy being spent is for the purpose of "minting" that bitcoin. At the moment there are about 900 new bitcoin brought into circulation every day. So about 328,500 annually. At a price of about $42,000 currently, that is a total value of $14 billion. Right now the cost to produce bitcoin equals about the cost of energy. Average cost of electricity worldwide is about $80/MWh. With the estimated bitcoin network's 200TWh of annual consumption, this equals about $70M/TWh which is pretty close the to $80M/TWh. This is all at today's prices and today's block reward (6.25 btc/block). A vast majority of bitcoin was mined during the first two halving cycles of 50 btc/block and 25/btc/block respectively and during this phase it was mostly mined with CPUs and GPUs. By 2017 a majority of the 21 million max bitcoin had already been mined (~16M). The network was consuming less than 10TWh of electricity annually at this time. However, all this bitcoin is still in existence and circulation today. For example, in 2015 there were 1,314,000 bitcoin mined during that year for a total value in today's dollars of about $55B. The bitcoin network was only consuming about 5TWh of electricity annually. This equals about $400M in today's value per MWh of electricity used (at a cost of $80/MWh) that was spent to create it. That is an amazing cost of capital and there really is no comparison to anything else out there. To be able to produce that much usable economic value and put it into circulation at such an unbelievably low cost is invaluable.

The reason why this is an important metric is because as I've said, bringing bitcoin into circulation is a temporary phase. If the bitcoin economy continues to grow, the cost of producing the value that will be used to support this economy will be a one-time justifiable cost. The capital phase of bitcoin no doubt uses a lot of energy, but it is energy being spent in today's dollars that can be forever used by the economy for generations to come. No more capital energy needs to be ever spent again once all the bitcoin is mined. 90% of all bitcoin has already been mined and 99% will have been mined in about 8 years. Once this happens, then it is just operation cost that is expended as a result of on-chain fees (economic activity) and this is where bitcoin's efficiencies will shine (see lightning report).

Bitcoin fees account for less than 10% of the rewards miners receive currently (often about 1%). This balance in rewards (subsidy vs fees) will flip. This is a fact. This isn't just speculation on what will happen in the future. It is just a matter of when. Every 4 years the reward gets cut in half (next halving in ~2 years). So probably within the next decade or so the fees will begin to make up a dominant portion of the rewards. Again, as I've said, this will result in either a decrease of energy being used or a justified amount of energy used based on how much economic activity takes place. When fees become dominant, that is when bitcoin becomes more efficient than any other payments company that have a much larger overhead.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on April 09, 2022, 08:45:38 PM
But uhh what's it actually do?  Outside of creating a while new complex financial system you can currently make money off of in various ways if you're willing to hold the assets. 

What does it do? 

I mean seriously answer that question with out what it could do or what it might do.  How does it fundamentally build wealth.   What was this wealth created from. What work was changed or accomplished because of this thing.

Fundamentally what does it do. 

You keep comparing it to visa but nobody fucking uses it like that. If it's the next visa cool I'll cash out my stocks that produce shit to exchange funds for goods and services.

Seriously what's it do
 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 10, 2022, 06:04:12 AM
But uhh what's it actually do?  Outside of creating a while new complex financial system you can currently make money off of in various ways if you're willing to hold the assets. 

What does it do? 

I mean seriously answer that question with out what it could do or what it might do.  How does it fundamentally build wealth.   What was this wealth created from. What work was changed or accomplished because of this thing.

Fundamentally what does it do. 

You keep comparing it to visa but nobody fucking uses it like that. If it's the next visa cool I'll cash out my stocks that produce shit to exchange funds for goods and services.

Seriously what's it do
 

This question has been answered ad nauseam in this thread. At this point you're either being pedantic or were too busy posting spam messages and trolling to read anything in the thread.

Bitcoin is live today. You can use it if you wish or don't.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on April 10, 2022, 06:24:48 AM
But uhh what's it actually do?  Outside of creating a while new complex financial system you can currently make money off of in various ways if you're willing to hold the assets. 

What does it do? 

I mean seriously answer that question with out what it could do or what it might do.  How does it fundamentally build wealth.   What was this wealth created from. What work was changed or accomplished because of this thing.

Fundamentally what does it do. 

You keep comparing it to visa but nobody fucking uses it like that. If it's the next visa cool I'll cash out my stocks that produce shit to exchange funds for goods and services.

Seriously what's it do
 

This question has been answered ad nauseam in this thread. At this point you're either being pedantic or were too busy posting spam messages and trolling to read anything in the thread.

Bitcoin is live today. You can use it if you wish or don't.

Amen.  There is that much money to be made in crypto, but not everyone is along for the ride.  Some people are just NGMI.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on April 10, 2022, 07:05:08 AM
Among crypto skeptics, “But the Lighting Network!” has become a bit of an inside-joke. It’s always pulled out as an excuse one way or another. Let’s factor in lightning transactions! It’s a little tough to find numbers, but we can estimate for order-of-magnitude purposes, anyway. In September 2021, Lightning processed 660k transactions (source: https://www.research.arcane.no/the-state-of-lightning) Let’s be generous, and call it a cool million. And say that was an average month, so 12 million transactions in 2021. Cool, so we’re now ~10% more efficient, so only ~900,000x less efficient than Visa. What else we got? (Bear in mind, this ignores transactions from tumblers, wash trades, etc., which probably *shouldn’t* be counted for this, but are hard to measure)

And if we’re still having problems with the transactions-as-a-denominator thing (I’m puzzled as to why, since it is a system intended to transact in?), but what denominator should we look at? Users? Market Cap? Memes generated? In what angle are we looking at this where the colossal energy needs seem reasonable?

It amazes me that you could choose to cite that report and yet still come away with the initiative to post a negative post against bitcoin in comparison to VISA.
😂 there’s no winning with you lot. I post sources critical of Bitcoin, and “that source is biased!”. I cite very pro-Bitcoin sources that happen to give up some not-so-rosy numbers (buried deep deep in the doc), and you’re amazed I didn’t just absorb your opinion? Believe it or not, I read crypto sources all the time. It’s comedy gold most of the time and occasionally informative.
I mean the very first graphic in the report is a comparison between's VISA txn/sec capabilities (tens of thousands per sec) and the lightning network's capabilities (millions per sec). Something that you previously argued against. It is especially funny that you choose to cite certain things while ignoring other things. Clear cherry-picking. It is a clear indication of bias on your part.

Incorrect. One is Visa’s actual transactions/second. The other is Lightning’s theoretical upper-limit capacity.

For example, earlier you claimed how the lightning network is a centralizing feature for bitcoin, but the report you just linked to says that the lightning network is not inherently centralized and has actually be decreasing in centrality over time.

Number of nodes is not the only measure of decentralization. If some of the nodes are orders of magnitude more commonly used, that’s a form of centralization.

The fact that you're using numbers based on a nascent network that just 3 years ago had only ~$5M in value in it shows a clear lack unbiased critical thinking to look at what it can actually do based on its capabilities.


If it’s too new to criticize, it’s probably too new to evangelize as well. You’re here doing the latter, so… pick your poison.

As far as transactions go, the lightning network has seen parabolic growth over the last year. Even since this report was created several major exchanges and brokers have since announced support for lightning such as Kraken, CashApp, and BitStamp. While there is no true way to determine how many transactions it is processing (since all transactions are anonymous), the entire point of it is that it scales bitcoin effectively. This report you've now cited runs counter to the many claims against the lightning network you've previously argued. Here are a few points from the report that you've probably decided to overlook because it doesn't fit your narrative:

-Exponential network growth taking place
-28% of channels were private channels (so no data from them)
-Usage is global with significant LN presence in emerging markets
-El Salvador lightning adoption accelerating; estimated 1.4 billion transactions annually by 2030
-Lightning scaling to the tune of hundreds of trillions of transactions possible

Cool. Parabolic scaling and predictions that it’ll continue….

As I've said numerous times before, this is bitcoin's cost of capital phase. Bitcoin is being minted and that is what is driving the overall energy usage and growth. Bitcoin that is brought into circulation during this phase will be the only bitcoin that will ever be in circulation. So this is a one-time energy expenditure to kick start a new monetary network that is native to the internet. Since you're intent measuring energy expenditure per "something", since this is the capital production phase for bitcoin I'd propose looking at it from a different lens.

This is a cost of capital phase. Bitcoin is being "minted" into circulation which means that since the vast majority of energy being spent is for the purpose of "minting" that bitcoin. At the moment there are about 900 new bitcoin brought into circulation every day. So about 328,500 annually. At a price of about $42,000 currently, that is a total value of $14 billion. Right now the cost to produce bitcoin equals about the cost of energy. Average cost of electricity worldwide is about $80/MWh. With the estimated bitcoin network's 200TWh of annual consumption, this equals about $70M/TWh which is pretty close the to $80M/TWh. This is all at today's prices and today's block reward (6.25 btc/block). A vast majority of bitcoin was mined during the first two halving cycles of 50 btc/block and 25/btc/block respectively and during this phase it was mostly mined with CPUs and GPUs. By 2017 a majority of the 21 million max bitcoin had already been mined (~16M). The network was consuming less than 10TWh of electricity annually at this time. However, all this bitcoin is still in existence and circulation today. For example, in 2015 there were 1,314,000 bitcoin mined during that year for a total value in today's dollars of about $55B. The bitcoin network was only consuming about 5TWh of electricity annually. This equals about $11,000 in today's value per MWh of electricity used (at a cost of $80/MWh) that was spent to create it. That is an amazing cost of capital and there really is no comparison to anything else out there. To be able to produce that much usable economic value and put it into circulation at such an unbelievably low cost is invaluable.

The reason why this is an important metric is because as I've said, bringing bitcoin into circulation is a temporary phase. If the bitcoin economy continues to grow, the cost of producing the value that will be used to support this economy will be a one-time justifiable cost. The capital phase of bitcoin no doubt uses a lot of energy, but it is energy being spent in today's dollars that can be forever used by the economy for generations to come. No more capital energy needs to be ever spent again once all the bitcoin is mined. 90% of all bitcoin has already been mined and 99% will have been mined in about 8 years. Once this happens, then it is just operation cost that is expended as a result of on-chain fees (economic activity) and this is where bitcoin's efficiencies will shine (see lightning report).

Bitcoin fees account for less than 10% of the rewards miners receive currently (often about 1%). This balance in rewards (subsidy vs fees) will flip. This is a fact. This isn't just speculation on what will happen in the future. It is just a matter of when. Every 4 years the reward gets cut in half (next halving in ~2 years). So probably within the next decade or so the fees will begin to make up a dominant portion of the rewards. Again, as I've said, this will result in either a decrease of energy being used or a justified amount of energy used based on how much economic activity takes place. When fees become dominant, that is when bitcoin becomes more efficient than any other payments company that have a much larger overhead.

Hey. Guess what else has parabolic growth over the past 12 years? Bitcoin’s electrical usage. While its block rewards are decreasing and the number of bitcoins mined is decreasing So forgive me if I don’t buy your:
1. Lightning usage is growing rapidly and will continue to do so because I say so
2. Bitcoin energy usage is growing rapidly but will stop any day now because I say so

And Bitcoins will continue to be mineable for the rest of our lives, through the year 2,140. And—importantly—you and I have no idea how that’ll affect the game theory of miners. Maybe developers lift the cap, and there’s consensus to do so, assuming the oceans haven’t boiled by then.

Editing to add:

If I understand your argument correctly, you’re basically suggesting the electricity used to mine Bitcoin, today, is largely waste? In case that deduction isn’t clear, let me explain:

- You state that once Bitcoin rewards are sufficiently smaller, electricity use will decrease. I’m guessing that is because:
- Fewer miners will compete to mine Bitcoin, since it’s less profitable to do so
- And this is not a problem
- Therefore much of the mining being done today is redundant (waste)

Is this accurate?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 10, 2022, 08:29:09 AM
😂 there’s no winning with you lot. I post sources critical of Bitcoin, and “that source is biased!”. I cite very pro-Bitcoin sources that happen to give up some not-so-rosy numbers (buried deep deep in the doc), and you’re amazed I didn’t just absorb your opinion? Believe it or not, I read crypto sources all the time. It’s comedy gold most of the time and occasionally informative.

You took that wrong. It was more like you took an extremely positive report on bitcoin's lightning network and managed to spin it negative somehow.

Incorrect. One is Visa’s actual transactions/second. The other is Lightning’s theoretical upper-limit capacity.

False. The "tens of thousands" of transactions per second noted for VISA is their theoretical upper limit as well.

Number of nodes is not the only measure of decentralization. If some of the nodes are orders of magnitude more commonly used, that’s a form of centralization.

It is like you didn't even read the part in regards to centralization in the report.

If it’s too new to criticize, it’s probably too new to evangelize as well. You’re here doing the latter, so… pick your poison.

It is definitely not too new to criticize. But your criticisms just need to extend beyond claiming things without backing anything up. Like when you claimed it is centralizing in three separate paragraphs after I asked you to explain the reasoning behind that claim but never did. You just kept repeating "it is, it is, it is!", then followed that up by citing a report that makes the claim to the contrary while ignoring that part of it.

Cool. Parabolic scaling and predictions that it’ll continue….

Parabolic growth, not scaling. The scaling side has already been proved out. You know there is a testnet where these transaction per second figures are tested out? These aren't "theoretical upper limit" figures, but actual figures that have been shown it can perform at those levels. I also give you real world numbers on its efficiency, but for some reason (without ever even having used the technology yourself) you claim its false. When you say "I don't know why those numbers are false, but I just know they're false", that's called bias. Full stop.

Hey. Guess what else has parabolic growth over the past 12 years? Bitcoin’s electrical usage.

This is factually not true. Not even close. I am beginning to feel like you don't understand what a parabola is. Its energy usage has seen pretty linear growth throughout most of its existence and, for much of it, it has seen plateaus of energy use between cycles.

https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)

And Bitcoins will continue to be mineable for the rest of our lives, through the year 2,140.

Either you believe something will continue to go up in price exponentially all the way until 2140 or fees will end up becoming the dominant incentive for miners. Both those things can't be true. That's a fact.

If I understand your argument correctly, you’re basically suggesting the electricity used to mine Bitcoin, today, is largely waste?

I think you should reread what I wrote if you concluded that I think it was waste. That's not what my cost of capital explanation was about at all. I think you missed something there...
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on April 11, 2022, 06:40:06 PM

You took that wrong. It was more like you took an extremely positive report on bitcoin's lightning network and managed to spin it negative somehow.

I used the number of transactions from the report. To expect me to take the entire “report” at face-value is… weird.

Incorrect. One is Visa’s actual transactions/second. The other is Lightning’s theoretical upper-limit capacity.

False. The "tens of thousands" of transactions per second noted for VISA is their theoretical upper limit as well.

Touche. Upon further reading, it seems I was wrong here. VISA’s limit is in the low tens-of-thousands per second.


It is like you didn't even read the part in regards to centralization in the report.

If it’s too new to criticize, it’s probably too new to evangelize as well. You’re here doing the latter, so… pick your poison.

It is definitely not too new to criticize. But your criticisms just need to extend beyond claiming things without backing anything up. Like when you claimed it is centralizing in three separate paragraphs after I asked you to explain the reasoning behind that claim but never did. You just kept repeating "it is, it is, it is!", then followed that up by citing a report that makes the claim to the contrary while ignoring that part of it.

I don’t know what your background is. I’m guessing it’s not Computer Science? I’ll try to elaborate why this is the case:

Lightning Network basically means two things these days. The “flavor” you’re largely talking about, originally proposed in 2015 where people pre-fund channels, and strive to keep them open as long as possible to avoid paying the fees to write the aggregated transactions on-chain. This obviously has its drawbacks, as it’s expensive to hold up a lot of money pre-funding your Dunkin’ Donuts channel ($200), your Jiffy Lube channel ($100), your Trader Joe’s channel $(500), etc. This is like the a pre-paid credit card with much higher fees. Not ideal.

So, we move toward a system where you can rely on the network to pay people you don’t have a direct channel with. To do this, the system needs to find the shortest (or sufficiently short) path between you and your recipient. This is the basis of the famous Dijkstra’s Algorithm. Dijkstra’s says, basically: in a network with N nodes and C connections, the shortest path can be found in order C + N log N. Here, order means computational time. The dilemma for Lightning Network is when these numbers get very high, that computational time gets too high to be feasible. Even at just 100k nodes, mobile devices are unable to find the shortest path in anything approaching “real time”. The fact that many nodes in the lightning network are devices that are being turned off and on means he network topology changes faster than it can be spanned. In such an environment, the shortest route often cannot be found. Sometimes no route can be found at all!

Fortunately, there’s an easy solution to this. Centralization! Large hubs do the intermediary work, and the problem is solved. This is what is happening in Lightning. It is why it is as performant as it is. And this is what I mean by centralization.

Another very obvious mathematical hair-in-the-soup for LN is the underlying Bitcoin transaction limit (~450k/day). So if Bitcoin was used exclusively by LN, it could support around 13.5M channel open/close monthly. Assuming an average ~monthly channel cycle time (people won’t likely pre-fund much more money than a month’s worth of expenses), that’s < 7M channels. So best case scenario here, LN can support a medium sized city, assuming people each have a couple channels open, as LN advocates seem to envision. The LN does not scale.

So enter companies like Strike, which effectively do away with actually using any decentralized and/or blockchain technology under the hood, and embrace centralization completely, to solve these dilemmas at the core of Bitcoin’s design.
Cool. Parabolic scaling and predictions that it’ll continue….

Parabolic growth, not scaling. The scaling side has already been proved out. You know there is a testnet where these transaction per second figures are tested out? These aren't "theoretical upper limit" figures, but actual figures that have been shown it can perform at those levels. I also give you real world numbers on its efficiency, but for some reason (without ever even having used the technology yourself) you claim its false. When you say "I don't know why those numbers are false, but I just know they're false", that's called bias. Full stop.


You misunderstand me. As I’ve explained again above: what you’re comparing is not apples-to-apples. I know this because I understand the fundamentals of network topologies. You. Are. Not. Comparing. Apples. To. Apples. I encourage you to share more details if you’d like me to dig in and explain what they are. What I’ve said, and I’ll re-iterate here, is: I do not need to know the details of your lightning setup to know that you’re not comparing apples-to-apples because it is quite literally impossible for lightning to out-perform Visa on a cost-basis. I do not need to know the details of someone’s road-trip, or which highways they took, to know that they did not drive from New York to California in an hour. It is an impossibility with any car technology known to man.

Hey. Guess what else has parabolic growth over the past 12 years? Bitcoin’s electrical usage.

This is factually not true. Not even close. I am beginning to feel like you don't understand what a parabola is. Its energy usage has seen pretty linear growth throughout most of its existence and, for much of it, it has seen plateaus of energy use between cycles.

Just attaching a graph here taken directly from the University of Cambridge site we’ve repeatedly cited. Here it is for posterity: https://ccaf.io/cbeci/index Note: I’m not even referring to the “cumulative” line. The bars describing monthly electricity consumption sure don’t look linear to me!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Scandium on April 12, 2022, 07:42:47 AM
As Schwab's newsletter just reminded me, another fun thing to note is that IRS consider crypto property, so any gains means you have to pay capital gains. Perhaps not a big deal if you're investing speculating, but imagine using crypto to make hundreds of purchases per year! Every time there is a change in price (i.e. all.the.time!) you'd end up with gains and losses and would have to keep track if and report it!

I bought some ETH for $20, two hours later it's $95, so I pay $50 in "gas fees" to buy a $20 pizza, and I pay 15% taxes on.. $20? $70?
Welcome to the glorious future! Much convenient! Remember when we used visa? WOw that was terrible, so glad we're done with that
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Shane on April 12, 2022, 08:13:55 AM
Wonder how long it will be before the US government cracks down on crypto 'currencies'? The feds are pretty slow to act sometimes, but eventually they're going to get around to it. The IRS recently started asking taxpayers on the 1040 if they'd bought/sold any crypto currencies. So, they're taking names and gathering data, now. If it's really true that bitcoin, etal., are better than the existing financial infrastructure, do you really think Visa, MC, and Amex are just going to roll over and accept defeat? Seems more likely they'll instruct their lackeys in Congress to do something about it. No?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on April 12, 2022, 08:17:15 AM
Just attaching a graph here taken directly from the University of Cambridge site we’ve repeatedly cited. Here it is for posterity: https://ccaf.io/cbeci/index Note: I’m not even referring to the “cumulative” line. The bars describing monthly electricity consumption sure don’t look linear to me!

Linear acceleration, maybe
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 12, 2022, 08:31:31 AM
I used the number of transactions from the report. To expect me to take the entire “report” at face-value is… weird.

The fact that you admit this and choose to accept for of their data and not others because you simply don't like that other data is a clear indication of bias. For you to claim otherwise is absurd. Especially when the comments you make that run counter to their data, you don't bring other contradictory data from other sources. Instead, you just simply say "nope, that's wrong."

I don’t know what your background is. I’m guessing it’s not Computer Science? I’ll try to elaborate why this is the case:

I am not sure why you continue to make assumptions so much, especially when I mentioned earlier what my background is. Making assumptions about someone rather than debate their arguments presented is not debating in good faith. Yet you continue to do this. You say you have a background as a computer scientist. I have not questioned your background once even though you've made numerous incorrect statements with regards to topics related to the field. I trust you're correct about your background and there is no reason for me to argue about that. But just because someone has a background in something does not mean they know the entire field with expertise, especially one as complex as computer science. Anyone intimately familiar with computer science would know this. It is a field that exemplifies the quote "The more you know, the more you realize you don't know."

Lightning Network basically means two things these days. The “flavor” you’re largely talking about, originally proposed in 2015 where people pre-fund channels, and strive to keep them open as long as possible to avoid paying the fees to write the aggregated transactions on-chain. This obviously has its drawbacks, as it’s expensive to hold up a lot of money pre-funding your Dunkin’ Donuts channel ($200), your Jiffy Lube channel ($100), your Trader Joe’s channel $(500), etc. This is like the a pre-paid credit card with much higher fees. Not ideal.

Huh?? There is no two "flavors" of bitcoin. The lightning network I've discussed and described is the lightning network that is live today. The numbers I've given are from the lightning network that is live and operating on mainnet today. There are multiple implementations of lightning network nodes (LND, c-lightning, eclair, etc), but they all conform to the adopted BOLT spec. When I talk about transaction aggregation, I'm not just talking about payments that I make personally through my channels, but also payments that route through my channels from others. Because of onion routing, there is no way for me to determine whether or not a payment routed through my node came from my directly connected peer or from a node beyond them. In the end, it doesn't matter, the balance in my channels changes all the same and the fees are still all in aggregate.

So, we move toward a system where you can rely on the network to pay people you don’t have a direct channel with. To do this, the system needs to find the shortest (or sufficiently short) path between you and your recipient. This is the basis of the famous Dijkstra’s Algorithm. Dijkstra’s says, basically: in a network with N nodes and C connections, the shortest path can be found in order C + N log N. Here, order means computational time. The dilemma for Lightning Network is when these numbers get very high, that computational time gets too high to be feasible. Even at just 100k nodes, mobile devices are unable to find the shortest path in anything approaching “real time”. The fact that many nodes in the lightning network are devices that are being turned off and on means he network topology changes faster than it can be spanned. In such an environment, the shortest route often cannot be found. Sometimes no route can be found at all!

Fortunately, there’s an easy solution to this. Centralization! Large hubs do the intermediary work, and the problem is solved. This is what is happening in Lightning. It is why it is as performant as it is. And this is what I mean by centralization.

Well for one, let's remind ourselves what your original claim about lightning was:
Quote
Lightning network is a centralization scheme that completely obviates the entire point of Bitcoin.
Quote
You also must trust the lightning network itself

However, as I stated, you are in full control of your bitcoin keys at all times actively using the lightning network. At no point while using the lightning network do you need to trust anyone. Routing a payment over the network does not require trust any other nodes with your funds. If a payment fails mid-route, you just calculate a new path; your funds can't be stolen. So any large routing node that exist on the network that your payment might route through has no ability to steal the funds in your payment. Unlike traditional payment rails where custodians must take control of your funds in order to route a payment on your behalf, this is absolutely not true of both bitcoin or the lightning network. Censorship on the lightning network is also not an issue since routing nodes don't know the true source of a payment due to onion routing and even if a payment failed at a specific node, a new path can be calculated.

As I mentioned, there is absolutely no difference between a raw lightning transaction and a raw bitcoin transaction. Furthermore, once taproot is fully implemented in the lightning network it won't be possible to discern a lightning channel on-chain from any other bitcoin transaction. Lightning network is also completely opt-in. You're not forced to use the lightning network if you don't wish to. Finally, if choosing to use the lightning network, you're not forced into a peer relationship with anyone else using the lightning network nor are you forced to route payments through any node you don't wish to route through. Given all of this I can hardly understand your claim that lightning "obviates the entire point of bitcoin".

Also, as shown in the report you cited, the number of cut nodes and channels has been decreasing for some time as the network has grown. They also show that lightning network clustering has also been trending down with time. This is a clear indication that the network is becoming more and more interconnected as time goes on. This is in direct contrast to your own claims.

As far as your comments about routing, part of your fundamental misunderstanding I feel stems from the fact that you believe the lightning network needs to route payments based on the shortest path whereas in reality paths are typically weighted based on fee cost and you don't need to choose the absolute shortest path based on all possible paths when any path that completes the transaction will suffice. This fact drastically reduces the burden when calculating a route when the full network graph is synced. The pathfinding algorithms are also not defined specifically in the BOLT spec. Each implementation can implement their own pathfinding algorithms. Dijkstra's algorithm is not strictly used by these implementations. There are in fact many routing algorithms that are both in use across the lightning network today as well as many new possibilities being researched. For example, trampoline routing has been implemented in LND that helps route calculation, but also helps by adding additional privacy, as well as promoting additional decentralization of LN's topology (contrary to your claim). It uses nested onions with an outer layer used for routing and an inner layer used for trampolines.

https://lists.linuxfoundation.org/pipermail/lightning-dev/2019-April/001956.html (https://lists.linuxfoundation.org/pipermail/lightning-dev/2019-April/001956.html)
https://github.com/lightning/bolts/pull/829 (https://github.com/lightning/bolts/pull/829)

There is also atomic multi-path payments that can further both increase privacy and also increase the ease with which routes are calculated while decreasing the need to rely upon larger routing hubs that have large channels.

https://lists.linuxfoundation.org/pipermail/lightning-dev/2018-February/000993.html (https://lists.linuxfoundation.org/pipermail/lightning-dev/2018-February/000993.html)

There is also JIT routing that allows for on-demand channel rebalance that can open up new paths that were found to be invalid due to insufficient channel liquidity at the time of payment. This greatly eases the burden with which new paths much be calculated because of a previous temporary channel failure.

https://lists.linuxfoundation.org/pipermail/lightning-dev/2019-March/001891.html (https://lists.linuxfoundation.org/pipermail/lightning-dev/2019-March/001891.html)

There is also a lot of research into path finding that alleviates the burden of calculating routes such as the spider protocol as described here:
https://dspace.mit.edu/bitstream/handle/1721.1/124129/1142812072-MIT.pdf?sequence=1&isAllowed=y (https://dspace.mit.edu/bitstream/handle/1721.1/124129/1142812072-MIT.pdf?sequence=1&isAllowed=y)

And also Ant routing algorithm:
https://core.ac.uk/download/pdf/237320294.pdf (https://core.ac.uk/download/pdf/237320294.pdf)

It seems to me that you've continued just parroting simplistic views on how bitcoin and lightning operate based on singular terms or talking points you've might of heard somewhere without understand the large breath and scope of the topic at hand. You do continue to do this all while at the same time discrediting the very real world numbers from my own node that I operate on the lightning network all because you claim "you know otherwise" without real world use by yourself or data presented to the contrary.

I encourage you to share more details if you’d like me to dig in and explain what they are. What I’ve said, and I’ll re-iterate here, is: I do not need to know the details of your lightning setup to know that you’re not comparing apples-to-apples because it is quite literally impossible for lightning to out-perform Visa on a cost-basis. I do not need to know the details of someone’s road-trip, or which highways they took, to know that they did not drive from New York to California in an hour. It is an impossibility with any car technology known to man.

You can keep going on about your same tired and inapt analogy about cars and apples, but at the end of the day I've given you actual real world usage and numbers. My account is not anomalous in anyway. What more would you like me to share? I've presented to you how much volume my node routes as well as how much fees I've collected and paid, and the number of transactions I've successfully forwarded. Based on this, I've shown you how little the fees are in percentage of the volume being moved. My node isn't even a top node on the network. So I'll ask again, what more information would you like me to share? You claim to know so much about lightning, so clearly if you believe my numbers to be false then you'd be able to provide some reasoning as to why you think they're false and request the data that would (according to you) invalid what I'm saying. The reality is that you have no idea what you're talking about and my numbers are in fact valid and true and anyone who has run a lightning node can confirm. You say it is "impossible" for lightning to out-perform VISA (even though the report you cited claims otherwise) and yet against all the data being presented to you, you continue to present your own data that would back up your claim of impossibility.

Just attaching a graph here taken directly from the University of Cambridge site we’ve repeatedly cited. Here it is for posterity: https://ccaf.io/cbeci/index Note: I’m not even referring to the “cumulative” line. The bars describing monthly electricity consumption sure don’t look linear to me!

I already linked to the data that shows clear linear growth throughout the ASIC age. Showing data growth from periods where CPUs and GPUs were used in mining is not a valid comparison since obviously mining hadn't matured yet as it had not been both optimized nor industrialized yet. The graph you showed is absolutely not parabolic. If you look at bitcoin's energy from the ASIC age you can clearly see linear growth as well as plateaus. Look at what I linked to again without the tail end period between 2014-2016. If you look at from 2017 onward which is really when the age of ASIC became dominant, then you can clearly see the linear growth here. To make the claim that bitcoin's energy growth is parabolic then you'd have to ignore this fact.

See first diagram here:
https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)

The only way you could claim that bitcoin energy consumption is exponential and parabolic is if you somehow think that ASIC manufacturers can produce chips at a continuously accelerating rate and also that electricity will continue to become available to miners at a continuously accelerating rate. Both of these statements are absurd and obviously not true.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 12, 2022, 08:59:03 AM
As Schwab's newsletter just reminded me, another fun thing to note is that IRS consider crypto property, so any gains means you have to pay capital gains. Perhaps not a big deal if you're investing speculating, but imagine using crypto to make hundreds of purchases per year! Every time there is a change in price (i.e. all.the.time!) you'd end up with gains and losses and would have to keep track if and report it!

I bought some ETH for $20, two hours later it's $95, so I pay $50 in "gas fees" to buy a $20 pizza, and I pay 15% taxes on.. $20? $70?
Welcome to the glorious future! Much convenient! Remember when we used visa? WOw that was terrible, so glad we're done with that
Just to add a link to that, it looks like Ethereum gas fees stayed above $40 for at least a month, and this article mentions a $52 gas fee.
https://news.bitcoin.com/average-ethereum-gas-fee-jumps-20-per-transfer-l2-fees-follow-rise/

I have no crypto in my portfolio now (*), but I did sell some last year - and had to do the calculations myself.  Maybe until I confirm my latest address, Coinbase doesn't want to provide a 1099-B, so all I got was a summary.  Where I only had to deal with a few sales by hand, some users are struggling with Coinbase despite getting a 1099-B... like this example with 841 transactions.
https://ttlc.intuit.com/community/taxes/discussion/when-i-upload-my-1099-b-from-coinbase-it-is-asking-me-to-verify-841-transactions-manually-that-is/00/2492696


(*) on Coinbase I have ETH2 that I "staked" until the proof-of-stake Etherium network (2.0) goes live.  That could be months or years, and until then I cannot sell, trade or move the staked ETH2.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on April 12, 2022, 02:37:39 PM
I used the number of transactions from the report. To expect me to take the entire “report” at face-value is… weird.

The fact that you admit this and choose to accept for of their data and not others because you simply don't like that other data is a clear indication of bias. For you to claim otherwise is absurd. Especially when the comments you make that run counter to their data, you don't bring other contradictory data from other sources. Instead, you just simply say "nope, that's wrong."

Heads up: this is my final response to you. :)

I disagree that looking at things with a critical eye is biased. RT may publish articles with figures that lend credence to an anti-Putin argument. This does not mean the entirety of the article, or the source, should be taken at face-value.

I don’t know what your background is. I’m guessing it’s not Computer Science? I’ll try to elaborate why this is the case:

I am not sure why you continue to make assumptions so much, especially when I mentioned earlier what my background is. Making assumptions about someone rather than debate their arguments presented is not debating in good faith. Yet you continue to do this. You say you have a background as a computer scientist. I have not questioned your background once even though you've made numerous incorrect statements with regards to topics related to the field. I trust you're correct about your background and there is no reason for me to argue about that. But just because someone has a background in something does not mean they know the entire field with expertise, especially one as complex as computer science. Anyone intimately familiar with computer science would know this. It is a field that exemplifies the quote "The more you know, the more you realize you don't know."

I feel like there's many misunderstandings here. And this is another one. I was not at all trying to disparage you or anyone else without a CS background. Your previous responses in this thread made me feel like you did have such a background. I was less-than-explicit in my "centralization" arguments prior, because I assumed it was clear enough. That was not the case, and I expanded here. Sorry for my wording here. No ill-will here.

Lightning Network basically means two things these days. The “flavor” you’re largely talking about, originally proposed in 2015 where people pre-fund channels, and strive to keep them open as long as possible to avoid paying the fees to write the aggregated transactions on-chain. This obviously has its drawbacks, as it’s expensive to hold up a lot of money pre-funding your Dunkin’ Donuts channel ($200), your Jiffy Lube channel ($100), your Trader Joe’s channel $(500), etc. This is like the a pre-paid credit card with much higher fees. Not ideal.

Huh?? There is no two "flavors" of bitcoin. The lightning network I've discussed and described is the lightning network that is live today.

Two "flavors" of LIGHTNING. Not Bitcoin. The two flavors are: 1. one channel per vendor. And recently-ish 2. the full network setup that has many centralized hub nodes.

The numbers I've given are from the lightning network that is live and operating on mainnet today. There are multiple implementations of lightning network nodes (LND, c-lightning, eclair, etc), but they all conform to the adopted BOLT spec. When I talk about transaction aggregation, I'm not just talking about payments that I make personally through my channels, but also payments that route through my channels from others. Because of onion routing, there is no way for me to determine whether or not a payment routed through my node came from my directly connected peer or from a node beyond them. In the end, it doesn't matter, the balance in my channels changes all the same and the fees are still all in aggregate.

So, we move toward a system where you can rely on the network to pay people you don’t have a direct channel with. To do this, the system needs to find the shortest (or sufficiently short) path between you and your recipient. This is the basis of the famous Dijkstra’s Algorithm. Dijkstra’s says, basically: in a network with N nodes and C connections, the shortest path can be found in order C + N log N. Here, order means computational time. The dilemma for Lightning Network is when these numbers get very high, that computational time gets too high to be feasible. Even at just 100k nodes, mobile devices are unable to find the shortest path in anything approaching “real time”. The fact that many nodes in the lightning network are devices that are being turned off and on means he network topology changes faster than it can be spanned. In such an environment, the shortest route often cannot be found. Sometimes no route can be found at all!

Fortunately, there’s an easy solution to this. Centralization! Large hubs do the intermediary work, and the problem is solved. This is what is happening in Lightning. It is why it is as performant as it is. And this is what I mean by centralization.

Well for one, let's remind ourselves what your original claim about lightning was:
Quote
Lightning network is a centralization scheme that completely obviates the entire point of Bitcoin.
Quote
You also must trust the lightning network itself

However, as I stated, you are in full control of your bitcoin keys at all times actively using the lightning network. At no point while using the lightning network do you need to trust anyone. Routing a payment over the network does not require trust any other nodes with your funds. If a payment fails mid-route, you just calculate a new path; your funds can't be stolen. So any large routing node that exist on the network that your payment might route through has no ability to steal the funds in your payment. Unlike traditional payment rails where custodians must take control of your funds in order to route a payment on your behalf, this is absolutely not true of both bitcoin or the lightning network. Censorship on the lightning network is also not an issue since routing nodes don't know the true source of a payment due to onion routing and even if a payment failed at a specific node, a new path can be calculated.

As I mentioned, there is absolutely no difference between a raw lightning transaction and a raw bitcoin transaction. Furthermore, once taproot is fully implemented in the lightning network it won't be possible to discern a lightning channel on-chain from any other bitcoin transaction. Lightning network is also completely opt-in. You're not forced to use the lightning network if you don't wish to. Finally, if choosing to use the lightning network, you're not forced into a peer relationship with anyone else using the lightning network nor are you forced to route payments through any node you don't wish to route through. Given all of this I can hardly understand your claim that lightning "obviates the entire point of bitcoin".

In other words: people who care about decentralization can pay a premium to do it. Everyone else can use the centralization inherent in the efficient Lightning Network. I guess that's cool, but... for a protocol that expends a shit-ton of energy and waste for the sole purpose of being decentralized, that definitely feels like somehting that "obviates the entire point of bitcoin" to me. But maybe I'm a stickler.

As far as your comments about routing, part of your fundamental misunderstanding I feel stems from the fact that you believe the lightning network needs to route payments based on the shortest path whereas in reality paths are typically weighted based on fee cost and you don't need to choose the absolute shortest path based on all possible paths when any path that completes the transaction will suffice. This fact drastically reduces the burden when calculating a route when the full network graph is synced.

FWIW, Dijkstra's algorithm uses weighted directed graphs. It specifically is designed for cost minimization, not minimum number of hops. Other, less expensive algorithms, like Floyd-Warshal would necessarily lead to even more centralization and less fee competition.

The pathfinding algorithms are also not defined specifically in the BOLT spec. Each implementation can implement their own pathfinding algorithms. Dijkstra's algorithm is not strictly used by these implementations. There are in fact many routing algorithms that are both in use across the lightning network today as well as many new possibilities being researched. For example, trampoline routing has been implemented in LND that helps route calculation, but also helps by adding additional privacy, as well as promoting additional decentralization of LN's topology (contrary to your claim). It uses nested onions with an outer layer used for routing and an inner layer used for trampolines.

https://lists.linuxfoundation.org/pipermail/lightning-dev/2019-April/001956.html (https://lists.linuxfoundation.org/pipermail/lightning-dev/2019-April/001956.html)
https://github.com/lightning/bolts/pull/829 (https://github.com/lightning/bolts/pull/829)

There is also atomic multi-path payments that can further both increase privacy and also increase the ease with which routes are calculated while decreasing the need to rely upon larger routing hubs that have large channels.

https://lists.linuxfoundation.org/pipermail/lightning-dev/2018-February/000993.html (https://lists.linuxfoundation.org/pipermail/lightning-dev/2018-February/000993.html)

There is also JIT routing that allows for on-demand channel rebalance that can open up new paths that were found to be invalid due to insufficient channel liquidity at the time of payment. This greatly eases the burden with which new paths much be calculated because of a previous temporary channel failure.

https://lists.linuxfoundation.org/pipermail/lightning-dev/2019-March/001891.html (https://lists.linuxfoundation.org/pipermail/lightning-dev/2019-March/001891.html)

There is also a lot of research into path finding that alleviates the burden of calculating routes such as the spider protocol as described here:
https://dspace.mit.edu/bitstream/handle/1721.1/124129/1142812072-MIT.pdf?sequence=1&isAllowed=y (https://dspace.mit.edu/bitstream/handle/1721.1/124129/1142812072-MIT.pdf?sequence=1&isAllowed=y)

And also Ant routing algorithm:
https://core.ac.uk/download/pdf/237320294.pdf (https://core.ac.uk/download/pdf/237320294.pdf)

It seems to me that you've continued just parroting simplistic views on how bitcoin and lightning operate based on singular terms or talking points you've might of heard somewhere without understand the large breath and scope of the topic at hand. You do continue to do this all while at the same time discrediting the very real world numbers from my own node that I operate on the lightning network all because you claim "you know otherwise" without real world use by yourself or data presented to the contrary.

Full disclosure: I randomly chose one of these (Ant routing) to pick on. I am not going to waste time debunking every other techno-babbly thing you bring up. But let's talk Ant routing. What is it? A proposal to solve, and I quote: "... several problems of current implementation, such as channel information update and centralization by beacon nodes". Oh! Centralization? No way! Shocked, I am, that centralization is apparently problem in the LN! (source: https://arxiv.org/abs/2002.01374)

Moving on... this is a new theoretical idea. It hasn't—as far as I can tell—been implemented. It's more "SOME DAY!" can-kicking that we've been hearing since 2011 with Bitcoin critiques. It's exhausting. Update us all when this is working!

Just attaching a graph here taken directly from the University of Cambridge site we’ve repeatedly cited. Here it is for posterity: https://ccaf.io/cbeci/index Note: I’m not even referring to the “cumulative” line. The bars describing monthly electricity consumption sure don’t look linear to me!

I already linked to the data that shows clear linear growth throughout the ASIC age. Showing data growth from periods where CPUs and GPUs were used in mining is not a valid comparison since obviously mining hadn't matured yet as it had not been both optimized nor industrialized yet. The graph you showed is absolutely not parabolic. If you look at bitcoin's energy from the ASIC age you can clearly see linear growth as well as plateaus. Look at what I linked to again without the tail end period between 2014-2016. If you look at from 2017 onward which is really when the age of ASIC became dominant, then you can clearly see the linear growth here. To make the claim that bitcoin's energy growth is parabolic then you'd have to ignore this fact.

See first diagram here:
https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)

The only way you could claim that bitcoin energy consumption is exponential and parabolic is if you somehow think that ASIC manufacturers can produce chips at a continuously accelerating rate and also that electricity will continue to become available to miners at a continuously accelerating rate. Both of these statements are absurd and obviously not true.

OH! Pardon me for getting in the way of your cherry-picked date range! Why you think it's obvious that moving from less efficient CPU's/GPU's to more efficient ASICs results in greater electrical use confuses the hell out of me! But I'm clearly not all that bright :)

I'm claiming bitcoin energy consumption is exponential because the data shows it's exponential. This ain't difficult, my man.

Anyway, that's it from me! Enjoy your cryptoing.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 12, 2022, 03:32:39 PM
Huh?? There is no two "flavors" of bitcoin. The lightning network I've discussed and described is the lightning network that is live today.

Two "flavors" of LIGHTNING. Not Bitcoin. The two flavors are: 1. one channel per vendor. And recently-ish 2. the full network setup that has many centralized hub nodes.

I meant to say two flavors of lightning there. That was a mis-type by my part there. There are not two flavors of lightning. The moment the current spec of lightning network that was worked on between c-lightning, LND, and eclair went live on mainnet, it always had payments routes implemented in it. Saying it is a "recently-ish" thing is false since it is something that has been "always-ish".


I feel like there's many misunderstandings here. And this is another one. I was not at all trying to disparage you or anyone else without a CS background. Your previous responses in this thread made me feel like you did have such a background.

For the record, my background is computer science. I've been in the field for 19 years. Sometimes I wonder if you read my posts fully. I literally said that I even mentioned what my background was in a previous response to you. Then you respond to me saying that you're guessing that my background isn't computer science, then follow that up with saying you weren't meaning to be disparaging and that you felt my background was CS contrary to your earlier statement. You're all over the place. No ill-will either, but I was just making the point that if you want to debate in good-faith, it is best to just debate the subjects at hand based on the merit with which they're presented. It doesn't matter to me what either of our backgrounds are. If you're making a claim that I disagree with, regardless of either of our areas of expertise, then you should back those claims up with reasoning and data. Something that you've failed to do time and time again.

Full disclosure: I randomly chose one of these (Ant routing) to pick on. I am not going to waste time debunking every other techno-babbly thing you bring up. But let's talk Ant routing. What is it? A proposal to solve, and I quote: "... several problems of current implementation, such as channel information update and centralization by beacon nodes". Oh! Centralization? No way! Shocked, I am, that centralization is apparently problem in the LN! (source: https://arxiv.org/abs/2002.01374)

Moving on... this is a new theoretical idea. It hasn't—as far as I can tell—been implemented. It's more "SOME DAY!" can-kicking that we've been hearing since 2011 with Bitcoin critiques. It's exhausting. Update us all when this is working!

"randomly chose one of these"...sure. Yet here is another instance of you saying you're going to debunk something that I bring up and in that very same paragraph you don't actually get to the part where you debunk it. Then, you follow that up with a claim about about how it is more "SOME DAY" stuff and yet fail to realize that 3 of the 5 concepts that I brought up are actually currently live and being utilized today (Trampolines, AMPP, and JIT routing). But sure, I'm sure you "randomly" chose that one...


OH! Pardon me for getting in the way of your cherry-picked date range! Why you think it's obvious that moving from less efficient CPU's/GPU's to more efficient ASICs results in greater electrical use confuses the hell out of me! But I'm clearly not all that bright :)

I'm claiming bitcoin energy consumption is exponential because the data shows it's exponential. This ain't difficult, my man.

Anyway, that's it from me! Enjoy your cryptoing.

If you want to claim that there was an exponential increase in energy usage between the CPU/GPU/FPGA era and the ASIC era, that's fine. There absolutely has been an exponential increase in energy usage as the industry transitioned from simply being performed in people's basements to entire warehouses of ASICs (from 2009-2016). That's plain to see. But ASICs have been around for over 5 years now and since that time bitcoin's energy usage has been completely linear. That's also plain to see. So we can just leave it there.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 13, 2022, 06:29:40 AM
Heads up: this is my final response to you. :)
Spoiler alert, it won't be.

... But ASICs have been around for over 5 years now and since that time bitcoin's energy usage has been completely linear. That's also plain to see. So we can just leave it there.
I assume the_gastropod's "final response" leaves you with time to reply to others, and I am curious about energy usage being linear.  Is the hardware you purchase using the same kilowatt hours as older generations?  Meaning for a rack of ASICs, has energy usage of that been constant?

Years ago I recall mining hardware going obsolete quickly.  You could buy hardware that was a year or two old, but it could not compete in terms of energy costs.  Bitcoin mining runs 24 hours a day and is electricity intensive, so the electricity cost is a key factor.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on April 13, 2022, 08:21:29 AM
Years ago I recall mining hardware going obsolete quickly.  You could buy hardware that was a year or two old, but it could not compete in terms of energy costs.  Bitcoin mining runs 24 hours a day and is electricity intensive, so the electricity cost is a key factor.

This brings some questions for me that I've had. I know far less than what you folks are talking about, am not CS trained, so correct me if I miss something:

As I understand it, the proof of work system is inherently designed to be slow/inefficient on the basis of securing the blockchain. This design is also inherently scaled to be more difficult as time goes on due to the increasing difficulty of calculations being made (everything else being equal).

So my two questions are:

1) It seems that decreasing energy costs could come from a couple of things. Obviously, more efficient hardware has come into play. Also, from my understanding, larger mining operations can more easily out-compete smaller ones, so does that mean that the distribution of earned coins from mining is becoming more centralized from bigger differences in computing power? For instance, in 2015, the difference in mining may have only been 10x between the slowest computer and largest, whereas now it could be 1000x. A hobbyist could earn coin back then, but now cannot, etc.

2) Either way, decreasing energy costs obviously are beneficial for the world at large, but isn't that competing with the design of the system? I guess I don't get the point of a proof of work design if it then becomes a game of trying to make that work easier. Then we just become really good at that game. What am I missing?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on April 13, 2022, 08:29:42 AM
Years ago I recall mining hardware going obsolete quickly.  You could buy hardware that was a year or two old, but it could not compete in terms of energy costs.  Bitcoin mining runs 24 hours a day and is electricity intensive, so the electricity cost is a key factor.

This brings some questions for me that I've had. I know far less than what you folks are talking about, am not CS trained, so correct me if I miss something:

As I understand it, the proof of work system is inherently designed to be slow/inefficient on the basis of securing the blockchain. This design is also inherently scaled to be more difficult as time goes on due to the increasing difficulty of calculations being made (everything else being equal).

So my two questions are:

1) It seems that decreasing energy costs could come from a couple of things. Obviously, more efficient hardware has come into play. Also, from my understanding, larger mining operations can more easily out-compete smaller ones, so does that mean that the distribution of earned coins from mining is becoming more centralized from bigger differences in computing power? For instance, in 2015, the difference in mining may have only been 10x between the slowest computer and largest, whereas now it could be 1000x. A hobbyist could earn coin back then, but now cannot, etc.

2) Either way, decreasing energy costs obviously are beneficial for the world at large, but isn't that competing with the design of the system? I guess I don't get the point of a proof of work design if it then becomes a game of trying to make that work easier. Then we just become really good at that game. What am I missing?
These are my understandings too (also noting the glut of obsolete mining rigs for sale, the rising energy usage, and the centralization). In any other technology, declining performance and increasing cost of use over time might be called "planned obsolescence" but here it's considered an innovation in itself.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on April 13, 2022, 10:40:58 AM
As I understand it, the proof of work system is inherently designed to be slow/inefficient on the basis of securing the blockchain. This design is also inherently scaled to be more difficult as time goes on due to the increasing difficulty of calculations being made (everything else being equal).

A minor modification to this:

The difficulty of the calculations gets harder the more people are trying to work on them. Because the price of bitcoin has increased dramatically in the past decade the potential value of mining has increased and so more people spend more money on calculations which drives up the difficulty. But there is nothing inherent in the bitcoin approach that requires the difficulty to get harder over time. If the price drops, over time it makes less sense for people to spend money on hardware and electricity, the total computing power drops, and the difficulty of the calculation drops in parallel.

Even if the price of bitcoin remains constant, the regular reductions in the reward size per plot (e.g. how many new bitcoins are "mined" each day) drives down the economic incentive for mining and would result in a reduced difficulty of the calculation over time.

So it's only when the price of bitcoin increases faster than the reward from mining declines that the difficulty of the calculation gets harder over time.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on April 13, 2022, 11:34:19 AM
Even if the price of bitcoin remains constant, the regular reductions in the reward size per plot (e.g. how many new bitcoins are "mined" each day) drives down the economic incentive for mining and would result in a reduced difficulty of the calculation over time.

So it's only when the price of bitcoin increases faster than the reward from mining declines that the difficulty of the calculation gets harder over time.

Ah, that's what I didn't understand before (and still don't tbh). Likely from abbreviated explanations of how the equation system works.

I understood it to be a "race" to be the first to finish the calculation, where the remaining mining computers are used to verify validity of the first one. Are difficulty and process speed interchangeable terms here?

How is this all related to # of transactions? I'm assuming that Bitcoin's vision is to have several order's of magnitude more transactions than is currently happening on the network.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 13, 2022, 11:56:44 AM
I'll clarify a few things on the mining side here.

There are several factors that determine profitability. Bitcoin's price, block rewards/fees, electricity costs, miner efficiency, and bitcoin's difficulty level.

So the dynamics that play out are this:

Bitcoin is designed to try and keep the average block time at around 1 block every 10 minutes. So if blocks are being "discovered" every 9 minutes, that means there are more miners contributing hashing power to the network that results is blocks being found quicker. Bitcoin adjusts the difficulty approximately every 2 weeks (after every 2016 blocks). So less blocks being found as a result of less hashrate on the network means a difficulty adjustment downware to make it easier to find blocks and vice versa.

All things being equal (bitcoin price, electricity costs, miner efficiency, etc) a higher difficulty level means less profitability since the task at hand is becoming more difficult for the equipment you have. You're going to be solving less blocks and so therefore your rewards are getting diminished.

To try and achieve the same profitability you had before the difficulty adjustment, you'd either need to find cheaper electricity or acquire miners that are more efficient and provide more hashrate per unit of electricity consumed. If you don't make any changes to the work you're doing, eventually as the amount of computing power expands (either due to more hashrate being contributed from more efficient miners or more people bringing miners online) your share of the total hashrate diminishes which means you make less profit. It is also important to note that larger mining operations don't "out compete" smaller ones necessarily. There are very slight economies of scale with initial capital costs of mining machines. You can achieve a slight discount from manufacturers if you buy in bulk. You might also be able to find cheaper electricity prices through contract negotiation and location. But in general, miners are computing against the current difficulty level. So if I am profitable at a given electricity price with a given miner machine model, then it doesn't matter if I am using 1000 of those units or just 1, my profit percentage will be the same. So the idea that a small-time miner can't be profitable isn't really true. You can set up a single mining unit and as long as you have access to some cheap electricity, you can still mine bitcoin at a profit.

Price also plays a big factor into things. The higher the price goes, the more profits all miners are receiving. This is what really drives the increase in energy usage by the network. Because right now, a vast majority of the rewards a miner receives per block found comes from the block subsidy. Every block found gives the miners that found it 6.25 bitcoin. Fees that bitcoin users pay to have their transactions confirmed by miners are also contributed as part of the rewards for finding a block, but at the moment those only account for about 2% of the total rewards. So with the price of bitcoin going up, all miners receive higher profits which can result in expansion of their operations and overall expansion of the industry. But every 4 years, the block reward gets cut in half. So instead of 6.25 bitcoins being rewarded for finding a block, only 3.125 bitcoin will be given out. If the price doesn't follow suit, then there is an immediate and impactful cut in profits for miners across the industry. This generally results in some miners that were border line being profitable shutting down [some of] their operations. This reduction in hashrate thus then leads to a lowering of the difficulty level and a new equilibrium is found in the mining industry for the miners that remain.

This decrease in the block rewards is also a shock to the markets since there is less incoming supply of bitcoin and thus a lowering of liquidity. So price does typically respond upwards after these halvings, but it isn't always immediate. Since a vast majority of the rewards comes from this block subsidy, mining bitcoin is essentially minting new bitcoins into the market and is why this phase of mining is the capital production phase. A majority of the energy being spent on mining is being spent to generate new bitcoins rather than confirming transactions (fees).

Eventually though, since the price can't go exponential forever, these halvings will result in a higher pressure on miner profitability unless transaction fees can begin to fill in some of that void. If transaction fees don't take up some of that slack, bitcoin mining will continue to use less energy until a new equilibrium is met at which point, bitcoin's energy usage will be a direct correlation to how much the bitcoin network is being used economically. The amount spent on fees will go almost entirely to the cost of electricity to confirm it with very little overhead. The market will pay for how much security it needs. If it is a massive market and bitcoin is processing a large number of transactions, then fees will rise and this the security of the network is increased. Miner profits go up which means more energy is being spent to secure the network and thus the network is more secure against attacks. If not many people are using the network, the fees are lower and thus electricity usage goes down and bitcoin's security budget doesn't need to be as high since the network won't face as many attacks. So it theoretically all balances out.

As far as mining hardware lifespan goes, now that the mining and ASIC chip industry has matured, efficiency gains for mining machines has tampered off quite a bit and is more inline with efficiency gains in chipsets for other general computing needs. The lifespan of profitable mining machines is about 4 years at the moment. This is a good website (search for sha-256 to filter for bitcoin miners) that gives a breakdown of miner profitability based on the models available. As you can see there are many miners that were released in 2018 that are still profitable today and there are many 2020 models that are still some of the top profitable machines available.

https://www.asicminervalue.com/

If you look year to year, there really is only modest incremental improvements in efficiency at this point. A miner in 2020 that gave you 85Th/s @ 3200W might give you 95Th/s @ 3200W in 2021's next release model. Furthermore, there is quite a large aftermarket now for mining machines. Since a business cares about operational costs and turning a profit, they need to make sure their mining machines are turning as much profit as possible. An individual though has more leeway. An individual who is looking to purchase bitcoin for themselves from any exchange anyway, minus fees paid, could opt instead to mine some bitcoin at a slight cost to themselves as a means of "purchasing" bitcoin for themselves. So many miners in the list that might not be profitable for a business to run actually have a lot of secondary life for individuals that are willing to mine bitcoin at a slight cost as a means of acquiring some. So you can find a lot of those mining machines for really cheap on the secondary markets like eBay. So while they might have a lifespan of about 4 years in the business world, they could see any additional year of life in the aftermarket.

As far as energy usage for each ASIC goes, it really depends on the model, but generally there will be different tiers. You'll have some models that can operate on a 120V circuit and thus can plug into the typical home outlet and run at ~10 amps for a wattage of about 1200. Then there are models that require a 240V circuit that draw much more power at around 3000W. You don't want to have to always upgrade or change the circuit you're operating on when you swap out mining machines, so you'll generally upgrade from unit to unit with similar energy demands.

It seems like Moore's law might be slowing down a bit and the supply chain issues also seemed to slow down chip gains, this leads to an additional ceiling for the overall energy consumption of the network. It just takes time to produce miners and bring them into production and there just isn't a way to exponentially expand a now mature industry.

Also, as I mentioned in one of my earlier posts, the mining industry is much more decentralized now than it has ever been. There are now many more mining pools available and the mining entities within those pools has grown significantly over the years. Hashrate will certainly always be dominated by the large corporate miners, but there are simply more corporate miners mining bitcoin these days than there was in the past.

EDIT: I see maizefolk responded with some of the same points I made albeit much more concise.  :)

I also just wanted to add that the amount of computation power required to confirmed blocks is uncorrelated to the number of transactions being processed. A block could contain 1 transaction or 1000 and it will required the same amount of electricity to "find" either block. This is why energy calculations on a "per transaction" basis don't make much sense here.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on April 13, 2022, 12:00:24 PM
How is this all related to # of transactions? I'm assuming that Bitcoin's vision is to have several order's of magnitude more transactions than is currently happening on the network.

Right now, the mining (which records bitcoin transactions) is paid for by giving the miners bitcoins randomly as they mine - so there's no fee to bitcoin users.  In the future there will not be enough incentive for miners to do this (as eventually all bitcoins will be given away) so the people who want to trade bitcoin will have to pay the miners a direct fee to record their transactions into the blockchain.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on April 13, 2022, 12:09:09 PM
Even if the price of bitcoin remains constant, the regular reductions in the reward size per plot (e.g. how many new bitcoins are "mined" each day) drives down the economic incentive for mining and would result in a reduced difficulty of the calculation over time.

So it's only when the price of bitcoin increases faster than the reward from mining declines that the difficulty of the calculation gets harder over time.

Ah, that's what I didn't understand before (and still don't tbh). Likely from abbreviated explanations of how the equation system works.

I understood it to be a "race" to be the first to finish the calculation, where the remaining mining computers are used to verify validity of the first one. Are difficulty and process speed interchangeable terms here?

How is this all related to # of transactions? I'm assuming that Bitcoin's vision is to have several order's of magnitude more transactions than is currently happening on the network.

Answering the last part first because it's easiest:

None of it is related to the number of transactions. That's the point a couple of folks were making in that long argument up thread. To a first approximation* the marginal energy cost of a bitcoin transaction is zero. But there's a large fixed energy cost to maintaining the block chain** so the average energy cost is high when few transactions are made and decreased the more total transactions are made.

Now for the other part: difficulty and process speed. Difficulty is how hard the mathematical problem that has to be solved for each new block of bitcoins to be mined. How fast the blocks are mined is determined by how hard the problem is and how much compute power is trying to solve the problem.

If more people start mining bitcoin (because the value of the bitcoin they get for mining has gone up) the problems start getting solved faster, so the bitcoin algorithm makes the problems that need to be solved harder over time. If fewer people are mining bitcoin (because the value of the bitcoin they get for mining has gone down), the the bitcoin algorithm makes the problems that need to be solved easier.

The goal is to have one problem solved on average every ten minutes, regardless of how many people are or are not participating in mining.

*Transaction fees mean the long term marginal cost is probably not exactly zero, but close enough for government work.

**And it's not really fixed, but it varies in response to the block reward and the value of bitcoin, not the number of transactions.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on April 13, 2022, 01:24:27 PM
So the price (in USD) of a bitcoin drives the supply of computing power, and as computing power increases, problem difficulty and electricity consumption increase. Thus, if bitcoin were to keep rising in price, the amount of energy consumed would keep rising too because the incentive of mining or validating bitcoin in terms of USD would greatly exceed the cost of electricity priced in USD, net of the effect of the algorithm making problems harder. Thus, to predict a world of $100,000 or $500,000 or $1,000,000 bitcoin is to predict a world with lots of cheap transactions and lots of miners solving very hard problems and where an ever-larger percentage of the planet's energy production must be devoted to maintaining the functionality of this particular currency.

It would seem that if the price of bitcoin is somewhat pegged to the price of electricity via the interaction of the price of electricity with the availability of computing power, then there would be some point in the function where the price of bitcoin is negatively correlated to the price of electricity. I.e. as electricity gets more expensive, there is less profit to be had mining or validating, and so less supply of computing power, all things being equal. The "make the problems easier as supply goes down" algorithm mitigates this electricity-price relationship, but I wonder if the algo can handle rapidly rising costs, such as during a period of high inflation that affects the price of electricity and mining rigs? 

A key lesson in business school is that it makes sense for businesses to continue money-losing endeavors if the losses from continuing to produce are less than the losses of shutting down. This is usually illustrated in terms of mines or factories continuing to run during recessions and leading to supply gluts / price collapses, but I wonder if the effect would hold true for crypto miners?

If today's high inflation causes electricity price hikes and higher costs for equipment, that would not necessarily lead to a 1:1 reduction in miners. If you have a sunk investment in a server farm with debt payments and everything, and the equipment is depreciating to zero within the next 4-5 years, then maybe it makes sense to run at a loss and at least produce some revenue instead of unplugging everything and waiting for the bills to come in. Stated another way, if electricity is a miner's variable cost, and depreciation/rent/cost of capital is a miner's fixed cost, then it makes sense for the miner to keep the operation running at a loss as long as revenue > variable cost, because those fixed costs must be paid regardless of whether the operation is running or not. When all miners make this same optimal decision, an over-supply situation occurs. In a bitcoin context, this would look like miners losing money but continuing to produce, thereby contributing to a supply glut that would inhibit the "make the problems easier" algorithm. What is a miner to do in this situation but sell their coin inventory for USD and cover their losses that way? Maybe this is why bitcoin has plummeted in response to higher inflation around the world.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on April 13, 2022, 01:41:46 PM
It would seem that if the price of bitcoin is somewhat pegged to the price of electricity via the interaction of the price of electricity with the availability of computing power, then there would be some point in the function where the price of bitcoin is negatively correlated to the price of electricity. I.e. as electricity gets more expensive, there is less profit to be had mining or validating, and so less supply of computing power, all things being equal. The "make the problems easier as supply goes down" algorithm mitigates this electricity-price relationship, but I wonder if the algo can handle rapidly rising costs, such as during a period of high inflation that affects the price of electricity and mining rigs? 

A key lesson in business school is that it makes sense for businesses to continue money-losing endeavors if the losses from continuing to produce are less than the losses of shutting down. This is usually illustrated in terms of mines or factories continuing to run during recessions and leading to supply gluts / price collapses, but I wonder if the effect would hold true for crypto miners?

If today's high inflation causes electricity price hikes and higher costs for equipment, that would not necessarily lead to a 1:1 reduction in miners. If you have a sunk investment in a server farm with debt payments and everything, and the equipment is depreciating to zero within the next 4-5 years, then maybe it makes sense to run at a loss and at least produce some revenue instead of unplugging everything and waiting for the bills to come in. Stated another way, if electricity is a miner's variable cost, and depreciation/rent/cost of capital is a miner's fixed cost, then it makes sense for the miner to keep the operation running at a loss as long as revenue > variable cost, because those fixed costs must be paid regardless of whether the operation is running or not. When all miners make this same optimal decision, an over-supply situation occurs. In a bitcoin context, this would look like miners losing money but continuing to produce, thereby contributing to a supply glut that would inhibit the "make the problems easier" algorithm. What is a miner to do in this situation but sell their coin inventory for USD and cover their losses that way? Maybe this is why bitcoin has plummeted in response to higher inflation around the world.

I agree with your reasoning. People are going to invest in new computer hardware for mining bitcoins when the fixed (hardware) + variable costs (electricity mostly, rent and labor modestly) are below the expected return (the value of the expected number of bitcoins they can mine with their investment).

If the expected return is greater than variable costs but below variable + fixed, existing miners will run at a paper loss caused by depreciation but no new capacity will come online.

If expected return is less than variable costs existing miners will start shutting down, which will drive down the difficulty of the algorithm and increase expected returns until expected return at least equal variable costs.

However, keep in mind that while all miners have the same expected return per unit of compute spent on bitcoin mining, they'll have different fixed and variable cost structures including different prices for electricity and different amounts of investments in infrastructure so you still end up with a reasonably smooth supply curve in response to changes in the price of bitcoin with operations paying for electricity from the public grid most sensitive to changes in price (lower fixed and higher variable costs) and operations like this one (https://www.cnbc.com/2022/02/12/23-year-old-texans-made-4-million-mining-bitcoin-off-flared-natural-gas.html) where electricity is part of the initial investment in infrastructure rather than on ongoing variable cost being the least responsive to changes in price.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 13, 2022, 02:24:05 PM
lifeanon269 - Thanks for the long explanation, and the surprise that mining hardware isn't improving much in profitability.  The link you provided shows that, but I find it puzzling.  For example, "Gh/s" is a billion hashs/sec, while "Th/s" is a trilliong hashes per second - it's 1000x faster.

I sorted that link by release date, and see "Goldshell LT6" (Jan 2022) uses "Scrypt" at a hashrate of 3.35 Gh/s.  "Goldshell CK6" (Dec 2021) uses "Eaglesong" to achieve a 19.3 Th/s hashrate.  Their energy usage (3200w, 3300w) are similar, yet the hashrate is 5,000x greater for the "CK6"... and yet their daily profit is $7.86 and $8.76 per day!
https://www.asicminervalue.com/

To double-check my understanding of "Th/s" and "Gb/s", I went to the following link and changed the default "40 Th/s" ($3.12 profit/day) into "40 Gh/s" which displays a loss of $4.31/day.  According to this website, Th/s versus Gb/s would have a huge impact on profitability - unlike the prior website.
https://www.asicminervalue.com/

Is the "algo" really so important that it can overcome 5000x differences in hashrate?  Or is there something else I'm missing that can reconcile the differences between the above two websites?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 13, 2022, 02:24:44 PM
So the price (in USD) of a bitcoin drives the supply of computing power, and as computing power increases, problem difficulty and electricity consumption increase. Thus, if bitcoin were to keep rising in price, the amount of energy consumed would keep rising too because the incentive of mining or validating bitcoin in terms of USD would greatly exceed the cost of electricity priced in USD, net of the effect of the algorithm making problems harder. Thus, to predict a world of $100,000 or $500,000 or $1,000,000 bitcoin is to predict a world with lots of cheap transactions and lots of miners solving very hard problems and where an ever-larger percentage of the planet's energy production must be devoted to maintaining the functionality of this particular currency.

There is a downward force opposing the upward force of bitcoin's price on mining profitability and in the long run, due to exponential power, downward force should win. The bitcoin halvings every 4 years cut that miner reward in half.

At today's price of $41,000, in two years when the next halving occurs, the price would need to equal $82,000 in for the block rewards to remain the same for miners. In 6 years from now, the price of bitcoin would need to equal $164,000. In 10 years from now, $328,000. ...And so on and so on. And these price points are just to maintain the same profitability for miners today. This is assuming all else equal; electricity, capital costs, etc. But given inflation over that same period, these numbers are probably on the minimum side. You can only have the price go exponential every 4 years so many times before the rewards for mining diminish to the point where either transaction fees make up a larger portion of incentives for miners. So the energy use of the network either plateaus or actually starts decreasing because the network isn't being used (fees paid) as much as the energy being consumed demands.

It would seem that if the price of bitcoin is somewhat pegged to the price of electricity via the interaction of the price of electricity with the availability of computing power, then there would be some point in the function where the price of bitcoin is negatively correlated to the price of electricity. I.e. as electricity gets more expensive, there is less profit to be had mining or validating, and so less supply of computing power, all things being equal. The "make the problems easier as supply goes down" algorithm mitigates this electricity-price relationship, but I wonder if the algo can handle rapidly rising costs, such as during a period of high inflation that affects the price of electricity and mining rigs?

There have been periods where the average profitability of miners was in the negative. This typically was during periods of high volatility and the price dropped significantly in a short period of time. Because the difficulty adjusts every 2016 blocks (~2 weeks), it would take some pretty massive shocks to keep miners from continuing to mine bitcoin. During those periods where the price plummeted, some of the miners that were on the borderline of profitability would shut down and the expected difficulty adjustment that would ensue, the remaining miners would continue to mine at losses knowing some future relief was inbound following the adjustment. But the difficulty adjustment is a pretty remarkable innovation given the fact that a massive number of miners (estimates of 20-30%) migrated from China over a period of a few weeks and the network continued to operate and the difficulty just adjusted accordingly. Chinese miners detriment was to all other miners' boon since the difficulty adjustment means everyone else's profits suddenly increased.

The thing to keep in mind with the difficulty adjustment is that it is based on block time, not actual time. So every 2016 blocks, the difficulty adjusts. But if blocks are coming in slower (say every 12 minutes on average), then this means the next adjustment period won't come until later as well. Which means during that period, because blocks aren't coming in as frequently, the network is not confirming as many transactions. This can result in higher fees during that period of time as demand for having transactions confirmed increases. This can result in some miners coming back online to collect those increased fees. So it is definitely an interesting market dynamic at play that is pretty unique to bitcoin.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lifeanon269 on April 13, 2022, 02:33:07 PM
lifeanon269 - Thanks for the long explanation, and the surprise that mining hardware isn't improving much in profitability.  The link you provided shows that, but I find it puzzling.  For example, "Gh/s" is a billion hashs/sec, while "Th/s" is a trilliong hashes per second - it's 1000x faster.

I sorted that link by release date, and see "Goldshell LT6" (Jan 2022) uses "Scrypt" at a hashrate of 3.35 Gh/s.  "Goldshell CK6" (Dec 2021) uses "Eaglesong" to achieve a 19.3 Th/s hashrate.  Their energy usage (3200w, 3300w) are similar, yet the hashrate is 5,000x greater for the "CK6"... and yet their daily profit is $7.86 and $8.76 per day!
https://www.asicminervalue.com/

To double-check my understanding of "Th/s" and "Gb/s", I went to the following link and changed the default "40 Th/s" ($3.12 profit/day) into "40 Gh/s" which displays a loss of $4.31/day.  According to this website, Th/s versus Gb/s would have a huge impact on profitability - unlike the prior website.
https://www.asicminervalue.com/

Is the "algo" really so important that it can overcome 5000x differences in hashrate?  Or is there something else I'm missing that can reconcile the differences between the above two websites?

Yes, some blockchains attempted to be ASIC "resistant" by incorporating hashing algorithms that are very difficult to design a workable chipset around. The idea was that they wanted to maintain a proof-of-work mining network that was still targeted toward individuals being able to mine with their computers. However, it was a futile effort and there were several failures and side effects in that. One being the exorbitant costs of GPUs nowadays because of the demand for them being used to mine the alt-coins that use these alternative hashing algorithms. The other failure was that, as you can see, chipset makers were successful designing ASICs for many of these hashing algorithms which resulted in miners that were much more efficient than GPUs for these proof-of-work algorithms.

That being said, SHA256 is an extremely simple hashing algorithm and is simple to design an chipset around. This is one of the reasons why it was chosen as a tried and tested algorithm. But to answer your point, the efficiency with which manufacturers can design a chipset around these algorithms is why you'll see some ASICs able to perform at GH/s for some algorithms versus TH/s for others. There are magnitudes differences in efficiency.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on April 13, 2022, 02:36:15 PM
lifeanon269 - Thanks for the long explanation, and the surprise that mining hardware isn't improving much in profitability.  The link you provided shows that, but I find it puzzling.  For example, "Gh/s" is a billion hashs/sec, while "Th/s" is a trilliong hashes per second - it's 1000x faster.

I sorted that link by release date, and see "Goldshell LT6" (Jan 2022) uses "Scrypt" at a hashrate of 3.35 Gh/s.  "Goldshell CK6" (Dec 2021) uses "Eaglesong" to achieve a 19.3 Th/s hashrate.  Their energy usage (3200w, 3300w) are similar, yet the hashrate is 5,000x greater for the "CK6"... and yet their daily profit is $7.86 and $8.76 per day!
https://www.asicminervalue.com/

To double-check my understanding of "Th/s" and "Gb/s", I went to the following link and changed the default "40 Th/s" ($3.12 profit/day) into "40 Gh/s" which displays a loss of $4.31/day.  According to this website, Th/s versus Gb/s would have a huge impact on profitability - unlike the prior website.
https://www.asicminervalue.com/

Is the "algo" really so important that it can overcome 5000x differences in hashrate?  Or is there something else I'm missing that can reconcile the differences between the above two websites?

The issue you're running into is that these are tools for different hashing algorithms used by different crytocurrencies so they are supplying different and non-substitutable markets with different difficulty adjustments and rewards in different currencies with different dollar values.

Only the miners listed as running the SHA-256 algorithm are suitable for actually mining bitcoin specifically.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on April 13, 2022, 02:41:47 PM
maizefolk - Thanks, that was the key thing I was missing.  The "algo" limits which crypto currency the mining hardware can mine.
lifeanon269 - I see, so I should really compare either the same algo, or know which algos target the same blockchain, and compare those.


If today's high inflation causes electricity price hikes and higher costs for equipment, that would not necessarily lead to a 1:1 reduction in miners.
While a business typically shuts down to avoid paying rent and wages, a Bitcoin miner could just turn off their equipment until electricity prices fall.  I would expect a mixture of selling hardware and waiting, which could still lead to hardware being available for cheap.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: seattlecyclone on April 13, 2022, 08:03:26 PM
Even if the price of bitcoin remains constant, the regular reductions in the reward size per plot (e.g. how many new bitcoins are "mined" each day) drives down the economic incentive for mining and would result in a reduced difficulty of the calculation over time.

So it's only when the price of bitcoin increases faster than the reward from mining declines that the difficulty of the calculation gets harder over time.

Ah, that's what I didn't understand before (and still don't tbh). Likely from abbreviated explanations of how the equation system works.

I understood it to be a "race" to be the first to finish the calculation, where the remaining mining computers are used to verify validity of the first one. Are difficulty and process speed interchangeable terms here?

How is this all related to # of transactions? I'm assuming that Bitcoin's vision is to have several order's of magnitude more transactions than is currently happening on the network.

The protocol is set up to mint a certain number of blocks per hour (on average), and only a certain number of transactions can be included in each block. The product of these two limits sets the limit for the number of transactions that can be recorded on the blockchain per unit of time. Changing this limit would require changing the protocol, which requires a pretty high level of consensus amongst miners and is generally pretty hard to do. The way around this limit is to allow for transactions that are denominated in BTC but aren't actually recorded on the blockchain, such as those facilitated through the Lightning network.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on June 14, 2022, 07:59:02 AM
To the moon!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ATtiny85 on June 14, 2022, 08:12:38 AM
To the moon!

Hmm, and which moon would that be?

I think the crypto sub-market is a fun distraction to watch. I have 0.0% allocated, so it is fully observatory.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChickenStash on June 14, 2022, 08:27:36 AM
To the moon!

It's just tunneling through the Earth's core to get there - taking the scenic route.

I put a few bucks in a year ago and I'm at -53% so far. Booya!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on June 14, 2022, 10:26:02 AM
Per the thread title, I agree with having a low negative % of crypto.  The S&P 500 is down 20% from its peak, while bond yields are 5% below the rate of inflation.  The markets are very likely to fall further and take crypto down further with it.

Last week I bought BITO put options and cashed most of those in for a nice return today.  I'm still holding a short position on GBTC and a couple crypto stocks.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on June 14, 2022, 12:23:50 PM
Per the thread title, I agree with having a low negative % of crypto.  The S&P 500 is down 20% from its peak, while bond yields are 5% below the rate of inflation.  The markets are very likely to fall further and take crypto down further with it.

Last week I bought BITO put options and cashed most of those in for a nice return today.  I'm still holding a short position on GBTC and a couple crypto stocks.

LOL, I purchased your BITO puts.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on June 14, 2022, 12:59:52 PM
Per the thread title, I agree with having a low negative % of crypto.  The S&P 500 is down 20% from its peak, while bond yields are 5% below the rate of inflation.  The markets are very likely to fall further and take crypto down further with it.

Last week I bought BITO put options and cashed most of those in for a nice return today.  I'm still holding a short position on GBTC and a couple crypto stocks.
LOL, I purchased your BITO puts.
Haha!  That's perfect - because I actually screwed up (with a nice profit) by selling today.  I mixed up two expiration dates (this week and July), and sold both.  This is a rare occurance where I agree with someone who bought when I sold.

Yesterday there was contagion fear as Celsius halted withdrawals and for apparently unrelated reasons so did the largest crypto exchange (Binance).  I think today crypto is recovering from overshooting yesterday's fears... but when the FOMC meeting ends tomorrow (after the market close Wed), I expect that will do more damage to stocks and crypto.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on June 14, 2022, 02:38:57 PM
Per the thread title, I agree with having a low negative % of crypto.  The S&P 500 is down 20% from its peak, while bond yields are 5% below the rate of inflation.  The markets are very likely to fall further and take crypto down further with it.

Last week I bought BITO put options and cashed most of those in for a nice return today.  I'm still holding a short position on GBTC and a couple crypto stocks.
LOL, I purchased your BITO puts.
Haha!  That's perfect - because I actually screwed up (with a nice profit) by selling today.  I mixed up two expiration dates (this week and July), and sold both.  This is a rare occurance where I agree with someone who bought when I sold.

Yesterday there was contagion fear as Celsius halted withdrawals and for apparently unrelated reasons so did the largest crypto exchange (Binance).  I think today crypto is recovering from overshooting yesterday's fears... but when the FOMC meeting ends tomorrow (after the market close Wed), I expect that will do more damage to stocks and crypto.
Yea when the tide goes out on crypto, as it is now, we're going to see things we'll never forget.

Entire exchanges that were scams all along, stable coins without the collateral they claimed to have, pump and dumps, fake trading volumes, ponzi schemes layered on ponzi schemes, "major" coins with zero volume days, a wave of tech bro suicides, etc. For a while there, everyone was repeating the line about how all the thousands of minor coins were going nowhere but Bitcoin and Ethereum would continue to become major world currencies. Things have gotten quiet since we entered the "anxiety" phase:

(https://static.coindesk.com/wp-content/uploads/2018/12/cheat-sheet.png)

But in this case IDK if there will be a recovery phase.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: bacchi on June 14, 2022, 04:42:56 PM
Coinbase got hit by the Super Bowl ad curse.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ToTheMoon on June 14, 2022, 06:10:50 PM
To the moon!
Yes?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on June 14, 2022, 06:45:38 PM
To the moon!
Yes?

Well played sir, well played.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on June 14, 2022, 09:27:36 PM
To the moon!
Yes?

Well played sir, well played.

My thoughts keep orbiting this exchange
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on June 15, 2022, 07:40:47 AM
This is definitely a moment when those of us who've gone heavily into Crypto area grateful that it was only a LOW percentage, yes.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on June 15, 2022, 12:45:47 PM
This is definitely a moment when those of us who've gone heavily into Crypto area grateful that it was only a LOW percentage, yes.

And/or to have an extremely low cost basis. I figure bitcoin could fall another 99.7% before my "forget I have them for years at a time" holdings are in the red.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: ATtiny85 on June 15, 2022, 01:44:41 PM
To the moon!
Yes?

Well played sir, well played.

My thoughts keep orbiting this exchange

It came to me in stages,  but finally I understood the gravity of the exchange. It took some time since it is not really my field.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on June 15, 2022, 04:49:18 PM
Yes I have 20%. @Malcat  I plan to rebalance my portfolio annually to keep it at 20% crypto.

Genuinely curious: you stickin' to this plan?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: HPstache on June 15, 2022, 04:50:53 PM
Yes I have 20%. @Malcat  I plan to rebalance my portfolio annually to keep it at 20% crypto.

Genuinely curious: you stickin' to this plan?

@whywork
Title: Re: What do you think of adding a low% of crypto allocation
Post by: PDXTabs on June 15, 2022, 04:54:25 PM
This is definitely a moment when those of us who've gone heavily into Crypto area grateful that it was only a LOW percentage, yes.

And/or to have an extremely low cost basis. I figure bitcoin could fall another 99.7% before my "forget I have them for years at a time" holdings are in the red.

Yes, my BTC cost basis was $450, but I sold it to buy a house.*

* - not the whole thing
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on June 15, 2022, 07:35:59 PM
I haven't bought any crypto since 2019 but I will be buying again soon.  Buying in early-2017 and again late-2018-19 was the best financial decision I ever made.  I have no reason to think late-2022-23 will be any different so I'm sticking to my playbook!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on June 16, 2022, 12:15:50 AM
Why is the previous 4 years the timeline of choice? Why not the last 6 months? Over the past 6 months, Bitcoin is down 17%.

I don't mind Bitcoin itself. However, the strong advocates for this type of "investment" has a tendency to bug the shit out of me. The very strong vocal advocates tend to have very little money to invest and want to get rich quick.

It is my belief that the MMM crowd probably has a small amount in their portfolio. However, the MMM crowd is smart enough not to be spewing Bitcoin FOMO all over the place. It looks and smells like barf.


Thank you to whoever brought back this thread. I just wanted to re-post my first comment on this thread from September 25, 2021, when bitcoin was trading at $42,705.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FLBiker on June 16, 2022, 06:39:45 AM
The past few weeks is probably the closest I've followed crypto.  I thought about getting into it in 2011 (had $2000 at Dwolla, intending to buy BTC via Mt. Gox) but I decided not to at the last minute.  Perhaps I'd be rich, perhaps I'd be bitter at having my account hacked and my coins stolen, who knows?  Anyways, after that, I kind of tangentially paid attention, but I never really considered investing because the price was always so much higher than when I first considered it.

Fundamentally, though, I just don't get it.  As I say, I've paid a lot more attention over these past few weeks, and I still don't get it.  Clearly, the vast majority of the alt coins are just pump and dump scams being promoted via social media to enrich the creators and early adopters.  The ability of exchanges to just lock down withdrawals is very problematic, and I don't trust the "dollar pegged" coins at all.  Blockchain absolutely has lots of utility, but I don't understand why one particular flavor of it is inherently valuable.  I mean, a given coin could be "scarce" in the sense that there might be a finite limit, but they can keep cutting those coins up smaller and smaller, plus someone can always make another coin that utilizes blockchain.  I can't get past cryptocurrency seeming more like a collectible than either a currency or an investment, and the tremendous overlap between crypto enthusiasts and NFT enthusiasts doesn't diminish this perception for me.  Lots of people make money on collectibles, but I'm not interested in them.

And so much of the "investment advice" I've been seeing is all charting and technical analysis which, based on my admittedly limited understanding, is all hooey.  It's like fortune telling based on tea leaves or animal bones -- you're looking at things, trying to discern patterns that will hold true in the future, and you will be right some of the time.  And there's all this knocking of "fiat" currency -- but I don't get it.  1) I don't invest in "fiat" currency.  I invest in companies (via low cost index funds), and I use fiat currency to buy things because that's what the stores accept.  If some blockchain-based currency became the standard denomination of things, I'd use that.  2) Why would I have more faith in some group of developers than I would in a government?  Both are potentially flawed, and neither are based on a "real" commodity.  3) All this fear that "the government can just seize your assets" seems overblown (as I don't plan to be sanctioned any time soon for my association with war criminals), and we're absolutely seeing exchanges seize assets from folks with absolutely no justification (other than that the exchanges needed the money).

Full disclosure -- I feel the same way about gold, despite it's having been a "store of value" for much of human history.  I just don't get it.  Who cares about yellow shiny metal?  Investing in companies makes sense to me -- they have a value because they create a good or perform a service, and as they grow and accumulate profits, it makes sense to me that those values would gradually increase.

Fundamentally, I'm a firm believer in only investing in things I understand.  Cryptocurrency continues to fail that test for me.  People will undoubtedly make (and lose) lots of money in it, as they do in lots of other things I don't understand (baseball cards, gold, options, etc.).  I can live with that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on June 16, 2022, 02:45:10 PM
I've flirted with buying a little crypto before. Today, finally the bit the bullet in one of the most cautious ways possible - buying a tidbit of BITW.

My intent is to buy more if crypto keeps dropping but I don't have a super-concrete plan. I intend to buy larger amounts if it keeps dropping, with the hope that after the drop it rebounds a lot faster than stocks. In my mind it's vaguely similar to some sort of long option on equity markets, in that it could go zero more easily than stocks but have greater gains during upturns.



Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on June 16, 2022, 03:01:11 PM
I've flirted with buying a little crypto before. Today, finally the bit the bullet in one of the most cautious ways possible - buying a tidbit of BITW.

My intent is to buy more if crypto keeps dropping but I don't have a super-concrete plan. I intend to buy larger amounts if it keeps dropping, with the hope that after the drop it rebounds a lot faster than stocks. In my mind it's vaguely similar to some sort of long option on equity markets, in that it could go zero more easily than stocks but have greater gains during upturns.

So all the benefits of timing the market coupled with speculating?  :P
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on June 16, 2022, 03:55:30 PM
I've flirted with buying a little crypto before. Today, finally the bit the bullet in one of the most cautious ways possible - buying a tidbit of BITW.

My intent is to buy more if crypto keeps dropping but I don't have a super-concrete plan. I intend to buy larger amounts if it keeps dropping, with the hope that after the drop it rebounds a lot faster than stocks. In my mind it's vaguely similar to some sort of long option on equity markets, in that it could go zero more easily than stocks but have greater gains during upturns.

So all the benefits of timing the market coupled with speculating?  :P

Exactly!!!!!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on June 16, 2022, 08:32:23 PM
I haven't bought any crypto since 2019 but I will be buying again soon.  Buying in early-2017 and again late-2018-19 was the best financial decision I ever made.  I have no reason to think late-2022-23 will be any different so I'm sticking to my playbook!
Were there also some failure-to-sell financial decisions since 2017 that count among the worst?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on June 16, 2022, 09:30:00 PM
I haven't bought any crypto since 2019 but I will be buying again soon.  Buying in early-2017 and again late-2018-19 was the best financial decision I ever made.  I have no reason to think late-2022-23 will be any different so I'm sticking to my playbook!
Were there also some failure-to-sell financial decisions since 2017 that count among the worst?

There is always someone who bought into something early. Good for them. However, that is not representative of this thread. The thread was started on September 6, 2021. The idea that was proposed was that maybe the average investor should have a small allocation to crypto for a small boost in overall returns, especially considering the recent run-up in prices.

Many posters responded with "no thanks" The crypto crowd responded with, "You just don't understand. It's a new world. You are going to regret it" The other side responded with, "I understand enough to not like it. I like index funds and real estate more. I will not regret it. I don't buy investments based on speculation and FOMO"

On September 6, 2021, Bitcoin was at $52,686 and now on June 16, 2022 it's around $20,500.

On September 30, 2021, I posted on this thread (bolded below) that Bitcoin was going to crash 50-90% within 6 months of the first U.S. government regulation of crypto. I think Biden passed an executive order on March 16, 2022 to regulate crypto. It didn't do much immediately, but it was the first step in establishing future regulation, which was kind of my point from the original post.     

I don't really follow crypto that much because I think it's stupid, but when asked of my opinion, my opinion is below. Looking back, it's not a bad guess. On March 16, 2022 Bitcoin was trading at $41,133. It's now down 50%. I'm 3 months into my 6 month prediction. I have another 3 months for it to drop more. If it ends up in the 50% to 90% decrease range, I guess I was correct.

We will see what happens. Only time will tell. Maybe it rebounds?


Here is another opinion. It might not be worth much, but here it is.

1. People are making money on appreciating Bitcoin. However, they are not paying income taxes.

2. The US government wants to collect on the capital gains of Bitcoin.

3. The US government will start to put restrictions on buying/selling/trading bitcoin in an effort to collect capital gains.

4. The market of holders in bitcoin will interpret this as a threat to the growth and ceiling of Bitcoin.

5. Because Bitcoin is mostly based on speculation, trust and price will fall 50%-90% within 6 months of the first US government restriction. Yes, I understand the technology make sense. However, when people are scared, it really doesn't matter.

I don't really care either way.

I appreciate the few willing to allocate 40% to crypto when they have a near or above 1 million portfolio. It allows the opportunity for an apples to apples conversation.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on June 16, 2022, 10:16:30 PM
^^ Thanks for typing all of that in bold so that I can more clearly understand it!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on June 17, 2022, 08:55:25 AM
I think people have been pretty open that the supposition of the thread is nowhere near a 40% allocation to crypto.

Since we're mustachians, many of us can have $10,000 in crypto and have that represent a small fraction of our worlds.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on June 17, 2022, 11:51:13 AM
On September 30, 2021, I posted on this thread (bolded below) that Bitcoin was going to crash 50-90% within 6 months of the first U.S. government regulation of crypto. I think Biden passed an executive order on March 16, 2022 to regulate crypto. It didn't do much immediately, but it was the first step in establishing future regulation, which was kind of my point from the original post.     
...
3. The US government will start to put restrictions on buying/selling/trading bitcoin in an effort to collect capital gains.

4. The market of holders in bitcoin will interpret this as a threat to the growth and ceiling of Bitcoin.

5. Because Bitcoin is mostly based on speculation, trust and price will fall 50%-90% within 6 months of the first US government restriction. Yes, I understand the technology make sense. However, when people are scared, it really doesn't matter.

Elsewhere I predicted CPI-U above 8.5%, which was correct for the wrong reasons.  Incorrect assumptions on my part canceled out, and CPI-U was 8.6% last Friday.  So even when the direction is correct, I think it's important to understand what went right and wrong with a prediction.  And hopefully you view it that way, too.

Your point (3) mentions "restrictions on buying/selling/trading bitcoin", and your recent post claims a March executive order on crypto fulfills that criteria.  But what I see is an executive order to study crypto, not to do anything.  In my view, the executive order does not place "restrictions on buying/selling/trading bitcoin".

https://www.natlawreview.com/article/president-biden-issues-executive-order-cryptocurrencies-taking-steps-toward
Quote
On March 9, 2022 President Joe Biden issued the “Executive Order on Ensuring Responsible Development of Digital Assets” (the Executive Order), in which he called for a broad review of digital assets, including cryptocurrencies, citing the $3 trillion digital asset market cap as of November 2021 and a survey suggesting that upwards of 16 percent of American adults have invested in, traded, or used cryptocurrencies.

On point (4), US crypto companies widely take the exact opposite view.  They want mainstream acceptance, and view government regulation as a pathway to mainstream acceptance - they welcome regulation.  From the time of your Sept 30 2021 prediction to the week after Biden's executive order, BTC-USD fell 6%.

2021 Sep 30: 43,790.89

2022 Mar  2:  43,924.12
2022 Mar  9:  41,982.93
2022 Mar 16: 41,143.93
2022 Mar 31: 45,538.68

The Fed started raising its Fed funds rate in March, and provided more guidance on future rate hikes.  Near the end of March a 0.50% was hinted at, and this is what followed after the Fed's actions:

2022 Apr 30:  37,714.88
2022 May 31: 31,792.31
today: 20,575.67

I'm not a passive observer in this, either - last week I predicted CPI-U with incorrect assumptions, and invested in a drop in crypto.  Last week I invested roughly 0.33% of my portfolio in BITO puts expiring this week, and the returns on those were insane.  The reason I made that "bet"/"speculation"/"investment" was to take advantage of how CPI-U would drive stock market drops, and that would translate into drops in the price of BTC.

That's how I think BTC's price should be viewed - as currently driven by the stock market.  I don't think regulations have the impact you expect, and I pointed to the executive order where I don't see restrictions on trading crypto.  I point to the past week as an example of my theory that stock market drops drive BTC price drops.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on June 19, 2022, 08:52:19 AM
I read "Atomic Habits" on audio last summer. The basic idea is that making many small changes can lead to large outcomes. I feel like this applies to financial decisions and my personal life.

I think my story is very similar to many others on this forum. Many small changes over 5-10 years, lead to large outcomes.

Learning to say "no" to a very small allocation to "X"... makes a big difference because those offers are not just one. I got the same pitch from my brother to buy silver. Five years before that, he told me to buy Iraqi Dinar.

The person doing to pitch often says, "But, it's only a small allocation, so what's the downside?" The downside is if you repeatedly make poor financial decisions over long periods of time, even if they are small, they lead to big consequences.

I'm 42 and my brother is 40. My brother sold his wife's house in Jan 2020 and they bought a 5th wheel and silver. However, they don't have enough money to buy a truck to tow it. They bought silver at $25 and are waiting for it to hit $50 before they can buy a truck. They have been staying with different family members for the past two years, mostly rent free. They bounce from house to house.

So I guess the downside is being homeless. However, my brother's allocation to silver is not small. He is all in. To the moon!

 



Title: Re: What do you think of adding a low% of crypto allocation
Post by: JAYSLOL on June 19, 2022, 10:12:35 AM
I read "Atomic Habits" on audio last summer. The basic idea is that making many small changes can lead to large outcomes. I feel like this applies to financial decisions and my personal life.

I think my story is very similar to many others on this forum. Many small changes over 5-10 years, lead to large outcomes.

Learning to say "no" to a very small allocation to "X"... makes a big difference because those offers are not just one. I got the same pitch from my brother to buy silver. Five years before that, he told me to buy Iraqi Dinar.

The person doing to pitch often says, "But, it's only a small allocation, so what's the downside?" The downside is if you repeatedly make poor financial decisions over long periods of time, even if they are small, they lead to big consequences.

I'm 42 and my brother is 40. My brother sold his wife's house in Jan 2020 and they bought a 5th wheel and silver. However, they don't have enough money to buy a truck to tow it. They bought silver at $25 and are waiting for it to hit $50 before they can buy a truck. They have been staying with different family members for the past two years, mostly rent free. They bounce from house to house.

So I guess the downside is being homeless. However, my brother's allocation to silver is not small. He is all in. To the moon!

The other problem of “it’s only a small percentage of my AA” is that, if you are actually following your AA and are rebalancing, if you have say $500k NW and 5% in crypto ($25k), and it falls to half, you need to buy another $12k to rebalance to 5%.  And then it drops by half again in the next 6 months so you need to buy another $11k and now your low percentage has cost you around 10% to own.  I’m not saying crypto isn’t here to stay, but there’s no guarantee it is, and if you have even a small percentage and the hype dies off and you keep buying lower and lower do you just keep going or abandon your AA?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on June 19, 2022, 11:09:26 AM

The other problem of “it’s only a small percentage of my AA” is that, if you are actually following your AA and are rebalancing, if you have say $500k NW and 5% in crypto ($25k), and it falls to half, you need to buy another $12k to rebalance to 5%.  And then it drops by half again in the next 6 months so you need to buy another $11k and now your low percentage has cost you around 10% to own.  I’m not saying crypto isn’t here to stay, but there’s no guarantee it is, and if you have even a small percentage and the hype dies off and you keep buying lower and lower do you just keep going or abandon your AA?

That's a huge issue for rebalancing, and the more often you rebalance, the bigger an issue it becomes. Also, it seems like rebalancing is only guaranteed to be useful if the assets balanced have similar long term performances, or one goes up when the other goes down. There's no guarantee crypto will ever bounce back at all.

Still, if crypto survives at all, logically it will have ups as well as downs. If you buy more when it's down and less when it's up, you might come out ahead. Its high volatility suggests that a strategy that distinguishes well between the low periods and high ones could be effective. Rebalancing is a strategy that seeks to automate the buy low sell high process, so maybe it is relevant.

I think that a logical approach might be rebalance, but rebalance rarely. That would minimize the total loss in the event that crypto dies, but still produce gains if it bounces back. Maybe:
1. do once a year, not once a quarter?
2. assume 3 or 4 down years max, never investing more than a quarter of expected max allocation?
3. So if your target was 8%, invest 2% / year under "low" conditions, nothing in non-low ones
4. Don't sell unless allocation is over 8%

This still has all sorts of uncertainties, like "what is low" and whether to sell all of the amount over 8% or only some. Or since it's certainly not guaranteed, whether to try it at all. :)

For myself, the tiny bit I bought is an opening attempt to buy low. Not suggesting anyone repeat my example, just offering info as a contribution to group entertainment/education, in appreciation of others' contributions across the forum. For now I can buy more at each ratchet downwards if prices keep falling, for several ratchets down (another 20%, another 40%, perhaps) and still be within 2%.* But if it bounces back 3x to prior levels, or perhaps 5x, might be good.

Is this how a formerly sensible person squanders their minimal FIRE nest egg? Stay tuned/keep following, I guess.

*To be clear, I'm not planning to limit myself to 2%/year. Just discussing the idea in this thread, because it fits this thread's title.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: StashingAway on June 19, 2022, 12:55:15 PM
Is this how a formerly sensible person squanders their minimal FIRE nest egg? Stay tuned/keep following, I guess.

I think it's how you can curb FOMO without causing danger to your portfolio. Like playing Powerball after it reaches a certain $$ level.

I bought BTC several years ago primarily as an interest in actually attempting to use it as a currency as it was promoted. I'm no computer scientist, but I did attempt to learn and do it properly; host the wallet on my own device rather than an exchange, store the key in a physically hidden location; pay taxes on the gains when purchasing items with it.

I even bought a couple of (legal!) items with it when digital companies were all jumping on board a couple of years ago. But after what has to be over 100 hours of learning for a very clunky process, the BTC are gathering dust. I have no desire to jump back in and learn lightning network or hosing nodes or any of that nonsense; I can't be bothered and I know that if I can't as a quick learner and smart adapter to these things, then the general population has no hope to become fluent in the process in a safe and trustworthy manner. I heard a breakdown recently that described it as everyone having to become professional money launderers to keep their information safe on a public ledger. Just not going to happen with any of the current setups.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: JAYSLOL on June 19, 2022, 08:06:24 PM

The other problem of “it’s only a small percentage of my AA” is that, if you are actually following your AA and are rebalancing, if you have say $500k NW and 5% in crypto ($25k), and it falls to half, you need to buy another $12k to rebalance to 5%.  And then it drops by half again in the next 6 months so you need to buy another $11k and now your low percentage has cost you around 10% to own.  I’m not saying crypto isn’t here to stay, but there’s no guarantee it is, and if you have even a small percentage and the hype dies off and you keep buying lower and lower do you just keep going or abandon your AA?

That's a huge issue for rebalancing, and the more often you rebalance, the bigger an issue it becomes. Also, it seems like rebalancing is only guaranteed to be useful if the assets balanced have similar long term performances, or one goes up when the other goes down. There's no guarantee crypto will ever bounce back at all.

Still, if crypto survives at all, logically it will have ups as well as downs. If you buy more when it's down and less when it's up, you might come out ahead. Its high volatility suggests that a strategy that distinguishes well between the low periods and high ones could be effective. Rebalancing is a strategy that seeks to automate the buy low sell high process, so maybe it is relevant.

I think that a logical approach might be rebalance, but rebalance rarely. That would minimize the total loss in the event that crypto dies, but still produce gains if it bounces back. Maybe:
1. do once a year, not once a quarter?
2. assume 3 or 4 down years max, never investing more than a quarter of expected max allocation?
3. So if your target was 8%, invest 2% / year under "low" conditions, nothing in non-low ones
4. Don't sell unless allocation is over 8%

This still has all sorts of uncertainties, like "what is low" and whether to sell all of the amount over 8% or only some. Or since it's certainly not guaranteed, whether to try it at all. :)

For myself, the tiny bit I bought is an opening attempt to buy low. Not suggesting anyone repeat my example, just offering info as a contribution to group entertainment/education, in appreciation of others' contributions across the forum. For now I can buy more at each ratchet downwards if prices keep falling, for several ratchets down (another 20%, another 40%, perhaps) and still be within 2%.* But if it bounces back 3x to prior levels, or perhaps 5x, might be good.

Is this how a formerly sensible person squanders their minimal FIRE nest egg? Stay tuned/keep following, I guess.

*To be clear, I'm not planning to limit myself to 2%/year. Just discussing the idea in this thread, because it fits this thread's title.

Yeah, those were all the issues I was wrestling with when I decided to throw some money in crypto back in summer of 2017.  The $1k or so I put in, which at the time was like 2% of my NW, rocketed up to almost $3k, a fairly significant amount for me, so I cashed it in out of sheer luck right before the crash.  It did rebound, but if it had kept going down and I kept rebalancing further and further down, I could have potentially lost quite a bit.  I’m all for making a quick buck, but in my mind Asset Allocations should only be used for long term holds, and I don’t feel crypto provides much value to society (the specific coins that is, the tech behind it tbd).  So while there may be huge gains short or even long term, I’m definitely weary of designating an actual portion of my AA to it, even if small.  Perhaps with some of those safeguards like infrequent rebalancing and cutting losses after a certain number of down years etc I’d consider buying some again. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on June 29, 2022, 10:13:43 AM
I've flirted with buying a little crypto before. Today, finally the bit the bullet in one of the most cautious ways possible - buying a tidbit of BITW.

My intent is to buy more if crypto keeps dropping but I don't have a super-concrete plan. I intend to buy larger amounts if it keeps dropping, with the hope that after the drop it rebounds a lot faster than stocks. In my mind it's vaguely similar to some sort of long option on equity markets, in that it could go zero more easily than stocks but have greater gains during upturns.

Bought much bigger tidbit of BITW today, and also some BITQ. Nearly at 2% portfolio. Happy for now; additional musings in investment journal.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lutorm on June 29, 2022, 06:33:17 PM
Sometimes I reminisce about mining some bitcoins back in 2011. I sold those immediately and made like a couple hundred $ profit, which I was pretty happy with at the time. (Although I have a note that I paid about $100 for the electricity for mining them, too.) It looks like BTC price was about $30 at that time so I must have had of order 10, so a couple hundred thousand $ now. But would I buy some? No way.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on November 12, 2022, 04:40:09 PM
"That statement and literally the title of this thread are recency bias.

I'm more worried about something that provides one of the three basic needs and has a shortage of supply relative to demand. Than the fart I just jarred from my unicorn failing. Fuck

I'm out.

Sorry I'll bookmark this thread to return in 10 years to say told ya so and dance on the tears of the followers. Maybe sooner.
« Last Edit: February 02, 2022, 04:21:02 PM by boarder42 »"





@boarder42    Are you ready for your "told ya so" dance? Turns out it didn't take 10 years. It only took 9 months.

I've got a "told ya so" shimmy going on, but not a full on dance. Some key points below.

Original post was September 6, 2021 after a short-term run-up on price to $51,800 for bitcoin.

               -As boarder42 suggested. This is recency bias (availability heuristic).

               -I was more harsh and called it FOMO barf.

               -Walt called it fraud. Looks like that is the case for FTX at the moment. 


 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on November 12, 2022, 08:17:04 PM

I've got a "told ya so" shimmy going on, but not a full on dance. Some key points below.

Original post was September 6, 2021 after a short-term run-up on price to $51,800 for bitcoin.

               -As boarder42 suggested. This is recency bias (availability heuristic).

               -I was more harsh and called it FOMO barf.

               -Walt called it fraud. Looks like that is the case for FTX at the moment. 


 

FTX
Had bad effects
Its crypto followers
Now swallowing losses
Is this the last of the crypto wrecks?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on November 12, 2022, 09:33:37 PM
I'm pleased that (so far) the various crypto collapses/frauds/etc haven't caused any systemic problems in the real/non crypto world.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 13, 2022, 06:33:34 AM
Binance, Coinbase, Kraken, Binance.US and KuCoin... there's a hole where FTX used to be, but the other crypto exchanges can take up the slack.  For Coinbase it's an opportunity to poach FTX's customers, which could explain its +12.8% gain on Friday.
https://coinmarketcap.com/rankings/exchanges/

Crypto might have no potential (-100%) or it might have some potential (+200% in a recovery).  Bitcoin is about -65% YTD.  It has suffered crashes worse than that several times, and recovered each time.  The rewards and odds of recovery favor buying some crypto, in my view.  I recently bought shares of Riot Blockchain (RIOT), which is -76% YTD.  Will it collapse or quadruple?  If it takes 5 years to recover, that's still a 32%/year return.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BeanCounter on November 13, 2022, 09:49:41 AM
Sure if you like gambling, but some more and maybe it will work out. But I believe buying any crypto with the idea that it might still have a viable use case is foolish.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on November 13, 2022, 10:27:41 AM
I enjoy that no one in my world any ore accuses me of just not understanding why crypto is such an amazing investment.

Exactly a year ago I was hanging out with in-laws who were aggressively condescending me that I just couldn't grasp why crypto was a better investment than the property I was buying in their city.

They're now both priced out of real estate in their own hometown and I'm several hundred percent up on my investment. Their various alt-coin investments??? Well, I just haven't heard anything about those in awhile.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Shane on November 13, 2022, 11:11:16 AM
I enjoy that no one in my world any ore accuses me of just not understanding why crypto is such an amazing investment.

Exactly a year ago I was hanging out with in-laws who were aggressively condescending me that I just couldn't grasp why crypto was a better investment than the property I was buying in their city.

They're now both priced out of real estate in their own hometown and I'm several hundred percent up on my investment. Their various alt-coin investments??? Well, I just haven't heard anything about those in awhile.

Congratulations on your RE investments! Just curious, why they're up, "in exactly one year", "several hundred percent?" Did you possess some sort of insider knowledge about the market that no one else knew about, or was everyone in your in-laws' town with money to invest just piling it all into crypto, so this amazing RE investment you took advantage of was going untouched, until you came along?...
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on November 13, 2022, 01:47:50 PM
Binance, Coinbase, Kraken, Binance.US and KuCoin... there's a hole where FTX used to be, but the other crypto exchanges can take up the slack. 

I think what most people are taking away from this is that crypto exchanges (FTX was supposedly one of the least risky/most stable) can't handle a run on withdrawals.

That pretty much puts into question *every* exchange, no?

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: mistymoney on November 13, 2022, 02:04:33 PM
the tulips of our time....
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on November 13, 2022, 02:27:07 PM
I enjoy that no one in my world any ore accuses me of just not understanding why crypto is such an amazing investment.

Exactly a year ago I was hanging out with in-laws who were aggressively condescending me that I just couldn't grasp why crypto was a better investment than the property I was buying in their city.

They're now both priced out of real estate in their own hometown and I'm several hundred percent up on my investment. Their various alt-coin investments??? Well, I just haven't heard anything about those in awhile.

Congratulations on your RE investments! Just curious, why they're up, "in exactly one year", "several hundred percent?" Did you possess some sort of insider knowledge about the market that no one else knew about, or was everyone in your in-laws' town with money to invest just piling it all into crypto, so this amazing RE investment you took advantage of was going untouched, until you came along?...

Untouched? No. I just happened to spot a rising tide before it got too high and had a pile of money that I didn't want to solely dump into the overheated equities market at the time. Between high rents and a red hot market (no, I was not the only one with this idea), I'm up several times what I spent on down payment and repairs. Although, I didn't account for sweat equity.

As for my in-laws, lol, let's just say they're the last people who should be lecturing anyone about financial moves.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: redcedar on November 13, 2022, 02:39:05 PM
Makes sense to me.

Not because the asset class makes sense but because all of us make similar speculation bets on things we falsely believe are not at the same level of speculation. An employer. A spouse. A sibling. Forever home. Pick something we delude ourselves over.

A 1-5% bet is potatoes, the fingerling pig potato size potatoes, to the bigger bets we make all the time on those things we delude ourselves are “less risky” than crypto.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on November 13, 2022, 02:47:08 PM
Makes sense to me.

Not because the asset class makes sense but because all of us make similar speculation bets on things we falsely believe are not at the same level of speculation. An employer. A spouse. A sibling. Forever home. Pick something we delude ourselves over.

A 1-5% bet is potatoes, the fingering pig potato size potatoes, to the bigger bets we make all the time on those things we delude ourselves are “less risky” than crypto.

Are you comparing the decision to get married or get a job to investing in crypto somehow? And what the heck are "fingering pig potato size potatoes"?

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on November 13, 2022, 03:09:55 PM
Binance, Coinbase, Kraken, Binance.US and KuCoin... there's a hole where FTX used to be, but the other crypto exchanges can take up the slack.  For Coinbase it's an opportunity to poach FTX's customers, which could explain its +12.8% gain on Friday.

Probably not much slack to pick up.   FTX's marks customers are all out of crypto, at least what they had on the exchange.

I think what most people are taking away from this is that crypto exchanges (FTX was supposedly one of the least risky/most stable) can't handle a run on withdrawals.

That pretty much puts into question *every* exchange, no?

-W

Lately it has been popular for exchanges to provide proof of reserves.   Which of course is meaningless without a statement of the liabilities.   Since they aren't providing the liabilities it is a pretty good bet they are all underwater. 

Today it was reported that Crypto.com "accidently" lost $400 million of customers' ETH by depositing it in the "wrong wallet" (later returned).  It is widely speculated this is some kind of proof of reserves shenanigans.  This and probably some FTX nervousness has caused their in-house magic bean (CRO) to go into free fall.  Be interesting to see if they survive the week.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on November 13, 2022, 04:17:43 PM
I enjoy that no one in my world any ore accuses me of just not understanding why crypto is such an amazing investment.

Exactly a year ago I was hanging out with in-laws who were aggressively condescending me that I just couldn't grasp why crypto was a better investment than the property I was buying in their city.

They're now both priced out of real estate in their own hometown and I'm several hundred percent up on my investment. Their various alt-coin investments??? Well, I just haven't heard anything about those in awhile.

I had a similar experience with my brother and sister-in-law. They buy Iraqi Dinar, Silver and Crypto that cannot be exchanged for money. They have been anti-real estate since January 2020 when they sold their primary home. They bought a 5th wheel trailer and parked it at sister-in-law's moms house. They are very condescending towards others and act like they have all the answers. We are told, "the truth will come out and you will see"

The weird part is that when they make millions on their "investments", they have told everyone that they are going to buy a house on the beach in Florida. I'm not really sure I understand the whole thing correctly. It's very bizarre. I do know that they have been going 6 years strong with negative returns. I wonder how long it will last?   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on November 13, 2022, 04:22:56 PM
I enjoy that no one in my world any ore accuses me of just not understanding why crypto is such an amazing investment.

Exactly a year ago I was hanging out with in-laws who were aggressively condescending me that I just couldn't grasp why crypto was a better investment than the property I was buying in their city.

They're now both priced out of real estate in their own hometown and I'm several hundred percent up on my investment. Their various alt-coin investments??? Well, I just haven't heard anything about those in awhile.

I had a similar experience with my brother and sister-in-law. They buy Iraqi Dinar, Silver and Crypto that cannot be exchanged for money. They have been anti-real estate since January 2020 when they sold their primary home. They bought a 5th wheel trailer and parked it at sister-in-law's moms house. They are very condescending towards others and act like they have all the answers. We are told, "the truth will come out and you will see"

The weird part is that when they make millions on their "investments", they have told everyone that they are going to buy a house on the beach in Florida. I'm not really sure I understand the whole thing correctly. It's very bizarre. I do know that they have been going 6 years strong with negative returns. I wonder how long it will last?

Lol, were you the one who had to lose money to buy them silver as a gift?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BeanCounter on November 13, 2022, 04:26:31 PM
Binance, Coinbase, Kraken, Binance.US and KuCoin... there's a hole where FTX used to be, but the other crypto exchanges can take up the slack.  For Coinbase it's an opportunity to poach FTX's customers, which could explain its +12.8% gain on Friday.

Probably not much slack to pick up.   FTX's marks customers are all out of crypto, at least what they had on the exchange.



Hahaha. I didn’t think about it like that but you’re probably right.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: redcedar on November 13, 2022, 05:13:32 PM
Makes sense to me.

Not because the asset class makes sense but because all of us make similar speculation bets on things we falsely believe are not at the same level of speculation. An employer. A spouse. A sibling. Forever home. Pick something we delude ourselves over.

A 1-5% bet is potatoes, the fingering pig potato size potatoes, to the bigger bets we make all the time on those things we delude ourselves are “less risky” than crypto.

Are you comparing the decision to get married or get a job to investing in crypto somehow? And what the heck are "fingering pig potato size potatoes"?

-W


Edited for fingerling potatoes. The smaller fat finger size potatoes. Some call them pig potatoes as they are fed to pigs.

Yes I am comparing a lot of “normal” decisions to crypto speculation. Most of those decisions are made with similar or even less information or knowledge or wisdom as a crypto purchase. Now success is often viewed through luck or survivorship biased lenses. I knew I had the right spouse. Did you really? I picked an amazing job. Sure you did. Etc etc. After the fact eagle eye hindsight. On what often involved alot of luck or speculation.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on November 13, 2022, 05:55:54 PM
I wondered how long it would take for the unseemly celebrations to commence here - lol

There's undoubtedly tons of fraud/scams in the crypto world and the sooner each piece is uncovered the better - preferably without inflicting too much pain on the innocent/naive, though significant pain seems inevitable. Hopefully, many are now reconsidering the wisdom of holding significant value in centralised tokens and/or on centralised exchanges, etc.

IMO, there is Bitcoin and there is the bandwagon - and ALL of the bandwagon is suspect. Still holding Bitcoin, still happy to hold, and not worrying about short-term ups and downs . . .
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on November 13, 2022, 06:03:19 PM
I wondered how long it would take for the unseemly celebrations to commence here - lol

There's undoubtedly tons of fraud/scams in the crypto world and the sooner each piece is uncovered the better - preferably without inflicting too much pain on the innocent/naive, though significant pain seems inevitable. Hopefully, many are now reconsidering the wisdom of holding significant value in centralised tokens and/or on centralised exchanges, etc.

IMO, there is Bitcoin and there is the bandwagon - and ALL of the bandwagon is suspect. Still holding Bitcoin, still happy to hold, and not worrying about short-term ups and downs . . .


I'm only celebrating not being spoken down to by morons.

Beyond that, whomever wants to invest in crypto can go nuts.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on November 13, 2022, 07:47:53 PM
Yes I am comparing a lot of “normal” decisions to crypto speculation. Most of those decisions are made with similar or even less information or knowledge or wisdom as a crypto purchase. Now success is often viewed through luck or survivorship biased lenses. I knew I had the right spouse. Did you really? I picked an amazing job. Sure you did. Etc etc. After the fact eagle eye hindsight. On what often involved alot of luck or speculation.

Ok, so I did understand you. That's a pretty bizarre analogy. When getting married (most) people date many people, learn how they get along, meet each other's families/friends, often live together for a while, etc. Lots of information is gathered before making the leap, it's a pretty conservative process in many ways. The investing analogy would probably be value or index fund investing where there's considerable due diligence and pretty high confidence in a good outcome.

The crypto investing equivalent would be getting married in Vegas to someone you met the same night because they're really hot (or seemed that way through beer goggles). Very small chance it'll be great. Very large chance it's a disaster and they're going to disappear with all your money....

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 13, 2022, 08:39:36 PM
Binance, Coinbase, Kraken, Binance.US and KuCoin... there's a hole where FTX used to be, but the other crypto exchanges can take up the slack. 
I think what most people are taking away from this is that crypto exchanges (FTX was supposedly one of the least risky/most stable) can't handle a run on withdrawals.

That pretty much puts into question *every* exchange, no?
A "run on withdrawals" is difficult when all withdrawals are halted.  What actually happened was Binance targetting FTX, and potential fraud at FTX making them vulerable to collapse.  After Binance's CEO argued with FTX's CEO publicly, Binance announced it was dumping all FTT tokens (tokens created by FTX).  FTT tokens plunged in value on the announcement.

Sam Bankman Fried founded FTX and Alameda.  Earlier, when Alameda got into trouble, Sam's left hand (FTX) loaned his right hand (Alameda) billions to cover losses.  A significant part of the loan was in FTT tokens, which had dramatically fallen in value.  I believe the assets no longer covered the loan, and that made Alameda insolvent.  Because FTX had loaned billions to Alameda, and had no way to get its money back, FTX also became insolvent.

From what I've read, Sam Bankman Fried could go to prison.  The loan was improper, but he also stole customer assets which became part of the loan.  One investor talking on CNBC had to apologize for using profanity on the air, he was so pissed off.  This wasn't a normal run on assets or even a hack - it appears to be fraud.

Quote
Sam Bankman-Fried transferred at least $4 billion in FTX funds secured by assets including the crypto exchange's FTT token and shares in the trading platform Robinhood Markets Inc (HOOD) to support Alameda Research after the trading firm suffered a series of losses from deals, according to three people familiar with its operations, Reuters reported Thursday.
https://www.coindesk.com/business/2022/11/10/ftx-used-customer-funds-among-other-assets-to-prop-up-alameda-research-in-may-reuters/
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on November 13, 2022, 09:12:29 PM
Yeah, if it's mostly a fraud story, that's even worse for confidence in other crypto exchanges/ventures, though.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Mr. Green on November 13, 2022, 11:01:03 PM
If a bank was a new concept and several of them had become insolvent over the last two years and their customers lost all their money, and then in the latest version you found out the bank actually stole customers' money, made bad decisions, and then lost everyone else's money as a result, would you want to give any bank your money? I sure as hell wouldn't.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: havregryn on November 14, 2022, 12:20:45 AM
We live in Luxembourg in the middle of an epic real estate bubble. How that will go God only knows. Anyway, a year or two ago, some guys decided that they wanted to "make it possible for people who've been priced out of the market to invest in real estate" using "blockchain" and came up with some sort of "tokens" for investing in real estate. You needed a crypto wallet to store these tokens and I still don't really "get" what these tokens were supposed to be but obviously they are SOMEHOW connected to the crypto sphere if they need to be in a crypto wallet (whatever that is).

They were really drumming them up and very eager to explain HOW they would make it possible for anyone to benefit from real estate growth (which was also taken for granted to be eternal) but none of it made any sense. The best I can tell is that the "value" of these tokens is what they say it is, based on their "valuations" of their property portfolio (which remains owned by their company, not by magic tokens).  They don't buy the tokens back from you though and the founder, when asked how one then gets money in exchange for the tokens that have quadrupled in value, appeared to consider that question to be a sign of "not being serious enough about investing". They did however suggest they would, over time, create a secondary market where one could sell their tokens to someone else and make money that way.

Every single fuckin red flag is going off in my head, but young people are lapping this up.
"Investing" in this.

And to make it even more wtf, now everything is going to hell, actual real estate market, actual crypto, but they simply revalued their tokens some percent upwards (because "an independent valuation said so") and all these investors are feeling real smug because this is going even better than they anticipated. Everything else is down, their investment is up. But they have absolutely no way to exchange their investment for money until there is a secondary market and then they're entirely dependent on finding people willing to buy these tokens off of them (and praying to God that not everyone decides to do so at the same time).

Can anyone explain this to me, I mean, I don't intend to "invest" in this, but how is something like this given so much legitimacy!? I feel that 20y ago even my semi-literate grandma would have thought that this sounded like a bad idea, but this crypto generation is somehow genuinely convinced that this is how any investing is supposed to work. Plus, I don't think this is even meant as a scam, the guys seem very GENUINELY convinced that they're bringing real estate speculation to the poor masses, but all I can see is that they're selling some kind of an NFT of a certain % of a certain property. I really, really don't get it.
They insist this isn't anything like crypto or NFT and is in fact more like buying shares in a real estate company but when asked why aren't they then selling shares in their real estate company, no clear response.

I am really curious to hear what people think of this. Because I'm really beginning to feel like I am too old to understand the genius behind it. Is there ANY scenario in which this can sustain itself (not gonna invest, just curious and open to arguments).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Shane on November 14, 2022, 05:10:00 AM
I enjoy that no one in my world any ore accuses me of just not understanding why crypto is such an amazing investment.

Exactly a year ago I was hanging out with in-laws who were aggressively condescending me that I just couldn't grasp why crypto was a better investment than the property I was buying in their city.

They're now both priced out of real estate in their own hometown and I'm several hundred percent up on my investment. Their various alt-coin investments??? Well, I just haven't heard anything about those in awhile.

Congratulations on your RE investments! Just curious, why they're up, "in exactly one year", "several hundred percent?" Did you possess some sort of insider knowledge about the market that no one else knew about, or was everyone in your in-laws' town with money to invest just piling it all into crypto, so this amazing RE investment you took advantage of was going untouched, until you came along?...

Untouched? No. I just happened to spot a rising tide before it got too high and had a pile of money that I didn't want to solely dump into the overheated equities market at the time. Between high rents and a red hot market (no, I was not the only one with this idea), I'm up several times what I spent on down payment and repairs. Although, I didn't account for sweat equity.

As for my in-laws, lol, let's just say they're the last people who should be lecturing anyone about financial moves.
Oh, okay. Got it. Sorry, misunderstood and thought you meant the value of the RE had gone up several hundred percent in just one year, which seemed pretty incredible and like there might be an interesting story behind it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Shane on November 14, 2022, 05:23:41 AM
We live in Luxembourg in the middle of an epic real estate bubble. How that will go God only knows. Anyway, a year or two ago, some guys decided that they wanted to "make it possible for people who've been priced out of the market to invest in real estate" using "blockchain" and came up with some sort of "tokens" for investing in real estate. You needed a crypto wallet to store these tokens and I still don't really "get" what these tokens were supposed to be but obviously they are SOMEHOW connected to the crypto sphere if they need to be in a crypto wallet (whatever that is).

They were really drumming them up and very eager to explain HOW they would make it possible for anyone to benefit from real estate growth (which was also taken for granted to be eternal) but none of it made any sense. The best I can tell is that the "value" of these tokens is what they say it is, based on their "valuations" of their property portfolio (which remains owned by their company, not by magic tokens).  They don't buy the tokens back from you though and the founder, when asked how one then gets money in exchange for the tokens that have quadrupled in value, appeared to consider that question to be a sign of "not being serious enough about investing". They did however suggest they would, over time, create a secondary market where one could sell their tokens to someone else and make money that way.

Every single fuckin red flag is going off in my head, but young people are lapping this up.
"Investing" in this.

And to make it even more wtf, now everything is going to hell, actual real estate market, actual crypto, but they simply revalued their tokens some percent upwards (because "an independent valuation said so") and all these investors are feeling real smug because this is going even better than they anticipated. Everything else is down, their investment is up. But they have absolutely no way to exchange their investment for money until there is a secondary market and then they're entirely dependent on finding people willing to buy these tokens off of them (and praying to God that not everyone decides to do so at the same time).

Can anyone explain this to me, I mean, I don't intend to "invest" in this, but how is something like this given so much legitimacy!? I feel that 20y ago even my semi-literate grandma would have thought that this sounded like a bad idea, but this crypto generation is somehow genuinely convinced that this is how any investing is supposed to work. Plus, I don't think this is even meant as a scam, the guys seem very GENUINELY convinced that they're bringing real estate speculation to the poor masses, but all I can see is that they're selling some kind of an NFT of a certain % of a certain property. I really, really don't get it.
They insist this isn't anything like crypto or NFT and is in fact more like buying shares in a real estate company but when asked why aren't they then selling shares in their real estate company, no clear response.

I am really curious to hear what people think of this. Because I'm really beginning to feel like I am too old to understand the genius behind it. Is there ANY scenario in which this can sustain itself (not gonna invest, just curious and open to arguments).

Sounds kinda like an REIT. Maybe they just added the blockchain element to make the "investment" seem sexier to young, gullible "investors"?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on November 14, 2022, 05:55:57 AM
We live in Luxembourg in the middle of an epic real estate bubble. How that will go God only knows. Anyway, a year or two ago, some guys decided that they wanted to "make it possible for people who've been priced out of the market to invest in real estate" using "blockchain" and came up with some sort of "tokens" for investing in real estate. You needed a crypto wallet to store these tokens and I still don't really "get" what these tokens were supposed to be but obviously they are SOMEHOW connected to the crypto sphere if they need to be in a crypto wallet (whatever that is).
People in the U.S. invested in FTX, which was headquartered in the offshore tax haven of the Bahamas.  The project you describe is located in Luxembourg, regulated there, and involves real estate there.  That's a much safer environment to experiment in.
https://www.blochome.com/en/blog

My guess is that they have a corporation own a real estate property, which is very common.  The novel part is equating crypto tokens to the ownership shares.  Fractional real estate investment with crypto thrown in for excitement.  What I'd want to know are the fees they made on setting this up, and why they aren't renting this place and keeping the profits for themselves.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Metalcat on November 14, 2022, 06:59:33 AM
I enjoy that no one in my world any ore accuses me of just not understanding why crypto is such an amazing investment.

Exactly a year ago I was hanging out with in-laws who were aggressively condescending me that I just couldn't grasp why crypto was a better investment than the property I was buying in their city.

They're now both priced out of real estate in their own hometown and I'm several hundred percent up on my investment. Their various alt-coin investments??? Well, I just haven't heard anything about those in awhile.

Congratulations on your RE investments! Just curious, why they're up, "in exactly one year", "several hundred percent?" Did you possess some sort of insider knowledge about the market that no one else knew about, or was everyone in your in-laws' town with money to invest just piling it all into crypto, so this amazing RE investment you took advantage of was going untouched, until you came along?...

Untouched? No. I just happened to spot a rising tide before it got too high and had a pile of money that I didn't want to solely dump into the overheated equities market at the time. Between high rents and a red hot market (no, I was not the only one with this idea), I'm up several times what I spent on down payment and repairs. Although, I didn't account for sweat equity.

As for my in-laws, lol, let's just say they're the last people who should be lecturing anyone about financial moves.
Oh, okay. Got it. Sorry, misunderstood and thought you meant the value of the RE had gone up several hundred percent in just one year, which seemed pretty incredible and like there might be an interesting story behind it.

Lol, no, but incidentally the value of my other property I bought last year is arguably double what I paid for it based on current comps, but that's in a very whacky market and might be even harder to sell than the weird Luxembourg crypto shit described above. Lol

Title: Re: What do you think of adding a low% of crypto allocation
Post by: achvfi on November 14, 2022, 09:05:45 AM
    Probably better to listen to MMM and stay out and have lower overall portfolio returns.

    LMAO.

    In the not too distant future when this is worth next to nothing y'all will be claiming you got out before that happened and are living like kings. Rather than posting percentages of ownership stakes why not start journals and document your actual transactions.  What do you have to lose?  Someone may read 8t and buy more unicorn farts and drive up the value.  Hell it may even become a unicorn poop.

    Alright then. Not going to start a new thread at the moment, but I may soon.  Here's the numbers breakdown beyond just my current percentages:

    Notes/Dislaimers: 
    • On August 1 there was 695k in my retirement stache.  100% VTSAX
    • I'm unable to directly buy crypto from my retirement stache, but I do have access to Grayscale Trust products, so when I say I'm buying Eth or BTC, what I really mean is I'm buying their trusts.  It closely, but does not perfectly match the growth of these coins.
       

    August Details:
    • August 2 - I bought 100k of Crypto...50k Bitcoin Trust (GBTC) and 50k Ethereum Trust (ETHE)
    • August 20 - I bought 33k more of Ethereum Trust (ETHE)
    [/li]
    [/list]

    August Month End Totals:
          Stache Total: 731k
          Crypto total: 159k
          VTSAX total: 572k

    September Month End Totals: No new trades.
          Stache Total: 714k
          Crypto total: 147k
          VTSAX total: 567k

    October Details:
    • Sold Bitcoin Trust and bout extra ETHE, as well as Grayscale Large Cap (GDLC)
    • Purpose of owning GDLC is that it gives me exposure to Bitcoin, Ethereum, Carsano, Solana, Uniswap, Chainlink, Litecoin, and Bitcoin Cash
    [li]Additionally, I transferred 180k more from VTSAX into ETHE and GDLC[/li]
    [li]Finally, I transferred unneeded cash from checking and bought 3k each of the following: Enjin, Polkadot, Avalanche, Aave, Chainlink, VeChain, as well as 3k of Ethereum[/li][/list]

    October Month End Totals:
         Stache Total: 770k plus 20k in non-retirement account
          Crypto total: 395k
          VTSAX total: 395k

          Breakdown:
               ETHE - 155k
               GDLC - 217k
               Enjin - 3k
               Polkadot 3k
               Avalanche 3k
               Aave 3k
               Chainlink 3k
               VeChain 3k
               Ethereum 3k

    How is this portfolio doing now? Hopefully you got out before downturn.
    Title: Re: What do you think of adding a low% of crypto allocation
    Post by: theninthwall on November 14, 2022, 09:39:36 AM
    I wondered how long it would take for the unseemly celebrations to commence here - lol
    I think part of that is that the crypto community does a lot of shouting on the way up, but there is hardly any noise on the way down. When a lot of people are getting sucked in and putting up money they can’t afford to lose, the community needs to be accountable.
    Title: Re: What do you think of adding a low% of crypto allocation
    Post by: mistymoney on November 14, 2022, 11:20:16 AM
    Yes I am comparing a lot of “normal” decisions to crypto speculation. Most of those decisions are made with similar or even less information or knowledge or wisdom as a crypto purchase. Now success is often viewed through luck or survivorship biased lenses. I knew I had the right spouse. Did you really? I picked an amazing job. Sure you did. Etc etc. After the fact eagle eye hindsight. On what often involved alot of luck or speculation.

    Ok, so I did understand you. That's a pretty bizarre analogy. When getting married (most) people date many people, learn how they get along, meet each other's families/friends, often live together for a while, etc. Lots of information is gathered before making the leap, it's a pretty conservative process in many ways. The investing analogy would probably be value or index fund investing where there's considerable due diligence and pretty high confidence in a good outcome.

    The crypto investing equivalent would be getting married in Vegas to someone you met the same night because they're really hot (or seemed that way through beer goggles). Very small chance it'll be great. Very large chance it's a disaster and they're going to disappear with all your money....

    -W

    I think you're going a bit too far here.

    I'd take marriage to a hot stranger who at least seems nice and compatible during a 5-6 hour meeting any day over investing in crypto.

    I'd also wager that plenty of those marriages do and can work out fine, at least compared to 'regular' marriages - which also frequently implode. We only hear about the big vegas wedding blow ups, I think a lot are probably no worse than the standard we dated for 2 years marriages.

    Title: Re: What do you think of adding a low% of crypto allocation
    Post by: talltexan on November 14, 2022, 11:23:03 AM
    I've continued to invest in crypto and share my moves over in my journal, and...it's been emotionally draining. Losing money hurts, but it's also psychologically very trying.

    But, sure, if I were getting Alpha from it, I'd probably wonder why I was so restrained....
    Title: Re: What do you think of adding a low% of crypto allocation
    Post by: mistymoney on November 14, 2022, 11:31:55 AM
    We live in Luxembourg in the middle of an epic real estate bubble. How that will go God only knows. Anyway, a year or two ago, some guys decided that they wanted to "make it possible for people who've been priced out of the market to invest in real estate" using "blockchain" and came up with some sort of "tokens" for investing in real estate. You needed a crypto wallet to store these tokens and I still don't really "get" what these tokens were supposed to be but obviously they are SOMEHOW connected to the crypto sphere if they need to be in a crypto wallet (whatever that is).

    They were really drumming them up and very eager to explain HOW they would make it possible for anyone to benefit from real estate growth (which was also taken for granted to be eternal) but none of it made any sense. The best I can tell is that the "value" of these tokens is what they say it is, based on their "valuations" of their property portfolio (which remains owned by their company, not by magic tokens).  They don't buy the tokens back from you though and the founder, when asked how one then gets money in exchange for the tokens that have quadrupled in value, appeared to consider that question to be a sign of "not being serious enough about investing". They did however suggest they would, over time, create a secondary market where one could sell their tokens to someone else and make money that way.

    Every single fuckin red flag is going off in my head, but young people are lapping this up.
    "Investing" in this.

    And to make it even more wtf, now everything is going to hell, actual real estate market, actual crypto, but they simply revalued their tokens some percent upwards (because "an independent valuation said so") and all these investors are feeling real smug because this is going even better than they anticipated. Everything else is down, their investment is up. But they have absolutely no way to exchange their investment for money until there is a secondary market and then they're entirely dependent on finding people willing to buy these tokens off of them (and praying to God that not everyone decides to do so at the same time).

    Can anyone explain this to me, I mean, I don't intend to "invest" in this, but how is something like this given so much legitimacy!? I feel that 20y ago even my semi-literate grandma would have thought that this sounded like a bad idea, but this crypto generation is somehow genuinely convinced that this is how any investing is supposed to work. Plus, I don't think this is even meant as a scam, the guys seem very GENUINELY convinced that they're bringing real estate speculation to the poor masses, but all I can see is that they're selling some kind of an NFT of a certain % of a certain property. I really, really don't get it.
    They insist this isn't anything like crypto or NFT and is in fact more like buying shares in a real estate company but when asked why aren't they then selling shares in their real estate company, no clear response.

    I am really curious to hear what people think of this. Because I'm really beginning to feel like I am too old to understand the genius behind it. Is there ANY scenario in which this can sustain itself (not gonna invest, just curious and open to arguments).

    interesting. Do they have a portfolio of properties they've been buying? Are the properties rented and generation income?
    Title: Re: What do you think of adding a low% of crypto allocation
    Post by: mistymoney on November 14, 2022, 11:43:15 AM
      Probably better to listen to MMM and stay out and have lower overall portfolio returns.

      LMAO.

      In the not too distant future when this is worth next to nothing y'all will be claiming you got out before that happened and are living like kings. Rather than posting percentages of ownership stakes why not start journals and document your actual transactions.  What do you have to lose?  Someone may read 8t and buy more unicorn farts and drive up the value.  Hell it may even become a unicorn poop.

      Alright then. Not going to start a new thread at the moment, but I may soon.  Here's the numbers breakdown beyond just my current percentages:

      Notes/Dislaimers: 
      • On August 1 there was 695k in my retirement stache.  100% VTSAX
      • I'm unable to directly buy crypto from my retirement stache, but I do have access to Grayscale Trust products, so when I say I'm buying Eth or BTC, what I really mean is I'm buying their trusts.  It closely, but does not perfectly match the growth of these coins.
         

      August Details:
      • August 2 - I bought 100k of Crypto...50k Bitcoin Trust (GBTC) and 50k Ethereum Trust (ETHE)
      • August 20 - I bought 33k more of Ethereum Trust (ETHE)
      [/li]
      [/list]

      August Month End Totals:
            Stache Total: 731k
            Crypto total: 159k
            VTSAX total: 572k

      September Month End Totals: No new trades.
            Stache Total: 714k
            Crypto total: 147k
            VTSAX total: 567k

      October Details:
      • Sold Bitcoin Trust and bout extra ETHE, as well as Grayscale Large Cap (GDLC)
      • Purpose of owning GDLC is that it gives me exposure to Bitcoin, Ethereum, Carsano, Solana, Uniswap, Chainlink, Litecoin, and Bitcoin Cash
      [li]Additionally, I transferred 180k more from VTSAX into ETHE and GDLC[/li]
      [li]Finally, I transferred unneeded cash from checking and bought 3k each of the following: Enjin, Polkadot, Avalanche, Aave, Chainlink, VeChain, as well as 3k of Ethereum[/li][/list]

      October Month End Totals:
           Stache Total: 770k plus 20k in non-retirement account
            Crypto total: 395k
            VTSAX total: 395k

            Breakdown:
                 ETHE - 155k
                 GDLC - 217k
                 Enjin - 3k
                 Polkadot 3k
                 Avalanche 3k
                 Aave 3k
                 Chainlink 3k
                 VeChain 3k
                 Ethereum 3k

      How is this portfolio doing now? Hopefully you got out before downturn.

      Seconded. Reading these trade, checking the tickers. seems like most down 70/80% from highs last nov.
      Title: Re: What do you think of adding a low% of crypto allocation
      Post by: mistymoney on November 14, 2022, 12:18:49 PM
      I wondered how long it would take for the unseemly celebrations to commence here - lol
      I think part of that is that the crypto community does a lot of shouting on the way up, but there is hardly any noise on the way down. When a lot of people are getting sucked in and putting up money they can’t afford to lose, the community needs to be accountable.

      I'm not sure I buy this. We all have access to the same information. And we could all also choose to go through a financial advisor or DIY. If you choose DIY, do your research and make your decisions. Not sure why a community would need to be responsible?

      Anyone doing ponzi or other fraud, sure. But just a bunch of people deciding to do the same thing?
      We all had our choice to make.
      Title: Re: What do you think of adding a low% of crypto allocation
      Post by: GuitarStv on November 14, 2022, 12:44:44 PM
      I wondered how long it would take for the unseemly celebrations to commence here - lol
      I think part of that is that the crypto community does a lot of shouting on the way up, but there is hardly any noise on the way down. When a lot of people are getting sucked in and putting up money they can’t afford to lose, the community needs to be accountable.

      I'm not sure I buy this. We all have access to the same information. And we could all also choose to go through a financial advisor or DIY. If you choose DIY, do your research and make your decisions. Not sure why a community would need to be responsible?

      Anyone doing ponzi or other fraud, sure. But just a bunch of people deciding to do the same thing?
      We all had our choice to make.

      Bitcoin is uncomfortably close to a decentralized distributed pyramid scheme.  There has always been a lot of pressure on people who bought in to crypto to proselytize in order to continue to grow the pyramid.  Without those people buying in at the lower level, all the bitcoins that the early adopters got for less money aren't worth anything.
      Title: Re: What do you think of adding a low% of crypto allocation
      Post by: LateStarter on November 14, 2022, 01:23:29 PM
      I wondered how long it would take for the unseemly celebrations to commence here - lol
      I think part of that is that the crypto community does a lot of shouting on the way up, but there is hardly any noise on the way down. When a lot of people are getting sucked in and putting up money they can’t afford to lose, the community needs to be accountable.

      My point was that "doing a 'told ya so' dance", etc. is parroting the same attitude as "have fun staying poor". It's obnoxious and juvenile - pot meet kettle.
      Title: Re: What do you think of adding a low% of crypto allocation
      Post by: HPstache on November 14, 2022, 02:29:15 PM
        Probably better to listen to MMM and stay out and have lower overall portfolio returns.

        LMAO.

        In the not too distant future when this is worth next to nothing y'all will be claiming you got out before that happened and are living like kings. Rather than posting percentages of ownership stakes why not start journals and document your actual transactions.  What do you have to lose?  Someone may read 8t and buy more unicorn farts and drive up the value.  Hell it may even become a unicorn poop.

        Alright then. Not going to start a new thread at the moment, but I may soon.  Here's the numbers breakdown beyond just my current percentages:

        Notes/Dislaimers: 
        • On August 1 there was 695k in my retirement stache.  100% VTSAX
        • I'm unable to directly buy crypto from my retirement stache, but I do have access to Grayscale Trust products, so when I say I'm buying Eth or BTC, what I really mean is I'm buying their trusts.  It closely, but does not perfectly match the growth of these coins.
           

        August Details:
        • August 2 - I bought 100k of Crypto...50k Bitcoin Trust (GBTC) and 50k Ethereum Trust (ETHE)
        • August 20 - I bought 33k more of Ethereum Trust (ETHE)
        [/li]
        [/list]

        August Month End Totals:
              Stache Total: 731k
              Crypto total: 159k
              VTSAX total: 572k

        September Month End Totals: No new trades.
              Stache Total: 714k
              Crypto total: 147k
              VTSAX total: 567k

        October Details:
        • Sold Bitcoin Trust and bout extra ETHE, as well as Grayscale Large Cap (GDLC)
        • Purpose of owning GDLC is that it gives me exposure to Bitcoin, Ethereum, Carsano, Solana, Uniswap, Chainlink, Litecoin, and Bitcoin Cash
        [li]Additionally, I transferred 180k more from VTSAX into ETHE and GDLC[/li]
        [li]Finally, I transferred unneeded cash from checking and bought 3k each of the following: Enjin, Polkadot, Avalanche, Aave, Chainlink, VeChain, as well as 3k of Ethereum[/li][/list]

        October Month End Totals:
             Stache Total: 770k plus 20k in non-retirement account
              Crypto total: 395k
              VTSAX total: 395k

              Breakdown:
                   ETHE - 155k
                   GDLC - 217k
                   Enjin - 3k
                   Polkadot 3k
                   Avalanche 3k
                   Aave 3k
                   Chainlink 3k
                   VeChain 3k
                   Ethereum 3k

        How is this portfolio doing now? Hopefully you got out before downturn.

        Seconded. Reading these trade, checking the tickers. seems like most down 70/80% from highs last nov.

        @aceyou
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 14, 2022, 10:15:06 PM
        I wondered how long it would take for the unseemly celebrations to commence here - lol
        I think part of that is that the crypto community does a lot of shouting on the way up, but there is hardly any noise on the way down. When a lot of people are getting sucked in and putting up money they can’t afford to lose, the community needs to be accountable.

        If one doesn't start out with a view about what is or isn't a good investment a priori, this argument sounds an awful lot like the people who were constantly arguing against investing in the stock market at all time highs, predicting we'd all come to regret our decisions when the next bear market came, and then complained that there weren't more people panicking and selling low when actual market corrections came in 2018, and then in 2020, and again this year in 2022.

        Crypto may well be a terrible thing to invest in, but the simple fact that something has gone down in price doesn't, in of itself, mean it was a bad decision to buy it. Otherwise any time the stock market went down it would also mean it was a bad idea to buy stocks (it wasn't).

        Don't expecting people to publicly wail and gnash their teeth if the evidence you're expecting to convince them that their (probably) bad investment was bad wouldn't be strong enough evidence to convince you your (probably) good investment was good.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 15, 2022, 04:54:44 AM
        Bitcoin is uncomfortably close to a decentralized distributed pyramid scheme.  There has always been a lot of pressure on people who bought in to crypto to proselytize in order to continue to grow the pyramid.  Without those people buying in at the lower level, all the bitcoins that the early adopters got for less money aren't worth anything.
        That's not a pyramid scheme, unless you disagree with this definition:

        Quote
        A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products
        https://en.wikipedia.org/wiki/Pyramid_scheme

        Pyramid schemes are illegal.  Bitcoin has a regulated futures market in the U.S.  The U.S. government does not agree with you.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 15, 2022, 08:20:24 AM
        Bitcoin is uncomfortably close to a decentralized distributed pyramid scheme.  There has always been a lot of pressure on people who bought in to crypto to proselytize in order to continue to grow the pyramid.  Without those people buying in at the lower level, all the bitcoins that the early adopters got for less money aren't worth anything.
        That's not a pyramid scheme, unless you disagree with this definition:

        Quote
        A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products
        https://en.wikipedia.org/wiki/Pyramid_scheme

        Pyramid schemes are illegal.  Bitcoin has a regulated futures market in the U.S.  The U.S. government does not agree with you.

        I know this conversation has been had before, but let's unpack the definition:

        "a business model": The people who create a cryptocurrency have, in the past, sold some or all of what they created for personal profit (in government currencies). That's why there are thousands of cryptocurrencies. Wallets, exchanges, and cryptocurrency financial media are all businesses.

        "that recruits members via a promise of payments": The hoped-for promise of payment is the sort of exponential increase bitcoin saw between 2011 and 2018. There was also lots of talk about bitcoin and other cryptos being inherently deflationary by design. Near the peak, there were ads playing during the Superbowl trying to recruit members. People talked about the FOMO all the too-cautious people would feel when a cryptocurrency became a worldwide medium of exchange, and you'd have to buy in the future at $1M per coin or something like that.

        "for enrolling others into the scheme": Crypto enthusiasts were all over social media for years touting their coins as the next big thing, in an attempt to cause cryptocurrencies to become a major world currency, which would increase their value exponentially again. There are millions of cryptoshilling videos on YouTube and every other site/app, made by people who were already holding cryptocurrency.

        "rather than supplying the sale of investments or other products": The sale of investments part of this definition can be confusing, because even Bernie Madoff sold investments! The problem was that his investments were fictional records in a ledger that were thought by his clients to represent actual assets in the real world that exists outside Madoff's bookkeeping. The people who say cryptocurrency should have a value of $0 would compare cryptocoins with shares held in a Bernie Madoff account. For many years, it was possible to trade and redeem such shares for dollars, as is usually the case with such schemes, but eventually the lack of a tie to actual assets will be the undoing. As for the other products part of the definition, cryptocurrencies have yet to be adopted as a medium of exchange because they are more costly, slower, and much more risky to transact than government fiat currencies. They are constantly being hacked - often by insiders at these "wallets" and "brokerages" - recirculated by the hackers, and then hacked again, creating a loop that feeds upon the new money contributed by naive new buyers.

        In terms of legality, a mistake by a political or legal system does not transform a pyramid scheme into an investment that has any other outcome than a pyramid scheme would have. It does not mean wallets and brokerages are not able to hack their own customers, cover their tracks in the perfect crime, and launder the coins. It does not mean the government can recover or will insure your coins when someone steals them from you. It does not mean any cryptocurrency will ever fulfill its promise of replacing government fiat currencies as a medium of exchange. It does not mean new recruits are not necessary if crypto is going to appreciate or at least not collapse. It does not change the nature of cryptocurrency into something economically promising or even legitimate. All it means is that the government said to a corporation that they have permission to set up a betting market on a derived asset that could go to zero. That permission doesn't change a particular coin into a non-scam.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 15, 2022, 09:23:05 AM
        Can always count on The Onion for some humorous social commentary: Man Who Lost Everything In Crypto Just Wishes Several Thousand More People Had Warned Him (https://www.theonion.com/man-who-lost-everything-in-crypto-just-wishes-several-t-1848764551)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 15, 2022, 09:40:49 AM
        Bitcoin is uncomfortably close to a decentralized distributed pyramid scheme.  There has always been a lot of pressure on people who bought in to crypto to proselytize in order to continue to grow the pyramid.  Without those people buying in at the lower level, all the bitcoins that the early adopters got for less money aren't worth anything.
        That's not a pyramid scheme, unless you disagree with this definition:

        Quote
        A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products
        https://en.wikipedia.org/wiki/Pyramid_scheme

        Pyramid schemes are illegal.  Bitcoin has a regulated futures market in the U.S.  The U.S. government does not agree with you.

        I know this conversation has been had before, but let's unpack the definition:

        "a business model": The people who create a cryptocurrency have, in the past, sold some or all of what they created for personal profit (in government currencies). That's why there are thousands of cryptocurrencies. Wallets, exchanges, and cryptocurrency financial media are all businesses.

        "that recruits members via a promise of payments": The hoped-for promise of payment is the sort of exponential increase bitcoin saw between 2011 and 2018. There was also lots of talk about bitcoin and other cryptos being inherently deflationary by design. Near the peak, there were ads playing during the Superbowl trying to recruit members. People talked about the FOMO all the too-cautious people would feel when a cryptocurrency became a worldwide medium of exchange, and you'd have to buy in the future at $1M per coin or something like that.

        "for enrolling others into the scheme": Crypto enthusiasts were all over social media for years touting their coins as the next big thing, in an attempt to cause cryptocurrencies to become a major world currency, which would increase their value exponentially again. There are millions of cryptoshilling videos on YouTube and every other site/app, made by people who were already holding cryptocurrency.

        "rather than supplying the sale of investments or other products": The sale of investments part of this definition can be confusing, because even Bernie Madoff sold investments! The problem was that his investments were fictional records in a ledger that were thought by his clients to represent actual assets in the real world that exists outside Madoff's bookkeeping. The people who say cryptocurrency should have a value of $0 would compare cryptocoins with shares held in a Bernie Madoff account. For many years, it was possible to trade and redeem such shares for dollars, as is usually the case with such schemes, but eventually the lack of a tie to actual assets will be the undoing. As for the other products part of the definition, cryptocurrencies have yet to be adopted as a medium of exchange because they are more costly, slower, and much more risky to transact than government fiat currencies. They are constantly being hacked - often by insiders at these "wallets" and "brokerages" - recirculated by the hackers, and then hacked again, creating a loop that feeds upon the new money contributed by naive new buyers.

        In terms of legality, a mistake by a political or legal system does not transform a pyramid scheme into an investment that has any other outcome than a pyramid scheme would have. It does not mean wallets and brokerages are not able to hack their own customers, cover their tracks in the perfect crime, and launder the coins. It does not mean the government can recover or will insure your coins when someone steals them from you. It does not mean any cryptocurrency will ever fulfill its promise of replacing government fiat currencies as a medium of exchange. It does not mean new recruits are not necessary if crypto is going to appreciate or at least not collapse. It does not change the nature of cryptocurrency into something economically promising or even legitimate. All it means is that the government said to a corporation that they have permission to set up a betting market on a derived asset that could go to zero. That permission doesn't change a particular coin into a non-scam.

        Yep, this is more or less my argument.  If you don't believe that crypto is a pyramid scheme . . . fine.  But you have to admit that it certainly seems uncomfortably close to one.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Shane on November 15, 2022, 10:49:03 AM

        "for enrolling others into the scheme": Crypto enthusiasts were all over social media for years touting their coins as the next big thing, in an attempt to cause cryptocurrencies to become a major world currency, which would increase their value exponentially again. There are millions of cryptoshilling videos on YouTube and every other site/app, made by people who were already holding cryptocurrency.

        Even this thread seems like part of a broader push by the industry to mainstream crypto. The hardcore crypto bros knew they couldn't get everyone to totally drink the Kool-Aid, but if they could convince normies to just put a small% of their retirement savings into crypto, it could potentially prop up their pyramid scheme for just a little while longer. A couple of irl friends, who I know aren't on this forum, both came to me late last year, right around the time this thread was started in September, 2021, near the top of the crypto bubble, and each asked almost the same exact question as the OP, "What do you think about my putting a small percentage of my investments into crypto?" It's hard for me to believe that this thread, my friends' questions, and the crypto ads during the Superbowl, were all just a coincidence.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Glenstache on November 15, 2022, 11:14:00 AM
        Bitcoin is uncomfortably close to a decentralized distributed pyramid scheme.  There has always been a lot of pressure on people who bought in to crypto to proselytize in order to continue to grow the pyramid.  Without those people buying in at the lower level, all the bitcoins that the early adopters got for less money aren't worth anything.
        That's not a pyramid scheme, unless you disagree with this definition:

        Quote
        A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products
        https://en.wikipedia.org/wiki/Pyramid_scheme

        Pyramid schemes are illegal.  Bitcoin has a regulated futures market in the U.S.  The U.S. government does not agree with you.
        It seemed more like a pump and dump with a frosting of unregulated self-dealing (a-la FTX).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 15, 2022, 11:30:58 AM
        Bitcoin is uncomfortably close to a decentralized distributed pyramid scheme.  There has always been a lot of pressure on people who bought in to crypto to proselytize in order to continue to grow the pyramid.  Without those people buying in at the lower level, all the bitcoins that the early adopters got for less money aren't worth anything.
        That's not a pyramid scheme, unless you disagree with this definition:

        Quote
        A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products
        https://en.wikipedia.org/wiki/Pyramid_scheme

        Pyramid schemes are illegal.  Bitcoin has a regulated futures market in the U.S.  The U.S. government does not agree with you.
        ...
        "that recruits members via a promise of payments": The hoped-for promise of payment is the sort of exponential increase bitcoin saw between 2011 and 2018. There was also lots of talk about bitcoin and other cryptos being inherently deflationary by design. Near the peak, there were ads playing during the Superbowl trying to recruit members. People talked about the FOMO all the too-cautious people would feel when a cryptocurrency became a worldwide medium of exchange, and you'd have to buy in the future at $1M per coin or something like that.\
        ...
        Your first sentence tries to redefine what "promise of payments" means - you're twisting words to fit your agenda.  Hoping for something isn't a promise - its a hope.  Nobody makes "promises of payments" to those buying Bitcoin, but if you admit that the pyramid scheme theory falls apart.

        So here's a more basic question: where is the pyramid?  Every bit of data and software for Bitcoin is 100% transparent and public.  Where is the pyramid?

        In 2021 the price of BTC reached over $60,000 and is now under $20,000.  That's not how pyramid schemes work - they do not give greater rewards to those who invest later, and screw over the early members to the scheme.  And this 2021-2022 is not an isolated incident, as Bitcoin has crashed by 80% repeatedly.

        It does not promise payments, nor reward people according to a hierarchy.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 15, 2022, 11:34:53 AM
        Yep, this is more or less my argument.  If you don't believe that crypto is a pyramid scheme . . . fine.  But you have to admit that it certainly seems uncomfortably close to one.
        I didn't state my beliefs, I pointed to flaws in the claim of a "pyramid scheme".  And I'll ask you the same question: where is the pyramid?  Where is the hierarchy of Bitcoin?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on November 15, 2022, 11:57:18 AM
        There are two components here:   Cryptocurrency and crypoexchanges.   By definition, most cryptocurrency itself is not a Ponzi.   It is best described as a speculative bubble--like Beanie Babies.   No one says "invest in Bitcoin and I'll pay you interest."   People buy Bitcoin (and most crypto) in the belief it will increase in price.

        Cryptoexchanges like FTX, Celsisus, Pancakeswap, etc. are 100% Ponzis.  They promise high rates interest (which they call rewards) which are usually paid by a token they print themselves and require new investors to remain solvent.   That checks every single box of a Ponzi scheme. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 15, 2022, 12:23:29 PM
        Cryptoexchanges like FTX, Celsisus, Pancakeswap, etc. are 100% Ponzis.  They promise high rates interest (which they call rewards) which are usually paid by a token they print themselves and require new investors to remain solvent.   That checks every single box of a Ponzi scheme.

        Celsius is a case we know the most about: It sounds like they were making unhedged investments and loans in cryptocurrency while accepting customer deposits in cyptocurrencies that were essentially equivalent to US dollars. They paid high interest rates in (faux) USD, but could cover those interest costs because the value of free floating cryptocurrencies were increasing faster than Celsius was paying out interest to its depositors.

        Their business model worked well so long as free floating cryptocurrencies were increasing in value fast. And it blew up as soon as free floating cryptocurrencies moved strongly in the other direction. They almost certainly committed fraud in assuring people that their deposits were "safe". They were at a minimum negligent in not hedging against price declines (although if they had hedged properly it would probably have cost enough that their business model wouldn't work, maybe that should have been a warning sign). It looks like they may have committed a whole other set of crimes in marketing to non-accredited investors.

        The critical thing that distinguishes celsius from a ponzi scheme is that a ponzi scheme promises people high and safe returns from a business that doesn't exist, and uses new investor's money to pay out withdrawals from earlier investors. Celsius promised high and safe returns from a business that did exist (it just wasn't actually safe), and when the business blew up and celsius lost their depositors' money they stopped paying out money and declared bankruptcy*, rather than pretending everything was fine and using new customers' deposits to pay old customers' withdrawals.

        FTX may have been an actual ponzi scheme. It is quite clear they didn't have actual assets to match customer deposits. If you have a chance to read Matt Levine's latest breakdown of their balance sheet, it's definitely worth doing. Short excerpt below.

        Spoiler: show
        Quote
        If you blithely add up the “liquid,” “less liquid” and “illiquid” assets, at their “deliverable” value as of Thursday, and subtract the liabilities, you do get a positive net equity of about $700 million. (Roughly $9.6 billion of assets versus $8.9 billion of liabilities.) But then there is the “Hidden, poorly internally labeled ‘fiat@’ account,” with a balance of negative $8 billion.[1] I don’t actually think that you’re supposed to subtract that number from net equity — though I do not know how this balance sheet is supposed to work! — but it doesn’t matter. If you try to calculate the equity of a balance sheet with an entry for HIDDEN POORLY INTERNALLY LABELED ACCOUNT, Microsoft Clippy will appear before you in the flesh, bloodshot and staggering, with a knife in his little paper-clip hand, saying “just what do you think you’re doing Dave?” You cannot apply ordinary arithmetic to numbers in a cell labeled “HIDDEN POORLY INTERNALLY LABELED ACCOUNT.” The result of adding or subtracting those numbers with ordinary numbers is not a number; it is prison.[2]

        ...

        And then the basic question is, how bad is the mismatch. Like, $16 billion of dollar liabilities and $16 billion of liquid dollar-denominated assets? Sure, great. $16 billion of dollar liabilities and $16 billion worth of Bitcoin assets? Not ideal, incredibly risky, but in some broad sense understandable. $16 billion of dollar liabilities and assets consisting entirely of some magic beans that you bought in the market for $16 billion? Very bad. $16 billion of dollar liabilities and assets consisting mostly of some magic beans that you invented yourself and acquired for zero dollars? WHAT? Never mind the valuation of the beans; where did the money go? What happened to the $16 billion? Spending $5 billion of customer money on Serum would have been horrible, but FTX didn’t do that, and couldn’t have, because there wasn’t $5 billion of Serum available to buy. FTX shot its customer money into some still-unexplained reaches of the astral plane and was like “well we do have $5 billion of this Serum token we made up, that’s something?” No it isn’t!


        *It isn't clear this was a choice on their part. Their business blew up at a time when people were pulling money out of crypto rather than putting it in. I'm not sure they could have gotten the new flow of customer deposits necessary to keep a ponzi scheme running even if they'd wanted to go down that road.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: achvfi on November 15, 2022, 12:51:52 PM
        There are two components here:   Cryptocurrency and crypoexchanges.   By definition, most cryptocurrency itself is not a Ponzi.   It is best described as a speculative bubble--like Beanie Babies.   No one says "invest in Bitcoin and I'll pay you interest."   People buy Bitcoin (and most crypto) in the belief it will increase in price.

        Cryptoexchanges like FTX, Celsisus, Pancakeswap, etc. are 100% Ponzis.  They promise high rates interest (which they call rewards) which are usually paid by a token they print themselves and require new investors to remain solvent.   That checks every single box of a Ponzi scheme. 

        I was watching movie, Big Short. Adopting a dialog from it..

        If Cryptocurrency is dog shit, crypto derived financial products is dogshit wrapped in cat shit.

        https://www.youtube.com/watch?v=3U8nDMCjAMA
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: BicycleB on November 15, 2022, 12:55:20 PM

        The critical thing that distinguishes celsius from a ponzi scheme is that a ponzi scheme promises people high and safe returns from a business that doesn't exist, and uses new investor's money to pay out withdrawals from earlier investors. Celsius promised high and safe returns from a business that did exist (it just wasn't actually safe), and when the business blew up and celsius lost their depositors' money they stopped paying out money and declared bankruptcy*, rather than pretending everything was fine and using new customers' deposits to pay old customers' withdrawals.

        FTX may have been an actual ponzi scheme. It is quite clear they didn't have actual assets to match customer deposits. If you have a chance to read Matt Levine's latest breakdown of their balance sheet, it's definitely worth doing.

        Well put!

        I agree about Celsius. I agree about the end state of FTX. I won't be surprised if what happened at FTX was about the same as Celsius, but then when they ran short, FTX covered up at first and thus morphed into a Ponzi, though arguably distinguished by hope that it would turn around (where a true Ponzi can't have such a hope). Regardless, the depth of FTX's failure convinces me that we're closer to the end of crypto as an appealing greater-fool case than I thought and that has moved me to attempt selling my nice registered crypto-related ETFs.

        Ironically, the day before FTX scandal broke, the roughly flat performance of crypto in recent months had made me wonder if its descent had run its course and it would soon join stocks in at least a temporary rally. Prior to that I'd been thinking of crypto as roughly a leveraged stock play, with swings now predominantly correlated to S&P but larger in %,  so I had bought another 3/4% of portfolio or so in the same ETFs, BITW and BITQ. Wrong move!

        The result is that until tomorrow, when the trades settle, I cannot sell any of the crypto ETFs without violating SEC rules (at least, it would be a Good Faith violation of the customer agreement that the ETF vendor needs to comply with SEC rules, and I might suffer restrictions thereby). I currently intend to sell them. At today's prices, net loss on the adventure roughly 1/2 % of portfolio.

        PS. Yeah, I read Levine's column. Great stuff.

        ETA 11/15: While it starts with an ad, Upper Echelon's Nine Circles of Crypto Hell video contains incisive comments explaining his metaphor, summarizing and commenting on SBX's place in the cypto industry. (Actual title is "It All Comes CRASHING Down - Crypto in Chaos".) https://www.youtube.com/watch?v=ieu3VzKkp1c
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Mr. Green on November 15, 2022, 03:49:43 PM
        If you try to calculate the equity of a balance sheet with an entry for HIDDEN POORLY INTERNALLY LABELED ACCOUNT, Microsoft Clippy will appear before you in the flesh, bloodshot and staggering, with a knife in his little paper-clip hand, saying “just what do you think you’re doing Dave?” You cannot apply ordinary arithmetic to numbers in a cell labeled “HIDDEN POORLY INTERNALLY LABELED ACCOUNT.” The result of adding or subtracting those numbers with ordinary numbers is not a number; it is prison.
        That is fantastic.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 15, 2022, 09:09:32 PM
        Bitcoin is uncomfortably close to a decentralized distributed pyramid scheme.  There has always been a lot of pressure on people who bought in to crypto to proselytize in order to continue to grow the pyramid.  Without those people buying in at the lower level, all the bitcoins that the early adopters got for less money aren't worth anything.
        That's not a pyramid scheme, unless you disagree with this definition:

        Quote
        A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products
        https://en.wikipedia.org/wiki/Pyramid_scheme

        Pyramid schemes are illegal.  Bitcoin has a regulated futures market in the U.S.  The U.S. government does not agree with you.
        ...
        "that recruits members via a promise of payments": The hoped-for promise of payment is the sort of exponential increase bitcoin saw between 2011 and 2018. There was also lots of talk about bitcoin and other cryptos being inherently deflationary by design. Near the peak, there were ads playing during the Superbowl trying to recruit members. People talked about the FOMO all the too-cautious people would feel when a cryptocurrency became a worldwide medium of exchange, and you'd have to buy in the future at $1M per coin or something like that.\
        ...
        Your first sentence tries to redefine what "promise of payments" means - you're twisting words to fit your agenda.  Hoping for something isn't a promise - its a hope.  Nobody makes "promises of payments" to those buying Bitcoin, but if you admit that the pyramid scheme theory falls apart.

        So here's a more basic question: where is the pyramid?  Every bit of data and software for Bitcoin is 100% transparent and public.  Where is the pyramid?

        In 2021 the price of BTC reached over $60,000 and is now under $20,000.  That's not how pyramid schemes work - they do not give greater rewards to those who invest later, and screw over the early members to the scheme.  And this 2021-2022 is not an isolated incident, as Bitcoin has crashed by 80% repeatedly.

        It does not promise payments, nor reward people according to a hierarchy.

        Regarding promises of payments,

        a) Convicted Ponzi scheme ringleader Bernie Madoff did not promise specific returns, he simply delivered high returns for many years. Investment money rushed toward him by word of mouth and from people chasing past performance. If we want to get strictly legalistic, we could say Madoff only committed accounting fraud and should have been acquitted of running a Ponzi because he didn't specify a dollar or percentage outcome. But most people will accept that Madoff was clearly a Ponzi scheme even if he didn't promise a specific return on investment. Not telling people they'll earn a specific number made him more credible. We can't be thrown off by one optional detail in the definition of a Ponzi scheme, or else we make the same mistake as Madoff's victims.

        b) People on Wall Street Bets, Facebook, and YouTube were literally drawing cartoon rockets symbolically taking cryptocoins to the moon. They were literally posting pictures of the luxury cars they allegedly bought with crypto gains. Meanwhile the crypto-intellectuals were talking about how whatevercoin was going to take over the role of the US dollar in international exchange, and how each coin could go to at least some outrageous price target, like $100k, $200k, $500k, $750k, $1M - they were throwing numbers out all over the place and extrapolating from 2011-2018.

        Regarding transparency, the blockchain itself may be transparent in theory, but what is transparent about how you got your coins stolen, who now owns them, or why the exchange / wallet / brokerage you had to use as a non-technical user just disappeared with all your money? This is where theory collides with real life.

        There are over 1M FTX account holders who looked as hard as they could, and couldn't spot the reason they were about to lose their entire investment in what was the world's most legitimate looking exchange! They got conned, just like the victims of dozens of other hacks, collapses, pump and dumps, etc. It's fair to assume lots of people only think they own the coins their financial helper displays on the screen, and that the actual coins were sold long ago or the money laundered long ago. It's easy to post a fake number of bitcoins owned on the screen.

        It's odd to say the various falls in the value of Bitcoin prove it's not a Ponzi scheme. Eventually going down is exactly what Ponzi schemes do. Enron stock went up and down for a while, until it went down to zero. Yet I'd say price action is the last thing we should be looking at, since it appears that more than half of all these "transparent" price discovery trades are fake: https://www.forbes.com/sites/javierpaz/2022/08/26/more-than-half-of-all-bitcoin-trades-are-fake/?sh=785cd6c56681 (https://www.forbes.com/sites/javierpaz/2022/08/26/more-than-half-of-all-bitcoin-trades-are-fake/?sh=785cd6c56681)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 16, 2022, 04:45:01 AM
        While I believe Madoff promised 12% returns, call that a Ponzi scheme.

        It's odd to say the various falls in the value of Bitcoin prove it's not a Ponzi scheme. Eventually going down is exactly what Ponzi schemes do. Enron stock went up and down for a while, until it went down to zero.
        Enron soared but once it fell 50%, it never recovered.
        https://www.famous-trials.com/enron/1791-stockchart

        When the 2008 crisis arrived, Madoff's Ponzi scheme collapsed.  In a fraud case, the FBI doesn't recover people's fake gains, just their investments.  By that measure, they recovered 88% of the money involved in Madoff's ponzi scheme.
        https://www.justice.gov/opa/pr/justice-department-announces-total-distribution-over-4-billion-victims-madoff-ponzi-scheme

        In a Ponzi scheme, when a significant drop occurs, new money can't keep up with withdrawals, and the whole thing collapses.  That happened to Madoff.  And yet when Japanese crypto exchange Mt Gox was hacked, Bitcoin didn't collapse.  It lost 99% of its value, and then recovered.  I'm not aware of any Ponzi scheme that has collapsed 95% or more and recovered, because a drop of that magnitude causes a Ponzi scheme to collapse.

        The US Treasury Secretary and President of the United States have both said crypto needs to be regulated.  If it is a fraud, is the President of the United States involved, and Janet Yellin as well?  And then you claim the Bitcoin Futures market is also a fraud.  How deep into the U.S. government does your fraud claim go?
        https://www.whitehouse.gov/briefing-room/statements-releases/2022/09/16/fact-sheet-white-house-releases-first-ever-comprehensive-framework-for-responsible-development-of-digital-assets/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: StashingAway on November 16, 2022, 06:28:30 AM
        In a Ponzi scheme, when a significant drop occurs, new money can't keep up with withdrawals, and the whole thing collapses.  That happened to Madoff.  And yet when Japanese crypto exchange Mt Gox was hacked, Bitcoin didn't collapse.  It lost 99% of its value, and then recovered.  I'm not aware of any Ponzi scheme that has collapsed 95% or more and recovered, because a drop of that magnitude causes a Ponzi scheme to collapse.

        It doesn't have to be *exactly* like Enron, or Madoff, or what have you. No doubt bitcoin is different from those analogies. The mechanics are different, the details are new, the timescale isn't predictable. But they all smell of the same stink from certain perspectives.

        The US Treasury Secretary and President of the United States have both said crypto needs to be regulated.  If it is a fraud, is the President of the United States involved, and Janet Yellin as well?  And then you claim the Bitcoin Futures market is also a fraud.  How deep into the U.S. government does your fraud claim go?

        First off, saying something needs to be regulated is pretty broad. MLMs are "regulated", that doesn't mean they're not a skeezy drain on society. The prez paying creedence by making a consumper protections executive order isn't any more than saying that it is a big deal and needs to be looked at. It's not validating it. Covid and payday loans are regulated by the government, that doesn't make them somehow virtuous.

        Second off, the US isn't some paragon of infallible decisions.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 16, 2022, 07:44:49 AM
        While I believe Madoff promised 12% returns, call that a Ponzi scheme.

        It's odd to say the various falls in the value of Bitcoin prove it's not a Ponzi scheme. Eventually going down is exactly what Ponzi schemes do. Enron stock went up and down for a while, until it went down to zero.
        Enron soared but once it fell 50%, it never recovered.
        https://www.famous-trials.com/enron/1791-stockchart

        When the 2008 crisis arrived, Madoff's Ponzi scheme collapsed.  In a fraud case, the FBI doesn't recover people's fake gains, just their investments.  By that measure, they recovered 88% of the money involved in Madoff's ponzi scheme.
        https://www.justice.gov/opa/pr/justice-department-announces-total-distribution-over-4-billion-victims-madoff-ponzi-scheme

        In a Ponzi scheme, when a significant drop occurs, new money can't keep up with withdrawals, and the whole thing collapses.  That happened to Madoff.  And yet when Japanese crypto exchange Mt Gox was hacked, Bitcoin didn't collapse.  It lost 99% of its value, and then recovered.  I'm not aware of any Ponzi scheme that has collapsed 95% or more and recovered, because a drop of that magnitude causes a Ponzi scheme to collapse.

        The US Treasury Secretary and President of the United States have both said crypto needs to be regulated.  If it is a fraud, is the President of the United States involved, and Janet Yellin as well?  And then you claim the Bitcoin Futures market is also a fraud.  How deep into the U.S. government does your fraud claim go?
        https://www.whitehouse.gov/briefing-room/statements-releases/2022/09/16/fact-sheet-white-house-releases-first-ever-comprehensive-framework-for-responsible-development-of-digital-assets/

        I think it's a fallacy to say "because it once went down X%, it cannot be a Ponzi scheme." If everyone believed this, then it would be easy to run an obvious Ponzi scheme by saying that you lost money in a couple of quarters, and one could be immune from prosecution if your fund went down in a few quarters. A robotic jury would say you were innocent because those quarters of losses violate the rigid definition. The flipside statement, "because it once went up X%, it cannot be a Ponzi scheme" is obviously fallacious, because such a scheme can post positive returns as long as new investors keep putting money in.

        The U.S. government has been in a state of policy uncertainty about crypto for years. Is it a currency, a security, or a fraud? It is unclear, because our old laws and language around fraud, laundering, pyramid schemes, securities, accounting, etc. never could have anticipated the possibility of anything like cryptocurrencies. Plus, there seems to be no organizational structure or person to hold accountable. No politician wants to take a stand, because then all the people invested in crypto would blame them for the collapse - better to let it evolve naturally. That's the flaw with being legalistic rather than practical in our definitions - it allows people to invent new schemes that seem to escape one or two definitional points and attain the aura of legitimacy. The government is failing to protect people, but it's not necessarily complicit. The only things that have been regulated are things that fall under current laws, like futures markets or crypto funds like BITO and ETHE, and a lot of people at the SEC didn't think those should be approved.

        The SEC dismissed Harry Markopolis' whistle blowing about Bernie Madoff for years, because Madoff's enterprise was considered too big and well-established to be a fraud. Anyone who took this government inaction, or the closure of multiple investigations since 1992, as a legitimacy signal made a disastrous error. There's no substitute for due dilligence and personal skepticism, especially in unregulated markets already rife with fraud.

        Madoff's returns were variable, not fixed or promised. Variable returns would have made his proprietary "split strike" collar trading method seem more realistic than if he posted the exact same return every year or promised a certain amount to everyone. From https://www.econcrises.org/2017/04/20/bernard-l-madoff-investment-securities-2008-2009/ (https://www.econcrises.org/2017/04/20/bernard-l-madoff-investment-securities-2008-2009/) :
        Quote
        Madoff’s returns also exhibited a Sharpe ratio that ranged between 2.5 and 4.0 for 15 years in a row—an extreme outlier, to put it mildly.
        So no, it wasn't the old-school "earn 10% per week guaranteed return" Ponzi scheme. It looked from the outside like a proprietary wealth management fund, with high but variable returns.

        Speaking of looking legitimate, Madoff was a pioneer in using computers for trading, developed the technology that became the NASDAQ, and was once the non-executive chair of the NASDAQ. His firm was once the NASDAQ's largest market maker. He was once on the board of and chairperson of the National Association of Securities Dealers, a self-regulatory body. Madoff also sat on the board of the Securities Industry Association. By all social indicators, he was one of the most legitimate people on Wall Street. These were 100% false signals. It was still a Ponzi, even though Madoff didn't check all the usual boxes.

         
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 16, 2022, 08:00:23 AM
        Convicted Ponzi scheme ringleader Bernie Madoff did not promise specific returns, he simply delivered high returns for many years. Investment money rushed toward him by word of mouth and from people chasing past performance. If we want to get strictly legalistic, we could say Madoff only committed accounting fraud and should have been acquitted of running a Ponzi because he didn't specify a dollar or percentage outcome.

        From a strict legalistic perspective Madoff was convicted of "securities fraud, investment adviser fraud, mail fraud, wire fraud, three counts of money laundering, false statements, perjury, false filings with the United States Securities and Exchange Commission ("SEC"), and theft from an employee benefit plan."

        Note that none of those crimes are "running a ponzi scheme." Not because he was acquitted because there isn't a specific law that targets ponzi schemes. Although it would be impossible to conduct an actual ponzi scheme without running afoul of some anti-fraud law or another and you see those crimes heavily represented in the list of things Madoff was actually convicted of.

        Quote
        There are over 1M FTX account holders who looked as hard as they could, and couldn't spot the reason they were about to lose their entire investment in what was the world's most legitimate looking exchange!

        I would say CoinBase was and is well ahead of FTX on the criteria of "looking legitimate." Could you explain on what do you base the assertion that FTX was the most legitimate looking exchange in the world prior to its collapse?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 16, 2022, 08:13:19 AM
        While I believe Madoff promised 12% returns, call that a Ponzi scheme.
        Madoff's returns were variable, not fixed or promised. Variable returns would have made his proprietary "split strike" collar trading method seem more realistic than if he posted the exact same return every year or promised a certain amount to everyone. From https://www.econcrises.org/2017/04/20/bernard-l-madoff-investment-securities-2008-2009/ (https://www.econcrises.org/2017/04/20/bernard-l-madoff-investment-securities-2008-2009/) :
        Quote
        Madoff’s returns also exhibited a Sharpe ratio that ranged between 2.5 and 4.0 for 15 years in a row—an extreme outlier, to put it mildly.
        So no, it wasn't the old-school "earn 10% per week guaranteed return" Ponzi scheme. It looked from the outside like a proprietary wealth management fund, with high but variable returns.
        You're confusing Sharpe ratios with returns.  From the article you posted:

        Quote
        Among the many red flags highlighted by Markopolos was that Madoff’s fund reported having earned 16% average annual returns before fees over 14½ years by using the split-strike conversion strategy.

        I don't know Madoff's fees, but 16% before fees drops to about 12.8% after the typical 20% carry for the hedge fund industry.

        "Opinion: Bernie Madoff’s Measly 12% Guaranteed Returns Just Wouldn’t Cut It In This Market"
        https://hard-money.net/opinion-bernie-madoffs-measly-12-guaranteed-returns-just-wouldnt-cut-it-in-this-market/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 16, 2022, 08:20:08 AM
        While I believe Madoff promised 12% returns, call that a Ponzi scheme.

        It's odd to say the various falls in the value of Bitcoin prove it's not a Ponzi scheme. Eventually going down is exactly what Ponzi schemes do. Enron stock went up and down for a while, until it went down to zero.
        Enron soared but once it fell 50%, it never recovered.
        https://www.famous-trials.com/enron/1791-stockchart

        When the 2008 crisis arrived, Madoff's Ponzi scheme collapsed.  In a fraud case, the FBI doesn't recover people's fake gains, just their investments.  By that measure, they recovered 88% of the money involved in Madoff's ponzi scheme.
        https://www.justice.gov/opa/pr/justice-department-announces-total-distribution-over-4-billion-victims-madoff-ponzi-scheme

        In a Ponzi scheme, when a significant drop occurs, new money can't keep up with withdrawals, and the whole thing collapses.  That happened to Madoff.  And yet when Japanese crypto exchange Mt Gox was hacked, Bitcoin didn't collapse.  It lost 99% of its value, and then recovered.  I'm not aware of any Ponzi scheme that has collapsed 95% or more and recovered, because a drop of that magnitude causes a Ponzi scheme to collapse.

        The US Treasury Secretary and President of the United States have both said crypto needs to be regulated.  If it is a fraud, is the President of the United States involved, and Janet Yellin as well?  And then you claim the Bitcoin Futures market is also a fraud.  How deep into the U.S. government does your fraud claim go?
        https://www.whitehouse.gov/briefing-room/statements-releases/2022/09/16/fact-sheet-white-house-releases-first-ever-comprehensive-framework-for-responsible-development-of-digital-assets/
        I think it's a fallacy to say "because it once went down X%, it cannot be a Ponzi scheme." If everyone believed this, then it would be easy to run an obvious Ponzi scheme by saying that you lost money in a couple of quarters, and one could be immune from prosecution if your fund went down in a few quarters. A robotic jury would say you were innocent because those quarters of losses violate the rigid definition. The flipside statement, "because it once went up X%, it cannot be a Ponzi scheme" is obviously fallacious, because such a scheme can post positive returns as long as new investors keep putting money in.
        You're putting words in my mouth.  Where did I say the words you quoted?

        I think you're misinterpreting the following statement I made:
        Quote
        I'm not aware of any Ponzi scheme that has collapsed 95% or more and recovered, because a drop of that magnitude causes a Ponzi scheme to collapse.
        Again, "collapsed 95% or more" and then recovered.  Not some other order as you claim, or separating those statements as if I didn't connect them.  Collapse 95% and recover.

        Where are these hypothetical Ponzi schemes that claimed to lose money to draw in customers?  I'm describing what happens in actual Ponzi schemes, and you're describing something else.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 16, 2022, 08:46:51 AM
        ...it would be impossible to conduct an actual ponzi scheme without running afoul of some anti-fraud law or another and you see those crimes heavily represented in the list of things Madoff was actually convicted of.
        Yes, Ponzi schemes are just one category covered by fraud laws. I was (unclearly) framing discussion about the strict definition of a Ponzi scheme. I.e. if you were on a jury and your job was to determine if a particular financial activity met the criteria of the definition, would you vote to convict or acquit based on the objection that specific returns were not promised?

        Quote
        I would say CoinBase was and is well ahead of FTX on the criteria of "looking legitimate." Could you explain on what do you base the assertion that FTX was the most legitimate looking exchange in the world prior to its collapse?
        Maybe CoinBase does look more legitimate in some ways. Being publicly traded counts for a lot but lots of publicly traded entities have gone bust.

        SBF was the children of lawyers who studied financial regulation. SBF was interested in philanthropy and advocated regulation of the crypto industry, which suggests benign motives compared to the greedier side of the industry. FTX was the 2nd largest exchange by their multi-billion-dollar volume (Binance was/is 1st) which would put them in the top tier of "legitimacy" - or at least one would think.

        Of course, perceived legitimacy involves us regular people scrutinizing what others post on the internet. If they post legitimate-looking things, the whole enterprise can look legitimate. Maybe the point of this exercise is not to determine that Binance or Coinbase are the more legitimate brokerage, it is to expose the error of the process and realize we cannot accurately see anything inside these organizations.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 16, 2022, 09:18:32 AM
        I would say CoinBase was and is well ahead of FTX on the criteria of "looking legitimate." Could you explain on what do you base the assertion that FTX was the most legitimate looking exchange in the world prior to its collapse?
        Maybe CoinBase does look more legitimate in some ways. Being publicly traded counts for a lot but lots of publicly traded entities have gone bust.

        SBF was the children of lawyers who studied financial regulation. SBF was interested in philanthropy and advocated regulation of the crypto industry, which suggests benign motives compared to the greedier side of the industry. FTX was the 2nd largest exchange by their multi-billion-dollar volume (Binance was/is 1st) which would put them in the top tier of "legitimacy" - or at least one would think.

        Of course, perceived legitimacy involves us regular people scrutinizing what others post on the internet. If they post legitimate-looking things, the whole enterprise can look legitimate. Maybe the point of this exercise is not to determine that Binance or Coinbase are the more legitimate brokerage, it is to expose the error of the process and realize we cannot accurately see anything inside these organizations.

        More than just being publicly traded, Coinbase is incorporated and regulated in the USA rather than the Bahamas. The main FTX exchange didn't even accept customers based in the USA although they did have a small US subsidiary.

        The bigger take away here is that volume is probably not a good metric for which exchanges us regular people pick to trade on, since so much volume is driven by HFT. FTX apparently had a reputation as an exchange where it was easier for HFT traders to make money, perhaps because they were frequently trading against Alameda which was run by the same hopped up on modafanil, adderall and selegiline team* as the main FTX exchange. *Seriously FTX/Alameda has a psychiatrist on staff to prescribe drugs to their employees.

        When the CEO of your affiliated hedge fund is tweeting about the joys of regular amphatamine use (https://twitter.com/carolinecapital/status/1379036346300305408) (presumably of the adderall flavor rather than meth), it is probably a sign that this is not a trustworthy and legitimate business to be working with. And I think we're seeing this in that most of the impact of FTX's collapse seems to be on other crypto-hedge funds and businesses, rather than people -- other than FTX employees -- who had significant fractions of their net worth sitting on that exchange.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 16, 2022, 09:42:03 AM
        Quote
        I think it's a fallacy to say "because it once went down X%, it cannot be a Ponzi scheme." If everyone believed this, then it would be easy to run an obvious Ponzi scheme by saying that you lost money in a couple of quarters, and one could be immune from prosecution if your fund went down in a few quarters. A robotic jury would say you were innocent because those quarters of losses violate the rigid definition. The flipside statement, "because it once went up X%, it cannot be a Ponzi scheme" is obviously fallacious, because such a scheme can post positive returns as long as new investors keep putting money in.
        You're putting words in my mouth.  Where did I say the words you quoted?

        I think you're misinterpreting the following statement I made:
        Quote
        I'm not aware of any Ponzi scheme that has collapsed 95% or more and recovered, because a drop of that magnitude causes a Ponzi scheme to collapse.
        Again, "collapsed 95% or more" and then recovered.  Not some other order as you claim, or separating those statements as if I didn't connect them.  Collapse 95% and recover.

        Where are these hypothetical Ponzi schemes that claimed to lose money to draw in customers?  I'm describing what happens in actual Ponzi schemes, and you're describing something else.
        It sounds like you are proposing a criteria for determining whether a thing is a Ponzi scheme or not. The criteria you specifically stated is if it ever fell 95% and then recovered, it cannot be a Ponzi.

        I can come up with examples where historical scams fell by a lower percentage than that, and I can come up with examples where the same person orchestrated a second scheme after the failure or -100% returns of the first, but I am unaware of any other -95% -> +2,000% sequence of return events in the history of Ponzi schemes. Perhaps a scholar of financial fraud could come up with examples, but I am not such a scholar.

        My earlier example imagined a Ponzi scheme which lost some amount of money for a couple of quarters, in order to dodge a strict definition and yet still be a Ponzi scheme. I wasn't thinking 95%, but was merely using the thought experiment to show how every other element of a Ponzi could be in place and the reporting of a loss (real or fake) would not change its characteristics or transform it from being a scam to being a legitimate investment.

        But why draw the line at 95%? Why not 20% or even 5%? Madoff made up his performance numbers out of thin air for decades, so what does reported performance have to do with the legitimacy of an investment? Would Madoff have become more legitimate if, in a particular year, he reported 10% returns instead of 15%?

        I can envision scenarios where a Ponzi scheme reports and maybe actually experiences -95% performance just to convince investors they had obtained six-figure leverage over something, while offering a limited-liability equity product that can only go to zero. Such a lotto ticket would be a great deal - other than being fake - and would attract lots of money after convincing lots of people it couldn't be a scheme because schemes don't ever go down that much.

        That's sort of what happened with cryptos. People were reasoning "Why shouldn't I drop $10k into this market? The most I can lose is $10k and it could potentially make me a millionaire if it goes up 100x like it did in the past! These things have more upside leverage than downside."

        In the meantime, can we agree that crypto fulfills the other elements of the definition? It's a business model that recruits members who think they'll get a big payment for recruiting others to the scheme rather than supplying the sale of legitimate investments or other products? Can we agree on at least 75-80% of the definition being met?

        (Note that price behavior is not part of the definition.)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GilesMM on November 16, 2022, 11:00:30 AM
        Charlie Munger had this to say about FTX and digital currency in general -

        “It’s partly fraud and partly delusion. That’s a bad combination,” Munger said. “I don’t like either fraud or delusion and the delusion may be more extreme than the fraud.”

        “If you’ve got a good idea, it’s much easier to push that to wretched access,” Munger added. “Good ideas, carried to wretched excess, become bad ideas. Nobody’s gonna say, ‘I got some shitt that I want to sell you.’ They say – it’s blockchain!’”
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: mistymoney on November 16, 2022, 11:15:14 AM
        All will be revealed in the fulness of time.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: BicycleB on November 16, 2022, 01:39:17 PM
        Ponzi or not, followed through on selling, not adding. Loss realized: roughly 0.6% of portfolio.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on November 16, 2022, 01:52:34 PM
        You guys are making it way too hard.  The key part that differentiates a Ponzi from other types of fraud is the actual payout.  The high payout is the thing which attracts new money from investors, which is used to provide high rates of return, and the payout is the thing that causes the Ponzi to fail.   

        Enron:  They were cooking the books to make the company look more valuable.  Not a Ponzi.

        Madoff:  He was taking money from new investors to pay high rates of return to current investors.  Definite Ponzi.

        Beanie Babies:  Did not promise a payout.  Price was set by speculators who were hoping for a greater fool.  Not a Ponzi. 

        Celsius Network:  Paid high rates of return using money obtained from new investors.  Definite Ponzi.

        Bitcoin:  Does not promise a payout.  Price is set by speculators who are hoping for a greater fool.*   Not a Ponzi. 


        *I personally think the price is being manipulated, but in general the greater fool thing is what is happening.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 17, 2022, 06:44:09 AM
        Quote
        I think it's a fallacy to say "because it once went down X%, it cannot be a Ponzi scheme." If everyone believed this, then it would be easy to run an obvious Ponzi scheme by saying that you lost money in a couple of quarters, and one could be immune from prosecution if your fund went down in a few quarters. A robotic jury would say you were innocent because those quarters of losses violate the rigid definition. The flipside statement, "because it once went up X%, it cannot be a Ponzi scheme" is obviously fallacious, because such a scheme can post positive returns as long as new investors keep putting money in.
        You're putting words in my mouth.  Where did I say the words you quoted?

        I think you're misinterpreting the following statement I made:
        Quote
        I'm not aware of any Ponzi scheme that has collapsed 95% or more and recovered, because a drop of that magnitude causes a Ponzi scheme to collapse.
        Again, "collapsed 95% or more" and then recovered.  Not some other order as you claim, or separating those statements as if I didn't connect them.  Collapse 95% and recover.

        Where are these hypothetical Ponzi schemes that claimed to lose money to draw in customers?  I'm describing what happens in actual Ponzi schemes, and you're describing something else.
        It sounds like you are proposing a criteria for determining whether a thing is a Ponzi scheme or not. The criteria you specifically stated is if it ever fell 95% and then recovered, it cannot be a Ponzi.

        I can come up with examples where historical scams fell by a lower percentage than that, and I can come up with examples where the same person orchestrated a second scheme after the failure or -100% returns of the first, but I am unaware of any other -95% -> +2,000% sequence of return events in the history of Ponzi schemes. Perhaps a scholar of financial fraud could come up with examples, but I am not such a scholar.

        My earlier example imagined a Ponzi scheme which lost some amount of money for a couple of quarters, in order to dodge a strict definition and yet still be a Ponzi scheme. I wasn't thinking 95%, but was merely using the thought experiment to show how every other element of a Ponzi could be in place and the reporting of a loss (real or fake) would not change its characteristics or transform it from being a scam to being a legitimate investment.

        But why draw the line at 95%? Why not 20% or even 5%? Madoff made up his performance numbers out of thin air for decades, so what does reported performance have to do with the legitimacy of an investment? Would Madoff have become more legitimate if, in a particular year, he reported 10% returns instead of 15%?

        I can envision scenarios where a Ponzi scheme reports and maybe actually experiences -95% performance just to convince investors they had obtained six-figure leverage over something, while offering a limited-liability equity product that can only go to zero. Such a lotto ticket would be a great deal - other than being fake - and would attract lots of money after convincing lots of people it couldn't be a scheme because schemes don't ever go down that much.

        That's sort of what happened with cryptos. People were reasoning "Why shouldn't I drop $10k into this market? The most I can lose is $10k and it could potentially make me a millionaire if it goes up 100x like it did in the past! These things have more upside leverage than downside."

        In the meantime, can we agree that crypto fulfills the other elements of the definition? It's a business model that recruits members who think they'll get a big payment for recruiting others to the scheme rather than supplying the sale of legitimate investments or other products? Can we agree on at least 75-80% of the definition being met?

        (Note that price behavior is not part of the definition.)
        I don't respond to every element in your posts, but that doesn't mean agreement.  I brought up several authorities including the President of the United States, the US Treasury Secretary, and US Futures markets with all relevant regulators.  And your response, without evidence, is that all of them are being defrauded and don't know it.  If you can assume things without evidence, while I have to dig up authorities for you to ignore, there doesn't seem much point in that discussion.  But it's not agreement.

        When a Ponzi scheme collapses, it loses 100%.  I picked 95% drop and recovery because once a Ponzi scheme loses 95%, I'm not aware of any example where it doesn't proceed to a 100% loss.

        You mentioned a 5% drop, which is random noise.  Stocks, bonds, gold, crypto, real estate all have dropped 5% and recovered.  In the earlier graph with Enron, it clearly went up and down more than 5%, but once it fell 95% it was a collapse.  When you look at real world events, my 95% crash (and recovery) criteria is evident and your possible 5% criteria doesn't signal anything.

        Was GameStop a Ponzi scheme?  People buying to make the price go higher?  I view it as a short squeeze, but maybe in your view that's a Ponzi scheme as well (with FOMO, widespread coverage, etc).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 17, 2022, 09:00:37 AM
        When a Ponzi scheme collapses, it loses 100%.  I picked 95% drop and recovery because once a Ponzi scheme loses 95%, I'm not aware of any example where it doesn't proceed to a 100% loss.

        I looked deeper into the Bernie Madoff scheme because we can all agree it was a Ponzi and because there's lots of easily-accessible info about it. Turns out, investors in the scheme "have recovered 75 cents on the dollar" thanks to the work of a large team of recovery lawyers. They might have done better investing with Madoff than some people did investing in bank stocks since 2008, lol!

        https://webreprints.djreprints.com/4743180552220.html (https://webreprints.djreprints.com/4743180552220.html)
        https://www.madofftrustee.com/ (https://www.madofftrustee.com/)

        With the whole "is it a Ponzi" question, we are probably falling into the same categorization trap as paleontologists sometimes fall into when trying to fit their latest fossil into a list of distinct species. They'll find a fossil which had traits of both species A and species B, get into arguments over which species description best fits the fossil, and then realize the fossil represents the transition between species A and B.

        The futility of the argument reveals how nature doesn't have distinct categories and doesn't care about the labels we invent as shorthand for a complex reality. The error is in trying to force a spectrum of changing things into categories we invented. Maybe our inability to agree on old labels applying to cryptocurrencies reflects an error in our categorical thinking process. Schemes like Charles Ponzi's original are rare today, just like the alpha variant of COVID-19, because so many people have immunity. Their descendants are definitely around with a different set of traits. Whether to call them a new species or not is academic. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: BicycleB on November 17, 2022, 09:53:17 AM
        When a Ponzi scheme collapses, it loses 100%.  I picked 95% drop and recovery because once a Ponzi scheme loses 95%, I'm not aware of any example where it doesn't proceed to a 100% loss.

        I looked deeper into the Bernie Madoff scheme because we can all agree it was a Ponzi and because there's lots of easily-accessible info about it. Turns out, investors in the scheme "have recovered 75 cents on the dollar" thanks to the work of a large team of recovery lawyers. They might have done better investing with Madoff than some people did investing in bank stocks since 2008, lol!

        https://webreprints.djreprints.com/4743180552220.html (https://webreprints.djreprints.com/4743180552220.html)
        https://www.madofftrustee.com/ (https://www.madofftrustee.com/)

        With the whole "is it a Ponzi" question, we are probably falling into the same categorization trap as paleontologists sometimes fall into when trying to fit their latest fossil into a list of distinct species. They'll find a fossil which had traits of both species A and species B, get into arguments over which species description best fits the fossil, and then realize the fossil represents the transition between species A and B.

        The futility of the argument reveals how nature doesn't have distinct categories and doesn't care about the labels we invent as shorthand for a complex reality. The error is in trying to force a spectrum of changing things into categories we invented. Maybe our inability to agree on old labels applying to cryptocurrencies reflects an error in our categorical thinking process. Schemes like Charles Ponzi's original are rare today, just like the alpha variant of COVID-19, because so many people have immunity. Their descendants are definitely around with a different set of traits. Whether to call them a new species or not is academic.

        Well said @ChpBstrd!!!

        I mean - in the sense that the arguments have been well thought out and have brought forth competing viewpoints, they've been useful, and expanded my thinking. But I think you're right that the new substance, not the old label, is what's important, and the key factor is that in crypto we're seeing a New Variant.

        I don't think crypto is restricted to this, but these Ponzi-like, arguably Ponzi-in-a-new-bottle effects seem to have been the main factor raising prices above those from the original "govt can't track illicit activity" use case.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: StashingAway on November 17, 2022, 09:59:47 AM
        It doesn't have to be *exactly* like Enron, or Madoff, or what have you. No doubt bitcoin is different from those analogies. The mechanics are different, the details are new, the timescale isn't predictable. But they all smell of the same stink from certain perspectives.

        ... MLMs are "regulated", that doesn't mean they're not a skeezy drain on society. The prez paying credence by making a consumer protections executive order isn't any more than saying that it is a big deal and needs to be looked at. It's not validating it. Covid and payday loans are regulated by the government, that doesn't make them somehow virtuous.

        ChpBstrd has a better way of explaining what I was trying to point out yesterday.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 18, 2022, 05:45:21 AM
        For those certain that crypto will fail, why not buy "put options" on Coinbase stock (COIN)?

        For example, 2024-01-19 PUT $80 would cost around $980/contract.  If Coinbase hits zero, that PUT option is worth $80/share x 100 shares = $8,000.  That's how I would play the cynical view of crypto: +7163% return if crypto crashes in 22 months, and -100% return if it doesn't.

        Of the people who view crypto as worthless, did any of you invest against it?  Back in March I brought up the way to do that: Coinbase put options with an $80 strike, which was $980 when I posted originally.  Eight months later, that same option is worth $4190 for a +327% profit.
        https://finance.yahoo.com/quote/COIN/options?p=COIN&date=1705622400
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 18, 2022, 06:26:55 AM
        When a Ponzi scheme collapses, it loses 100%.  I picked 95% drop and recovery because once a Ponzi scheme loses 95%, I'm not aware of any example where it doesn't proceed to a 100% loss.
        I looked deeper into the Bernie Madoff scheme because we can all agree it was a Ponzi and because there's lots of easily-accessible info about it. Turns out, investors in the scheme "have recovered 75 cents on the dollar" thanks to the work of a large team of recovery lawyers. They might have done better investing with Madoff than some people did investing in bank stocks since 2008, lol!
        That joke about banks isn't accurate.  SPDR S&P Bank ETF (KBE) has a +50% gain since 2008 until now, which is better than a -24% loss.  It's more fair to compare 2008-2018, where KBE only had a +5% gain.

        Keep in mind the Madoff money was unavailble for over a decade.  Someone who invested 3 years before the collapse thought they had a +40% return, only to be told they have zero.  From 2006-2018, the S&P 500 returned +163% while the Madoff recovery fund paid out -24% losses.  The FBI assigns time a value of zero, which creates a huge opportunity cost.

        If you're trying to call this an exception to my 95% crash with no recovery, don't you have to claim the Ponzi scheme did not collapse, and was taken over by the FBI?  Did the FBI continue Madoff's Ponzi scheme, or does the general rule I proposed still hold?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 18, 2022, 09:06:51 AM
        When a Ponzi scheme collapses, it loses 100%.  I picked 95% drop and recovery because once a Ponzi scheme loses 95%, I'm not aware of any example where it doesn't proceed to a 100% loss.
        I looked deeper into the Bernie Madoff scheme because we can all agree it was a Ponzi and because there's lots of easily-accessible info about it. Turns out, investors in the scheme "have recovered 75 cents on the dollar" thanks to the work of a large team of recovery lawyers. They might have done better investing with Madoff than some people did investing in bank stocks since 2008, lol!
        That joke about banks isn't accurate.  SPDR S&P Bank ETF (KBE) has a +50% gain since 2008 until now, which is better than a -24% loss.  It's more fair to compare 2008-2018, where KBE only had a +5% gain.

        Keep in mind the Madoff money was unavailble for over a decade.  Someone who invested 3 years before the collapse thought they had a +40% return, only to be told they have zero.  From 2006-2018, the S&P 500 returned +163% while the Madoff recovery fund paid out -24% losses.  The FBI assigns time a value of zero, which creates a huge opportunity cost.

        If you're trying to call this an exception to my 95% crash with no recovery, don't you have to claim the Ponzi scheme did not collapse, and was taken over by the FBI?  Did the FBI continue Madoff's Ponzi scheme, or does the general rule I proposed still hold?
        Lehman and AIG stock investments might have left a person with <75% today, depending on timing. Also, the FBI did not seize many of the assets until years later - so some victims probably benefited from the appreciation of stock and bond assets after 2008.

        The Madoff example only illustrates how a Ponzi-adjacent scheme does not need to lose 95% of their assets to go bust. Madoff, like FTX and now a couple of other cryptobrokerages, was unable to promptly meet redemption requests because assets that were supposed to be inside the organization had been moved out of the organization. There were massive piles of assets; they were just in the wrong place when customers came in demanding cash the same day. As word spread that the organizations were not promptly meeting redemption requests, the bank runs accelerated.

        Maybe the missing piece to the analogy is that we can imagine a world in which Madoff Securities or FTX kept large reserves of actual assets, instead of holding minimal assets to backstop their on-demand accounts.

        What if, say, half of customer assets were kept quickly available for redemption and the other half were stolen? That probably would have been enough reserves to stop the bank runs and both schemes could have continued operating to this day. Madoff's error was to move his clients' assets into his personal accounts so that he could live a life of luxury off the personal accounts, when he could have just spent out of the Madoff Securities accounts and been more prepared for the 2008 wave of redemption requests. Likewise, FTX errored by moving a bunch of clients' assets to Alameda, leaving themselves unprepared for a bank run (and perhaps sparking the bank run when people saw them moving the assets). Getting caught amounted to having too many of the assets in an illiquid place, just like with bank runs on legitimate banks. Except with Madoff and FTX, that illiquid place was not a portfolio of loans, it was personal accounts.

        Let's do another thought experiment. Suppose Madoff had kept 75% of customer assets in liquid accounts, knowing he was just one bank run away from being discovered, and wisely reasoning that his personal accounts would do him no good if he was ever caught. He could still print false account statements with made-up returns, could still fund redemption requests from new victims' money in normal times, could still run every other aspect of the scheme, and could still live like a king. It would still be a Ponzi, just more conservatively run.

        When 2008 happened, suppose customers asked to immediately withdraw 70% of the original deposits in Madoff Securities. Madoff could promptly and immediately pay each account holder from the reserves, and that would have been sufficient to avoid a run (particularly because clients believed Madoff was running a collar strategy, with limited loss potential).

        Behind the scenes this hypothetical Madoff Securities would have lost 95% of its clients' cash: 70% from redemptions and 25% from previous theft. The Ponzi scheme would have survived 2008 after losing 95% of its actual funds, might have attracted more money by reporting reasonable performance through the crisis, and might have only been found out after Madoff's death. This hypothetical post-2008 Madoff Securities would have only been as leveraged as Madoff Securities was in reality. The strong market performance after 2009 and low interest rates would have given Madoff cover to report very high earnings, attracting lots more capital, and report a full recovery.

        Of course, financial scams are typically set up by greedy and reckless people who are disinclined not to personally use every dollar they pull in. The thought experiment shows it is possible for a Ponzi to lose 95% and come back completely. Madoff wasn't caught by the FBI or SEC after 16 years of on and off investigation; his undoing was a traditional bank run which he could have avoided. I'm sure he spent his last years in prison wondering why he didn't hold more liquidity.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: StashingAway on November 18, 2022, 09:09:09 AM
        For those certain that crypto will fail, why not buy "put options" on Coinbase stock (COIN)?

        For example, 2024-01-19 PUT $80 would cost around $980/contract.  If Coinbase hits zero, that PUT option is worth $80/share x 100 shares = $8,000.  That's how I would play the cynical view of crypto: +7163% return if crypto crashes in 22 months, and -100% return if it doesn't.

        Of the people who view crypto as worthless, did any of you invest against it?  Back in March I brought up the way to do that: Coinbase put options with an $80 strike, which was $980 when I posted originally.  Eight months later, that same option is worth $4190 for a +327% profit.
        https://finance.yahoo.com/quote/COIN/options?p=COIN&date=1705622400

        I would like to refer to the response to your proposal when you suggested it. No sense in trying to guess how and when things will pan out when your personal opinion is that they're not making sense currently.

        For those certain that crypto will fail, why not buy "put options" on Coinbase stock (COIN)?
        The market can stay irrational longer than I can remain liquid.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: JAYSLOL on November 18, 2022, 09:21:10 AM
        For those certain that crypto will fail, why not buy "put options" on Coinbase stock (COIN)?

        For example, 2024-01-19 PUT $80 would cost around $980/contract.  If Coinbase hits zero, that PUT option is worth $80/share x 100 shares = $8,000.  That's how I would play the cynical view of crypto: +7163% return if crypto crashes in 22 months, and -100% return if it doesn't.

        Of the people who view crypto as worthless, did any of you invest against it?  Back in March I brought up the way to do that: Coinbase put options with an $80 strike, which was $980 when I posted originally.  Eight months later, that same option is worth $4190 for a +327% profit.
        https://finance.yahoo.com/quote/COIN/options?p=COIN&date=1705622400

        I also view smoking as “worthless”.  Just because I won’t use my money to stockpile cigarettes for an activity I’ll never partake in and frankly think others should’t either, doesn’t mean I’ll straight up gamble my money instead betting against cigarette companies
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 18, 2022, 09:21:42 AM
        Yes I have 20%. @Malcat  I plan to rebalance my portfolio annually to keep it at 20% crypto.

        Genuinely curious: you stickin' to this plan?

        @whywork

        *crickets*

        The crypto evangelists have gone eerily quiet.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: mistymoney on November 18, 2022, 11:21:59 AM
        For those certain that crypto will fail, why not buy "put options" on Coinbase stock (COIN)?

        For example, 2024-01-19 PUT $80 would cost around $980/contract.  If Coinbase hits zero, that PUT option is worth $80/share x 100 shares = $8,000.  That's how I would play the cynical view of crypto: +7163% return if crypto crashes in 22 months, and -100% return if it doesn't.

        Of the people who view crypto as worthless, did any of you invest against it?  Back in March I brought up the way to do that: Coinbase put options with an $80 strike, which was $980 when I posted originally.  Eight months later, that same option is worth $4190 for a +327% profit.
        https://finance.yahoo.com/quote/COIN/options?p=COIN&date=1705622400

        I would like to refer to the response to your proposal when you suggested it. No sense in trying to guess how and when things will pan out when your personal opinion is that they're not making sense currently.

        For those certain that crypto will fail, why not buy "put options" on Coinbase stock (COIN)?
        The market can stay irrational longer than I can remain liquid.

        I'd also like to chime in here as someone who would never invest in crypto, and would also never bet "against" anything.

        I do buy individual stocks in addition to ETFs/mutuals - but only for buy and hold, never on short term speculation or shorting or anything like that. And aside from that perspective, many on this board are strictly broad market index investor, as MMM advised.

        So the suggest to this particular audience to bet against crypto is an odd one, imo. Betting against anything is risky, collars, etc notwithstanding. It isn't in my wheelhouse and I have no inclination to go down that direction at all. Too much risk for too much uncertain reward.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GilesMM on November 18, 2022, 12:06:57 PM
        Well put, Misty. There is a huge difference between saying “that is a dumb place to put your money” and saying “I know that thing will decrease in value and I know when so I will bet against it”.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 18, 2022, 02:15:41 PM
        Yea if I was to bet against all the products I think are horrible ideas, I'd have to buy puts against most automakers, credit card companies, restaurants, tobacco/weed, booze, chemicals, fashion, most of the internet, most broadcast media, homebuilders, casinos, movie studios, etc.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: onecoolcat on November 18, 2022, 03:39:40 PM
        Putting it on the record, like i did in 2018-19.  I am buying. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 18, 2022, 10:31:59 PM
        Yea if I was to bet against all the products I think are horrible ideas, I'd have to buy puts against most automakers, credit card companies, restaurants, tobacco/weed, booze, chemicals, fashion, most of the internet, most broadcast media, homebuilders, casinos, movie studios, etc.
        You claimed crypto was a Ponzi scheme.  If you believe crypto will not collapse, how can it be a Ponzi scheme?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 18, 2022, 11:10:07 PM
        For those certain that crypto will fail, why not buy "put options" on Coinbase stock (COIN)?

        For example, 2024-01-19 PUT $80 would cost around $980/contract.  If Coinbase hits zero, that PUT option is worth $80/share x 100 shares = $8,000.  That's how I would play the cynical view of crypto: +7163% return if crypto crashes in 22 months, and -100% return if it doesn't.

        Of the people who view crypto as worthless, did any of you invest against it?  Back in March I brought up the way to do that: Coinbase put options with an $80 strike, which was $980 when I posted originally.  Eight months later, that same option is worth $4190 for a +327% profit.
        https://finance.yahoo.com/quote/COIN/options?p=COIN&date=1705622400

        I would like to refer to the response to your proposal when you suggested it. No sense in trying to guess how and when things will pan out when your personal opinion is that they're not making sense currently.

        For those certain that crypto will fail, why not buy "put options" on Coinbase stock (COIN)?
        The market can stay irrational longer than I can remain liquid.
        Which was an incorrect statement which I corrected with the following reply.

        For those certain that crypto will fail, why not buy "put options" on Coinbase stock (COIN)?
        The market can stay irrational longer than I can remain liquid.
        Note that "put options" gives the holder the option, but not the requirement, to sell shares at the given price.  No additional liquidity is required.

        I'm mostly exploring the idea that people who dislike crypto will not put money behind their idea.  There's a certainty that crypto is wrong, but not a certainty to invest against it.

        Which suggests maybe its a waste of time to correct people's incorrect statements.

        Quote
        A put option (or “put”) is a contract giving the option buyer the right, but not the obligation, to sell—or sell short—a specified amount of an underlying security
        https://www.investopedia.com/terms/p/putoption.asp
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on November 19, 2022, 01:51:17 AM
        Yea if I was to bet against all the products I think are horrible ideas, I'd have to buy puts against most automakers, credit card companies, restaurants, tobacco/weed, booze, chemicals, fashion, most of the internet, most broadcast media, homebuilders, casinos, movie studios, etc.
        You claimed crypto was a Ponzi scheme.  If you believe crypto will not collapse, how can it be a Ponzi scheme?

        I believe cryptocurrencies have minimal utility and should in the long run be worthless. In the short run? Anything could happen. I'm not interested in taking a bet either way. Same with some of the other things in that @ChpBstrd's list: there are plenty of businesses that I doubt will survive the next decade or two, but I'm not running out to short their stock or buy options because I have no particular reason to believe the collapse is imminent.

        Can you understand the distinction here? It seems several people have brought this up when you suggest that everyone who isn't aboard the crypto train should logically buy some puts. Just because I believe the intrinsic value is zero doesn't mean the market is going to agree with me before the option expires.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Shane on November 19, 2022, 05:10:14 AM
        You guys are making it way too hard.  The key part that differentiates a Ponzi from other types of fraud is the actual payout.  The high payout is the thing which attracts new money from investors, which is used to provide high rates of return, and the payout is the thing that causes the Ponzi to fail.   

        Enron:  They were cooking the books to make the company look more valuable.  Not a Ponzi.

        Madoff:  He was taking money from new investors to pay high rates of return to current investors.  Definite Ponzi.

        Beanie Babies:  Did not promise a payout.  Price was set by speculators who were hoping for a greater fool.  Not a Ponzi. 

        Celsius Network:  Paid high rates of return using money obtained from new investors.  Definite Ponzi.

        Bitcoin:  Does not promise a payout.  Price is set by speculators who are hoping for a greater fool.*   Not a Ponzi. 


        *I personally think the price is being manipulated, but in general the greater fool thing is what is happening.


        I thought Telecaster made a good case, in the post above, against labeling crypto as a ponzi scheme, at least in the case of Bitcoin. Does it really matter, though, if crypto currencies are a ponzi or just a scam in search of greater fools? Seems like quibbling over semantics to me.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GilesMM on November 19, 2022, 06:14:14 AM
        Yea if I was to bet against all the products I think are horrible ideas, I'd have to buy puts against most automakers, credit card companies, restaurants, tobacco/weed, booze, chemicals, fashion, most of the internet, most broadcast media, homebuilders, casinos, movie studios, etc.
        You claimed crypto was a Ponzi scheme.  If you believe crypto will not collapse, how can it be a Ponzi scheme?

        I believe the correct term is "Pyramid" scheme. This is where the participants understand that new gullible participants are required to boost prices and for them to make money.  Crypto is a pyramid scheme.   Of course, the game may be over now since it may be years before people have faith enough to buy it again, if ever.

        In a Ponzi a master schemer is fooling all the participants by offering generous terms which are actually supported mostly by new participants.  FTX was run by an alleged master schemer who was said to be mis-using all participants funds for the overall business and for his personal gain.  Probably not a Ponzi setup, just a sloppy business run by a charismatic genius (people foolishly bought the man instead of the product; some may have bought Gemini for similar reasons).  In fact, the demise may have been driven as much by an angry competitor as by FTX mis-steps.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Psychstache on November 19, 2022, 07:29:27 AM
        For those certain that crypto will fail, why not buy "put options" on Coinbase stock (COIN)?

        For example, 2024-01-19 PUT $80 would cost around $980/contract.  If Coinbase hits zero, that PUT option is worth $80/share x 100 shares = $8,000.  That's how I would play the cynical view of crypto: +7163% return if crypto crashes in 22 months, and -100% return if it doesn't.

        Of the people who view crypto as worthless, did any of you invest against it?  Back in March I brought up the way to do that: Coinbase put options with an $80 strike, which was $980 when I posted originally.  Eight months later, that same option is worth $4190 for a +327% profit.
        https://finance.yahoo.com/quote/COIN/options?p=COIN&date=1705622400

        I would like to refer to the response to your proposal when you suggested it. No sense in trying to guess how and when things will pan out when your personal opinion is that they're not making sense currently.

        For those certain that crypto will fail, why not buy "put options" on Coinbase stock (COIN)?
        The market can stay irrational longer than I can remain liquid.
        Which was an incorrect statement which I corrected with the following reply.

        For those certain that crypto will fail, why not buy "put options" on Coinbase stock (COIN)?
        The market can stay irrational longer than I can remain liquid.
        Note that "put options" gives the holder the option, but not the requirement, to sell shares at the given price.  No additional liquidity is required.

        I'm mostly exploring the idea that people who dislike crypto will not put money behind their idea.  There's a certainty that crypto is wrong, but not a certainty to invest against it.

        Which suggests maybe its a waste of time to correct people's incorrect statements.

        Quote
        A put option (or “put”) is a contract giving the option buyer the right, but not the obligation, to sell—or sell short—a specified amount of an underlying security
        https://www.investopedia.com/terms/p/putoption.asp

        Are reasonably priced 20-year puts an option? If so, I will think about it.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on November 19, 2022, 07:37:20 AM
        The fact that we're quibbling over whether the best move is to ignore crypto or figure out a way to short it really says it all, doesn't it?

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: bwall on November 19, 2022, 08:25:22 AM
        Lehman and AIG stock investments might have left a person with <75% today, depending on timing. Also, the FBI did not seize many of the assets until years later - so some victims probably benefited from the appreciation of stock and bond assets after 2008.

        The Madoff example only illustrates how a Ponzi-adjacent scheme does not need to lose 95% of their assets to go bust. Madoff, like FTX and now a couple of other cryptobrokerages, was unable to promptly meet redemption requests because assets that were supposed to be inside the organization had been moved out of the organization. There were massive piles of assets; they were just in the wrong place when customers came in demanding cash the same day. As word spread that the organizations were not promptly meeting redemption requests, the bank runs accelerated.

        Maybe the missing piece to the analogy is that we can imagine a world in which Madoff Securities or FTX kept large reserves of actual assets, instead of holding minimal assets to backstop their on-demand accounts.

        What if, say, half of customer assets were kept quickly available for redemption and the other half were stolen? That probably would have been enough reserves to stop the bank runs and both schemes could have continued operating to this day. Madoff's error was to move his clients' assets into his personal accounts so that he could live a life of luxury off the personal accounts, when he could have just spent out of the Madoff Securities accounts and been more prepared for the 2008 wave of redemption requests. Likewise, FTX errored by moving a bunch of clients' assets to Alameda, leaving themselves unprepared for a bank run (and perhaps sparking the bank run when people saw them moving the assets). Getting caught amounted to having too many of the assets in an illiquid place, just like with bank runs on legitimate banks. Except with Madoff and FTX, that illiquid place was not a portfolio of loans, it was personal accounts.

        Let's do another thought experiment. Suppose Madoff had kept 75% of customer assets in liquid accounts, knowing he was just one bank run away from being discovered, and wisely reasoning that his personal accounts would do him no good if he was ever caught. He could still print false account statements with made-up returns, could still fund redemption requests from new victims' money in normal times, could still run every other aspect of the scheme, and could still live like a king. It would still be a Ponzi, just more conservatively run.

        When 2008 happened, suppose customers asked to immediately withdraw 70% of the original deposits in Madoff Securities. Madoff could promptly and immediately pay each account holder from the reserves, and that would have been sufficient to avoid a run (particularly because clients believed Madoff was running a collar strategy, with limited loss potential).

        Behind the scenes this hypothetical Madoff Securities would have lost 95% of its clients' cash: 70% from redemptions and 25% from previous theft. The Ponzi scheme would have survived 2008 after losing 95% of its actual funds, might have attracted more money by reporting reasonable performance through the crisis, and might have only been found out after Madoff's death. This hypothetical post-2008 Madoff Securities would have only been as leveraged as Madoff Securities was in reality. The strong market performance after 2009 and low interest rates would have given Madoff cover to report very high earnings, attracting lots more capital, and report a full recovery.

        Of course, financial scams are typically set up by greedy and reckless people who are disinclined not to personally use every dollar they pull in. The thought experiment shows it is possible for a Ponzi to lose 95% and come back completely. Madoff wasn't caught by the FBI or SEC after 16 years of on and off investigation; his undoing was a traditional bank run which he could have avoided. I'm sure he spent his last years in prison wondering why he didn't hold more liquidity.

        I love the thought experiment. In effect, 'how closely can one court disaster and not go over the edge?' Cliff diving in Acapulco is by comparison a tame sport for old grandmothers.

        A problem I see with the outline above is that it doesn't account for the clients' fictitious gains. Presumably, any client looking to redeem their assets would also want to redeem the gains they were led to believe accrued to them. Since these gains were non existent, it'd be impossible for them to be fully redeemed at all, much less with the reserve proportions listed above.

        The prospective remedy for Madoff would have been to selectively have accounts crushed at some point along the way. "Oops! One trade went bad, you lost 50%!", or something to this effect. The investor would pull out his remaining balance which would be below the initial investment amount. As you can imagine, this remedy brings another set of problems with it; people aren't going to believe the losses occurred so quickly, demand an investigation, etc. Reporting a fictitious bad year across the board wouldn't solve anything either--just incur more redemptions.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 19, 2022, 09:38:53 AM
        Yea if I was to bet against all the products I think are horrible ideas, I'd have to buy puts against most automakers, credit card companies, restaurants, tobacco/weed, booze, chemicals, fashion, most of the internet, most broadcast media, homebuilders, casinos, movie studios, etc.
        You claimed crypto was a Ponzi scheme.  If you believe crypto will not collapse, how can it be a Ponzi scheme?

        I believe cryptocurrencies have minimal utility and should in the long run be worthless. In the short run? Anything could happen. I'm not interested in taking a bet either way. Same with some of the other things in that @ChpBstrd's list: there are plenty of businesses that I doubt will survive the next decade or two, but I'm not running out to short their stock or buy options because I have no particular reason to believe the collapse is imminent.

        Can you understand the distinction here? It seems several people have brought this up when you suggest that everyone who isn't aboard the crypto train should logically buy some puts. Just because I believe the intrinsic value is zero doesn't mean the market is going to agree with me before the option expires.
        You're putting words in my mouth.  The words "did any of you" does not mean "everyone", which becomes apparent when you actually quote what I said:

        Of the people who view crypto as worthless, did any of you invest against it?

        My goal was to correct factual misstatements. But instead multiple posters are putting words in my mouth - not even reading what I said accurately.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 19, 2022, 09:53:01 AM
        Putting it on the record, like i did in 2018-19.  I am buying.
        I alternate long and short with crypto.  At the start of this year I sold all my crypto.  I even profitted off short positions as crypto was driven lower by Fed rate hikes.  At the end of October I flipped to buying, but I expect a 3-5 year wait.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 20, 2022, 09:31:37 AM
        Yea if I was to bet against all the products I think are horrible ideas, I'd have to buy puts against most automakers, credit card companies, restaurants, tobacco/weed, booze, chemicals, fashion, most of the internet, most broadcast media, homebuilders, casinos, movie studios, etc.
        You claimed crypto was a Ponzi scheme.  If you believe crypto will not collapse, how can it be a Ponzi scheme?
        Regardless of how we categorize them, if there's one thing we know about Ponzi or pyramid or MLM or name-your-name schemes, it's that they can go on for decades. History is full of examples of such things that just keep growing beyond all rationale. Their collapses are hard to predict in a time-bound way.

        Second, crypto throws in the added complexity of fake trades and highly manipulated markets. According to investigators, exchanges do "wash sales" to themselves in an attempt to inflate the prices of various coins. This may be what FTX and Alameda were up to - using client assets to corner the market on illiquid coins, including their own, making it appear prices were going "to the moon" in order to attract new investment into those coins.
        https://www.forbes.com/sites/javierpaz/2022/08/26/more-than-half-of-all-bitcoin-trades-are-fake/?sh=6a6d46f26681 (https://www.forbes.com/sites/javierpaz/2022/08/26/more-than-half-of-all-bitcoin-trades-are-fake/?sh=6a6d46f26681)

        So even if a person has complete confidence that buttcoin or whatever is going to zero someday, they do not know the schedule of the next wash cycle. This isn't at all like shorting a commodity based on observations of supply and demand, or shorting a stock because you can predict by the store's empty parking lot and unappealing deals that their earnings will disappoint. This is like out-timing somebody else's penny stock pump and dump.

        Third, scams or greater-fool-theory investments depend on the ability of the promoters to continue attracting new money - after already doing so for a long time, building up their skills and reputation, etc. If one was to lay down a bet that such a scheme would run out of new investors by time X, one would be making the mirror-image bet as the person buying the asset and assuming they'll find a greater fool to sell it to by time X. Neither bet has any evidence in its favor. It's a gamble on the supply and sentiment of new investors either way, and each bet will be right or wrong at different times, like any bet in roulette. Why play a zero-sum back-alley dice hustle against sophisticated conmen when there's a world full of companies actually creating economic value with their stocks and bonds for sale in more-transparent markets?

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: vand on November 20, 2022, 10:46:53 AM
        When a Ponzi scheme collapses, it loses 100%.  I picked 95% drop and recovery because once a Ponzi scheme loses 95%, I'm not aware of any example where it doesn't proceed to a 100% loss.
        I looked deeper into the Bernie Madoff scheme because we can all agree it was a Ponzi and because there's lots of easily-accessible info about it. Turns out, investors in the scheme "have recovered 75 cents on the dollar" thanks to the work of a large team of recovery lawyers. They might have done better investing with Madoff than some people did investing in bank stocks since 2008, lol!
        That joke about banks isn't accurate.  SPDR S&P Bank ETF (KBE) has a +50% gain since 2008 until now, which is better than a -24% loss.  It's more fair to compare 2008-2018, where KBE only had a +5% gain.

        Keep in mind the Madoff money was unavailble for over a decade.  Someone who invested 3 years before the collapse thought they had a +40% return, only to be told they have zero.  From 2006-2018, the S&P 500 returned +163% while the Madoff recovery fund paid out -24% losses.  The FBI assigns time a value of zero, which creates a huge opportunity cost.

        If you're trying to call this an exception to my 95% crash with no recovery, don't you have to claim the Ponzi scheme did not collapse, and was taken over by the FBI?  Did the FBI continue Madoff's Ponzi scheme, or does the general rule I proposed still hold?
        Lehman and AIG stock investments might have left a person with <75% today, depending on timing. Also, the FBI did not seize many of the assets until years later - so some victims probably benefited from the appreciation of stock and bond assets after 2008.

        The Madoff example only illustrates how a Ponzi-adjacent scheme does not need to lose 95% of their assets to go bust. Madoff, like FTX and now a couple of other cryptobrokerages, was unable to promptly meet redemption requests because assets that were supposed to be inside the organization had been moved out of the organization. There were massive piles of assets; they were just in the wrong place when customers came in demanding cash the same day. As word spread that the organizations were not promptly meeting redemption requests, the bank runs accelerated.

        Maybe the missing piece to the analogy is that we can imagine a world in which Madoff Securities or FTX kept large reserves of actual assets, instead of holding minimal assets to backstop their on-demand accounts.

        What if, say, half of customer assets were kept quickly available for redemption and the other half were stolen? That probably would have been enough reserves to stop the bank runs and both schemes could have continued operating to this day. Madoff's error was to move his clients' assets into his personal accounts so that he could live a life of luxury off the personal accounts, when he could have just spent out of the Madoff Securities accounts and been more prepared for the 2008 wave of redemption requests. Likewise, FTX errored by moving a bunch of clients' assets to Alameda, leaving themselves unprepared for a bank run (and perhaps sparking the bank run when people saw them moving the assets). Getting caught amounted to having too many of the assets in an illiquid place, just like with bank runs on legitimate banks. Except with Madoff and FTX, that illiquid place was not a portfolio of loans, it was personal accounts.

        Let's do another thought experiment. Suppose Madoff had kept 75% of customer assets in liquid accounts, knowing he was just one bank run away from being discovered, and wisely reasoning that his personal accounts would do him no good if he was ever caught. He could still print false account statements with made-up returns, could still fund redemption requests from new victims' money in normal times, could still run every other aspect of the scheme, and could still live like a king. It would still be a Ponzi, just more conservatively run.

        When 2008 happened, suppose customers asked to immediately withdraw 70% of the original deposits in Madoff Securities. Madoff could promptly and immediately pay each account holder from the reserves, and that would have been sufficient to avoid a run (particularly because clients believed Madoff was running a collar strategy, with limited loss potential).

        Behind the scenes this hypothetical Madoff Securities would have lost 95% of its clients' cash: 70% from redemptions and 25% from previous theft. The Ponzi scheme would have survived 2008 after losing 95% of its actual funds, might have attracted more money by reporting reasonable performance through the crisis, and might have only been found out after Madoff's death. This hypothetical post-2008 Madoff Securities would have only been as leveraged as Madoff Securities was in reality. The strong market performance after 2009 and low interest rates would have given Madoff cover to report very high earnings, attracting lots more capital, and report a full recovery.

        Of course, financial scams are typically set up by greedy and reckless people who are disinclined not to personally use every dollar they pull in. The thought experiment shows it is possible for a Ponzi to lose 95% and come back completely. Madoff wasn't caught by the FBI or SEC after 16 years of on and off investigation; his undoing was a traditional bank run which he could have avoided. I'm sure he spent his last years in prison wondering why he didn't hold more liquidity.



        Although I don't proclaim to be an authority as I recall the only reason that Madoff got "caught" out was that he confessed it to his sons who then reported him to the SEC. 

        It could well still be ongoing had he not been so guilt stricken that he made that confession - and the very reason why was that his reported returns were good but not SO good that they raised a red flag.

        If you're running a ponzi you don't shout about it from the rooftops - a lesson which SBF despite his massive intellect was too stupid to heed.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GilesMM on November 20, 2022, 11:28:23 AM

        Although I don't proclaim to be an authority as I recall the only reason that Madoff got "caught" out was that he confessed it to his sons who then reported him to the SEC. 

        It could well still be ongoing had he not been so guilt stricken that he made that confession - and the very reason why was that his reported returns were good but not SO good that they raised a red flag.

        If you're running a ponzi you don't shout about it from the rooftops - a lesson which SBF despite his massive intellect was too stupid to heed.

        No, Madoff confessed because "the gig was up", he could no longer maintain the scheme because he had some redemptions he couldn't pay.  Not enough new blood to support the existing customers.  His hand was forced.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on November 21, 2022, 01:13:30 PM
        Of the people who view crypto as worthless, did any of you invest against it?  Back in March I brought up the way to do that: Coinbase put options with an $80 strike, which was $980 when I posted originally.  Eight months later, that same option is worth $4190 for a +327% profit.
        https://finance.yahoo.com/quote/COIN/options?p=COIN&date=1705622400

        Coinbase stock is down 25% in just the last five days, so that would have been a good bet.  That said, I occasionally drop by r/Bitcoin and follow Bitcoin maximalists like Michael Saylor on Twitter.  The Bitcoin maxis--many of them anyway--have created an alternate reality complete with alternate histories and alternate economic theories explaining why mass Bitcoin adoption is inevitable.  There are many stories of people who lost huge amounts of money in the Voyager and Celsius implosions, and yet use this alternate reality as motivation to buy more Bitcoin.  The response to any news or event that might be detrimental to Bitcoin is thought stopping shibboleths like this is good for Bitcoin, we're still early, etc.  Fiat inflation is seen as one of the primary evils of mankind, but they don't recognize that Bitcoin's has inflated by about 350% in the past year.  This is explained away by saying "1 BTC = 1 BTC."   Which is technically true, but also nonsensical in context.

        Bottom line, there is a hardened cadre of Bitcoin maximalists who have unshakable faith in Bitcoin regardless of evidence to the contrary.   I believe this faith partially explains why the whole space is so shot with fraud and scams.  Regardless, the maxis will always be buying and holding Bitcoin.   So I believe there is a hard floor somewhere.  Don't know where it is.   Not much interested in finding out. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 21, 2022, 03:10:48 PM
        That said, I occasionally drop by r/Bitcoin and follow Bitcoin maximalists like Michael Saylor on Twitter.  The Bitcoin maxis--many of them anyway--have created an alternate reality complete with alternate histories and alternate economic theories explaining why mass Bitcoin adoption is inevitable.  There are many stories of people who lost huge amounts of money in the Voyager and Celsius implosions, and yet use this alternate reality as motivation to buy more Bitcoin.  The response to any news or event that might be detrimental to Bitcoin is thought stopping shibboleths like this is good for Bitcoin, we're still early, etc.  Fiat inflation is seen as one of the primary evils of mankind, but they don't recognize that Bitcoin's has inflated by about 350% in the past year.  This is explained away by saying "1 BTC = 1 BTC."   Which is technically true, but also nonsensical in context.

        Bottom line, there is a hardened cadre of Bitcoin maximalists who have unshakable faith in Bitcoin regardless of evidence to the contrary.   I believe this faith partially explains why the whole space is so shot with fraud and scams.  Regardless, the maxis will always be buying and holding Bitcoin.   So I believe there is a hard floor somewhere.  Don't know where it is.   Not much interested in finding out.
        Sounds like the sort of talk we hear from goldbugs.

        Gold has industrial applications that lead to a certain amount of demand regardless of the speculators and collectors. These industrial applications increase demand with the economic cycle (in theory) which means gold should (in theory) appreciate during the times when inflation / monetary velocity is increasing most. People tend to buy electronics and jewelry in boom times.

        Bitcoin's native applications include laundering, ransomware, ransoms, drug trades, etc. What does that have to do with inflation? IDK.

        But I suppose either Bitcoin or gold could both provide a psychological function for those skeptical of all the mainstream people's businesses, bonds, stocks, etc. and yearning for a simple investment that doesn't require accounting training to understand.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: lifeanon269 on November 22, 2022, 06:49:56 AM
        The Bitcoin maxis--many of them anyway--have created an alternate reality complete with alternate histories and alternate economic theories explaining why mass Bitcoin adoption is inevitable.  There are many stories of people who lost huge amounts of money in the Voyager and Celsius implosions, and yet use this alternate reality as motivation to buy more Bitcoin.  The response to any news or event that might be detrimental to Bitcoin is thought stopping shibboleths like this is good for Bitcoin, we're still early, etc.  Fiat inflation is seen as one of the primary evils of mankind, but they don't recognize that Bitcoin's has inflated by about 350% in the past year.  This is explained away by saying "1 BTC = 1 BTC."   Which is technically true, but also nonsensical in context.

        Bottom line, there is a hardened cadre of Bitcoin maximalists who have unshakable faith in Bitcoin regardless of evidence to the contrary.   I believe this faith partially explains why the whole space is so shot with fraud and scams.  Regardless, the maxis will always be buying and holding Bitcoin.   So I believe there is a hard floor somewhere.  Don't know where it is.   Not much interested in finding out.

        FWIW, if you're a bitcoin maxi who doesn't associate with the many scams across the industry, you're probably not participating in those third-party institutions doing the scamming and likely holding custody of your own bitcoin. After all, that is the entire point of bitcoin.

        There was a good article that was just published that talks about the separation bitcoin needs from the industry that has now completely corrupted the original idea of it.

        https://www.nbcnews.com/think/opinion/bitcoin-vs-ftx-crypto-king-sam-bankman-fried-problem-rcna57964 (https://www.nbcnews.com/think/opinion/bitcoin-vs-ftx-crypto-king-sam-bankman-fried-problem-rcna57964)

        Also, if you're someone who believes in bitcoin and the economics behind it, you're not seeing CPI inflation as a primary evil, but rather monetary inflation. Seeing the price of goods fluctuated up and down isn't a bad thing and can be the result of many different market forces. What bitcoin proponents are against is having centralized authorities who attempt to control those market prices via manipulation of the money supply. That is what they are against, not CPI inflation itself. The latter is often just a resultant effect of the primary force of monetary inflation. Bitcoin doesn't and won't prevent the price of goods from ever going up at any point in time. The main point behind their economic beliefs is that bitcoin would provide a stable money supply with which goods can be priced. It is also why bitcoiners don't recognize your claim that bitcoin has "inflated by about 350% in the past year". It is because they're not looking at CPI inflation since that is a secondary effect. They're focused on monetary inflation. In that case, bitcoin has only inflated by 1.5% over the last year.

        The problem is that our fiat economy completely dwarfs the economy of bitcoin. So if you're pricing bitcoin in fiat money, then the massive swings in fiat money that can ebb and flow between fiat and bitcoin can greatly fluctuate bitcoin's relative value when priced in fiat money. That is why many proponents say "1 BTC = 1 BTC" even though in reality it makes little sense (because we don't price our goods in bitcoin).

        As someone who believes that bitcoin can do our world a lot of good, I am also not oblivious to many of the realities of our world. For example, I don't believe fiat currencies are going away and I don't believe bitcoin will ever be a world reserve currency in my lifetime. That said, just because it isn't widely used as a global reserve doesn't mean it still can't do people a lot of good. Obviously this thought is in the minority here, but I also can't help but think that is odd given the fact that this is a forum full of Mustachian thinkers that for some reason can't realize how bad our centralized inflationary monetary policies are for the economy, saving, the environment, etc.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on November 22, 2022, 08:40:39 AM
        Go read Bryan's "Cross of Gold" speech...

        There's a reason we collectively decided to have a central authority intervene in the money supply. But nobody alive today experienced it.

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: lemonlyman on November 22, 2022, 08:44:33 AM
        Go read Bryan's "Cross of Gold" speech...

        There's a reason we collectively decided to have a central authority intervene in the money supply. But nobody alive today experienced it.

        -W

        +1

        The Ascent of Money by Niall Ferguson
        And America's Bank by Roger Lowenstein

        Are some really good primer's for central banks.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 22, 2022, 08:47:44 AM
        Go read Bryan's "Cross of Gold" speech...

        There's a reason we collectively decided to have a central authority intervene in the money supply. But nobody alive today experienced it.

        -W

        Bimetallism is a political cause that has zero relevance today, but learning enough to understand why it was a major political issue at the start of the 20th century definitely helps people understand the financial monetary issues we do face today.

        Sort of like how studying a foreign language for a couple of years teaches people (or at least taught me) way more about how the english language worked than years and years of english classes.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: lifeanon269 on November 22, 2022, 09:48:54 AM
        Go read Bryan's "Cross of Gold" speech...

        There's a reason we collectively decided to have a central authority intervene in the money supply. But nobody alive today experienced it.

        -W

        I don't know how can you take the Cross of Gold speech as anything other than an indictment against central authorities over money. The entire debate over bimetallism and the policies that preceded and followed the turn of the century (1873-1900) is a shining example of how authorities squabbled over how to set a monetary standard for the economy. It was less about creating a standard monetary policy and more about setting a rigid exchange ratio between gold and silver as opposed to a market driven exchange ratio of the independent gold and silver coins. It is no surprise that the bureaucratic manipulation of a rigid exchange ratio between gold and silver failed. The parallels between the arguments over control of the monetary standard between 1873-1900 and the debates had over today's centralized credit-based monetary policies are immediately apparent. It was and always has been about governments wanting control over money.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on November 22, 2022, 10:07:17 AM
        Fair enough. We'll agree to disagree. From my perspective, the inabiity of the government to react to economic contractions due to the gold standard was a major cause of the wild recessions/depressions of the era. The last 80 years or so have been remarkably stable in comparison.

        So while there are always problems with what the Fed does, they pale in comparison to the problems involved with NOT doing those things.

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: lifeanon269 on November 22, 2022, 10:24:11 AM
        Fair enough. We'll agree to disagree. From my perspective, the inabiity of the government to react to economic contractions due to the gold standard was a major cause of the wild recessions/depressions of the era. The last 80 years or so have been remarkably stable in comparison.

        So while there are always problems with what the Fed does, they pale in comparison to the problems involved with NOT doing those things.

        -W

        We can agree to disagree. Especially considering I've already wrote about much of it in this very thread already. Around page 20 I actually specifically talk about the great depression and what lead up to it. IMO, we wouldn't need drastic swings in monetary policy in any given direction if there weren't drastic swings in policy in the opposing direction. There have been numerous times in this very thread where I asked others to name a deflationary economic cycle that wasn't preceded by an economic bubble. No one could name one. Far too often those bubbles (such as the 1920's) were driven by massive amounts of credit and monetary expansion. What goes up always comes down.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: BicycleB on November 22, 2022, 10:29:06 AM
        Go read Bryan's "Cross of Gold" speech...

        There's a reason we collectively decided to have a central authority intervene in the money supply. But nobody alive today experienced it.

        -W

        I don't know how can you take the Cross of Gold speech as anything other than an indictment against central authorities over money. The entire debate over bimetallism and the policies that preceded and followed the turn of the century (1873-1900) is a shining example of how authorities squabbled over how to set a monetary standard for the economy. It was less about creating a standard monetary policy and more about setting a rigid exchange ratio between gold and silver as opposed to a market driven exchange ratio of the independent gold and silver coins. It is no surprise that the bureaucratic manipulation of a rigid exchange ratio between gold and silver failed. The parallels between the arguments over control of the monetary standard between 1873-1900 and the debates had over today's centralized credit-based monetary policies are immediately apparent. It was and always has been about governments wanting control over money.

        I can see how your interpretation of Cross of Gold fits in with your overall viewpoint. I don't think it's the most accurate way to view it though.

        IIRC, the underlying argument in the speech is that deflation crushes debtors, and that because the economy of the day had a large percentage of the working class operating under a system of loans related to their work (farmers in debt for seed, supplies etc), the working class was being unfairly crushed by deflation that benefited the wealthy. In itself this suggests that a Bitcoin-based system would benefit Bitcoin holders at the expense of everyone else, but is unclear about the effect on the overall economy.

        The larger conclusion that most economists draw from that time's events though is that the farmers had a deeper point on their side: that money supply needs to at least expand to the needs of the economy, or else it slows the economy down, damaging the life of the people as a whole. The farmers were arguing that expanding the currency to include silver-backed bills would free them from the crushing fixed gold currency (not a govt argument, a class based argument; in their view the govt was supporting the opposing class) but I think that economists generalize that the overall economy would grow if their suggestion were followed, because the economy of the day had expanded past the size that the gold-backed currency could efficiently serve.

        You're no doubt aware of another factor: that a little bit of deflation means you can't just stay rich by holding currency; under deflation, you're losing buying power every year. This may seem unfair if you expect to be rich and want a safe simple way to stay rich. But in the inflation scenario, the safest move is to invest in businesses or conduct economic activity, which increases the overall economy. For this as well as the "sufficient currency" reason, most economists suggest that a deflationary currency is bad and a currency that inflates slightly is better for the overall economy. In this respect, govt isn't the point, it's just a mechanism for establishing the needed currency.   

        Heck, if Bitcoin produced a currency that was better at providing slight inflation and other needed characteristics than the dull old dollar,  I imagine that economists would be in favor of it.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: lifeanon269 on November 22, 2022, 11:47:18 AM
        Go read Bryan's "Cross of Gold" speech...

        There's a reason we collectively decided to have a central authority intervene in the money supply. But nobody alive today experienced it.

        -W

        I don't know how can you take the Cross of Gold speech as anything other than an indictment against central authorities over money. The entire debate over bimetallism and the policies that preceded and followed the turn of the century (1873-1900) is a shining example of how authorities squabbled over how to set a monetary standard for the economy. It was less about creating a standard monetary policy and more about setting a rigid exchange ratio between gold and silver as opposed to a market driven exchange ratio of the independent gold and silver coins. It is no surprise that the bureaucratic manipulation of a rigid exchange ratio between gold and silver failed. The parallels between the arguments over control of the monetary standard between 1873-1900 and the debates had over today's centralized credit-based monetary policies are immediately apparent. It was and always has been about governments wanting control over money.

        I can see how your interpretation of Cross of Gold fits in with your overall viewpoint. I don't think it's the most accurate way to view it though.

        IIRC, the underlying argument in the speech is that deflation crushes debtors, and that because the economy of the day had a large percentage of the working class operating under a system of loans related to their work (farmers in debt for seed, supplies etc), the working class was being unfairly crushed by deflation that benefited the wealthy.

        Agreed here, but then how do you not see the conclusion that should be drawn from that? You have a credit driven inflationist society that needs more monetary inflation in order to ease those burdens or else experience economic hardship... The only solution to monetary inflation is more monetary inflation in the eyes of proponents. And when that house of cards comes crashing down, they blame anything but monetary inflation.

        FWIW, (with obvious hindsight benefit) would not be a proponent of those on the free silver or gold standard side of things back in the late 1800's. But I merely point out the fallacy in arguing for interventionist monetary policy that both adherents were so obviously committed to.

        The larger conclusion that most economists draw from that time's events though is that the farmers had a deeper point on their side: that money supply needs to at least expand to the needs of the economy, or else it slows the economy down, damaging the life of the people as a whole.

        I wholeheartedly disagree that the money supply needs to expand in order for the economy to grow. In fact, I don't know many economist that would even argue that. The economy can grow just fine with a stable money supply and there is plenty of history to show for that. I'll agree that the economy doesn't grow as quickly as compared with an easy money credit driven one. But that's the point, isn't it? Slower and more stable growth compared to reckless growth rife with malinvestment that inevitably leads to economic crashes, environmental devastation, wealth inequality, etc.

        You're no doubt aware of another factor: that a little bit of deflation means you can't just stay rich by holding currency; under deflation, you're losing buying power every year. This may seem unfair if you expect to be rich and want a safe simple way to stay rich. But in the inflation scenario, the safest move is to invest in businesses or conduct economic activity, which increases the overall economy. For this as well as the "sufficient currency" reason, most economists suggest that a deflationary currency is bad and a currency that inflates slightly is better for the overall economy. In this respect, govt isn't the point, it's just a mechanism for establishing the needed currency.

        I think you have that backward here, no? Inflation (whether referring to monetary inflation or CPI inflation) means you're losing buying power. Your $1 today will buy you less tomorrow. Either way, my argument isn't for a heavily deflating monetary supply no more than it is for a heavily inflating one. Too much of something is bad, no matter which way you go. My argument is for a stable money supply free from manipulation. In that regard, the economy as it expands or contracts will be free to negotiate value exchanges. So long as you don't have uncontrolled malinvestments rampant throughout the economy (which easy money promotes), you're not going to have drastic fluctuations in the size of the economy, but rather more slower and controlled growth that is naturally brought about by advances in productivity (ie, the Mustachian way). Investing in productive businesses will always be a better way at increasing wealth compared to just holding currency since it is the productive gains yielded from those investments that end up producing more goods in relation to the stable money supply. In other words, the currency can't become more valuable without increases in productivity to begin with. Future productivity increases require investments into the future brought about by savings from today.

        Heck, if Bitcoin produced a currency that was better at providing slight inflation and other needed characteristics than the dull old dollar,  I imagine that economists would be in favor of it.

        I would argue that those in control of money would never be in favor of releasing that control, regardless of the monetary policy exhibited.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 22, 2022, 12:28:28 PM
        My argument is for a stable money supply free from manipulation.

        In what way is crypto free from manipulation?

        It's free from planned manipulation by central banks.  But there's heavy influenced by manipulation of other sorts - pump n'dump, wash trading, whale wall spoofing, stop hunting, etc.  Why do you prefer this alternate manipulation?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: lifeanon269 on November 22, 2022, 12:59:54 PM
        My argument is for a stable money supply free from manipulation.

        In what way is crypto free from manipulation?

        It's free from planned manipulation by central banks.  But there's heavy influenced by manipulation of other sorts - pump n'dump, wash trading, whale wall spoofing, stop hunting, etc.  Why do you prefer this alternate manipulation?

        You just answered it yourself. Free from central bank manipulation. FWIW, I think central bank manipulation is a strong leader to other forms of monetary scams that come about during times of easy money.

        I am not sure what makes you think I am an advocate of "crypto" and any scams that may be associated with the industry. I've long criticized the scams in the industry even in this very thread long ago numerous times.

        https://forum.mrmoneymustache.com/investor-alley/what-do-you-think-of-adding-a-low-of-crypto-allocation/msg2972902/#msg2972902 (https://forum.mrmoneymustache.com/investor-alley/what-do-you-think-of-adding-a-low-of-crypto-allocation/msg2972902/#msg2972902)

        Even just a couple posts above I linked to an article going into depth in the seperation between bitcoin and the rest of the industry it is associated with.

        There was a good article that was just published that talks about the separation bitcoin needs from the industry that has now completely corrupted the original idea of it.

        https://www.nbcnews.com/think/opinion/bitcoin-vs-ftx-crypto-king-sam-bankman-fried-problem-rcna57964 (https://www.nbcnews.com/think/opinion/bitcoin-vs-ftx-crypto-king-sam-bankman-fried-problem-rcna57964)

        At the end of the day, the only thing that stops humans from trying to scam other humans is strong enforcement of laws that would provide a disincentive in doing so. That's quite the contrast to what we have today where time and time again wealthy individuals get off free from the devastation the brought upon many. Whether that is financial, environmental, or health devastation, etc. All too often the perpetrators get off without any penalty or the penalty is just a meager cost of doing business. I really hope Sam Bankman-Fried goes to jail for a long time. Saying that I "prefer this alternate manipulation" means to explain that there is actually a difference between the fraud that occurs with third-party institutions in traditional finance versus the fraud that happens with third-parties in this new "crypto" industry. I would argue there isn't much difference. FTX is the same as Lehman, is the same as Enron, is the same as Madoff, etc etc etc. They're all guilty parties that betrayed the trust of those that trusted them with their money.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: bwall on November 22, 2022, 01:52:34 PM
        Fair enough. We'll agree to disagree. From my perspective, the inabiity of the government to react to economic contractions due to the gold standard was a major cause of the wild recessions/depressions of the era. The last 80 years or so have been remarkably stable in comparison.

        So while there are always problems with what the Fed does, they pale in comparison to the problems involved with NOT doing those things.

        -W

        +1.

        Keep in mind that since the year 1900 the population of the USA was 75 million, give or take. Today it's 4.5x larger. Thus, in order to keep the money supply exactly the same relative to the population, the USA would have to dig 4.5x more shiny metal out of the earth. If you can't dig enough metal out of the ground to keep up with population growth, then you experience deflation.

        We also couldn't have fought WWII on the gold standard. The bad guys would've won simply because we couldn't dig enough shiny metal out of the earth first.

        No national highway system either without mining gold first.

        Nor could FDR have spent all that money on social programs if we had to dig a specific metal out of the ground first. Which, I suspect is the real reason people today wish for the return of the gold standard. Less spending towards poor people would be a direct result.



         
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: achvfi on November 22, 2022, 02:42:24 PM

        So while there are always problems with what the Fed does, they pale in comparison to the problems involved with NOT doing those things.

        -W
        +1

        Between 18th century to early 20th century there was a financial/economic crisis every 3-4 years. Wiping away peoples fortunes time and again. Central banks evolved and came into existence over time to provide stability to the system. It took decades to achieve this.

        https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States#Free_Banking_Era_to_the_Great_Depression_(1836-1929)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 22, 2022, 02:57:52 PM
        I remain really excited about cryptocurrency as a payment medium. But we're in the process of getting to watch the first real financial crisis of the crypto world right now and it is fascinating.

        Companies like Genesis made their money by accepting short term loans from companies like BlockFi relatively low interest rates and lending long term at higher interest rates. Now FCX has spooked the whole industry, everyone is calling back their loans to build their liquidity buffers, individual customers are pulling their deposits because they're not sure if the "banks" are solvent, and a lot of institutions are likely to collapse.

        That's not an inherent flaw in cryptocurrencies, we've seen the same thing play out over and over again since banking became a thing. But it also indicates that just using cryptocurrency in place of dollars (or gold) doesn't make the problems economic systems without central banks face moot.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: BicycleB on November 22, 2022, 04:09:21 PM

        You're no doubt aware of another factor: that a little bit of deflation means you can't just stay rich by holding currency; under deflation, you're losing buying power every year. This may seem unfair if you expect to be rich and want a safe simple way to stay rich. But in the inflation scenario, the safest move is to invest in businesses or conduct economic activity, which increases the overall economy. For this as well as the "sufficient currency" reason, most economists suggest that a deflationary currency is bad and a currency that inflates slightly is better for the overall economy. In this respect, govt isn't the point, it's just a mechanism for establishing the needed currency.

        I think you have that backward here, no?


        Yes, I typed deflation instead of inflation.

        Feeling a little, ah, deflated about my typing skills. ;)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: BicycleB on November 22, 2022, 04:24:46 PM
        my argument isn't for a heavily deflating monetary supply no more than it is for a heavily inflating one. Too much of something is bad, no matter which way you go. My argument is for a stable money supply free from manipulation. In that regard, the economy as it expands or contracts will be free to negotiate value exchanges. So long as you don't have uncontrolled malinvestments rampant throughout the economy (which easy money promotes), you're not going to have drastic fluctuations in the size of the economy, but rather more slower and controlled growth that is naturally brought about by advances in productivity (ie, the Mustachian way). Investing in productive businesses will always be a better way at increasing wealth compared to just holding currency since it is the productive gains yielded from those investments that end up producing more goods in relation to the stable money supply. In other words, the currency can't become more valuable without increases in productivity to begin with. Future productivity increases require investments into the future brought about by savings from today.


        Thanks for clarifying; that helps. The now-bolded does raise the question of which aspect of the money supply should be stable, though (as well as how to create that stability).

        If the currency is Fixcoins and you have a fixed number of Fixcoins, the value of a given good is unstable whenever the supply of goods changes. If you seek a fixed price for a given good, the number of Fixcoins would have to be unstable, adjusting to varied supply of goods. What's more important? Is it the number of Fixcoins that should be stable, or the price of goods in terms of Fixcoin?

        Anecdotally, people scream about inflation whenever the price of goods changes in terms of the dominant coin. Wouldn't such price changes be a guaranteed fixture (no pun intended) of a system with a fixed number of coins as the currency? Wouldn't most people prefer steady prices of goods? Wouldn't economic decisions be made most neutrally and efficiently under stable prices of goods?

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: lifeanon269 on November 22, 2022, 04:44:13 PM
        Keep in mind that since the year 1900 the population of the USA was 75 million, give or take. Today it's 4.5x larger. Thus, in order to keep the money supply exactly the same relative to the population, the USA would have to dig 4.5x more shiny metal out of the earth. If you can't dig enough metal out of the ground to keep up with population growth, then you experience deflation.

        To put it another way, higher population means more productivity (more workers and more goods). Not all deflation is created equal in the same way that not all inflation is. Deflation as a result of higher productivity is a good thing. It is why the cost of many technologies goes down over time or the cost of a food crop goes down as yields increase. Those are good reasons for deflation and having a stable money supply over the course of those changes is not a bad thing. It means people can afford more things and the standard of living for people goes up.

        We also couldn't have fought WWII on the gold standard. The bad guys would've won simply because we couldn't dig enough shiny metal out of the earth first.

        First off, funding wars should be the last thing on your list of "reasons to have central banking". Second, it seems like a disingenuous argument to make to say that the US (I'm assuming the "we" refers to the US here) couldn't have fought WWII without acknowledging the fact that European countries came off the gold standard prior to both WWI and WWII.

        Yes, no government control of money means that governments must fund their military industrial complexes the old fashioned way, with tax revenue. That's a good thing, IMO. As we see with so many corrupt nations around the world, wherever there is abuse of military power, there is almost always an abuse of the country's money supply as well.

        No national highway system either without mining gold first.

        Nor could FDR have spent all that money on social programs if we had to dig a specific metal out of the ground first. Which, I suspect is the real reason people today wish for the return of the gold standard. Less spending towards poor people would be a direct result.

        Expanding the money supply doesn't mean you can't fund social programs or projects. It just means you need to actually have a plan to pay for it as opposed to being able to inflate away the incurred debt. I'm not sure why you say you need to "mine gold first" here (assuming you're referring to a gold backed currency). You still have credit within the system and governments can still sell bonds, for example. It just means that more responsibility must be taken to ensure those bonds can be paid for in the future. It doesn't prevent you from having insurance programs either. If you're concerned about poor people, I would argue that the massive increases in CPI inflation over time as a result of inflationary monetary policy have robbed far more poor people of their wealth.

        That's not an inherent flaw in cryptocurrencies, we've seen the same thing play out over and over again since banking became a thing. But it also indicates that just using cryptocurrency in place of dollars (or gold) doesn't make the problems economic systems without central banks face moot.

        Yup, anyone touting something like bitcoin as a solution to all our problems in our fiscal (and non-fiscal) world is probably talking all hype. Institutional problems like we've seen with FTX will still be around and requires real effort by our governments to help enforce laws strictly and regulate industries responsibly to protect consumers. But I think the argument from bitcoin proponents you'll see is that without easy money in our credit based money system, many of the scams and malinvestments we see take place will become much less common. To commit fraud, you'd need to risk your own hard-earned money instead of "risking" fake leveraged money that appeared out of thin air.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: lifeanon269 on November 22, 2022, 04:54:33 PM
        Thanks for clarifying; that helps. The now-bolded does raise the question of which aspect of the money supply should be stable, though (as well as how to create that stability).

        If the currency is Fixcoins and you have a fixed number of Fixcoins, the value of a given good is unstable whenever the supply of goods changes. If you seek a fixed price for a given good, the number of Fixcoins would have to be unstable, adjusting to varied supply of goods. What's more important? Is it the number of Fixcoins that should be stable, or the price of goods in terms of Fixcoin?

        Anecdotally, people scream about inflation whenever the price of goods changes in terms of the dominant coin. Wouldn't such price changes be a guaranteed fixture (no pun intended) of a system with a fixed number of coins as the currency? Wouldn't most people prefer steady prices of goods? Wouldn't economic decisions be made most neutrally and efficiently under stable prices of goods?

        I don't think under either system you will ever achieve a stable price of goods. I don't think any economist would argue that and even under basic scrutiny that idea falls apart. After all, you only have one supply of money and massive amounts of different goods each with their own varying supply. Even if you attempt to control the supply of money for one single good, every other single good out there will have their own independent supply as well that can't be controlled for as a result.

        The price of goods should be determined by the market, not the money supply. If supply of a good decreases and demand stays the same, then the price should go up. If the supply of a good increases (maybe as a result of increased production), then the cost of that good should come down. That's basic economic theory. I'm not sure why anyone would think that controlling the money supply is a solution to these natural market forces.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 22, 2022, 05:08:27 PM
        That's not an inherent flaw in cryptocurrencies, we've seen the same thing play out over and over again since banking became a thing. But it also indicates that just using cryptocurrency in place of dollars (or gold) doesn't make the problems economic systems without central banks face moot.

        Yup, anyone touting something like bitcoin as a solution to all our problems in our fiscal (and non-fiscal) world is probably talking all hype. Institutional problems like we've seen with FTX will still be around and requires real effort by our governments to help enforce laws strictly and regulate industries responsibly to protect consumers. But I think the argument from bitcoin proponents you'll see is that without easy money in our credit based money system, many of the scams and malinvestments we see take place will become much less common. To commit fraud, you'd need to risk your own hard-earned money instead of "risking" fake leveraged money that appeared out of thin air.

        Cryptocurrency definitely removes the ability for central banks to create new real money out of thin air. But does it actually prevent "fake leveraged money that appeared out of thin air"? What we are seeing in many of the active crypto exchanges are indeed leveraged futures products that are/were funded by interest paying customer deposits.

        You could envision a world where everyone only used their own wallets and no one ever borrowed or lent bitcoin (or other cryptos). But it seems like the world we actually find ourselves in is that the fractional reserve banking business model reemerges, will all its attendant benefits and risks, even in these new currencies (just like it did with both fiat and gold-backed currencies).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: lifeanon269 on November 22, 2022, 07:45:55 PM
        Cryptocurrency definitely removes the ability for central banks to create new real money out of thin air. But does it actually prevent "fake leveraged money that appeared out of thin air"? What we are seeing in many of the active crypto exchanges are indeed leveraged futures products that are/were funded by interest paying customer deposits.

        You could envision a world where everyone only used their own wallets and no one ever borrowed or lent bitcoin (or other cryptos). But it seems like the world we actually find ourselves in is that the fractional reserve banking business model reemerges, will all its attendant benefits and risks, even in these new currencies (just like it did with both fiat and gold-backed currencies).

        No, bitcoin would not remove the ability for "false credit" as it is called to exist within the economic system. My criticism with central banking is that essentially we have trillions of "sanctioned" false credit wide spread throughout our system that gives rise to malinvestments that only leads to systemic collapse throughout. You can't have widespread false credit throughout the economy without the existence of our central banks and their expansive monetary policies. Credit expansion starts and ends with the central bank, full stop.

        It is one thing for an individual institution to issue false credit to borrowers only for that institutions' house of cards to collapse and for people involved to lose money. But without the wide spread sanctioned false credit issued top-down throughout the economy, the repercussions of that collapse would be fairly self contained and you wouldn't have situations where an institution is "too big to fail."

        At the end of the day, true credit would (should) be the dominant form of credit that would exist that is simply the transfer of real capital between savers and borrowers. True credit can expand and contract as needed, but it is always backed by real capital and doesn't present systemic risk in the same way that false credit does. Furthermore, the ability that bitcoin would allow for individuals to take full custody of their funds at any time would provide a further check and balance against false credit throughout the system.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 22, 2022, 08:09:36 PM
        At the end of the day, true credit would (should) be the dominant form of credit that would exist that is simply the transfer of real capital between savers and borrowers. True credit can expand and contract as needed, but it is always backed by real capital and doesn't present systemic risk in the same way that false credit does. Furthermore, the ability that bitcoin would allow for individuals to take full custody of their funds at any time would provide a further check and balance against false credit throughout the system.

        Loaning bitcoins (or USD) would seem to fall into the category you are defining as "true" credit. In both cases I hand over my dollars (or bitcoins) to a second party who assumes a contractual obligation to pay them back to me, ideally with interest, at a later date.

        But in both cases I have counterparty risk. I cannot take custody of my funds at any time, I'm dependent on the party I've signed a contract with to return the funds I've lent them following through on that contract. The credit risk would appear to be equivalent in both cases, no?

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: roomtempmayo on November 22, 2022, 09:56:44 PM
        But I merely point out the fallacy in arguing for interventionist monetary policy that both adherents were so obviously committed to.

        So the nut of your enthusiasm for crypto is that it will create a stable money supply outside of state control?

        Why exactly do you think that those who currently control the money supply, with all of the power and armies to back them up, would just sit around and willingly let that happen?

        And why would the general population that is always poor accept that system when states are unable to intervene in financial crises?  You'd have one economic cycle until the pitchforks come out, just like they did in the 1890s.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on November 22, 2022, 10:22:41 PM
        FWIW, if you're a bitcoin maxi who doesn't associate with the many scams across the industry, you're probably not participating in those third-party institutions doing the scamming and likely holding custody of your own bitcoin. After all, that is the entire point of bitcoin.

        There was a good article that was just published that talks about the separation bitcoin needs from the industry that has now completely corrupted the original idea of it.

        https://www.nbcnews.com/think/opinion/bitcoin-vs-ftx-crypto-king-sam-bankman-fried-problem-rcna57964 (https://www.nbcnews.com/think/opinion/bitcoin-vs-ftx-crypto-king-sam-bankman-fried-problem-rcna57964)

        That was a well-written article that brings up a point I've made many times over the years.  As we've had these discussions over the years, Bitcoin proponents have claimed that adoption is increasing because of Square, Flexa, Paypal, government of El Salvador, etc. have made it possible to complete Bitcoin transactions for everyday expenses.  But, as I've pointed out, all those examples require a trusted third party, which negates the entire premise of Bitcoin.    If the transaction requires a trusted third party, then you don't need Bitcoin at all.  Full stop. 

        Quote
        The main point behind their economic beliefs is that bitcoin would provide a stable money supply with which goods can be priced. It is also why bitcoiners don't recognize your claim that bitcoin has "inflated by about 350% in the past year". It is because they're not looking at CPI inflation since that is a secondary effect. They're focused on monetary inflation. In that case, bitcoin has only inflated by 1.5% over the last year.

        They can recognize my claim or not. But the reality at the kitchen table is that if you were saving up for a down payment on a house or a car in Bitcoin, your down payment has turned into dust.  The notion that monetary inflation is only 1.5% as you watch your savings vaporize is cold comfort. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: BicycleB on November 22, 2022, 10:29:01 PM
        Thanks for clarifying; that helps. The now-bolded does raise the question of which aspect of the money supply should be stable, though (as well as how to create that stability).

        If the currency is Fixcoins and you have a fixed number of Fixcoins, the value of a given good is unstable whenever the supply of goods changes. If you seek a fixed price for a given good, the number of Fixcoins would have to be unstable, adjusting to varied supply of goods. What's more important? Is it the number of Fixcoins that should be stable, or the price of goods in terms of Fixcoin?

        Anecdotally, people scream about inflation whenever the price of goods changes in terms of the dominant coin. Wouldn't such price changes be a guaranteed fixture (no pun intended) of a system with a fixed number of coins as the currency? Wouldn't most people prefer steady prices of goods? Wouldn't economic decisions be made most neutrally and efficiently under stable prices of goods?

        I don't think under either system you will ever achieve a stable price of goods. I don't think any economist would argue that and even under basic scrutiny that idea falls apart. After all, you only have one supply of money and massive amounts of different goods each with their own varying supply. Even if you attempt to control the supply of money for one single good, every other single good out there will have their own independent supply as well that can't be controlled for as a result.

        The price of goods should be determined by the market, not the money supply. If supply of a good decreases and demand stays the same, then the price should go up. If the supply of a good increases (maybe as a result of increased production), then the cost of that good should come down. That's basic economic theory. I'm not sure why anyone would think that controlling the money supply is a solution to these natural market forces.

        I agree prices are unlikely to be perfectly stable, but I didn't mean that they would be. And when I wrote about a given good, I didn't mean that some regulator would control the whole economy based on one good's price. My phrasing "a given good" implies that there are other goods in the system. I discussed one good in attempt to be clear. Sorry if it didn't work.

        We agree that there are many prices in the economy. I'm sure you're aware that in the US, economists attempt to summarize the many prices using measures such as CPI. Conceptually, such a thing as relatively stable prices can be understood, and so can relatively unstable prices. It appears to me that most people prefer relatively stable prices.

        If govts affect the size of the money supply, as you already agree that they do, logically their effect could tend toward relatively stable prices or unstable prices in terms of the chosen currency, depending on the govt's actions. You yourself state repeatedly (if I understand you) that overly inflating the money supply causes problems, which implies that a less inflationary policy could be chosen. If you thought a govt could be trusted to maintain a fixed money supply, it sounds like you'd prefer that to the fiat fiasco (as one might call it) that currently dominates the globe. Since govt is untrustworthy in that regard, you propose that Bitcoin will serve as the fixed or stable money supply, correct?

        What I'm proposing is that if the money supply really became fixed, "stable" at some consistent size, then prices would vary. You seem to agree with that, specifying that under a fixed money supply, the resulting prices would lead to the best, most undistorted economy.

        Prices vary now too, so it's a fair question which circumstance they'd vary more in. I'm suggesting that it's possible for govts to come closer to stable prices than a fixed currency would, and offering the thought that most people would prefer that to the fixed "stable" supply of currency.

        You're welcome to disagree. Just hoping to be understood along the way, I guess. Anyway, take care.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: okonumiyaki on November 23, 2022, 02:15:53 AM
        Furthermore, the ability that bitcoin would allow for individuals to take full custody of their funds at any time would provide a further check and balance against false credit throughout the system.

        Eh?  How does that work? 

        If A lends B bitcoin to buy a house from C, the bitcoin now belong to C, and A has an IOU from B.  A has no ability to take full custody of their funds at any time. Depending on the contract and local laws, they may be able to take custody of the house
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: bwall on November 23, 2022, 05:02:14 AM
        Keep in mind that since the year 1900 the population of the USA was 75 million, give or take. Today it's 4.5x larger. Thus, in order to keep the money supply exactly the same relative to the population, the USA would have to dig 4.5x more shiny metal out of the earth. If you can't dig enough metal out of the ground to keep up with population growth, then you experience deflation.

        To put it another way, higher population means more productivity (more workers and more goods). Not all deflation is created equal in the same way that not all inflation is. Deflation as a result of higher productivity is a good thing. It is why the cost of many technologies goes down over time or the cost of a food crop goes down as yields increase. Those are good reasons for deflation and having a stable money supply over the course of those changes is not a bad thing. It means people can afford more things and the standard of living for people goes up.

        Higher population doesn't mean more productivity per worker. Many countries today have higher populations than 40 years ago but not higher productivity.

        Higher population might lead to more aggregate economic output for a country. But the increased economic output resulting from increased population cannot be equated to increased worker productivity and increased standards of living. For decades leading up to 1980 (or even 1990?) China's population increased significantly, yet productivity remained unchanged. As a result, standards of living remained very low for decades despite increased population.

        Higher standards of living are driven only by higher worker productivity.

        Higher worker productivity is driven by by one thing and one thing only; innovation and the resulting technological advances.
        Therefore, increased population has no bearing on increased worker productivity.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: bwall on November 23, 2022, 04:52:04 PM
        No national highway system either without mining gold first.

        Nor could FDR have spent all that money on social programs if we had to dig a specific metal out of the ground first. Which, I suspect is the real reason people today wish for the return of the gold standard. Less spending towards poor people would be a direct result.

        Expanding the money supply doesn't mean you can't fund social programs or projects. It just means you need to actually have a plan to pay for it as opposed to being able to inflate away the incurred debt. I'm not sure why you say you need to "mine gold first" here (assuming you're referring to a gold backed currency). You still have credit within the system and governments can still sell bonds, for example. It just means that more responsibility must be taken to ensure those bonds can be paid for in the future. It doesn't prevent you from having insurance programs either. If you're concerned about poor people, I would argue that the massive increases in CPI inflation over time as a result of inflationary monetary policy have robbed far more poor people of their wealth.

        By definition poor people in the USA are neither creditors nor possessors of wealth. One could argue that they benefit most in an inflationary environment (at the expense of creditors), but only to the extent to which they have loans at rates fixed below the rate of inflation.

        However, if by poor people you mean the citizens of China, then I'd agree 100%. The PRC currently holds around $1trillion in US debt and $3trillion in USD reserves. Take, say, 9% average annual inflation for 2022, then this means a wealth transfer on the order of 360 billion USD from the (poor) citizens of China to the (rich) citizens of the USA, or about $1000 per capita, USA. Even with a historically low USD inflation rate of 2%, this still results in an $80 billion annual wealth from China to the USA. Dollar deflation would result in a wealth transfer from the USA (borrower) to China (creditor).
        As a US taxpayer I'm glad to see the USA benefit at the expense of China.
        As a person who wishes to see the poor enjoy the fruits of their labor, it saddens.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 28, 2022, 10:12:10 AM
        This just in: Crypto firm BlockFi files for bankruptcy after FTX collapse (https://www.bbc.com/news/business-63786201?utm_source=ground.news&utm_medium=referral)

        The faster crypto crashes and burns, the better.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 28, 2022, 04:25:51 PM
        This just in: Crypto firm BlockFi files for bankruptcy after FTX collapse (https://www.bbc.com/news/business-63786201?utm_source=ground.news&utm_medium=referral)

        The faster crypto crashes and burns, the better.

        22 years ago, I was on forums a lot like this one where people were arguing about whether Yahoo, Netscape, and Pets.com were good values now that they'd fallen by double digit percentages.

        Then, as now, I was against the fad investments being promoted on the media despite having no underlying economic rationale.

        Then, as now, there were "bros" arguing forcibly about how all the old geezers were missing out on the big picture. The internet was inevitable, they correctly said, so therefore all these money-bleeding companies were inevitable, they incorrectly said.

        The difference is that the internet actually was inevitable in 2000 and this was obvious at the time. It is not clear whether cryptocurrencies and NFTs are inevitable in 2022.

        In 2000, tech companies like Amazon, Apple, and Microsoft were destined to create value. However, can we really say in 2022 Dogecoin or Litecoin or even Bitcoin are destined to become the world's next reserve currency? After 13 years of development, Bitcoin still isn't being used as a currency except in cases of kidnapping, laundering, or ransomware, after which it's quickly tumbled and traded for dollars. You cannot buy a stick of bubble gum with it. It's harder, not easier, to use than dollars, despite all the development effort that went into it. It's less secure too. After all this time it's still just a speculation. Compare this stall-out with the continuous improvement and new business ideas emerging from the internet circa 2000.

        So the people we shook our heads at for buying AOL, Webvan, and Boo.com actually had a stronger rationale than crypto has right now.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 30, 2022, 12:14:46 PM
        Kraken to lay off 30% of its staff. (https://markets.businessinsider.com/news/currencies/kraken-layoffs-crypto-exchange-ftx-winter-jesse-powell-2022-11)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 30, 2022, 12:46:28 PM
        Speaking of failing crypto exchanges . . . did Magic: The Gathering Online Exchange ever make good for the hundreds of millions that disappeared from it?  It did handle what, 70% of bitcoin transactions at one point?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on November 30, 2022, 02:22:21 PM
        OT but I actually know someone who has boxes of Magic cards stashed away that he considers his retirement fund.

        I had to stop talking to him about anything to do with investing a while ago.

        But they will probably be worth more than crypto, to be fair. And at least you can play with them.

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 30, 2022, 02:52:10 PM
        Crypto comes and goes, but a tournament winning high quality red burn deck is forever.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GilesMM on November 30, 2022, 03:55:49 PM
        ...

        In 2000, tech companies like Amazon, Apple, and Microsoft were destined to create value....

        I thought that at the time. Then MSFT went sideways for a decade after the tech crash and with Steve Ballmer doing nothing as CEO.  They were still the operating system in everyone's PC, but had mis-steps in phones and other stuff.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 30, 2022, 04:24:43 PM
        Speaking of failing crypto exchanges . . . did Magic: The Gathering Online Exchange ever make good for the hundreds of millions that disappeared from it?  It did handle what, 70% of bitcoin transactions at one point?

        They're in the process of doing so.

        Took 8+ years. Doing the math, people are going to be made at least whole in USD terms, but still only a small fraction of what their deposits would have been worth if they'd kept the bitcoins they had on the exchange when it collapsed from now to today. (When MtGox failed bitcoin was at about $100. Now it's 170x higher.)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: mistymoney on November 30, 2022, 08:30:25 PM
        Kraken to lay off 30% of its staff. (https://markets.businessinsider.com/news/currencies/kraken-layoffs-crypto-exchange-ftx-winter-jesse-powell-2022-11)

        release the kraken?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: BicycleB on November 30, 2022, 10:24:58 PM
        Kraken to lay off 30% of its staff. (https://markets.businessinsider.com/news/currencies/kraken-layoffs-crypto-exchange-ftx-winter-jesse-powell-2022-11)

        release the kraken?

        I think it's more of a (cough cough) release from the kraken
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ATtiny85 on December 01, 2022, 05:22:06 AM
        Kraken to lay off 30% of its staff. (https://markets.businessinsider.com/news/currencies/kraken-layoffs-crypto-exchange-ftx-winter-jesse-powell-2022-11)

        release the kraken?

        I think it's more of a (cough cough) release from the kraken

        kraken night soil, lovely mental image.

        I have enjoyed reading all the crypto talk. Until crypto is in mainstream stock index funds, I won't own any, but it is great to read the back and forth.

        ...

        In 2000, tech companies like Amazon, Apple, and Microsoft were destined to create value....

        I thought that at the time. Then MSFT went sideways for a decade after the tech crash and with Steve Ballmer doing nothing as CEO.  They were still the operating system in everyone's PC, but had mis-steps in phones and other stuff.

        Yeah, but at no time during that decade was there ever a thought that MSFT was not doing "something real", and it was still somewhat obvious that they would continue to create value throughout, right? I bought 50 shares in taxable somewhere around 2002, and they look decent now. (all VTSAX all the time now, but have some old individual stocks like this that will eventually be donated)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Reynold on December 01, 2022, 09:52:25 AM
        In looking at the Forbes article cited earlier I saw a mention of an earlier June 28 interview with Bankman-Fried, CEO of FTX, where he warns that some "third tier" exchanges are secretly already bankrupt. 

        https://www.forbes.com/sites/stevenehrlich/2022/06/28/bankman-fried-some-crypto-exchanges-already-secretly-insolvent/?sh=6ec2134a47f7

        The article also mentions FTX as one of the largest exchanges, and Bankman-Fried says that FTX had been profitable for the last 10 quarters.  I hate to think what it would look like now if by some mischance it had been *losing* money. . . :) 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on December 01, 2022, 12:34:14 PM
        Crypto comes and goes, but a tournament winning high quality red burn deck is forever.

        Last I played a Cursed scroll milling deck was the shits! Is that still the case?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on December 01, 2022, 12:48:39 PM
        Crypto comes and goes, but a tournament winning high quality red burn deck is forever.

        Last I played a Cursed scroll milling deck was the shits! Is that still the case?

        I last played MTG in the 90s  . . .  my understanding of the current ruleset is rather limited.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on December 01, 2022, 02:19:09 PM
        In related news, Kevin O'Leary on Twitter shows why it is a called a confidence scam:

        Quote
        I lost millions as an investor in  @FTX and got sandblasted as a paid spokesperson for the firm but after listening to that interview I’m in the @billAckman camp about the kid!

        https://twitter.com/kevinolearytv/status/1598123428527017985

        He can't admit to himself that he was scammed, and so doubles down on his opinion that SBF is a good guy.   Charles Ponzi reportedly received Christmas Cards in jail from his victims. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: talltexan on December 02, 2022, 11:43:35 AM
        Crypto comes and goes, but a tournament winning high quality red burn deck is forever.

        Seriously, red is the worst color, takes no talent to play. Just bolt to the face, then bolt any critters that come out.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Psychstache on December 02, 2022, 12:11:49 PM
        Crypto comes and goes, but a tournament winning high quality red burn deck is forever.

        Seriously, red is the worst color, takes no talent to play. Just bolt to the face, then bolt any critters that come out.

        There's a bit more skill to winning consistently with burn, but any goof can pick it up and do okay with a little luck. I don't know about tournament winning though. If you are not Patrick Sullivan, then you're pretty much 45% to win with burn regardless of format or opponents deck choice.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on December 08, 2022, 12:16:18 PM
        Crypto comes and goes, but a tournament winning high quality red burn deck is forever.

        Seriously, red is the worst color, takes no talent to play. Just bolt to the face, then bolt any critters that come out.

        Agreed! Blue is fun, because it pisses everyone off. Black is cool because it's the most metal.
        (I'm glad we can finally get something useful out of this thread)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: achvfi on December 08, 2022, 12:53:59 PM
        It was interesting to see Jamie Dimon say that Bitcoin is not a real market. I wonder if they know/think there is some kind of manipulation going on.

        https://www.youtube.com/watch?v=TIJbTsYbHME

        CNBC anchors just move on to some other topic.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on December 08, 2022, 05:46:06 PM
        It was interesting to see Jamie Dimon say that Bitcoin is not a real market. I wonder if they know/think there is some kind of manipulation going on.

        https://www.youtube.com/watch?v=TIJbTsYbHME

        CNBC anchors just move on to some other topic.

        The mainstream media has been incredibly soft on crypto.  The space is shot with billions of fraud and market manipulation and there is very little serious press dedicated to it.  Even recent stuff with SBF has been incredibly softball. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on December 09, 2022, 09:36:18 AM
        It was interesting to see Jamie Dimon say that Bitcoin is not a real market. I wonder if they know/think there is some kind of manipulation going on.

        https://www.youtube.com/watch?v=TIJbTsYbHME

        CNBC anchors just move on to some other topic.

        The mainstream media has been incredibly soft on crypto.  The space is shot with billions of fraud and market manipulation and there is very little serious press dedicated to it.  Even recent stuff with SBF has been incredibly softball.

        Yep. The media / social media been complicit and given crypto-scams lots of free publicity. Similarly, the government has refused to investigate all but the most obvious frauds if cryptocurrency or NFTs are involved. Wouldn't want to anger the apes.

        Losing thousands of dollars on cryptocurrency scams like FTX or rug-pulls is going to be a generational experience for younger men in this era. How will they respond? Probably with more distrust of the mainstream media and more distrust of their government.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on December 09, 2022, 11:39:58 AM
        Losing thousands of dollars on cryptocurrency scams like FTX or rug-pulls is going to be a generational experience for younger men in this era. How will they respond? Probably with more distrust of the mainstream media and more distrust of their government.

        Ironically, the same couple things that will set them up for the next big scam.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 09, 2022, 11:54:46 AM
        It was interesting to see Jamie Dimon say that Bitcoin is not a real market. I wonder if they know/think there is some kind of manipulation going on.

        https://www.youtube.com/watch?v=TIJbTsYbHME

        CNBC anchors just move on to some other topic.
        The mainstream media has been incredibly soft on crypto.  The space is shot with billions of fraud and market manipulation and there is very little serious press dedicated to it.  Even recent stuff with SBF has been incredibly softball.
        In case you missed the interview with Kraken's new CEO (formerly its COO), he called SBF a "fraudster" and used the word fraud multiple times.  The CNBC host had to state that SBF has not been convicted of fraud or any other charge.  They have to tread carefully in case SBF goes to court and is found innocent, which then turns statements to the contrary into slander.

        In the CNBC interview by host Andrew Ross Sorkin, he repeatedly asked SBF about "co-mingling of funds", which SBF claimed was part of FTX's borrowing program that users could agree to.  But the host kept using "co-minging of funds" in every question, regardless of that answer.

        The impression I'm gathering is of a two-faced person.  Binance helps FTX get started, and within a few years they learn SBF is badmouthing them to U.S. government regulators.  People claim to have been told about liquidity fears and co-mingling of funds earlier than SBF stated in his interview.  I think we're going to need third party forensic accounting to unravel it, rather than interviews.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on December 09, 2022, 04:52:11 PM
        The impression I'm gathering is of a two-faced person.  Binance helps FTX get started, and within a few years they learn SBF is badmouthing them to U.S. government regulators.  People claim to have been told about liquidity fears and co-mingling of funds earlier than SBF stated in his interview.  I think we're going to need third party forensic accounting to unravel it, rather than interviews.

        In a recent interview with Coffeezilla, SBF straight up said FTX was co-mingling funds. 

        https://youtu.be/4o_jPzBZSIo
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 09, 2022, 08:32:36 PM
        The impression I'm gathering is of a two-faced person.  Binance helps FTX get started, and within a few years they learn SBF is badmouthing them to U.S. government regulators.  People claim to have been told about liquidity fears and co-mingling of funds earlier than SBF stated in his interview.  I think we're going to need third party forensic accounting to unravel it, rather than interviews.
        In a recent interview with Coffeezilla, SBF straight up said FTX was co-mingling funds. 

        https://youtu.be/4o_jPzBZSIo
        Great video for learning about co-mingling of funds, and for what SBF did.  First, I didn't realize that margin customers and other customers need to have two separate pools of assets.  If you have one big account where margin and non-margin deposits are held, that is co-mingling of assets.

        SBF says FTX had one "omni" pool for all customer funds... which means margin customers and spot customers shared the same pool!  Any losses in margin accounts would eat away at accounts which had no margin terms on their accounts.  It sounds like FTX did not use separate pools for margin and non-margin accounts.  And according to the video, that would be fraud.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on December 13, 2022, 08:39:53 AM
        SEC charges disgraced crypto tycoon Sam Bankman-Fried with defrauding investors. (https://www.news24.com/fin24/markets/sec-charges-disgraced-crypto-tycoon-sam-bankman-fried-with-defrauding-investors-20221213)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GilesMM on December 13, 2022, 08:59:59 AM
        I predict he will plead to lesser charges and serve about 8 years. Complex case.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on December 13, 2022, 01:35:52 PM
        I'm still waiting for the street riots that would occur if an actual dollar-bank pulled something like this and lost their depositors' money. The silence is deafening, which suggests depositors were (a) largely comprised of criminals, or (b) fully aware they were participating in a greater-fool gamble and had already accepted the possibility of losing their entire investment.

        At this point, after a decade of suspicious hacks, rug pulls, pump-and-dumps, and outright fraud, is it still reasonable to think by default that ANY company strictly in this space is legitimate? Or is it more rational to assume they are not legitimate until proven otherwise (and IDK how you'd prove legitimacy because all records can be falsified).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on December 13, 2022, 02:03:01 PM
        HODL HODL HODL!
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Glenstache on December 13, 2022, 02:04:19 PM
        I'm still waiting for the street riots that would occur if an actual dollar-bank pulled something like this and lost their depositors' money. The silence is deafening, which suggests depositors were (a) largely comprised of criminals, or (b) fully aware they were participating in a greater-fool gamble and had already accepted the possibility of losing their entire investment.

        At this point, after a decade of suspicious hacks, rug pulls, pump-and-dumps, and outright fraud, is it still reasonable to think by default that ANY company strictly in this space is legitimate? Or is it more rational to assume they are not legitimate until proven otherwise (and IDK how you'd prove legitimacy because all records can be falsified).
        Well, I think it is rational to think that there is a high risk profile associated with crypto unless there is a greater degree of control on it. But, that greater degree of control is regulation, which crypto has been allergic to almost by definition and intent.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on December 13, 2022, 03:58:14 PM
        I'm still waiting for the street riots that would occur if an actual dollar-bank pulled something like this and lost their depositors' money. The silence is deafening, which suggests depositors were (a) largely comprised of criminals, or (b) fully aware they were participating in a greater-fool gamble and had already accepted the possibility of losing their entire investment.

        What reaction to the fall of FTX do you feel would have painted the people who used it in a positive light? I feel like you're setting up a no-win scenario here:

        If people complain that they lost money, they're idiots who have been conned.
        If people accepted the risk and so don't complain, they're clearly criminals or conmen themselves.

        If any possible outcome results in the same conclusion I'm not sure you're actually learning anything.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Travis on December 13, 2022, 04:05:01 PM
        SEC charges disgraced crypto tycoon Sam Bankman-Fried with defrauding investors. (https://www.news24.com/fin24/markets/sec-charges-disgraced-crypto-tycoon-sam-bankman-fried-with-defrauding-investors-20221213)

        The report to Congress from the current FTX CEO was certainly entertaining. Amongst other managerial oddities, what little accounting FTX actually did was done on Quickbooks.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 13, 2022, 04:07:25 PM
        I'm still waiting for the street riots that would occur if an actual dollar-bank pulled something like this and lost their depositors' money. The silence is deafening, which suggests depositors were (a) largely comprised of criminals, or (b) fully aware they were participating in a greater-fool gamble and had already accepted the possibility of losing their entire investment.
        Weeks ago an FTX investor cursed on air he was so pissed off, and more recently Kraken's new CEO called Mr Bankman-Fried a "fraudster".  If you don't listen, that isn't silence.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: BicycleB on December 13, 2022, 05:18:50 PM
        I'm still waiting for the street riots that would occur if an actual dollar-bank pulled something like this and lost their depositors' money. The silence is deafening, which suggests depositors were (a) largely comprised of criminals, or (b) fully aware they were participating in a greater-fool gamble and had already accepted the possibility of losing their entire investment.

        At this point, after a decade of suspicious hacks, rug pulls, pump-and-dumps, and outright fraud, is it still reasonable to think by default that ANY company strictly in this space is legitimate? Or is it more rational to assume they are not legitimate until proven otherwise (and IDK how you'd prove legitimacy because all records can be falsified).
        Well, I think it is rational to think that there is a high risk profile associated with crypto unless there is a greater degree of control on it. But, that greater degree of control is regulation, which crypto has been allergic to almost by definition and intent.

        Good point, @Glenstache!

        Fwiw - recently an article appeared in my email from a source I don't recall seeing before. It alleges that despite crypto community efforts, US regulators have been on the case, primarily due to current SEC chair Gary Gensler who as professor studied crypto before the SEC job. The effect, it says, has been a huge regulatory success story in that SEC blocked crypto from fatally infecting the wider financial system.

        Details:

        1. Like you said, crypto has largely sought to avoid and minimize regulation
        2. Bankman-Fried lobbied for light regulation to avoid heavier regulation
        3. SEC under Gensler has, with increasing detail and success, repeatedly asserted that:

        a. crypto is securities, therefore under SEC jurisdiction
        b. crypto exchanges need to conform to securities law
        c. crypto "banks" need to follow securities law (and I assume banking laws) but should not receive bank-like assistance from government

        4. Additionally, and consequentially, accounting standards have been updated to require banks that accept crypto to detail those holdings and hold sufficient cash to redeem in dollars any crypto received

        Results include:
        5. 3a above is increasingly if not universally accepted
        6. 3b above is increasingly accepted as a principle; implementation varies but is in process and has had some positive effect (effect is implied by the article, not directly stated)
        7. due to 3c above, the number of crypto banks is limited and normally they have not received bank-like assistance
        8. due to 4 above and other factors, several crypto companies tried to get stock listings but basically were stymied, preventing additional crypto acceptance that could have led to greater danger
        9. overall, the SEC's actions walled off the bulk of the conventional financial system from cypto effectively enough the keep the financial system safe

        https://www.economicliberties.us/our-work/gary-gensler-got-it-right/?emci=ce3aec84-ff7a-ed11-819c-000d3a9eb474&emdi=e52317f0-097b-ed11-819c-000d3a9eb474&ceid=25082919

        TL;DR - look! crypto is collapsing but conventional finance isn't! (not due to crypto, anyway) and it could have, but government blocked the infection from wounding the system and that's a regulatory success. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: bwall on December 13, 2022, 05:21:43 PM
        I'm still waiting for the street riots that would occur if an actual dollar-bank pulled something like this and lost their depositors' money. The silence is deafening, which suggests depositors were (a) largely comprised of criminals, or (b) fully aware they were participating in a greater-fool gamble and had already accepted the possibility of losing their entire investment.
        Weeks ago an FTX investor cursed on air he was so pissed off, and more recently Kraken's new CEO called Mr Bankman-Fried a "fraudster".  If you don't listen, that isn't silence.

        I've also heard a couple of people complain about losses. However, not to the degree to be expected for multi-billion losses.

        Perhaps those suffering loss are overseas and harder to find and report on? Wasn't FTX-Bahamas for ex-USA (offshore) account holders whereas the FTX-USA exchange was for the much smaller pool of USA based holders? Not sure.

        Perhaps there are other reasons why we haven't heard much from loss-holders. Perhaps they participated in large run-ups and view their losses as paper losses? Perhaps they held *hitcoins? Perhaps they don't know that they're losers (i.e. they didn't send coins to FTX but their current exchange operator did and hasn't notified them--I'm looking at you, Gemini)

        edited: or, perhaps the reason is as outlined by @BicycleB . Crypto was walled off from the financial system and thus the damages were retained within the crypto ecosystem.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Glenstache on December 13, 2022, 05:24:57 PM
        SEC charges disgraced crypto tycoon Sam Bankman-Fried with defrauding investors. (https://www.news24.com/fin24/markets/sec-charges-disgraced-crypto-tycoon-sam-bankman-fried-with-defrauding-investors-20221213)

        The report to Congress from the current FTX CEO was certainly entertaining. Amongst other managerial oddities, what little accounting FTX actually did was done on Quickbooks.
        Quickbooks! They also apparently handled invoices, etc through Slack.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Glenstache on December 13, 2022, 05:40:05 PM
        I'm still waiting for the street riots that would occur if an actual dollar-bank pulled something like this and lost their depositors' money. The silence is deafening, which suggests depositors were (a) largely comprised of criminals, or (b) fully aware they were participating in a greater-fool gamble and had already accepted the possibility of losing their entire investment.
        Weeks ago an FTX investor cursed on air he was so pissed off, and more recently Kraken's new CEO called Mr Bankman-Fried a "fraudster".  If you don't listen, that isn't silence.

        I've also heard a couple of people complain about losses. However, not to the degree to be expected for multi-billion losses.

        Perhaps those suffering loss are overseas and harder to find and report on? Wasn't FTX-Bahamas for ex-USA (offshore) account holders whereas the FTX-USA exchange was for the much smaller pool of USA based holders? Not sure.

        Perhaps there are other reasons why we haven't heard much from loss-holders. Perhaps they participated in large run-ups and view their losses as paper losses? Perhaps they held *hitcoins? Perhaps they don't know that they're losers (i.e. they didn't send coins to FTX but their current exchange operator did and hasn't notified them--I'm looking at you, Gemini)

        edited: or, perhaps the reason is as outlined by @BicycleB . Crypto was walled off from the financial system and thus the damages were retained within the crypto ecosystem.
        Or maybe the big holders/losers are simply speaking through court filings.

        On a parallel note, the SEC filing is an interesting read. It is striking how many tweets are included in the filing to illustrate points.
        https://www.sec.gov/litigation/complaints/2022/comp-pr2022-219.pdf
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 14, 2022, 04:23:30 AM
        From the Nov 2021 peak to the start of Nov 2022, Bitcoin (BTC) lost 57% of its value (68,789.63 to 20,494.90).  After the FTX collapse, it fell roughly 20%.  If the FTX collapse is catastrophic as some claim, why only a 20% drop?
        https://finance.yahoo.com/quote/BTC-USD/

        It's also not clear why the loss of $84 billion of BTC market cap would put the financial system at risk, when the Fed removes that much money from the bond markets every month (QT).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on December 14, 2022, 06:20:05 AM
        I'm still waiting for the street riots that would occur if an actual dollar-bank pulled something like this and lost their depositors' money.

        Remember the 'street riots' that followed the regulated-dollar-Madoff shitshow ? No, me neither.

        The silence is deafening, which suggests depositors were (a) largely comprised of criminals, or (b) fully aware they were participating in a greater-fool gamble and had already accepted the possibility of losing their entire investment.

        or (c) embarrassed about leaving themselves exposed to such risk by holding significant funds on an unregulated exchange in a wild west sector, and taken it on the chin as a hard lesson.
        This would certainly be me if I'd been caught up in it.

        At this point, after a decade of suspicious hacks, rug pulls, pump-and-dumps, and outright fraud, is it still reasonable to think by default that ANY company strictly in this space is legitimate? Or is it more rational to assume they are not legitimate until proven otherwise (and IDK how you'd prove legitimacy because all records can be falsified).

        It's very clear (to me, at least) that most of crypto is pretty scammy and fraudy. Caveat Emptor - and the further from regulation and the further into the weeds you venture, the moreso.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on December 14, 2022, 08:28:54 AM
        I'm still waiting for the street riots that would occur if an actual dollar-bank pulled something like this and lost their depositors' money. The silence is deafening, which suggests depositors were (a) largely comprised of criminals, or (b) fully aware they were participating in a greater-fool gamble and had already accepted the possibility of losing their entire investment.

        At this point, after a decade of suspicious hacks, rug pulls, pump-and-dumps, and outright fraud, is it still reasonable to think by default that ANY company strictly in this space is legitimate? Or is it more rational to assume they are not legitimate until proven otherwise (and IDK how you'd prove legitimacy because all records can be falsified).
        Well, I think it is rational to think that there is a high risk profile associated with crypto unless there is a greater degree of control on it. But, that greater degree of control is regulation, which crypto has been allergic to almost by definition and intent.

        Good point, @Glenstache!

        Fwiw - recently an article appeared in my email from a source I don't recall seeing before. It alleges that despite crypto community efforts, US regulators have been on the case, primarily due to current SEC chair Gary Gensler who as professor studied crypto before the SEC job. The effect, it says, has been a huge regulatory success story in that SEC blocked crypto from fatally infecting the wider financial system.

        Details:

        1. Like you said, crypto has largely sought to avoid and minimize regulation
        2. Bankman-Fried lobbied for light regulation to avoid heavier regulation
        3. SEC under Gensler has, with increasing detail and success, repeatedly asserted that:

        a. crypto is securities, therefore under SEC jurisdiction
        b. crypto exchanges need to conform to securities law
        c. crypto "banks" need to follow securities law (and I assume banking laws) but should not receive bank-like assistance from government

        4. Additionally, and consequentially, accounting standards have been updated to require banks that accept crypto to detail those holdings and hold sufficient cash to redeem in dollars any crypto received

        Results include:
        5. 3a above is increasingly if not universally accepted
        6. 3b above is increasingly accepted as a principle; implementation varies but is in process and has had some positive effect (effect is implied by the article, not directly stated)
        7. due to 3c above, the number of crypto banks is limited and normally they have not received bank-like assistance
        8. due to 4 above and other factors, several crypto companies tried to get stock listings but basically were stymied, preventing additional crypto acceptance that could have led to greater danger
        9. overall, the SEC's actions walled off the bulk of the conventional financial system from cypto effectively enough the keep the financial system safe

        https://www.economicliberties.us/our-work/gary-gensler-got-it-right/?emci=ce3aec84-ff7a-ed11-819c-000d3a9eb474&emdi=e52317f0-097b-ed11-819c-000d3a9eb474&ceid=25082919

        TL;DR - look! crypto is collapsing but conventional finance isn't! (not due to crypto, anyway) and it could have, but government blocked the infection from wounding the system and that's a regulatory success.
        These are very good points. We have to keep in mind that multiple members of Congress have received "donations" from the crypto industry, including FTX, and in return they've opposed all meaningful regulation of the sector and tried to get crypto-assets de-regulated under a "commodities" label.
        https://www.washingtonpost.com/business/2022/12/01/senate-agriculture-ftx-hearing-crypto/ (https://www.washingtonpost.com/business/2022/12/01/senate-agriculture-ftx-hearing-crypto/)

        Eight of our illustrious lawmakers sent Gensler a letter in March telling Gensler he had no authority to investigate crypto exchanges like FTX (an investigation was already ongoing at that time).
        https://onlysky.media/mclark/bankman-fried-arrested-now-whats-to-be-done-about-ponzinomics/?__vfz=medium%3Dtray_notification#vf-7630696c-a3c5-43a8-91d2-6cc5ca23a22f (https://onlysky.media/mclark/bankman-fried-arrested-now-whats-to-be-done-about-ponzinomics/?__vfz=medium%3Dtray_notification#vf-7630696c-a3c5-43a8-91d2-6cc5ca23a22f)

        So Gensler was politically constrained from going too hard after fraud at FTX, but what he could do is wall off the dollar-based banking system so that the coming implosion would not become contagious. Perhaps he is due our gratitude for running megabanks out of the space, despite not being able to stop the scam itself. Gensler is about to be hauled before Congress and it will be an interesting dynamic as members of Congress like Tom Emmer who tried to undercut his investigation of FTX will no doubt boldly blame him for not doing enough.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: BicycleB on December 14, 2022, 12:04:33 PM

        It's also not clear why the loss of $84 billion of BTC market cap would put the financial system at risk, when the Fed removes that much money from the bond markets every month (QT).

        What is the $84 billion figure from? I agree with you that $84B seems small compared to the overall financial system. YCharts today asserts BTC market cap is down about $580B since a year ago. Presumably the total including other coins is larger. For discussing systemic risk, wouldn't the right number be the systemic one?

        https://ycharts.com/indicators/bitcoin_market_cap#:~:text=Basic%20Info,65.17%25%20from%20one%20year%20ago.

        Regardless of the number, personally I've been imagining that the issue is not the dollar amount, but instead one or more of the following (yes, some of them overlap):

        1. Normal banks are backstopped by the govt to fully replace losses; if this guarantee were applied to crypto, the resulting increase in confidence might have allowed much larger dollar amounts to be at risk
        2. BTC market cap and crypto cap generally are to some extent notional; no one paid full price for all the coins. But if banks were backstopped on the losses, suddenly "real" money in the broader financial system is at stake.
        3. On some level, point 2 implies that the non-crypto-buying public would pay for the losses of crypto buyers
        4. To the extent that creation and loss of nominal crypto are potentially unlimited, a rational observer could conclude that a crypto collapse would be potentially unlimited, therefore more capable of causing systemic collapse
        5. However you slice it, putting the govt on the hook for crypto means potential systemic risk because it's an additional risk factor
        6. Any factor can cause a panic, but since crypto is risky, both allowing its spread and putting the govt on the hook to repay it would logically increase the risk of panic

        Prior this, prior to buying any crypto, I had considered the question of systemic risk and also how big could crypto get and tried to assess them by comparing crypto "cap" to measurements of other financial quantities, such as dollar value of gold in existence, gold used as bullion (if it's "digital gold", which is bigger?), dollars of paper currency, dollars in bank accounts, notional value of derivative contracts, market cap of stocks in US market, market cap of global stock market. Using $2T as rough peak for crypto, it seemed that the number is large relative to gold, smallish but potentially material compared to US stocks (less than 10%), small compared to total dollars in accounts, very small compared to estimated derivatives.

        From the above paragraph's comparisons, I then supposed that if crypto were to crash the system, it would be due to becoming a totem of panic or by triggering a chain of derivative contract defaults, not probably as a direct result of crypto value itself disappearing. It seemed to be that crypto had absorbed speculative energy that might instead have gone to gold or the stock market, but had not created a value amount similar to or larger than the rest of the system, as happened with tulips in the tulip mania if I understand correctly. A 10x increase would put crypto close the US stock market in value and represent a much larger risk, including likely large distortions of investment instead of the relatively small ones to date. So far it mostly was soaking up uninformed speculation, a perpetual part of the system, without expanding the quantity of the system's apparent speculative energy to some extraordinary level. So I figured greed could ramp up another 10x of crypto increases before reaching tulip levels, and maybe 3x or 5x before even being likely to trigger panic except at a symbolic level - unless it triggered chains of derivative defaults, a possibility that I couldn't estimate and which could already be in play.

        With all that said, it's the qualitative aspects that seemed powerful in the article, so I quoted it. Personally, I felt the significance wasn't so much about crypto per se as it was to inform readers that a govt agency has been doing its job to limit risks. I don't know if the author's implication that Gensler really saved the system is correct but I think it's important he did the kind of things he was supposed to be doing.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 14, 2022, 12:29:54 PM
        It's also not clear why the loss of $84 billion of BTC market cap would put the financial system at risk, when the Fed removes that much money from the bond markets every month (QT).
        What is the $84 billion figure from? YCharts today asserts BTC market cap is down about $580B since a year ago. Presumably the total including other coins is larger. For discussing systemic risk, wouldn't the right number be the systemic one?

        You dropped the first paragraph of my post, which held my main point:

        From the Nov 2021 peak to the start of Nov 2022, Bitcoin (BTC) lost 57% of its value (68,789.63 to 20,494.90).  After the FTX collapse, it fell roughly 20%.  If the FTX collapse is catastrophic as some claim, why only a 20% drop?
        https://finance.yahoo.com/quote/BTC-USD/

        My post was responding to those who point to the FTX collapse as a systemic problem, which means the recent 20% drop (now 12%) in BTC, and not the 57% drop before FTX collapsed.

        I divided the market cap of BTC by the current price to get the number of Bitcoins (21,014,822), and then multiplied that by the price drop ($20.5k to $16.5k = $4,000 drop roughly).  From before the FTX collapse to afterwards was a loss of $84 billion to BTC's market cap, roughly.
        https://coinmarketcap.com/currencies/bitcoin/

        The recent discussions all centered on FTX, not events before that.  The $84 billion of BTC market cap loss from FTX is less than the $95 billion the Fed is withdrawing from the bond markets (quantitative tightening) every month.
        https://www.bloomberg.com/news/articles/2022-08-29/qt-to-hit-full-stride-with-fed-shrinking-9-trillion-portfolio
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: BicycleB on December 14, 2022, 01:52:58 PM
        It's also not clear why the loss of $84 billion of BTC market cap would put the financial system at risk, when the Fed removes that much money from the bond markets every month (QT).
        What is the $84 billion figure from? YCharts today asserts BTC market cap is down about $580B since a year ago. Presumably the total including other coins is larger. For discussing systemic risk, wouldn't the right number be the systemic one?

        You dropped the first paragraph of my post, which held my main point:

        From the Nov 2021 peak to the start of Nov 2022, Bitcoin (BTC) lost 57% of its value (68,789.63 to 20,494.90).  After the FTX collapse, it fell roughly 20%.  If the FTX collapse is catastrophic as some claim, why only a 20% drop?
        https://finance.yahoo.com/quote/BTC-USD/

        My post was responding to those who point to the FTX collapse as a systemic problem, which means the recent 20% drop (now 12%) in BTC, and not the 57% drop before FTX collapsed.

        I divided the market cap of BTC by the current price to get the number of Bitcoins (21,014,822), and then multiplied that by the price drop ($20.5k to $16.5k = $4,000 drop roughly).  From before the FTX collapse to afterwards was a loss of $84 billion to BTC's market cap, roughly.
        https://coinmarketcap.com/currencies/bitcoin/

        The recent discussions all centered on FTX, not events before that.  The $84 billion of BTC market cap loss from FTX is less than the $95 billion the Fed is withdrawing from the bond markets (quantitative tightening) every month.
        https://www.bloomberg.com/news/articles/2022-08-29/qt-to-hit-full-stride-with-fed-shrinking-9-trillion-portfolio

        I dropped the first paragraph of your post because it didn't raise any questions in my mind that felt useful to address, and I think it can stand just fine. No disrespect intended.

        Thanks for the explanation of the $84B. It clarifies to me that we are (or seem to be) thinking of different things as "the system", which I didn't realize at first; my apology. You're focused on BTX and its effect on BTC, if I understand you. And your calculation seems very logical.

        My line of comment took as the main context a different commenter's remark that crypto has been generally regulation averse (commenter used different words). Thus when I address systemic risk, I mean risk to the broader financial system. Sorry for not making myself clear.

        Fwiw, I think your BTC point re FTX is cogent. I myself have been quite intrigued by the relative stability of both BTC and ETH since FTX's fall. Is its stability evidence that exchanges have little influence on BTC or ETH prices, and investors of those coins should now have little to fear? Are other exchanges propping up the prices, but they will fall after after other exchange collapses? Is some other factor propping up the prices, and if so, will they collapse or have they bottomed?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on December 14, 2022, 02:35:06 PM
        Fwiw, I think your BTC point re FTX is cogent. I myself have been quite intrigued by the relative stability of both BTC and ETH since FTX's fall. Is its stability evidence that exchanges have little influence on BTC or ETH prices, and investors of those coins should now have little to fear? Are other exchanges propping up the prices, but they will fall after after other exchange collapses? Is some other factor propping up the prices, and if so, will they collapse or have they bottomed?

        An argument that I don't agree with, but which I've seen discussion and so bring up for the sake of completeness is that the price of BTC and ETH is primarily not set by trades for USD directly but instead by trades for stable coins pegged to the dollar. USDT/USDC/BUSD etc. Assuming all of those really do maintain 1:1 reserves that distinction is largely moot.

        But if one or more of the big stable coins is issuing extra units not backed by reserves it would push up the price of BTC and ETH, analogously to how the fed's quantitative easing pushed up the valuations of stocks and pushed down the yields of bonds.

        Again, not arguing that this is the case, just adding to the list of potential explanations I've seen proposed or discussed.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on December 14, 2022, 02:54:56 PM
        Fwiw, I think your BTC point re FTX is cogent. I myself have been quite intrigued by the relative stability of both BTC and ETH since FTX's fall. Is its stability evidence that exchanges have little influence on BTC or ETH prices, and investors of those coins should now have little to fear? Are other exchanges propping up the prices, but they will fall after after other exchange collapses? Is some other factor propping up the prices, and if so, will they collapse or have they bottomed?

        The cynical, but in my opinion most likely explanation is that the price is being supported by wash sales. 

        https://www.banklesstimes.com/news/2022/10/05/51percent-of-daily-bitcoin-volume-in-2022-is-fake/

        The remaining exchanges have an existential interest in keeping the price high, so there is plenty of motivation.  If you look at the chart, there was a clear peg at $30K, then $20K and now $17K.   It sure appears as if the bots are doing a lot of trading. 



        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on December 15, 2022, 05:28:36 AM
        Fwiw, I think your BTC point re FTX is cogent. I myself have been quite intrigued by the relative stability of both BTC and ETH since FTX's fall. Is its stability evidence that exchanges have little influence on BTC or ETH prices, and investors of those coins should now have little to fear? Are other exchanges propping up the prices, but they will fall after after other exchange collapses? Is some other factor propping up the prices, and if so, will they collapse or have they bottomed?

        Why would you expect the FTX fiasco to detrimentally affect Bitcoin ?

        At heart, from what we know so far, the FTX fraud revolved largely around 2 things:

        1. Abuse of investors' trust in a 3rd party custodian (FTX)
        2. The lamest type of 'shitcoin' (FTT) that can be created/inflated at will, at zero cost, by a single controlling party

        Bitcoin was developed precisely to address the problems inherent in trusting 3rd parties and the centralised control of an easily inflated 'currency'. FTX has only emphasised the values of the Bitcoin project.

        Some spillover contagion is to be expected but, from a broader perspective, this clear-out of rubbish is good for Bitcoin.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: StashingAway on December 15, 2022, 08:31:27 AM
        Bitcoin was developed precisely to address the problems inherent in trusting 3rd parties and the centralised control of an easily inflated 'currency'. FTX has only emphasised the values of the Bitcoin project.


        FTX has also demonstrated that widespread adoption of those goals are not practical. Centralization is inherent to any process of smoothing out the transaction process. Something which has tons of oversight, history, and more equal wealth distribution with our current money system.

        The only way that has been demonstrated to use bitcoin in ways that reflect the Bitcoin Project values is for each individual to be incredibly vigilant, knowledgeable, and lucky when managing their coins. It's something that even tech enthusiasts have to spend a good deal of effort on. To keep people from tracking your public wallet(s) and tracing your purchasing patters you essential have to launder your own money. Anything easier is less secure, and anything more secure just isn't viable economically.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on December 15, 2022, 08:42:19 AM
        Bitcoin was developed precisely to address the problems inherent in trusting 3rd parties and the centralised control of an easily inflated 'currency'. FTX has only emphasised the values of the Bitcoin project.

        Some spillover contagion is to be expected but, from a broader perspective, this clear-out of rubbish is good for Bitcoin.

        If people walk away with the reasonable impression that 3rd party helpers in the crypto space are untrustworthy, it does not follow that adoption of cryptocurrencies will ever occur or that investor interest will increase. 99% of people need a 3rd party helper with an intuitive user interface in order to trade, hold, or use crypto. When those 99% walk away after being scammed a dozen ways, it's the end.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: the_gastropod on December 15, 2022, 01:22:56 PM
        Fwiw, I think your BTC point re FTX is cogent. I myself have been quite intrigued by the relative stability of both BTC and ETH since FTX's fall. Is its stability evidence that exchanges have little influence on BTC or ETH prices, and investors of those coins should now have little to fear? Are other exchanges propping up the prices, but they will fall after after other exchange collapses? Is some other factor propping up the prices, and if so, will they collapse or have they bottomed?

        Why would you expect the FTX fiasco to detrimentally affect Bitcoin ?

        At heart, from what we know so far, the FTX fraud revolved largely around 2 things:

        1. Abuse of investors' trust in a 3rd party custodian (FTX)
        2. The lamest type of 'shitcoin' (FTT) that can be created/inflated at will, at zero cost, by a single controlling party

        Bitcoin was developed precisely to address the problems inherent in trusting 3rd parties and the centralised control of an easily inflated 'currency'. FTX has only emphasised the values of the Bitcoin project.

        Some spillover contagion is to be expected but, from a broader perspective, this clear-out of rubbish is good for Bitcoin.

        What do you think affects Bitcoin's price? Can you think of any other 'shitcoins' that can be created/inflated at will, at zero cost, by a single controlling party that are widely used to buy/sell Bitcoin (and whose biggest customer was SBF's Alameda)?

        I think there are two competing narratives that are inherently at odds. 1. Bitcoin is an investment vehicle to turn $1 into many dollars in the future. I think it's pretty self-evident, the lion's share of Bitcoin (and "crypto" generally) participants believe this. And 2. That Bitcoin is a peer to peer network for transferring value in a decentralized way.

        I find 2 to be pretty undeniably true. It's neat in its mechanics. Kind of cute as a proof of concept. But wholly uninteresting as more than a toy project some clever person (people?) made 10+ years ago.

        Regardless of what I believe about the investment thing, it *clearly* matters a great deal what popular opinion is about crypto as an investment vehicle. I hope I'm not sticking my neck out too far to suggest: FTX's collapse isn't a trust-building event for the space, generally. Millions of people lost money in this. And Binance's future is looking fairly uncertain right now, as the US Dept of Justice is preparing charges against them for, among other things, money laundering. Binance's own defense attorneys response to the DoJ was basically "Prosecute us and the crypto industry will collapse".

        From: https://www.reuters.com/markets/us/us-justice-dept-is-split-over-charging-binance-crypto-world-falters-sources-2022-12-12/
        Quote
        Binance's defense attorneys at U.S. law firm Gibson Dunn have held meetings in recent months with Justice Department officials, the four people said. Among Binance's arguments: A criminal prosecution would wreak havoc on a crypto market already in a prolonged downturn. The discussions included potential plea deals, according to three of the sources.

        I predict Bitcoin's price will just continues to drop—maybe quickly, maybe slowly—from here out. The mania is over. Enough truth has been revealed to hopefully prevent any further massive thoughtless buy-ins into the space.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: harvestbook on December 16, 2022, 09:09:30 AM
        Binance's own defense attorneys response to the DoJ was basically "Prosecute us and the crypto industry will collapse".

        From: https://www.reuters.com/markets/us/us-justice-dept-is-split-over-charging-binance-crypto-world-falters-sources-2022-12-12/


        I don't really care one way or another, but my one concern over the bubble was it would get "too big too fail" and we'd arrive at the surreal position of governments bailing out the industry with taxpayer money. I just hope it collapses before too many Wall Street firms bet their futures on it.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on December 16, 2022, 10:28:46 AM
        https://www.newyorker.com/humor/borowitz-report/world-shocked-that-man-running-business-based-on-imaginary-money-might-be-fraud (https://www.newyorker.com/humor/borowitz-report/world-shocked-that-man-running-business-based-on-imaginary-money-might-be-fraud)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 16, 2022, 10:31:49 AM
        The cynical, but in my opinion most likely explanation is that the price is being supported by wash sales. 

        https://www.banklesstimes.com/news/2022/10/05/51percent-of-daily-bitcoin-volume-in-2022-is-fake/

        The remaining exchanges have an existential interest in keeping the price high, so there is plenty of motivation.  If you look at the chart, there was a clear peg at $30K, then $20K and now $17K.   It sure appears as if the bots are doing a lot of trading.
        In this context, Bitcoin wash sales are a simultaneous buy and sell at the same price.  Bitcoin's price is not "being supported" by wash sales, because wash sales do not impact the price.  They inflate trading volume, but not price.  To increase the price of Bitcoin, you need a seller asking a higher price and a willing buyer paying that price.

        In markets so far today I see the following price changes:
        S&P 500 ("SPY")  ...  -1.51%
        Nasdaq 100 ("QQQ") ... -1.16%
        Bitcoin futures ("BITO") ... -3.86%

        If you search for "TQQQ ETF" and click (Compare) and enter "BITO", you will see 3x Nasdaq compared to Bitcoin, and they are a close match.  This is how I view Bitcoin futures - as a very risky market that is first to be sold when risk surfaces in the markets - like today.

        The 3x Nasdaq ETF ("TQQQ") lost 3.59% while Bitcoin futures fell 3.86%.  To me, that is Bitcoin still behaving like the riskiest asset.  If the price was being faked, it shouldn't respond to risky financial conditions by falling in price.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on December 16, 2022, 11:19:02 AM
        Bitcoin was developed precisely to address the problems inherent in trusting 3rd parties and the centralised control of an easily inflated 'currency'. FTX has only emphasised the values of the Bitcoin project.

        Some spillover contagion is to be expected but, from a broader perspective, this clear-out of rubbish is good for Bitcoin.

        I think it is worthwhile to look at why so many people used the exchanges in the first place, especially given their extremely sketchy outward appearance.  One reason is that on some level you need some sort of brokerage to match up buyers and sellers.   On the next level, if you routinely buy or sell it is a lot easier of the crypto is kept on the exchange, just like a bank holds your regular money or a stock broker holds your stocks.   And finally, some people simply don't have the knowledge or skills to self-custody. 

        So I don't see how not having functional exchanges is good for Bitcoin because it just makes adoption that much harder.  And while it is good they are locking up the most blatant criminals, there is nothing to prevent them from being replaced by other criminals. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: joe189man on December 16, 2022, 12:31:51 PM
        The Coinbase exchange is a publicly traded company in the US. They are audited and hold reserves 1:1, or at least they say that. They make money by charging fees at the time of purchase and sale, kinda like a credit card transaction fee.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on December 16, 2022, 01:48:40 PM
        I don't really care one way or another, but my one concern over the bubble was it would get "too big too fail" and we'd arrive at the surreal position of governments bailing out the industry with taxpayer money. I just hope it collapses before too many Wall Street firms bet their futures on it.

        I don't think there is much risk of that.   The traditional financial system is is pretty disconnected from crypto.  Individuals might be greatly impacted (and have been) but the mainstream economy doesn't rely on crypto for anything important. 

        In this context, Bitcoin wash sales are a simultaneous buy and sell at the same price.  Bitcoin's price is not "being supported" by wash sales, because wash sales do not impact the price.  They inflate trading volume, but not price.  To increase the price of Bitcoin, you need a seller asking a higher price and a willing buyer paying that price.


        That's not what I'm talking about.  Maybe a better way to put it would be wash trade instead of wash sale.   In this context, the selling asking a higher price and the buyer will to pay that price are the same person.   
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: achvfi on December 16, 2022, 02:28:27 PM
        I don't really care one way or another, but my one concern over the bubble was it would get "too big too fail" and we'd arrive at the surreal position of governments bailing out the industry with taxpayer money. I just hope it collapses before too many Wall Street firms bet their futures on it.

        I don't think there is much risk of that.   The traditional financial system is is pretty disconnected from crypto.  Individuals might be greatly impacted (and have been) but the mainstream economy doesn't rely on crypto for anything important. 

        In this context, Bitcoin wash sales are a simultaneous buy and sell at the same price.  Bitcoin's price is not "being supported" by wash sales, because wash sales do not impact the price.  They inflate trading volume, but not price.  To increase the price of Bitcoin, you need a seller asking a higher price and a willing buyer paying that price.


        That's not what I'm talking about.  Maybe a better way to put it would be wash trade instead of wash sale.   In this context, the selling asking a higher price and the buyer will to pay that price are the same person.
        Wowza! That kind price manipulation can explain explosion in crypto values.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Glenstache on December 16, 2022, 02:59:03 PM
        I don't really care one way or another, but my one concern over the bubble was it would get "too big too fail" and we'd arrive at the surreal position of governments bailing out the industry with taxpayer money. I just hope it collapses before too many Wall Street firms bet their futures on it.

        I don't think there is much risk of that.   The traditional financial system is is pretty disconnected from crypto.  Individuals might be greatly impacted (and have been) but the mainstream economy doesn't rely on crypto for anything important. 

        In this context, Bitcoin wash sales are a simultaneous buy and sell at the same price.  Bitcoin's price is not "being supported" by wash sales, because wash sales do not impact the price.  They inflate trading volume, but not price.  To increase the price of Bitcoin, you need a seller asking a higher price and a willing buyer paying that price.


        That's not what I'm talking about.  Maybe a better way to put it would be wash trade instead of wash sale.   In this context, the selling asking a higher price and the buyer will to pay that price are the same person.
        Couldn't that just be money laundering? /s (but also, yes)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on December 16, 2022, 03:16:26 PM
        In this context, Bitcoin wash sales are a simultaneous buy and sell at the same price.  Bitcoin's price is not "being supported" by wash sales, because wash sales do not impact the price.  They inflate trading volume, but not price.  To increase the price of Bitcoin, you need a seller asking a higher price and a willing buyer paying that price.

        Suppose I am ShadyExchange.com. I can have either, or both, of the following goals: I want to inflate my trading volume so that I look more legitimate and attract more accounts. I also want to pump up the value of a coin, set of coins, or the exchange rate between two coins.

        Using the simplest example, suppose I mint a ShitCoin. I want my ShitCoin (SC) to increase in value against the USD. So I set up two puppet accounts on my own exchange and execute the following trades.

        Account 1                                 Account 2

        Start with 10k SC                      Start with $100
        Sell 10k SC at $0.01                  Buy 10k SC at $0.01
        Buy 5k SC for $100                    Sell 5k SC at $0.02
        End with 5k SC                          End with $100 and 5k SC

        As you can see, I've doubled the "market" price, and yet the sum of the assets in my two accounts is the same as what I started with. These transactions are free to me. I can simply reverse the direction of the sales periodically and this process can go on forever.

        Now suppose I programmed a bot to make this trade many times every day? A coin going up in price is going to attract attention. Eventually I will pull in someone to pay me $0.05 each for my 10k SC because that looks like the established fair market price to them. Now I received $500 for something I paid $100 for, or perhaps invented out of thin air, and I still have my original $100. But then maybe they play the same game?

        Now suppose all the exchanges do this, and that the cumulative effect is that even the most liquid "coins" show a steady appreciation in price over months and years. The only thing that could break is if the target audience figures out the game and stops putting new money into the system.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on December 16, 2022, 03:45:17 PM
        Bitcoin was developed precisely to address the problems inherent in trusting 3rd parties and the centralised control of an easily inflated 'currency'. FTX has only emphasised the values of the Bitcoin project.

        FTX has also demonstrated that widespread adoption of those goals are not practical. Centralization is inherent to any process of smoothing out the transaction process. Something which has tons of oversight, history, and more equal wealth distribution with our current money system.

        Eh ? FTX is simply not decentralised. That does not demonstrate that decentralisation is impractical.
        That said, I'm not really against centralised exchanges/brokers. The decentralisation point was directed at the 'currency'.

        The only way that has been demonstrated to use bitcoin in ways that reflect the Bitcoin Project values is for each individual to be incredibly vigilant, knowledgeable, and lucky when managing their coins.

        Yeah, self-custody is not straightforward, but it's easier than it used to be, and I have every confidence that it will get progressively easier in the future.
        Also, whilst self-custody is a bit tricky, I doubt there are many people that are interested in crypto AND smart enough to open an exchange account AND not smart enough to self-custody.

        To keep people from tracking your public wallet(s) and tracing your purchasing patters you essential have to launder your own money. Anything easier is less secure, and anything more secure just isn't viable economically.

        I don't know that tracking is a major concern for most - it's not currently a great concern of mine. There's also a lot of ongoing dev in this area and I'm quite sure that, should I feel the need(?), it will be easy to 'launder' my Bitcoin in the future.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on December 16, 2022, 03:48:53 PM
        Bitcoin was developed precisely to address the problems inherent in trusting 3rd parties and the centralised control of an easily inflated 'currency'. FTX has only emphasised the values of the Bitcoin project.

        Some spillover contagion is to be expected but, from a broader perspective, this clear-out of rubbish is good for Bitcoin.

        If people walk away with the reasonable impression that 3rd party helpers in the crypto space are untrustworthy, it does not follow that adoption of cryptocurrencies will ever occur or that investor interest will increase. 99% of people need a 3rd party helper with an intuitive user interface in order to trade, hold, or use crypto. When those 99% walk away after being scammed a dozen ways, it's the end.

        I firmly believe that offshore/unregulated exchanges ARE untrustworthy. It's not necessarily that they're all crooks - it's just that aren't any good reasons to trust them. The lessons are 1. find the best exchange/broker you can, and 2. don't leave funds on an exchange any longer than necessary.

        My expectation is that there is PLENTY more similar pain to come as scammy exchanges and scammy coins unravel. There will be a lot of gnashing of teeth but, hopefully, the rubbish will get weeded out and people will wise up.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on December 16, 2022, 04:01:30 PM
        Fwiw, I think your BTC point re FTX is cogent. I myself have been quite intrigued by the relative stability of both BTC and ETH since FTX's fall. Is its stability evidence that exchanges have little influence on BTC or ETH prices, and investors of those coins should now have little to fear? Are other exchanges propping up the prices, but they will fall after after other exchange collapses? Is some other factor propping up the prices, and if so, will they collapse or have they bottomed?

        Why would you expect the FTX fiasco to detrimentally affect Bitcoin ?

        At heart, from what we know so far, the FTX fraud revolved largely around 2 things:

        1. Abuse of investors' trust in a 3rd party custodian (FTX)
        2. The lamest type of 'shitcoin' (FTT) that can be created/inflated at will, at zero cost, by a single controlling party

        Bitcoin was developed precisely to address the problems inherent in trusting 3rd parties and the centralised control of an easily inflated 'currency'. FTX has only emphasised the values of the Bitcoin project.

        Some spillover contagion is to be expected but, from a broader perspective, this clear-out of rubbish is good for Bitcoin.

        What do you think affects Bitcoin's price?

        I'm just not bothered about short term price movements, especially those caused by external factors. So long as the security and integrity of the blockchain remains intact and the trend for improving tools and wider adoption continues, the future is bright for Bitcoin.

        Can you think of any other 'shitcoins' that can be created/inflated at will, at zero cost, by a single controlling party that are widely used to buy/sell Bitcoin (and whose biggest customer was SBF's Alameda)?

        Probably, but again I don't think it matters in the broad scheme of things. These things can cause shocks that whip the price around for a while, but so what ? It's just noise.

        I think there are two competing narratives that are inherently at odds. 1. Bitcoin is an investment vehicle to turn $1 into many dollars in the future. I think it's pretty self-evident, the lion's share of Bitcoin (and "crypto" generally) participants believe this. And 2. That Bitcoin is a peer to peer network for transferring value in a decentralized way.

        I find 2 to be pretty undeniably true. It's neat in its mechanics. Kind of cute as a proof of concept. But wholly uninteresting as more than a toy project some clever person (people?) made 10+ years ago.

        Regardless of what I believe about the investment thing, it *clearly* matters a great deal what popular opinion is about crypto as an investment vehicle. I hope I'm not sticking my neck out too far to suggest: FTX's collapse isn't a trust-building event for the space, generally. Millions of people lost money in this. And Binance's future is looking fairly uncertain right now, as the US Dept of Justice is preparing charges against them for, among other things, money laundering. Binance's own defense attorneys response to the DoJ was basically "Prosecute us and the crypto industry will collapse".

        From: https://www.reuters.com/markets/us/us-justice-dept-is-split-over-charging-binance-crypto-world-falters-sources-2022-12-12/
        Quote
        Binance's defense attorneys at U.S. law firm Gibson Dunn have held meetings in recent months with Justice Department officials, the four people said. Among Binance's arguments: A criminal prosecution would wreak havoc on a crypto market already in a prolonged downturn. The discussions included potential plea deals, according to three of the sources.

        I predict Bitcoin's price will just continues to drop—maybe quickly, maybe slowly—from here out. The mania is over. Enough truth has been revealed to hopefully prevent any further massive thoughtless buy-ins into the space.

        I predict: 99.9% crypto tokens will zero and most exchanges will fail - over the next few years ? decade ? $Billions will be lost, and millions will be hurt, and lawsuits and scandals will abound -  simply because it's nearly all make-a-quick-buck scammy rubbish. And: despite some collateral-damage knocks along the way, Bitcoin will survive and thrive.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: the_gastropod on December 16, 2022, 04:09:23 PM
        Hah. Then sounds like we almost entirely agree. There are an estimated 21,844 cryptocurrencies in the wild. I think 21,844 are worthless silly scams that'll go to 0. You think 21,843 of them will. Close 'nuff for me!
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on December 16, 2022, 04:14:31 PM
        Bitcoin was developed precisely to address the problems inherent in trusting 3rd parties and the centralised control of an easily inflated 'currency'. FTX has only emphasised the values of the Bitcoin project.

        Some spillover contagion is to be expected but, from a broader perspective, this clear-out of rubbish is good for Bitcoin.

        I think it is worthwhile to look at why so many people used the exchanges in the first place, especially given their extremely sketchy outward appearance.  One reason is that on some level you need some sort of brokerage to match up buyers and sellers.   On the next level, if you routinely buy or sell it is a lot easier of the crypto is kept on the exchange, just like a bank holds your regular money or a stock broker holds your stocks.   And finally, some people simply don't have the knowledge or skills to self-custody. 

        So I don't see how not having functional exchanges is good for Bitcoin because it just makes adoption that much harder.  And while it is good they are locking up the most blatant criminals, there is nothing to prevent them from being replaced by other criminals.

        Yeah, I agree. Good, reliable, honest, trustworthy exchanges / brokers would be nice. In the meantime, be selective and don't leave funds on there any longer than necessary.

        I say this is good for Bitcoin because:
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on December 16, 2022, 04:20:47 PM
        Hah. Then sounds like we almost entirely agree. There are an estimated 21,844 cryptocurrencies in the wild. I think 21,844 are worthless silly scams that'll go to 0. You think 21,843 of them will. Close 'nuff for me!

        Yup. We're 99.99% on the same page  :-)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 16, 2022, 05:59:55 PM
        Telecaster, ChpBstrd - In the U.S., wash trades are illegal.  The #2 and #3 crypto exchanges (Coinbase, Kraken) are both registered in the US.  Why does the price of Bitcoin on US based exchanges closely match the price on non-US exchanges?
        https://coinmarketcap.com/currencies/bitcoin/markets/

        int'l Binance (USDT) ... 16,707.82
        US Coinbase (USDT) ... 16,711.13
        US Coinbase (USD) ... $16,712.11
        int'l KuCoin (USDT) ... $16,713.02
        int'l Bitfinex (USD) ... $16,731.00
        US Kraken (USDT) ... $16,711.42

        And more specifically, do you have data that shows what you claim?  The article talked of wash sales to inflate volume - but do you have evidence of price manipulation in the current price of Bitcoin?

        When I see Bitcoin moving with other risky assets, that suggest something responding to financial conditions - not scammers.  For example, comparing TQQQ and BITO this year - both were hit by high inflation ("risk off" environment).  They have moved very close, like you would expect of people selling their riskiest investments.

        If Bitcoin's resistence in falling below $40,000 is evidence of a scam, would you also claim the S&P 500 is a scam?  The S&P 500 ETF "SPY" kept refusing to fall below $390 in the past 30 days.  Investors in both Bitcoin and the S&P 500 have lost money this year - so are both scams?    (Obviously I don't believe that, but it helps to apply the same arguments aimed at Bitcoin to something like the S&P 500, to demonstrate the faulty logic)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Tigerpine on December 16, 2022, 07:13:50 PM
        Wash trades are not illegal per se.  What is illegal is using a loss from a wash sale to made a deduction on taxes.
        https://www.schwab.com/learn/story/primer-on-wash-sales
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on December 16, 2022, 07:49:30 PM
        Hah. Then sounds like we almost entirely agree. There are an estimated 21,844 cryptocurrencies in the wild. I think 21,844 are worthless silly scams that'll go to 0. You think 21,843 of them will. Close 'nuff for me!

        Yup. We're 99.99% on the same page  :-)
        This reminds me of the joke about atheists and religious people: Out of 20,000 gods, both agree 19,999 of them don't exist! So not a big difference, right!

        Telecaster, ChpBstrd - In the U.S., wash trades are illegal.  The #2 and #3 crypto exchanges (Coinbase, Kraken) are both registered in the US.  Why does the price of Bitcoin on US based exchanges closely match the price on non-US exchanges?....

        And more specifically, do you have data that shows what you claim?  The article talked of wash sales to inflate volume - but do you have evidence of price manipulation in the current price of Bitcoin?
        The prices match across exchanges because arbitrage is easy and trading costs are low enough. I.e. any person on at least two exchanges could buy/sell to arbitrage any difference. The best illustration is forex markets for actual currencies.

        The price can go up and down even if exchanges or coin pump-and-dumpers are creating fake trades. Even the pump-and-dumpers have to sell sometime, and money is always moving from one hot thing to another, even if it is the ecosystem of pump-and-dumpers competing with each other. What would we accept as evidence of an artificially-propped-up market? A perfectly linear price trend? I'm not even sure how that outcome could be engineered even in my simplistic model.

        But let's be honest. Cryptocurrency promoters and "helper" businesses should be considered guilty-until-proven-innocent at this point. We're well beyond the "few bad apples" argument, and getting into deeper questions about whether anything is safe in this apple barrel, or why we've been offered a barrel with so many poisoned apples in it in the first place. I challenge anyone to remain optimistic about the state of the crypto industry after 10 minutes on https://web3isgoinggreat.com/ (https://web3isgoinggreat.com/).

        The people who thought FTX was legit because of all the other lemmings the million other users? They lost all their money. The people who used hundreds of other exchanges, wallets, and other services over the years lost all their money. There are literally stories of website operators disappearing into thin air with tens of millions of dollars in client money. Those who did their "due diligence" looking for negative press reports, weeding out services with anonymous owners, sticking with the most mainstream services, and reading the Twitter feed from the owner of their preferred helpers? Yea they got conned by FTX.

        Now we're told to just use Binance, Kraken, or Coinbase, because they're legitimate, and it's like "how many times can I fall for the same scam?" Why could they not be run just like FTX? There's no way to audit them, and regulators seem to be unable to get over the definition of securities and interference from members of Congress who received donations from the industry.

         
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on December 16, 2022, 08:01:13 PM
        Telecaster, ChpBstrd - In the U.S., wash trades are illegal.  The #2 and #3 crypto exchanges (Coinbase, Kraken) are both registered in the US.  Why does the price of Bitcoin on US based exchanges closely match the price on non-US exchanges?
        https://coinmarketcap.com/currencies/bitcoin/markets/
        <snip>

        I can't prove anything of course, but I believe it to be the simplest explanation and is the best fit for what we know.  Wash trades are as old as dirt.  Individuals and organizations colluding to manipulate prices is also as old as dirt.   There is nothing novel that needs to be created here.   All you need are motivated individuals/organizations and a lightly regulated/non-regulated space--which we have in spaces--and it would be absolutely shocking if it wasn't happening.

        And if you look at the charts for SPY and BTC, they don't look anything at all alike.   Over the last year, BTC has three clear plateaus.  SPY has no clear plateaus.  Charts themselves prove nothing, but the BTC chart looks really odd.  It doesn't look like charts for stocks at all. 

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on December 16, 2022, 08:14:57 PM
        Wash trades are not illegal per se.  What is illegal is using a loss from a wash sale to made a deduction on taxes.
        https://www.schwab.com/learn/story/primer-on-wash-sales

        Unfortunately, we're talking about two different things with the same name.   Generically, a wash trade is any kind of fake trade.   What you're talking is what most people talk about and mean then they say wash trade.    In your example, you sold stock to someone else and bought it back.  In this case, we're talking about when the buyer and seller are the same entity, or perhaps two entities who are colluding.  That's illegal in the US for stocks.  I don't know about crypto. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Tigerpine on December 16, 2022, 09:25:31 PM
        Wash trades are not illegal per se.  What is illegal is using a loss from a wash sale to made a deduction on taxes.
        https://www.schwab.com/learn/story/primer-on-wash-sales

        Unfortunately, we're talking about two different things with the same name.   Generically, a wash trade is any kind of fake trade.   What you're talking is what most people talk about and mean then they say wash trade.    In your example, you sold stock to someone else and bought it back.  In this case, we're talking about when the buyer and seller are the same entity, or perhaps two entities who are colluding.  That's illegal in the US for stocks.  I don't know about crypto.

        Yes, that is different from what I had in mind. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on December 17, 2022, 05:53:27 AM
        The people who thought FTX was legit because of all the other lemmings the million other users? They lost all their money. The people who used hundreds of other exchanges, wallets, and other services over the years lost all their money. There are literally stories of website operators disappearing into thin air with tens of millions of dollars in client money. Those who did their "due diligence" looking for negative press reports, weeding out services with anonymous owners, sticking with the most mainstream services, and reading the Twitter feed from the owner of their preferred helpers? Yea they got conned by FTX.

        Now we're told to just use Binance, Kraken, or Coinbase, because they're legitimate, and it's like "how many times can I fall for the same scam?" Why could they not be run just like FTX? There's no way to audit them, and regulators seem to be unable to get over the definition of securities and interference from members of Congress who received donations from the industry.

        You seem to be operating under the incorrect assumption that FTX was one of the main exchanges regular people were using to buy and trade crypto, when a bunch of it's volume was coming from A) HFT crypto "hedge funds" like the failed Three Arrows trading with super high leverage and B) Alameda, which was losing a bunch of money on the exchange, which made it easier for hedge funds to make money, which kept the trading volume high.

        Could Binance be run the same way as FTX? Sure. I don't know that they are, but it's a legitimate risk to talk about. Their business model is honestly a lot like FTX's in that they're creating futures and various sorts of leveraged products to draw in prop shops and crypto hedge funds.

        Could Coinbase? No. The critical difference is that coinbase is a publicly traded company incorporated and operating within the USA. If you'd asked me a year ago what the safest exchange is -- the one I'd advise my grandmother to use if she insisted she wanted to buy crypto -- I'd have said coinbase. If you'd asked me, "but what about FTX?", despite following crypto reasonably closely I would have first had to google the name. I then would have said "no way am I sending my money, let alone advising my grandmother to send her money, to some weird company based on a Caribbean island."

        Crypto hedge funds were willing to take the risk because FTX let them trade with more leverage and it was easier to make (or lose) more money. But FTX never looked like the safest exchange to anyone.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 17, 2022, 10:21:24 AM
        Telecaster, ChpBstrd - In the U.S., wash trades are illegal.  The #2 and #3 crypto exchanges (Coinbase, Kraken) are both registered in the US.  Why does the price of Bitcoin on US based exchanges closely match the price on non-US exchanges?....

        And more specifically, do you have data that shows what you claim?  The article talked of wash sales to inflate volume - but do you have evidence of price manipulation in the current price of Bitcoin?
        The prices match across exchanges because arbitrage is easy and trading costs are low enough. I.e. any person on at least two exchanges could buy/sell to arbitrage any difference. The best illustration is forex markets for actual currencies.

        The price can go up and down even if exchanges or coin pump-and-dumpers are creating fake trades. Even the pump-and-dumpers have to sell sometime, and money is always moving from one hot thing to another, even if it is the ecosystem of pump-and-dumpers competing with each other. What would we accept as evidence of an artificially-propped-up market? A perfectly linear price trend? I'm not even sure how that outcome could be engineered even in my simplistic model.

        But let's be honest. Cryptocurrency promoters and "helper" businesses should be considered guilty-until-proven-innocent at this point. We're well beyond the "few bad apples" argument, and getting into deeper questions about whether anything is safe in this apple barrel, or why we've been offered a barrel with so many poisoned apples in it in the first place. I challenge anyone to remain optimistic about the state of the crypto industry after 10 minutes on https://web3isgoinggreat.com/ (https://web3isgoinggreat.com/).

        The people who thought FTX was legit because of all the other lemmings the million other users? They lost all their money. The people who used hundreds of other exchanges, wallets, and other services over the years lost all their money. There are literally stories of website operators disappearing into thin air with tens of millions of dollars in client money. Those who did their "due diligence" looking for negative press reports, weeding out services with anonymous owners, sticking with the most mainstream services, and reading the Twitter feed from the owner of their preferred helpers? Yea they got conned by FTX.

        Now we're told to just use Binance, Kraken, or Coinbase, because they're legitimate, and it's like "how many times can I fall for the same scam?" Why could they not be run just like FTX? There's no way to audit them, and regulators seem to be unable to get over the definition of securities and interference from members of Congress who received donations from the industry.
        Who said the part after "Now we're told"?  What I said is to use data.  Up above, I showed the prices of Bitcoin on the largest crypto exchanges.  You can click the link, click to each exchange's market, and see the price for yourself.  Do you have data that contradicts that?

        Bitcoin sold off rapidly as inflation fears mounted, losing value much faster than the S&P 500 or Nasdaq.  And it looks like 3x Nasdaq ETF "TQQQ" and Bitcoin futures ETF "BITO" closely match - suggesting investors are driving the price, not fake information.  That's again something you can see for yourself: use "compare" on Google (search TQQQ, click "compare", enter "BITO", and look at YTD).

        I didn't tell you to "just use Binance, Kraken, Coinbase" - where did you get that from?  What I said is that Coinbase and Kraken are exchanges registered in the US, and by that I meant they are subject to US law.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Travis on December 17, 2022, 10:32:08 AM
        Circular trading of tokens behind a curtain was BitConnect's bot model, but with the addition of guaranteeing investors a fixed return on investment which required a Ponzi scheme to keep the money coming in.  They claimed they were trading tokens on an open exchange and sending users the profit from those trades, but after the system collapsed it turned out 75% of the tokens were owned by BitConnect.


        Regarding Binance's claim that charging them with anything could collapse crypto exchanges, I imagine there are DoJ and SEC types replying "we'll take that bet."
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 17, 2022, 10:41:42 AM
        Back in July 2021, Coinbase got fined based on am employee who created two projects that wound up wash trading with each other:
        Quote
        The Commodity Futures Trading Commission today issued an order filing and settling charges against digital asset exchange operator Coinbase Inc., based in San Francisco, California, for reckless false, misleading, or inaccurate reporting as well as wash trading by a former employee on Coinbase’s GDAX platform.
        https://www.cftc.gov/PressRoom/PressReleases/8369-21

        Sometimes it appears as an unintended consequence of people trying to reach VIP level with higher volume of trades in their account, like with Binance in July 2022:

        Quote
        A community manager at Mandala Exchange noticed on Friday that a large volume of Bitcoin had been suddenly traded within a short period of time, but Bitcoin’s price had barely changed. This suggested that a large number of traders were buying and selling, keeping the price more or less stable.

        “Think this is due to zero fees and people trying to gain VIP tiers,” Zhao explained, adding that Binance would “exclude BTC trading from VIP calculations” and “remove all incentives to wash trade” on the exchange.
        https://decrypt.co/104765/after-bitcoin-wash-trading-surges-on-binance-ceo-nixes-incentives

        This article spells it out well, but it is unclear which parts are from Dec 2019 and which parts are from a Sept 2021 update.  If accurate and up to date, it also confirms my thesis that US registered exchanges are less likely to have illigal fake trades ("wash trades").

        Quote
        Exchanges and Wash Trading
        The most heavily-impacted cryptocurrency exchanges are Bibox and OKEx. Their wash trading comprises more than 75% of all trades. Even after we exclude their wash trading volume, however, they are still among the top 20 exchanges by trading volume.

        The cleanest exchanges, on the other hand, are Kraken, Coinbase, Upbit, and Poloniex.

        Less than 10% of both Gemini and Binance’s volumes are reportedly wash traded. A previous report showed that Binance’s BTC/USDT market had a real volume of 100%.

        In any case, wash trading remains a serious challenge for the space. In fact, it’s one of the main issues that will have to be addressed in order for the US Securities and Exchange Commission (SEC) to approve a Bitcoin ETF.
        https://cryptopotato.com/50-of-all-bitcoin-is-subjected-to-wash-trading-report-says/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on December 17, 2022, 12:01:07 PM
        I wonder how it's going for @whywork?

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on December 17, 2022, 02:43:42 PM
        You seem to be operating under the incorrect assumption that FTX was one of the main exchanges regular people were using to buy and trade crypto, when a bunch of it's volume was coming from A) HFT crypto "hedge funds" like the failed Three Arrows trading with super high leverage and B) Alameda, which was losing a bunch of money on the exchange, which made it easier for hedge funds to make money, which kept the trading volume high.

        Could Binance be run the same way as FTX? Sure. I don't know that they are, but it's a legitimate risk to talk about. Their business model is honestly a lot like FTX's in that they're creating futures and various sorts of leveraged products to draw in prop shops and crypto hedge funds.

        Could Coinbase? No. The critical difference is that coinbase is a publicly traded company incorporated and operating within the USA. If you'd asked me a year ago what the safest exchange is -- the one I'd advise my grandmother to use if she insisted she wanted to buy crypto -- I'd have said coinbase. If you'd asked me, "but what about FTX?", despite following crypto reasonably closely I would have first had to google the name. I then would have said "no way am I sending my money, let alone advising my grandmother to send her money, to some weird company based on a Caribbean island."

        Crypto hedge funds were willing to take the risk because FTX let them trade with more leverage and it was easier to make (or lose) more money. But FTX never looked like the safest exchange to anyone.

        What I said is that Coinbase and Kraken are exchanges registered in the US, and by that I meant they are subject to US law.

        What I gather from the above is that the following are the new criteria to be followed to filter for a legitimate crypto exchange:
          1) Based in the U.S.
          2) Does not cater to hedge funds, focused more on retail traders (except FTX had between 1 and 5 million accounts, particularly from Asia).
          3) Is a household name in the US like Coinbase or increasingly Binance. 

        I invite corrections to the above Criteria for Legit Crypto Businesses.

        After corrections, would you establish a 5 year blind trust with a five-figure USD investment in Bitcoin? The executor has to follow your criteria exactly and set up one account. If they land on another future FTX, you lose 100%. Once the trust is established, it cannot be changed or revoked. Who's in?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on December 17, 2022, 05:03:06 PM
        What I gather from the above is that the following are the new criteria to be followed to filter for a legitimate crypto exchange:
          1) Based in the U.S.
          2) Does not cater to hedge funds, focused more on retail traders (except FTX had between 1 and 5 million accounts, particularly from Asia).
          3) Is a household name in the US like Coinbase or increasingly Binance. 

        I invite corrections to the above Criteria for Legit Crypto Businesses.

        After corrections, would you establish a 5 year blind trust with a five-figure USD investment in Bitcoin? The executor has to follow your criteria exactly and set up one account. If they land on another future FTX, you lose 100%. Once the trust is established, it cannot be changed or revoked. Who's in?

        Who said anything about new criteria?

        Take crypto out of it entirely. At what point in the last fifty years has the phrase: "Just send your money to some business incorporated in the Caribbean, I'm sure it will be safe there" been good financial advice?

        There are plenty of other reasons a business might be a bad place to trust with ones money, but I don't buy all these folks wringing their hands saying who could possible have foreseen that something might go wrong with FTX (or Binance for that matter). Leverage is dangerous stuff and US financial regulations typically exist for good reasons. I don't always agree with those reasons but on balance they do an awful lot more good than harm.

        To the extend I have any of my net worth invested in tied up in crypto, it's been quite safe for the last nine odd years. I don't anticipate needing to or wanting to interact with it any time in the next five either and I'm not at all worried about it going missing (might good to zero but that's a separate kind of risk).

        The only reason to put it on any exchange at all would be to trade (doesn't sound appealing/rewarding) or try to borrow against it/lever myself up (also doesn't sound appealing).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Travis on December 17, 2022, 05:55:40 PM
        What I gather from the above is that the following are the new criteria to be followed to filter for a legitimate crypto exchange:
          1) Based in the U.S.
          2) Does not cater to hedge funds, focused more on retail traders (except FTX had between 1 and 5 million accounts, particularly from Asia).
          3) Is a household name in the US like Coinbase or increasingly Binance. 

        I invite corrections to the above Criteria for Legit Crypto Businesses.

        After corrections, would you establish a 5 year blind trust with a five-figure USD investment in Bitcoin? The executor has to follow your criteria exactly and set up one account. If they land on another future FTX, you lose 100%. Once the trust is established, it cannot be changed or revoked. Who's in?

        Who said anything about new criteria?

        Take crypto out of it entirely. At what point in the last fifty years has the phrase: "Just send your money to some business incorporated in the Caribbean, I'm sure it will be safe there" been good financial advice?

        There are plenty of other reasons a business might be a bad place to trust with ones money, but I don't buy all these folks wringing their hands saying who could possible have foreseen that something might go wrong with FTX (or Binance for that matter). Leverage is dangerous stuff and US financial regulations typically exist for good reasons. I don't always agree with those reasons but on balance they do an awful lot more good than harm.

        To the extend I have any of my net worth invested in tied up in crypto, it's been quite safe for the last nine odd years. I don't anticipate needing to or wanting to interact with it any time in the next five either and I'm not at all worried about it going missing (might good to zero but that's a separate kind of risk).

        The only reason to put it on any exchange at all would be to trade (doesn't sound appealing/rewarding) or try to borrow against it/lever myself up (also doesn't sound appealing).
        A lot of folks also seem to act like this is the first time a crypto exchange was shady. FTX is simply the latest, and probably not the last.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 17, 2022, 07:09:49 PM
        You seem to be operating under the incorrect assumption that FTX was one of the main exchanges regular people were using to buy and trade crypto, when a bunch of it's volume was coming from A) HFT crypto "hedge funds" like the failed Three Arrows trading with super high leverage and B) Alameda, which was losing a bunch of money on the exchange, which made it easier for hedge funds to make money, which kept the trading volume high.

        Could Binance be run the same way as FTX? Sure. I don't know that they are, but it's a legitimate risk to talk about. Their business model is honestly a lot like FTX's in that they're creating futures and various sorts of leveraged products to draw in prop shops and crypto hedge funds.

        Could Coinbase? No. The critical difference is that coinbase is a publicly traded company incorporated and operating within the USA. If you'd asked me a year ago what the safest exchange is -- the one I'd advise my grandmother to use if she insisted she wanted to buy crypto -- I'd have said coinbase. If you'd asked me, "but what about FTX?", despite following crypto reasonably closely I would have first had to google the name. I then would have said "no way am I sending my money, let alone advising my grandmother to send her money, to some weird company based on a Caribbean island."

        Crypto hedge funds were willing to take the risk because FTX let them trade with more leverage and it was easier to make (or lose) more money. But FTX never looked like the safest exchange to anyone.

        What I said is that Coinbase and Kraken are exchanges registered in the US, and by that I meant they are subject to US law.

        What I gather from the above is that the following are the new criteria to be followed to filter for a legitimate crypto exchange:
          1) Based in the U.S.
          2) Does not cater to hedge funds, focused more on retail traders (except FTX had between 1 and 5 million accounts, particularly from Asia).
          3) Is a household name in the US like Coinbase or increasingly Binance. 

        I invite corrections to the above Criteria for Legit Crypto Businesses.

        After corrections, would you establish a 5 year blind trust with a five-figure USD investment in Bitcoin? The executor has to follow your criteria exactly and set up one account. If they land on another future FTX, you lose 100%. Once the trust is established, it cannot be changed or revoked. Who's in?
        maizefolk said binance could be run like FTX.  We don't know, because binance is based outside the US, and there are rumors the Justice Department is considering criminal charges against its founder.  There is a separate binance.us exchange that nobody has brought up before now, that is much smaller.

        Coinbase is a US based exchange.  The CTFT found that between 2015 and 2018, Coinbase had two accounts which sometimes traded with each other, but did not disclose that one of the accounts was run by Coinbase.  So they were doing some wash trades, and received a fine.  I assume they now comply with the law.  I don't know if exchanges outside the US need to adhere to this law.
        Quote
        The Commodity Futures Trading Commission today issued an order filing and settling charges against digital asset exchange operator Coinbase Inc., based in San Francisco, California, for reckless false, misleading, or inaccurate reporting as well as wash trading by a former employee on Coinbase’s GDAX platform.

        Another report listed Kraken and Coinbase among the "cleanest" exchanges.  That suggests they do far less of "wash trade" activity, which is consistent with the threat of legal action from the CFTC.  It also provides a basis for comparison with other exchanges, to see if the price of Bitcoin has been inflated.  But as I posted earlier, the price of Bitcoin on these exchanges did not vary much, even outside the US.  I conclude that "wash trades" are not inflating the price of Bitcoin.

        While I admire the suggestion of a bet, I don't agree with the premise.  If wash trading doesn't matter to the price of Bitcoin, why would I make investment decisions based on something that doen't matter?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on December 17, 2022, 07:21:08 PM
        What I gather from the above is that the following are the new criteria to be followed to filter for a legitimate crypto exchange:
          1) Based in the U.S.
          2) Does not cater to hedge funds, focused more on retail traders (except FTX had between 1 and 5 million accounts, particularly from Asia).
          3) Is a household name in the US like Coinbase or increasingly Binance. 

        I invite corrections to the above Criteria for Legit Crypto Businesses.

        After corrections, would you establish a 5 year blind trust with a five-figure USD investment in Bitcoin? The executor has to follow your criteria exactly and set up one account. If they land on another future FTX, you lose 100%. Once the trust is established, it cannot be changed or revoked. Who's in?

        Who said anything about new criteria?

        Take crypto out of it entirely. At what point in the last fifty years has the phrase: "Just send your money to some business incorporated in the Caribbean, I'm sure it will be safe there" been good financial advice?

        There are plenty of other reasons a business might be a bad place to trust with ones money, but I don't buy all these folks wringing their hands saying who could possible have foreseen that something might go wrong with FTX (or Binance for that matter). Leverage is dangerous stuff and US financial regulations typically exist for good reasons. I don't always agree with those reasons but on balance they do an awful lot more good than harm.

        To the extend I have any of my net worth invested in tied up in crypto, it's been quite safe for the last nine odd years. I don't anticipate needing to or wanting to interact with it any time in the next five either and I'm not at all worried about it going missing (might good to zero but that's a separate kind of risk).

        The only reason to put it on any exchange at all would be to trade (doesn't sound appealing/rewarding) or try to borrow against it/lever myself up (also doesn't sound appealing).
        A lot of folks also seem to act like this is the first time a crypto exchange was shady. FTX is simply the latest, and probably not the last.
        If anyone is aware of a list of shady / not shady crypto businesses, I would be interested to watch it over time and see if the customers of non-shady businesses lose all their money less frequently than the customers of shady ones.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 17, 2022, 07:21:33 PM
        After corrections, would you establish a 5 year blind trust with a five-figure USD investment in Bitcoin? The executor has to follow your criteria exactly and set up one account. If they land on another future FTX, you lose 100%. Once the trust is established, it cannot be changed or revoked. Who's in?
        I already mentioned that I like the idea of a bet, but that "wash trade" isn't an issue to invest in.  In case you want to start a separate discussion, I thought I'd open up the idea: should you invest in Bitcoin right now?  No way.

        Financial conditions are still high risk, which punishes high risk assets.  Bitcoin is down 65% in the past year - and actually, Coinbase stock (COIN) has dropped 85% in the past year.  Another crypto stock, Riot Blockchain (RIOT) has dropped 83% in the past 12 months.  If we had certainty that recession was not going to occur, it would still be better to buy COIN or RIOT stock, which has farther to rise in a recovery.

        In the first week of this year, I actually had BITO call options that gave me 2x the performance of Bitcoin.  I sold them all on Jan 5 because I felt 2022 would be a high risk year (7% inflation vs under 1% of Fed rate hikes, supply chains, Covid resurgence).  I would rather retain the ability to sell all my crypto when conditions warrent it, and I don't think a blind trust adds anything useful to that.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on December 17, 2022, 08:24:41 PM
        Quote
        Coinbase is a US based exchange.  The CTFT found that between 2015 and 2018, Coinbase had two accounts which sometimes traded with each other, but did not disclose that one of the accounts was run by Coinbase.  So they were doing some wash trades, and received a fine.  I assume they now comply with the law.  I don't know if exchanges outside the US need to adhere to this law.

        So because we know for certain they didn't comply with the law in the past, you now make the assumption they are above board?

        Is that a good assumption?  Is that smart? 

        Here's my assumption:  People who are known to be criminals are are in fact criminals, and if they screwed you once they will screw you again.  I might be going out on a limb, but I think that position is reasonable and defensible. 

        If you want to give known criminals your money because you think they can invest it better than you,  knock yourself out.  But is this really a hill you want to die on? 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on December 17, 2022, 08:44:14 PM
        Quote
        Coinbase is a US based exchange.  The CTFT found that between 2015 and 2018, Coinbase had two accounts which sometimes traded with each other, but did not disclose that one of the accounts was run by Coinbase.  So they were doing some wash trades, and received a fine.  I assume they now comply with the law.  I don't know if exchanges outside the US need to adhere to this law.

        So because we know for certain they didn't comply with the law in the past, you now make the assumption they are above board?

        Is that a good assumption?  Is that smart? 

        Here's my assumption:  People who are known to be criminals are are in fact criminals, and if they screwed you once they will screw you again.  I might be going out on a limb, but I think that position is reasonable and defensible. 

        If you want to give known criminals your money because you think they can invest it better than you,  knock yourself out.  But is this really a hill you want to die on?

        The problem with this criteria (some employees of an organization didn't follow the law and so their employer paid a fine when they were caught) is that it also describes almost every bank in america:

        https://www.nasdaq.com/articles/bofa-tops-fines-blacklist-with-us$82bn-payouts-in-last-20-years-2021-02-15
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Travis on December 17, 2022, 09:15:50 PM
        What I gather from the above is that the following are the new criteria to be followed to filter for a legitimate crypto exchange:
          1) Based in the U.S.
          2) Does not cater to hedge funds, focused more on retail traders (except FTX had between 1 and 5 million accounts, particularly from Asia).
          3) Is a household name in the US like Coinbase or increasingly Binance. 

        I invite corrections to the above Criteria for Legit Crypto Businesses.

        After corrections, would you establish a 5 year blind trust with a five-figure USD investment in Bitcoin? The executor has to follow your criteria exactly and set up one account. If they land on another future FTX, you lose 100%. Once the trust is established, it cannot be changed or revoked. Who's in?

        Who said anything about new criteria?

        Take crypto out of it entirely. At what point in the last fifty years has the phrase: "Just send your money to some business incorporated in the Caribbean, I'm sure it will be safe there" been good financial advice?

        There are plenty of other reasons a business might be a bad place to trust with ones money, but I don't buy all these folks wringing their hands saying who could possible have foreseen that something might go wrong with FTX (or Binance for that matter). Leverage is dangerous stuff and US financial regulations typically exist for good reasons. I don't always agree with those reasons but on balance they do an awful lot more good than harm.

        To the extend I have any of my net worth invested in tied up in crypto, it's been quite safe for the last nine odd years. I don't anticipate needing to or wanting to interact with it any time in the next five either and I'm not at all worried about it going missing (might good to zero but that's a separate kind of risk).

        The only reason to put it on any exchange at all would be to trade (doesn't sound appealing/rewarding) or try to borrow against it/lever myself up (also doesn't sound appealing).
        A lot of folks also seem to act like this is the first time a crypto exchange was shady. FTX is simply the latest, and probably not the last.
        If anyone is aware of a list of shady / not shady crypto businesses, I would be interested to watch it over time and see if the customers of non-shady businesses lose all their money less frequently than the customers of shady ones.

        A non-exhaustive list of crypto exchanges undone by fraud or stupidity:
        FTX
        BlockFi
        Three Arrows Capital
        Voyager
        Celsius
        Luna/Terra/Anchor
        BitConnect
        Quadriga

        None of these include crypto exchanges where an outside actor broke in and stole coins from depositors.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on December 17, 2022, 09:47:48 PM
        What I gather from the above is that the following are the new criteria to be followed to filter for a legitimate crypto exchange:
          1) Based in the U.S.
          2) Does not cater to hedge funds, focused more on retail traders (except FTX had between 1 and 5 million accounts, particularly from Asia).
          3) Is a household name in the US like Coinbase or increasingly Binance. 

        I invite corrections to the above Criteria for Legit Crypto Businesses.

        After corrections, would you establish a 5 year blind trust with a five-figure USD investment in Bitcoin? The executor has to follow your criteria exactly and set up one account. If they land on another future FTX, you lose 100%. Once the trust is established, it cannot be changed or revoked. Who's in?

        Who said anything about new criteria?

        Take crypto out of it entirely. At what point in the last fifty years has the phrase: "Just send your money to some business incorporated in the Caribbean, I'm sure it will be safe there" been good financial advice?

        There are plenty of other reasons a business might be a bad place to trust with ones money, but I don't buy all these folks wringing their hands saying who could possible have foreseen that something might go wrong with FTX (or Binance for that matter). Leverage is dangerous stuff and US financial regulations typically exist for good reasons. I don't always agree with those reasons but on balance they do an awful lot more good than harm.

        To the extend I have any of my net worth invested in tied up in crypto, it's been quite safe for the last nine odd years. I don't anticipate needing to or wanting to interact with it any time in the next five either and I'm not at all worried about it going missing (might good to zero but that's a separate kind of risk).

        The only reason to put it on any exchange at all would be to trade (doesn't sound appealing/rewarding) or try to borrow against it/lever myself up (also doesn't sound appealing).
        A lot of folks also seem to act like this is the first time a crypto exchange was shady. FTX is simply the latest, and probably not the last.
        If anyone is aware of a list of shady / not shady crypto businesses, I would be interested to watch it over time and see if the customers of non-shady businesses lose all their money less frequently than the customers of shady ones.

        A non-exhaustive list of crypto exchanges undone by fraud or stupidity:
        FTX
        BlockFi
        Three Arrows Capital
        Voyager
        Celsius
        Luna/Terra/Anchor
        BitConnect
        Quadriga

        None of these include crypto exchanges where an outside actor broke in and stole coins from depositors.
        Yes, but that's the past. I'd like to know if anyone can predict ahead of time which exchanges will lose their clients' assets in the future. I.e. comments above implied it is easy to spot the shady versus not-shady exchanges. Can anyone tell me with confidence which exchanges, funds, or wallets will exist by some time in the future, say 24 months from now?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Travis on December 17, 2022, 09:53:53 PM
        In my completely amateur opinion, the ones that act the most like actual regulated brokerages (assuming you're able to actually peek behind the curtain).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 18, 2022, 12:50:15 AM
        Quote
        Coinbase is a US based exchange.  The CTFT found that between 2015 and 2018, Coinbase had two accounts which sometimes traded with each other, but did not disclose that one of the accounts was run by Coinbase.  So they were doing some wash trades, and received a fine.  I assume they now comply with the law.  I don't know if exchanges outside the US need to adhere to this law.

        So because we know for certain they didn't comply with the law in the past, you now make the assumption they are above board?

        Is that a good assumption?  Is that smart? 

        Here's my assumption:  People who are known to be criminals are are in fact criminals, and if they screwed you once they will screw you again.  I might be going out on a limb, but I think that position is reasonable and defensible. 

        If you want to give known criminals your money because you think they can invest it better than you,  knock yourself out.  But is this really a hill you want to die on?
        You might try reading that report more carefully.  A former employee created a problem that at times traded with another Coinbase account.  That's happenstance, not criminal intent.

        "... wash trading by a former employee ..."
        "between January 2015 and September 2018"
        "Coinbase operated two automated trading programs, Hedger and Replicator, which generated orders that at times matched with one another. "
        https://www.cftc.gov/PressRoom/PressReleases/8369-21

        The CFTC said this ended in Sept 2018.  When the CFCT supports your view, you agree with them, but when they say it ended in 2018 you think they're wrong?

        There was another article in 2019 updated in 2021 that showed Coinbase was one of the cleanest exchanges in terms of "wash trades".  So the CFTC says Coinbase stopped in 2018, and another article 1 or 3 years later gave them a clean bill of health.  You're assuming things not reflected in the links I provided.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: lifeanon269 on December 20, 2022, 06:17:43 AM
        Yes, but that's the past. I'd like to know if anyone can predict ahead of time which exchanges will lose their clients' assets in the future. I.e. comments above implied it is easy to spot the shady versus not-shady exchanges. Can anyone tell me with confidence which exchanges, funds, or wallets will exist by some time in the future, say 24 months from now?

        Which kind of drives the entire point of bitcoin home that the entire reason it exists is to take custody of your own bitcoin rather than relying on a third-party institution. If someone isn't comfortable doing that, then maybe bitcoin just isn't for them.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: index on December 21, 2022, 02:15:07 PM
        Yes, but that's the past. I'd like to know if anyone can predict ahead of time which exchanges will lose their clients' assets in the future. I.e. comments above implied it is easy to spot the shady versus not-shady exchanges. Can anyone tell me with confidence which exchanges, funds, or wallets will exist by some time in the future, say 24 months from now?

        Which kind of drives the entire point of bitcoin home that the entire reason it exists is to take custody of your own bitcoin rather than relying on a third-party institution. If someone isn't comfortable doing that, then maybe bitcoin just isn't for them.

        Without the exchanges BTC has no liquidity and is next to worthless. Trusted intermediaries are necessary or else the only way to exchange cypto for fiat becomes person to person...
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: theolympians on January 06, 2023, 05:41:37 PM
        Yes, but that's the past. I'd like to know if anyone can predict ahead of time which exchanges will lose their clients' assets in the future. I.e. comments above implied it is easy to spot the shady versus not-shady exchanges. Can anyone tell me with confidence which exchanges, funds, or wallets will exist by some time in the future, say 24 months from now?

        Which kind of drives the entire point of bitcoin home that the entire reason it exists is to take custody of your own bitcoin rather than relying on a third-party institution. If someone isn't comfortable doing that, then maybe bitcoin just isn't for them.

        Without the exchanges BTC has no liquidity and is next to worthless. Trusted intermediaries are necessary or else the only way to exchange cypto for fiat becomes person to person...

        If memory serves, that was supposed to be a feature of crypto: no intermediary. No bank, escrow etc. We just send bitcoin to everyone, it was going to make banks banks not a major factor, it was going to be utopia for the common man.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on January 06, 2023, 05:47:02 PM
        Yes, but that's the past. I'd like to know if anyone can predict ahead of time which exchanges will lose their clients' assets in the future. I.e. comments above implied it is easy to spot the shady versus not-shady exchanges. Can anyone tell me with confidence which exchanges, funds, or wallets will exist by some time in the future, say 24 months from now?

        Which kind of drives the entire point of bitcoin home that the entire reason it exists is to take custody of your own bitcoin rather than relying on a third-party institution. If someone isn't comfortable doing that, then maybe bitcoin just isn't for them.

        Without the exchanges BTC has no liquidity and is next to worthless. Trusted intermediaries are necessary or else the only way to exchange cypto for fiat becomes person to person...

        If memory serves, that was supposed to be a feature of crypto: no intermediary. No bank, escrow etc. We just send bitcoin to everyone, it was going to make banks banks not a major factor, it was going to be utopia for the common man.

        That was back when they were pretending that it was going to be a currency.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: theolympians on January 07, 2023, 07:46:37 AM
        Yes, but that's the past. I'd like to know if anyone can predict ahead of time which exchanges will lose their clients' assets in the future. I.e. comments above implied it is easy to spot the shady versus not-shady exchanges. Can anyone tell me with confidence which exchanges, funds, or wallets will exist by some time in the future, say 24 months from now?

        Which kind of drives the entire point of bitcoin home that the entire reason it exists is to take custody of your own bitcoin rather than relying on a third-party institution. If someone isn't comfortable doing that, then maybe bitcoin just isn't for them.

        Without the exchanges BTC has no liquidity and is next to worthless. Trusted intermediaries are necessary or else the only way to exchange cypto for fiat becomes person to person...

        If memory serves, that was supposed to be a feature of crypto: no intermediary. No bank, escrow etc. We just send bitcoin to everyone, it was going to make banks banks not a major factor, it was going to be utopia for the common man.

        That was back when they were pretending that it was going to be a currency.

        The idea of crypto as a currency is a self-contradiction. If you buy a bitcoin 9or any other), there is no reason to use as a currency today, as it was touted as bring worth more in the future. So that thinking would naturally inhibit its use as a currency.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 07, 2023, 07:57:46 AM
        Yes, but that's the past. I'd like to know if anyone can predict ahead of time which exchanges will lose their clients' assets in the future. I.e. comments above implied it is easy to spot the shady versus not-shady exchanges. Can anyone tell me with confidence which exchanges, funds, or wallets will exist by some time in the future, say 24 months from now?

        Which kind of drives the entire point of bitcoin home that the entire reason it exists is to take custody of your own bitcoin rather than relying on a third-party institution. If someone isn't comfortable doing that, then maybe bitcoin just isn't for them.

        Without the exchanges BTC has no liquidity and is next to worthless. Trusted intermediaries are necessary or else the only way to exchange cypto for fiat becomes person to person...

        If memory serves, that was supposed to be a feature of crypto: no intermediary. No bank, escrow etc. We just send bitcoin to everyone, it was going to make banks banks not a major factor, it was going to be utopia for the common man.

        Just to point out the obvious . . .

        The 'no intermediary' feature of Bitcoin concerns the transfer of Bitcoin between different parties. This IS a peer-to-peer / 'no intermediary' process.

        Clearly, there is a need for a mechanism through which to acquire Bitcoin before you can participate in that. The current primary method for doing this is via centralised (and largely unregulated) exchanges. As we have seen, this is not without risk. Maybe we will soon see some regulation. Maybe a decentralised / trustless solution will appear. Maybe . . .

        In the meantime, you can:
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 07, 2023, 09:36:10 AM
        The idea of crypto as a currency is a self-contradiction. If you buy a bitcoin 9or any other), there is no reason to use as a currency today, as it was touted as bring worth more in the future. So that thinking would naturally inhibit its use as a currency.

        No reason ? Are you suggesting that the only reason to spend is that your currency is becoming increasingly worthless ?

        People would presumably continue to spend on food and other essentials rather than starve and freeze, etc.

        People might(?) spend less on non-essential items. When did that become a bad thing here (or for society, or for the environment, etc.) ?

        People might(?) think more long-term and/or more cautiously with regard to investments and loans, etc. Is that a bad thing ?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on January 07, 2023, 01:43:45 PM
        No reason ? Are you suggesting that the only reason to spend is that your currency is becoming increasingly worthless ?

        People would presumably continue to spend on food and other essentials rather than starve and freeze, etc.

        People might(?) spend less on non-essential items. When did that become a bad thing here (or for society, or for the environment, etc.) ?

        People might(?) think more long-term and/or more cautiously with regard to investments and loans, etc. Is that a bad thing ?

        A couple thoughts.  One is there is a chicken and egg problem.  Crytpo can't become widely accepted as a currency until people start widely using it as a currency.  But Bitcoin maximalists--like say, Michael Saylor--don't advocate spending, they advocate holding.  And the benefits are framed mostly in terms of getting rich in the future "have fun staying poor"  instead of in terms of day-to-day advantages which is what is needed for widespread adoption.  A real world example is Wikipedia, which was an early adopter of crypto donations and started accepting crypto donations in 2014.  Wiki stopped accepting crypto in 2022 because so few people were donating that way it wasn't worth the hassle.  So if people aren't using crypto now, when?

        The other is that we don't have to speculate what would happen in the event of a deflationary currency, we have many examples from history.  If there is an expectation that prices will be lower in the future, then future wages need to be lower too.  And the easiest way to do that is cut payroll.   And cutting payroll means less spending, which means more deflation, which means more payroll cuts, and so on.  Again, this is not hypothetical.  That is what is known to happen.   
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 07, 2023, 06:28:58 PM
        No reason ? Are you suggesting that the only reason to spend is that your currency is becoming increasingly worthless ?

        People would presumably continue to spend on food and other essentials rather than starve and freeze, etc.

        People might(?) spend less on non-essential items. When did that become a bad thing here (or for society, or for the environment, etc.) ?

        People might(?) think more long-term and/or more cautiously with regard to investments and loans, etc. Is that a bad thing ?

        A couple thoughts.  One is there is a chicken and egg problem.  Crytpo can't become widely accepted as a currency until people start widely using it as a currency.

        I don't see a chicken/egg problem - quite the opposite.
        Bitcoin can be, and is being, narrowly accepted as a currency while people narrowly use it as a currency. This started from zero and it's not clear why the widening trend can't/won't continue.
        Every new adopter makes it better for everyone already using it and more attractive to everyone not currently using it, ie. Network Effect.

        But Bitcoin maximalists--like say, Michael Saylor--don't advocate spending, they advocate holding.  And the benefits are framed mostly in terms of getting rich in the future "have fun staying poor"  instead of in terms of day-to-day advantages which is what is needed for widespread adoption.

        I can't speak for MS, but . . . I think his original focus was on how a rich man could best protect his wealth, ie. buy and hold. Since those early days there has been far more talk of the wider implications of Bitcoin and the wider potential for Bitcoin, eg. as a means of exchange (via Lightning), etc. - particularly amongst the unbanked and/or in unstable countries. And now, Microstrategy has announced plans to release Lightning-based (ie. Bitcoin_spending) software applications in 2023.

        Most other maximalists seem to have a broad outlook on what Bitcoin is and what it could become, and they do much more to advance it than just promote buy&hold.

        A real world example is Wikipedia, which was an early adopter of crypto donations and started accepting crypto donations in 2014.  Wiki stopped accepting crypto in 2022 because so few people were donating that way it wasn't worth the hassle.  So if people aren't using crypto now, when?

        A quick Google shows that the Wiki decision to stop accepting crypto donations was more about avoiding association with the ongoing environmental debate and scam concerns. Furthermore, it was initiated and pushed by the creator of web3isgoinggreat.com - clearly someone with a crypto-axe to grind. It definitely wasn't a simple 'not worth the hassle' decision.

        The other is that we don't have to speculate what would happen in the event of a deflationary currency, we have many examples from history.  If there is an expectation that prices will be lower in the future, then future wages need to be lower too.  And the easiest way to do that is cut payroll.   And cutting payroll means less spending, which means more deflation, which means more payroll cuts, and so on.  Again, this is not hypothetical.  That is what is known to happen.

        Invert every up/down word in that paragraph to see just some of the perils of an inflationary currency.

        And, note that Bitcoin is not inherently deflationary. Bitcoin is disinflationary with a slight tendency towards being deflationary due to lost coins.

        Regardless, Jeff Booth outlines some interesting thoughts on deflation in The Price of Tomorrow. In a nutshell, that technology just IS deflationary and that we live in an exponentially_increasingly_technological (and hence, exponentially_increasingly_deflationary) world, so we'd do well to get used to it and adapt to it. It's a good and succinct read - I've struggled to find fault with much of what he says.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on January 07, 2023, 08:25:19 PM
        In the meantime, you can:
        • Manage the risk by choosing your exchange / broker carefully. Maybe onshore, maybe a public co, etc. Also, there are Bitcoin-only brokers that are (imo) at the safer end of the spectrum simply because they're not participating in / promoting the alt-coin shitshow.
        • Minimise your exposure by self-custodying your Bitcoin immediately following purchase. 1 hour exposure = 0.01% of 1 year exposure.
        I think people are focused on this more in light of FTX's collapse.  FTX's former CEO, ironically, wanted to start FTX to properly handle leveraged products without collapsing.  But the safer route is an exchange that doesn't offer leverage, like with U.S.-based exchanges.

        FTX also raises a separate legal question: if someone bought Bitcoin on FTX, then sent that Bitcoin to their own wallet (self-custodying)... would they be subject to clawbacks?

        The current CEO of bankrupt FTX plans to claw back political donations.  But if he wants billions back from Binance's CEO, he could have a legal fight on his hands.  CZ could argue he offered to buy FTX, suggesting he was ignorant of the fraud, and a day later saw the books and declined to go further.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on January 07, 2023, 08:30:41 PM

        Quote
        ... (other quoted messages removed for brevity) ...

        Without the exchanges BTC has no liquidity and is next to worthless. Trusted intermediaries are necessary or else the only way to exchange cypto for fiat becomes person to person...
        If memory serves, that was supposed to be a feature of crypto: no intermediary. No bank, escrow etc. We just send bitcoin to everyone, it was going to make banks banks not a major factor, it was going to be utopia for the common man.
        That was back when they were pretending that it was going to be a currency.
        The idea of crypto as a currency is a self-contradiction. If you buy a bitcoin 9or any other), there is no reason to use as a currency today, as it was touted as bring worth more in the future. So that thinking would naturally inhibit its use as a currency.
        Even now with inflation near 7%, the U.S. has a more stable economy than many countries and various reliable means of payment.  If you look only at examples in the U.S., you are sampling from people who don't need to change.

        In countries like Venezuela, it's a different story with uncertain inflation, unreliable means of transfer, and people who work outside the country sending money back to family in Venezuela.

        Quote
        Chainalysis, a startup that researches blockchain transactions, in a 2020 report ranked Venezuela third on its Global Crypto Adoption Index, largely due to the high volume of bolivar transactions.
        ...
        In Venezuela, crypto is mainly used to hedge against inflation that causes bank deposits to sharply depreciate in weeks or even days.
        https://www.reuters.com/technology/venezuelas-economy-regresses-crypto-fills-gaps-2021-06-22/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on January 09, 2023, 07:45:22 AM
        In the meantime, you can:
        • Manage the risk by choosing your exchange / broker carefully. Maybe onshore, maybe a public co, etc. Also, there are Bitcoin-only brokers that are (imo) at the safer end of the spectrum simply because they're not participating in / promoting the alt-coin shitshow.
        • Minimise your exposure by self-custodying your Bitcoin immediately following purchase. 1 hour exposure = 0.01% of 1 year exposure.
        I think people are focused on this more in light of FTX's collapse.  FTX's former CEO, ironically, wanted to start FTX to properly handle leveraged products without collapsing.  But the safer route is an exchange that doesn't offer leverage, like with U.S.-based exchanges.

        FTX also raises a separate legal question: if someone bought Bitcoin on FTX, then sent that Bitcoin to their own wallet (self-custodying)... would they be subject to clawbacks?

        The current CEO of bankrupt FTX plans to claw back political donations.  But if he wants billions back from Binance's CEO, he could have a legal fight on his hands.  CZ could argue he offered to buy FTX, suggesting he was ignorant of the fraud, and a day later saw the books and declined to go further.

        But if one's financial intermediary is not loaning out one's crypto deposits to try and earn a spread, how do they make money? By charging transaction fees? If fractional banking was outlawed in the crypto world, for example, the only crypto exchanges/banks/brokerages would have to charge commissions. Otherwise, if there was no way to earn money, they couldn't exist. This is why there is no free Western Union.

        We're all used to stock brokerages with zero-commission trades, but in the background, they are loaning your shares to short sellers, earning spreads between futures and cash yields, doing options trades, etc. with your assets, and of course selling your data. I have some reservations about all this stuff with stocks, but FTX suggests the model cannot be made to work in the hyper-volatile and unregulated crypto universe where even the biggest counterparties and coins can collapse overnight.

        If a crypto website says it is not trading your assets to make money for itself, that raises questions about what possible way they could be earning money if not by stealing depositors' money or doing some Robinhood game of picking a penny off the B/A spreads.

        Looking at the broader picture, let's think about how the narrative has shifted:

        The point is perhaps to know the business model of your financial helpers, and to steer clear of unregulated markets where some dufus could take on silly amounts of risk and no one would notice.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: index on January 09, 2023, 08:04:13 AM
        Yes, but that's the past. I'd like to know if anyone can predict ahead of time which exchanges will lose their clients' assets in the future. I.e. comments above implied it is easy to spot the shady versus not-shady exchanges. Can anyone tell me with confidence which exchanges, funds, or wallets will exist by some time in the future, say 24 months from now?

        Which kind of drives the entire point of bitcoin home that the entire reason it exists is to take custody of your own bitcoin rather than relying on a third-party institution. If someone isn't comfortable doing that, then maybe bitcoin just isn't for them.

        Without the exchanges BTC has no liquidity and is next to worthless. Trusted intermediaries are necessary or else the only way to exchange cypto for fiat becomes person to person...

        If memory serves, that was supposed to be a feature of crypto: no intermediary. No bank, escrow etc. We just send bitcoin to everyone, it was going to make banks banks not a major factor, it was going to be utopia for the common man.

        Just to point out the obvious . . .

        The 'no intermediary' feature of Bitcoin concerns the transfer of Bitcoin between different parties. This IS a peer-to-peer / 'no intermediary' process.

        Clearly, there is a need for a mechanism through which to acquire Bitcoin before you can participate in that. The current primary method for doing this is via centralised (and largely unregulated) exchanges. As we have seen, this is not without risk. Maybe we will soon see some regulation. Maybe a decentralised / trustless solution will appear. Maybe . . .

        In the meantime, you can:
        • Manage the risk by choosing your exchange / broker carefully. Maybe onshore, maybe a public co, etc. Also, there are Bitcoin-only brokers that are (imo) at the safer end of the spectrum simply because they're not participating in / promoting the alt-coin shitshow.
        • Minimise your exposure by self-custodying your Bitcoin immediately following purchase. 1 hour exposure = 0.01% of 1 year exposure.

        Bitcoin can only support 7 transactions per second which is inadequate for use as a currency. The structural shortcomings of BTC make it necessary to use intermediaries i.e. the exchanges. For the exchanges to be trusted, they need to be well regulated which negates the whole P2P argument of BTC in the first place. BTC has value if you are transferring large sums in the 6+ figure amounts. For everyone else, a highly regulated central authority is needed to facilitate transactions.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on January 09, 2023, 08:07:58 AM
        In the meantime, you can:
        • Manage the risk by choosing your exchange / broker carefully. Maybe onshore, maybe a public co, etc. Also, there are Bitcoin-only brokers that are (imo) at the safer end of the spectrum simply because they're not participating in / promoting the alt-coin shitshow.
        • Minimise your exposure by self-custodying your Bitcoin immediately following purchase. 1 hour exposure = 0.01% of 1 year exposure.
        I think people are focused on this more in light of FTX's collapse.  FTX's former CEO, ironically, wanted to start FTX to properly handle leveraged products without collapsing.  But the safer route is an exchange that doesn't offer leverage, like with U.S.-based exchanges.

        FTX also raises a separate legal question: if someone bought Bitcoin on FTX, then sent that Bitcoin to their own wallet (self-custodying)... would they be subject to clawbacks?

        The current CEO of bankrupt FTX plans to claw back political donations.  But if he wants billions back from Binance's CEO, he could have a legal fight on his hands.  CZ could argue he offered to buy FTX, suggesting he was ignorant of the fraud, and a day later saw the books and declined to go further.

        But if one's financial intermediary is not loaning out one's crypto deposits to try and earn a spread, how do they make money? By charging transaction fees? If fractional banking was outlawed in the crypto world, for example, the only crypto exchanges/banks/brokerages would have to charge commissions. Otherwise, if there was no way to earn money, they couldn't exist. This is why there is no free Western Union.

        We're all used to stock brokerages with zero-commission trades, but in the background, they are loaning your shares to short sellers, earning spreads between futures and cash yields, doing options trades, etc. with your assets, and of course selling your data. I have some reservations about all this stuff with stocks, but FTX suggests the model cannot be made to work in the hyper-volatile and unregulated crypto universe where even the biggest counterparties and coins can collapse overnight.

        If a crypto website says it is not trading your assets to make money for itself, that raises questions about what possible way they could be earning money if not by stealing depositors' money or doing some Robinhood game of picking a penny off the B/A spreads.

        Looking at the broader picture, let's think about how the narrative has shifted:
        • 2016: Crypto is going to allow frictionless, free transactions with no intermediaries, transforming the global economy!
        • 2019: These noobs who lost their life savings because they left their coins in wallets on sketchy websites are doing it wrong.
        • 2022: Here are some guidelines to find a crypto website that is less likely to collapse - um... ooops... - here are NEW guidelines based on the ever-shrinking unique set of characteristics of crypto websites which haven't collapsed... yet.

        The point is perhaps to know the business model of your financial helpers, and to steer clear of unregulated markets where some dufus could take on silly amounts of risk and no one would notice.
        Did you mean to reply to another post?  I was talking about people who bought Bitcoin on FTX and self-custodied may or may not be the target of clawbacks.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: StashingAway on January 09, 2023, 08:39:14 AM

        People might(?) spend less on non-essential items. When did that become a bad thing here (or for society, or for the environment, etc.) ?

        People might(?) think more long-term and/or more cautiously with regard to investments and loans, etc. Is that a bad thing ?

        This may be true of the day to day spending of lower income. But that's not what drives the economy.

        The way the economy flows is that there is incentive for the wealthy to re-invest. The default is to invest and lend out your money, because that gets a reliably higher yield than hoarding money. Banks lend money for mortgages, corporations put money in brokerages to be managed, pension funds put their money in the market, etc.  The result of all of this is that potential money hoarders put that money back to use to increase value. There are problems with this (some you pointed out), but the alternative is worse for the everyday person.

        In a deflationary environment, "people" might do what you said. But the ultra-wealthy, the 1%ers, would have no reason not to hoard their own money. They could get loans based on their massive collateral and collect and collect, increasing the wealth gap with no way for the lower class to get any back. "People" would be royally screwed; no money flowing back into the economy. Less investments in start up companies, no reason for companies to expand operations, open a new franchise, etc. because their $ is doing great just sitting in the bank increasing value.

        The wealth gap is already larger in the BTC space than in USD, and has the trend of getting worse. No thank you from me.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on January 09, 2023, 02:36:58 PM
        A quick Google shows that the Wiki decision to stop accepting crypto donations was more about avoiding association with the ongoing environmental debate and scam concerns. Furthermore, it was initiated and pushed by the creator of web3isgoinggreat.com - clearly someone with a crypto-axe to grind. It definitely wasn't a simple 'not worth the hassle' decision.

        The reason I brought up Wikipedia is that it comes from populist, decentralized  "anyone can edit" grass-roots, is self-funded, no pay walls or subscriptions, operates mostly with volunteer labor, and is largely democratic.  It seems logical that there would be some natural overlap between Wiki supporters and crytpo-enthusiasts.  And because Wiki is donor supported, it needs to make it easy to accept payments by as many channels as possible, including across international borders.   So again there seems to be some natural overlap.   And indeed Wiki began accepting crypto donations in 2014, so they were pretty early.   But protecting your reputation is a hassle.   If crypto-donations were flowing over the transom it would be one thing.  But crypto-donations were on the order of about a hundredth of a percent of the total.   A rounding error of a rounding error.   With such little demand, the decision to stop accepting crypto does become pretty simple and the Wiki foundation voted overwhelmingly to stop accepting it.   That goes to my point that even after eight years too few people were donating via crytpo channels to make it worthwhile, and this is an area that would seem to be a natural fit. 

        This goes back to the chicken and egg problem, a record 66% Bitcoin did not move in the last year, and 45% has not moved in two years.   

        https://cryptoslate.com/over-66-of-the-total-bitcoin-supply-hasnt-moved-in-the-last-one-year-setting-a-record

        In order for Bitcoin to be useful as a currency, it needs to circulate.  But the people who own it are holding it. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on January 09, 2023, 03:05:28 PM
        A quick Google shows that the Wiki decision to stop accepting crypto donations was more about avoiding association with the ongoing environmental debate and scam concerns. Furthermore, it was initiated and pushed by the creator of web3isgoinggreat.com - clearly someone with a crypto-axe to grind. It definitely wasn't a simple 'not worth the hassle' decision.

        The reason I brought up Wikipedia is that it comes from populist, decentralized  "anyone can edit" grass-roots, is self-funded, no pay walls or subscriptions, operates mostly with volunteer labor, and is largely democratic.  It seems logical that there would be some natural overlap between Wiki supporters and crytpo-enthusiasts.  And because Wiki is donor supported, it needs to make it easy to accept payments by as many channels as possible, including across international borders.   So again there seems to be some natural overlap.   And indeed Wiki began accepting crypto donations in 2014, so they were pretty early.   But protecting your reputation is a hassle.   If crypto-donations were flowing over the transom it would be one thing.  But crypto-donations were on the order of about a hundredth of a percent of the total.   A rounding error of a rounding error.   With such little demand, the decision to stop accepting crypto does become pretty simple and the Wiki foundation voted overwhelmingly to stop accepting it.   That goes to my point that even after eight years too few people were donating via crytpo channels to make it worthwhile, and this is an area that would seem to be a natural fit. 

        This goes back to the chicken and egg problem, a record 66% Bitcoin did not move in the last year, and 45% has not moved in two years.   

        https://cryptoslate.com/over-66-of-the-total-bitcoin-supply-hasnt-moved-in-the-last-one-year-setting-a-record

        In order for Bitcoin to be useful as a currency, it needs to circulate.  But the people who own it are holding it.

        Even bitcoin proponents have largely given up on the idea that it's a currency.

        Bitcoin seems to act most like a commodity.  It's a finite resource that is interchangeable with others of the same sort, with a price driven entirely by supply and demand.  Like beanie babies.  Nobody wants to sell you groceries for your beanie baby . . . you just hang on to it in the attic in the hope that it will be worth more later when the next big beanie baby bubble develops.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Glenstache on January 09, 2023, 06:54:33 PM
        Compare against the question, "What do you think of adding a low% of British Pound allocation" ? 

        The OP's closing line is,

        Having a huge allocation to Crypto can be dicey but just adding a small percent and annually rebalancing seems a great strategy to enhance returns. What are your thoughts on this?

        The premise of the thread is that it is a speculative thing for return hoping that there will be adequate demand (or maybe even adoption) that it will be more valuable in the future than just leaving it as USD.  True believers may be fully bought in on the promise as a currency, but the market volatility, the way crypto has been pitched to the general public, and the content of most of the thread above belies that it is largely viewed as a speculative investment. If a person sees this as not substantially different than an allocation of some other currency, then fine. But I think that if the intent is to use to hold for value (as the numbers cited above for holding time indicate), then the value of a currency isn't really the point in practical terms. There are also people who buy gold to make things rather than buy and hold. But, even gold has only 36% (as of 2021) of market demand going to buy and hold reserves with the rest going to jewelery (55%) and industry (8%).
        https://www.statista.com/statistics/299609/gold-demand-by-industry-sector-share/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: index on January 10, 2023, 09:58:20 AM
        Compare against the question, "What do you think of adding a low% of British Pound allocation" ? 

        The OP's closing line is,

        Having a huge allocation to Crypto can be dicey but just adding a small percent and annually rebalancing seems a great strategy to enhance returns. What are your thoughts on this?

        The premise of the thread is that it is a speculative thing for return hoping that there will be adequate demand (or maybe even adoption) that it will be more valuable in the future than just leaving it as USD.  True believers may be fully bought in on the promise as a currency, but the market volatility, the way crypto has been pitched to the general public, and the content of most of the thread above belies that it is largely viewed as a speculative investment. If a person sees this as not substantially different than an allocation of some other currency, then fine. But I think that if the intent is to use to hold for value (as the numbers cited above for holding time indicate), then the value of a currency isn't really the point in practical terms. There are also people who buy gold to make things rather than buy and hold. But, even gold has only 36% (as of 2021) of market demand going to buy and hold reserves with the rest going to jewelery (55%) and industry (8%).
        https://www.statista.com/statistics/299609/gold-demand-by-industry-sector-share/

        The OP then stated his small percentage was 20% three posts later which I would argue is not a "small percentage".

        Really any marketable security can be "viewed" as a currency. The average house costs 1,500 shares of VTI!

        The utility of a currency is used to support the sky high valuation of BTC. You can observe the same with Tesla. I was listening to a podcast with Ron Baron talking about his largest investment TSLA. He justified the price by saying every uber/taxi and truck would be owned by TSLA self driving and extrapolating the growth of their auto sales world wide. Sure, if you extrapolate like that the right price for TSLA -> ∞. The same exercise can be used if you extrapolate the value of BTC when you make the assumption 21M BTC will be the only currency and necessitates: (total value of all assets)/21M = terminal value of BTC.   
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on January 10, 2023, 10:37:48 AM
        Bitcoin can only support 7 transactions per second which is inadequate for use as a currency. The structural shortcomings of BTC make it necessary to use intermediaries i.e. the exchanges. For the exchanges to be trusted, they need to be well regulated which negates the whole P2P argument of BTC in the first place.

        This is my big issue with this, to actually get any BTC you (more or less) need to go through a regulated, monitored exchange. "just use coinbase, it's safe". Ok sure, they require I upload a copy of my driver's license! But what if (when..) I want to use BTC to order an assassination or buy some heroin huh? You know; the only things you can use BTC for that you can't (or shouldn't) just use USD! So then what the hell is the point of BTC? For "legit" transactions the existing system is always better. And for "shady" ones you're not actually protected anyway. In fact giving someone cash is probably just easier.

        Even back when BTC was ~$50 I wanted to try to just for fun to get some, but totally anonymously. Short of mining myself, it was pretty difficult. At some point you'll need to transfer money to someone to exchange for BTC, and if done online that transaction can always be traced. I think I thought up some scheme involving buying gift cards with cash, but at a store with no security cameras! I gave up, and bought no btc.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on January 10, 2023, 11:19:48 AM
        I think you're forgetting that blockchain is the future.



        I know this because my uncle who can't figure out how to operate his email told me.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: theolympians on January 13, 2023, 02:47:16 AM
        The idea of crypto as a currency is a self-contradiction. If you buy a bitcoin 9or any other), there is no reason to use as a currency today, as it was touted as bring worth more in the future. So that thinking would naturally inhibit its use as a currency.

        No reason ? Are you suggesting that the only reason to spend is that your currency is becoming increasingly worthless ?

        People would presumably continue to spend on food and other essentials rather than starve and freeze, etc.

        People might(?) spend less on non-essential items. When did that become a bad thing here (or for society, or for the environment, etc.) ?

        People might(?) think more long-term and/or more cautiously with regard to investments and loans, etc. Is that a bad thing ?

        In the USA we have a currency. In any state currency, inflation is an issue. Currencies rise and fall in value. The dollar is the legal tender. The system is built to accept it.

        What I was saying about bitcoin remains the same. I remember several years ago, when bitcoin was rocketing a co-worker said," Wow, there was a time when someone bought a pizza for 23,000 bitcoin! Now you could buy one hundred pizzas with a bitcoin!"

        That is my point. Why use it now, when it will be worth more later. There is no incentive to spend it now or even later. The lack of common usage inhibits it's adoption.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: theolympians on January 13, 2023, 02:51:33 AM
        A quick Google shows that the Wiki decision to stop accepting crypto donations was more about avoiding association with the ongoing environmental debate and scam concerns. Furthermore, it was initiated and pushed by the creator of web3isgoinggreat.com - clearly someone with a crypto-axe to grind. It definitely wasn't a simple 'not worth the hassle' decision.

        The reason I brought up Wikipedia is that it comes from populist, decentralized  "anyone can edit" grass-roots, is self-funded, no pay walls or subscriptions, operates mostly with volunteer labor, and is largely democratic.  It seems logical that there would be some natural overlap between Wiki supporters and crytpo-enthusiasts.  And because Wiki is donor supported, it needs to make it easy to accept payments by as many channels as possible, including across international borders.   So again there seems to be some natural overlap.   And indeed Wiki began accepting crypto donations in 2014, so they were pretty early.   But protecting your reputation is a hassle.   If crypto-donations were flowing over the transom it would be one thing.  But crypto-donations were on the order of about a hundredth of a percent of the total.   A rounding error of a rounding error.   With such little demand, the decision to stop accepting crypto does become pretty simple and the Wiki foundation voted overwhelmingly to stop accepting it.   That goes to my point that even after eight years too few people were donating via crytpo channels to make it worthwhile, and this is an area that would seem to be a natural fit. 

        This goes back to the chicken and egg problem, a record 66% Bitcoin did not move in the last year, and 45% has not moved in two years.   

        https://cryptoslate.com/over-66-of-the-total-bitcoin-supply-hasnt-moved-in-the-last-one-year-setting-a-record

        In order for Bitcoin to be useful as a currency, it needs to circulate.  But the people who own it are holding it.

        "Environmental Concerns" what a load of crap. If it was making them $$$ they would continue to accept it. A public statement is the last place I would look to. I agree with telecaster.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: theolympians on January 13, 2023, 02:54:25 AM
        In the meantime, you can:
        • Manage the risk by choosing your exchange / broker carefully. Maybe onshore, maybe a public co, etc. Also, there are Bitcoin-only brokers that are (imo) at the safer end of the spectrum simply because they're not participating in / promoting the alt-coin shitshow.
        • Minimise your exposure by self-custodying your Bitcoin immediately following purchase. 1 hour exposure = 0.01% of 1 year exposure.

        Oh my, we have gone full circle. We should invest in credible institutions with a track record. I agree!

        Start-ups are always riskier, more so with new faces associated with them. Social Media OTH promotes many charlatans. FTX was only the newest.
        I think people are focused on this more in light of FTX's collapse.  FTX's former CEO, ironically, wanted to start FTX to properly handle leveraged products without collapsing.  But the safer route is an exchange that doesn't offer leverage, like with U.S.-based exchanges.

        FTX also raises a separate legal question: if someone bought Bitcoin on FTX, then sent that Bitcoin to their own wallet (self-custodying)... would they be subject to clawbacks?

        The current CEO of bankrupt FTX plans to claw back political donations.  But if he wants billions back from Binance's CEO, he could have a legal fight on his hands.  CZ could argue he offered to buy FTX, suggesting he was ignorant of the fraud, and a day later saw the books and declined to go further.

        But if one's financial intermediary is not loaning out one's crypto deposits to try and earn a spread, how do they make money? By charging transaction fees? If fractional banking was outlawed in the crypto world, for example, the only crypto exchanges/banks/brokerages would have to charge commissions. Otherwise, if there was no way to earn money, they couldn't exist. This is why there is no free Western Union.

        We're all used to stock brokerages with zero-commission trades, but in the background, they are loaning your shares to short sellers, earning spreads between futures and cash yields, doing options trades, etc. with your assets, and of course selling your data. I have some reservations about all this stuff with stocks, but FTX suggests the model cannot be made to work in the hyper-volatile and unregulated crypto universe where even the biggest counterparties and coins can collapse overnight.

        If a crypto website says it is not trading your assets to make money for itself, that raises questions about what possible way they could be earning money if not by stealing depositors' money or doing some Robinhood game of picking a penny off the B/A spreads.

        Looking at the broader picture, let's think about how the narrative has shifted:
        • 2016: Crypto is going to allow frictionless, free transactions with no intermediaries, transforming the global economy!
        • 2019: These noobs who lost their life savings because they left their coins in wallets on sketchy websites are doing it wrong.
        • 2022: Here are some guidelines to find a crypto website that is less likely to collapse - um... ooops... - here are NEW guidelines based on the ever-shrinking unique set of characteristics of crypto websites which haven't collapsed... yet.

        The point is perhaps to know the business model of your financial helpers, and to steer clear of unregulated markets where some dufus could take on silly amounts of risk and no one would notice.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 14, 2023, 02:38:03 PM

        A quick Google shows that the Wiki decision to stop accepting crypto donations was more about avoiding association with the ongoing environmental debate and scam concerns. Furthermore, it was initiated and pushed by the creator of web3isgoinggreat.com - clearly someone with a crypto-axe to grind. It definitely wasn't a simple 'not worth the hassle' decision.

        The reason I brought up Wikipedia is that it comes from populist, decentralized  "anyone can edit" grass-roots, is self-funded, no pay walls or subscriptions, operates mostly with volunteer labor, and is largely democratic.  It seems logical that there would be some natural overlap between Wiki supporters and crytpo-enthusiasts.  And because Wiki is donor supported, it needs to make it easy to accept payments by as many channels as possible, including across international borders.   So again there seems to be some natural overlap.   And indeed Wiki began accepting crypto donations in 2014, so they were pretty early.   But protecting your reputation is a hassle.   If crypto-donations were flowing over the transom it would be one thing.  But crypto-donations were on the order of about a hundredth of a percent of the total.   A rounding error of a rounding error.   With such little demand, the decision to stop accepting crypto does become pretty simple and the Wiki foundation voted overwhelmingly to stop accepting it.   That goes to my point that even after eight years too few people were donating via crytpo channels to make it worthwhile, and this is an area that would seem to be a natural fit. 

        This goes back to the chicken and egg problem, a record 66% Bitcoin did not move in the last year, and 45% has not moved in two years.   

        https://cryptoslate.com/over-66-of-the-total-bitcoin-supply-hasnt-moved-in-the-last-one-year-setting-a-record

        In order for Bitcoin to be useful as a currency, it needs to circulate.  But the people who own it are holding it.

        I'm not particularly surprised (or dismayed) by the Wikipedia decision. My only objection is the framing of it as a simple "because so few people were donating that way it wasn't worth the hassle" decision.

        The evidence shows that it was the outcome of a fairly rancorous campaign: "1. we shouldn't endorse (risky investment) crypto AND 2. cryptos may not align with our commitment to environmental sustainability AND 3. we risk damaging our reputation".
        I agree that the small amount of crypto donations made the decision easier, but overlooking/ignoring the strong anti-crypto campaign is omitting 3/4 of the story.

        You might think there should be a natural Wiki/crypto overlap/fit, but there clearly isn't. Someone vaguely familiar with MMM might think a typical freedom-loving, alternative-lifestyle, unconventional, independent-thinking, norm-challenging Mustachian is probably a Bitcoiner . . . .

        So, why didn't many people donate to Wikipedia with Bitcoin ? I suggest:
        Further detail in following post . . .


        "Environmental Concerns" what a load of crap. If it was making them $$$ they would continue to accept it. A public statement is the last place I would look to. I agree with telecaster.

        If you think Wikipedia's public statements are "a load of crap", you obviously don't think Wikipedia is "populist, decentralized 'anyone can edit' grass-roots" and "largely democratic" - which was, kind of, the point.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 14, 2023, 02:39:46 PM
        A deflationary currency can't work because it would always buy more in the future ??

        Assuming Bitcoin (+Lightning) continues to grow, and grow:

        Bitcoin purchasing power will continue to rise until it approaches some sort of equilibrium, ie. it will tend towards stability.
        In the extreme, Bitcoin purchasing power would probably just track the global GDP trend.

        At some point, holding Bitcoin looks preferable to holding inflationary local fiat currency - even as a short-term store of value risk/benefit proposition.
        The reason for using Bitcoin as a currency is not necessarily because people want a better means of exchange (though some do). It's because people want a better store of value, then hold Bitcoin in preference to fiat, and then need/want to spend it.

        For some in in very_high_inflation nations, that point has already been reached.
        For others in developing nations, that point might be reached soon.
        For others in wealthier nations with a more stable curency, that point may not be reached for some time.
        Regardless, as time goes on, it will make more sense for more people to transition to, and transact in, Bitcoin rather than local fiat currency.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on January 14, 2023, 07:51:39 PM
        It sure AF hasn't so far, though. I remember reading about how everyone was going to be accepting bitcoin 5+ years ago, but I've still never met anyone who has done a transaction, and the crowd I hang with is full of tech dorks.

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on January 15, 2023, 05:47:13 AM
        It sure AF hasn't so far, though. I remember reading about how everyone was going to be accepting bitcoin 5+ years ago, but I've still never met anyone who has done a transaction, and the crowd I hang with is full of tech dorks.
        I've personally bought VPN service with it - private browsing paid for with private payment.  That example aside, Visa handles payments better than Bitcoin, assuming you're not paying 1% foreign transaction fees.

        I'm a bit negative on Bitcoin and more optimistic about Ethereum.  The Ethereum Merge switched to energy saving "proof of stake", using 99.9% less energy, and giving it an advantage over Bitcoin.  NFTs run over Ethereum, not Bitcoin, and various other new things seem to be happening more there.  Bitcoin is an overpriced technology commodity that hasn't yet panned out.  Critics will say it never will, optimists say it's not out yet.  For Ethereum, new developments are visible and ongoing, so I think ETH is more interesting than BTC going forward.

        There are a few Bitcoin Futures ETF, but the first one (BITO) grabbed all of the investment dollars and passed $1 billion AUM before falling dramatically last year.  And ETH fell with BTC - but I think ETH could have a higher recovery than BTC, eventually overtaking it for the highest market cap.  So I'm considering moving 0.5% into ETH now, and just letting it sit and rot.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 15, 2023, 08:48:35 AM
        It sure AF hasn't so far, though. I remember reading about how everyone was going to be accepting bitcoin 5+ years ago, but I've still never met anyone who has done a transaction, and the crowd I hang with is full of tech dorks.

        -W

        The default for your dorky friends is to transact via the most advanced, respected, reliable banks in the world using the strongest fiat currency in the world. They are the luckiest people in the world in this respect and have little motivation to do anything different. If you're looking for Bitcoin_as_a_currency progress, you're looking in the wrong place.

        There is a big wide world beyond the US. The situation is different for most people and very different for many.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: EverythingisNew on January 15, 2023, 08:53:49 AM
        I think the halvening of Bitcoin in 2024 will be the end of it. It will become too expensive to mine. Without a first market, it will only have a secondary market and will become like Beanie Babies minus the physical object… so nothing. Without the miners there is no game to it anymore.

        Other crypto might do better if it can keep mining costs reasonable.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on January 15, 2023, 09:54:36 AM

        The default for your dorky friends is to transact via the most advanced, respected, reliable banks in the world using the strongest fiat currency in the world. They are the luckiest people in the world in this respect and have little motivation to do anything different. If you're looking for Bitcoin_as_a_currency progress, you're looking in the wrong place.

        There is a big wide world beyond the US. The situation is different for most people and very different for many.

        Very true. Are lots of people in, say, Gambia using BtC to buy and sell stuff?

        Based on some very quick googling the answer is, "no".

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 15, 2023, 11:51:20 AM
        It sure AF hasn't so far, though. I remember reading about how everyone was going to be accepting bitcoin 5+ years ago, but I've still never met anyone who has done a transaction, and the crowd I hang with is full of tech dorks.

        The default for your dorky friends is to transact via the most advanced, respected, reliable banks in the world using the strongest fiat currency in the world. They are the luckiest people in the world in this respect and have little motivation to do anything different. If you're looking for Bitcoin_as_a_currency progress, you're looking in the wrong place.

        There is a big wide world beyond the US. The situation is different for most people and very different for many.

        Very true. Are lots of people in, say, Gambia using BtC to buy and sell stuff?

        Based on some very quick googling the answer is, "no".

        How about their 80x more populous near neighbour, Nigeria (https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/cryptocurrency-usage-soars-in-nigeria-despite-bank-ban-70497781) ? Or, developing nations (https://researchfdi.com/resources/articles/rising-popularity-cryptocurrencies-developing-countries/) more generally ?

        I'm not claiming rampant adoption anywhere, but it's the developing nations that are leading the way in this respect.


        * I don't know either of the quoted sources but, from a quick scout around, both look pretty objective.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on January 15, 2023, 12:00:58 PM
        It sure AF hasn't so far, though. I remember reading about how everyone was going to be accepting bitcoin 5+ years ago, but I've still never met anyone who has done a transaction, and the crowd I hang with is full of tech dorks.

        The default for your dorky friends is to transact via the most advanced, respected, reliable banks in the world using the strongest fiat currency in the world. They are the luckiest people in the world in this respect and have little motivation to do anything different. If you're looking for Bitcoin_as_a_currency progress, you're looking in the wrong place.

        There is a big wide world beyond the US. The situation is different for most people and very different for many.

        Very true. Are lots of people in, say, Gambia using BtC to buy and sell stuff?

        Based on some very quick googling the answer is, "no".

        How about their 80x more populous near neighbour, Nigeria (https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/cryptocurrency-usage-soars-in-nigeria-despite-bank-ban-70497781) ? Or, developing nations (https://researchfdi.com/resources/articles/rising-popularity-cryptocurrencies-developing-countries/) more generally ?

        I'm not claiming rampant adoption anywhere, but it's the developing nations that are leading the way in this respect.


        * I don't know either of the quoted sources but, from a quick scout around, both look pretty objective.

        Ah, Nigeria.  Must be legit then . . . all those Nigerian princes wouldn't be involved in scams!
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on January 15, 2023, 12:52:01 PM
        That article is not about people making transactions, it's about people "investing".

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on January 15, 2023, 02:50:59 PM
        How about their 80x more populous near neighbour, Nigeria (https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/cryptocurrency-usage-soars-in-nigeria-despite-bank-ban-70497781) ? Or, developing nations (https://researchfdi.com/resources/articles/rising-popularity-cryptocurrencies-developing-countries/) more generally ?

        I'm not claiming rampant adoption anywhere, but it's the developing nations that are leading the way in this respect.


        * I don't know either of the quoted sources but, from a quick scout around, both look pretty objective.

        It makes sense that in countries without a well-developed banking system people would look for alternatives.  In the first article, it said Nigerians are increasingly buying Tether, not Bitcoin. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on January 15, 2023, 04:46:17 PM
        Given that the consensus at this point I think is that Tether is a big fraud, it's going to be a huge bummer for Nigerians when that one unravels.

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: BicycleB on January 15, 2023, 05:37:55 PM
        Re developing nations adopting new fintech faster than USA, I have seen it myself.

        In 2010 I visited Kenya and found it full of people paying for purchases via their phones (flip phones, using a system of codes transmitted via text, linked to payment accounts associated with their phone number). "Mpesa", I think, was the name of the leading company. We had nothing as effective or convenient in the US then, let alone as widespread.

        Adoption occurred partly because of the lack of previous widespread banking and non-cash payment systems. The principle that adoption can occur faster where it's needed more seems proven to me by this example, though whether this will happen regarding crypto could be different.

        My guess is that crypto won't end up dominating such spaces very often, but that's different from impossible.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on January 15, 2023, 06:11:58 PM
        In 2010 I visited Kenya and found it full of people paying for purchases via their phones (flip phones, using a system of codes transmitted via text, linked to payment accounts associated with their phone number). "Mpesa", I think, was the name of the leading company. We had nothing as effective or convenient in the US then, let alone as widespread.

        Adoption occurred partly because of the lack of previous widespread banking and non-cash payment systems. The principle that adoption can occur faster where it's needed more seems proven to me by this example, though whether this will happen regarding crypto could be different.

        M-Pesa was developed by Vodaphone after they noticed people were using cell phone minutes as a medium of exchange.   M-Pesa allows people to send and receive money via their cell phones without the need of a bank, and they can even send cash if needed.  It is faster and cheaper than Bitcoin. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: gary3411 on January 15, 2023, 06:42:36 PM
        https://astralcodexten.substack.com/p/why-im-less-than-infinitely-hostile
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: BicycleB on January 15, 2023, 08:41:11 PM
        https://astralcodexten.substack.com/p/why-im-less-than-infinitely-hostile

        I like ACX but hadn't seen this article. Thanks for posting.

        This shifted my thinking (I should have realized more of this before, but didn't know as many examples and hadn't given it enough weight. Also appreciated the "few hundred interesting projects and long tail of 1,000 scams" frame, and the challenging but insightful comparison to education).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: talltexan on January 16, 2023, 05:59:54 AM
        Given that the consensus at this point I think is that Tether is a big fraud, it's going to be a huge bummer for Nigerians when that one unravels.

        -W

        I am long on crypto-, but I must admit that I was disappointed to log into gemini and see Tether listed among the currencies they track and store there.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 16, 2023, 08:39:56 AM
        It sure AF hasn't so far, though. I remember reading about how everyone was going to be accepting bitcoin 5+ years ago, but I've still never met anyone who has done a transaction, and the crowd I hang with is full of tech dorks.

        The default for your dorky friends is to transact via the most advanced, respected, reliable banks in the world using the strongest fiat currency in the world. They are the luckiest people in the world in this respect and have little motivation to do anything different. If you're looking for Bitcoin_as_a_currency progress, you're looking in the wrong place.

        There is a big wide world beyond the US. The situation is different for most people and very different for many.

        Very true. Are lots of people in, say, Gambia using BtC to buy and sell stuff?

        Based on some very quick googling the answer is, "no".

        How about their 80x more populous near neighbour, Nigeria (https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/cryptocurrency-usage-soars-in-nigeria-despite-bank-ban-70497781) ? Or, developing nations (https://researchfdi.com/resources/articles/rising-popularity-cryptocurrencies-developing-countries/) more generally ?

        I'm not claiming rampant adoption anywhere, but it's the developing nations that are leading the way in this respect.


        * I don't know either of the quoted sources but, from a quick scout around, both look pretty objective.

        Ah, Nigeria.  Must be legit then . . . all those Nigerian princes wouldn't be involved in scams!

        I'm assuming this is a clumsy attempt at humour rather than a serious point.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 16, 2023, 08:41:33 AM
        That article is not about people making transactions, it's about people "investing".

        Which of the 2 articles ?

        The Nigeria article discusses remittances at length.
        The more general article is almost entirely about payments/currency.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on January 16, 2023, 08:49:30 AM
        I am long on crypto-, but I must admit that I was disappointed to log into gemini and see Tether listed among the currencies they track and store there.
        Do you mean because of suspicious promotions involving free Tether years ago, or the aborted audit of their finances?

        Last year when Celcius created a panic in stable coins, Tether (USDT) handled all withdrawls.  Whatever percentage of assets they actually hold, they have always been able to service withdrawals - and they've been tested several times.

        On Gemini that probably doesn't matter, since it's a U.S. based exchange that allows purchases and withdrawals directly in USD.  I recently bought some ETH on Gemini, on their trading screen (lower fees that way).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 16, 2023, 08:50:15 AM
        How about their 80x more populous near neighbour, Nigeria (https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/cryptocurrency-usage-soars-in-nigeria-despite-bank-ban-70497781) ? Or, developing nations (https://researchfdi.com/resources/articles/rising-popularity-cryptocurrencies-developing-countries/) more generally ?

        I'm not claiming rampant adoption anywhere, but it's the developing nations that are leading the way in this respect.


        * I don't know either of the quoted sources but, from a quick scout around, both look pretty objective.

        It makes sense that in countries without a well-developed banking system people would look for alternatives.  In the first article, it said Nigerians are increasingly buying Tether, not Bitcoin.

        The article does mention Tether once. Ethereum is mentioned once too.

        Did you miss the several references to Paxful (a Bitcoin-only platform) and one to LocalBitcoins (a Bitcoin-only platform) ?

        Check your Confirmation Bias.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on January 16, 2023, 08:58:59 AM
        It sure AF hasn't so far, though. I remember reading about how everyone was going to be accepting bitcoin 5+ years ago, but I've still never met anyone who has done a transaction, and the crowd I hang with is full of tech dorks.

        The default for your dorky friends is to transact via the most advanced, respected, reliable banks in the world using the strongest fiat currency in the world. They are the luckiest people in the world in this respect and have little motivation to do anything different. If you're looking for Bitcoin_as_a_currency progress, you're looking in the wrong place.

        There is a big wide world beyond the US. The situation is different for most people and very different for many.

        Very true. Are lots of people in, say, Gambia using BtC to buy and sell stuff?

        Based on some very quick googling the answer is, "no".

        How about their 80x more populous near neighbour, Nigeria (https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/cryptocurrency-usage-soars-in-nigeria-despite-bank-ban-70497781) ? Or, developing nations (https://researchfdi.com/resources/articles/rising-popularity-cryptocurrencies-developing-countries/) more generally ?

        I'm not claiming rampant adoption anywhere, but it's the developing nations that are leading the way in this respect.


        * I don't know either of the quoted sources but, from a quick scout around, both look pretty objective.

        Ah, Nigeria.  Must be legit then . . . all those Nigerian princes wouldn't be involved in scams!

        I'm assuming this is a clumsy attempt at humour rather than a serious point.

        Not at all.

        I'm about to come into some serious after helping a Nigerian prince perform some wire transfers, and if he's in favour of crypto then that's all the assurance I need!  Such an upstanding fellow would never lead a person financially astray.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 16, 2023, 09:21:48 AM
        It sure AF hasn't so far, though. I remember reading about how everyone was going to be accepting bitcoin 5+ years ago, but I've still never met anyone who has done a transaction, and the crowd I hang with is full of tech dorks.

        The default for your dorky friends is to transact via the most advanced, respected, reliable banks in the world using the strongest fiat currency in the world. They are the luckiest people in the world in this respect and have little motivation to do anything different. If you're looking for Bitcoin_as_a_currency progress, you're looking in the wrong place.

        There is a big wide world beyond the US. The situation is different for most people and very different for many.

        Very true. Are lots of people in, say, Gambia using BtC to buy and sell stuff?

        Based on some very quick googling the answer is, "no".

        How about their 80x more populous near neighbour, Nigeria (https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/cryptocurrency-usage-soars-in-nigeria-despite-bank-ban-70497781) ? Or, developing nations (https://researchfdi.com/resources/articles/rising-popularity-cryptocurrencies-developing-countries/) more generally ?

        I'm not claiming rampant adoption anywhere, but it's the developing nations that are leading the way in this respect.


        * I don't know either of the quoted sources but, from a quick scout around, both look pretty objective.

        Ah, Nigeria.  Must be legit then . . . all those Nigerian princes wouldn't be involved in scams!

        I'm assuming this is a clumsy attempt at humour rather than a serious point.

        Not at all.

        I'm about to come into some serious after helping a Nigerian prince perform some wire transfers, and if he's in favour of crypto then that's all the assurance I need!  Such an upstanding fellow would never lead a person financially astray.

        That's terrific - congratulations.

        Be careful though. Your post implied that you were judging the character of the entire nation based on that of these 'upstanding' princes. That may not be wise.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on January 16, 2023, 09:35:30 AM
        It sure AF hasn't so far, though. I remember reading about how everyone was going to be accepting bitcoin 5+ years ago, but I've still never met anyone who has done a transaction, and the crowd I hang with is full of tech dorks.

        The default for your dorky friends is to transact via the most advanced, respected, reliable banks in the world using the strongest fiat currency in the world. They are the luckiest people in the world in this respect and have little motivation to do anything different. If you're looking for Bitcoin_as_a_currency progress, you're looking in the wrong place.

        There is a big wide world beyond the US. The situation is different for most people and very different for many.

        Very true. Are lots of people in, say, Gambia using BtC to buy and sell stuff?

        Based on some very quick googling the answer is, "no".

        How about their 80x more populous near neighbour, Nigeria (https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/cryptocurrency-usage-soars-in-nigeria-despite-bank-ban-70497781) ? Or, developing nations (https://researchfdi.com/resources/articles/rising-popularity-cryptocurrencies-developing-countries/) more generally ?

        I'm not claiming rampant adoption anywhere, but it's the developing nations that are leading the way in this respect.


        * I don't know either of the quoted sources but, from a quick scout around, both look pretty objective.

        Ah, Nigeria.  Must be legit then . . . all those Nigerian princes wouldn't be involved in scams!

        I'm assuming this is a clumsy attempt at humour rather than a serious point.

        Not at all.

        I'm about to come into some serious after helping a Nigerian prince perform some wire transfers, and if he's in favour of crypto then that's all the assurance I need!  Such an upstanding fellow would never lead a person financially astray.

        That's terrific - congratulations.

        Be careful though. Your post implied that you were judging the character of the entire nation based on that of these 'upstanding' princes. That may not be wise.

        You mean not all Nigerians are above reproach?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 16, 2023, 10:51:57 AM
        It sure AF hasn't so far, though. I remember reading about how everyone was going to be accepting bitcoin 5+ years ago, but I've still never met anyone who has done a transaction, and the crowd I hang with is full of tech dorks.

        The default for your dorky friends is to transact via the most advanced, respected, reliable banks in the world using the strongest fiat currency in the world. They are the luckiest people in the world in this respect and have little motivation to do anything different. If you're looking for Bitcoin_as_a_currency progress, you're looking in the wrong place.

        There is a big wide world beyond the US. The situation is different for most people and very different for many.

        Very true. Are lots of people in, say, Gambia using BtC to buy and sell stuff?

        Based on some very quick googling the answer is, "no".

        How about their 80x more populous near neighbour, Nigeria (https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/cryptocurrency-usage-soars-in-nigeria-despite-bank-ban-70497781) ? Or, developing nations (https://researchfdi.com/resources/articles/rising-popularity-cryptocurrencies-developing-countries/) more generally ?

        I'm not claiming rampant adoption anywhere, but it's the developing nations that are leading the way in this respect.


        * I don't know either of the quoted sources but, from a quick scout around, both look pretty objective.

        Ah, Nigeria.  Must be legit then . . . all those Nigerian princes wouldn't be involved in scams!

        I'm assuming this is a clumsy attempt at humour rather than a serious point.

        Not at all.

        I'm about to come into some serious after helping a Nigerian prince perform some wire transfers, and if he's in favour of crypto then that's all the assurance I need!  Such an upstanding fellow would never lead a person financially astray.

        That's terrific - congratulations.

        Be careful though. Your post implied that you were judging the character of the entire nation based on that of these 'upstanding' princes. That may not be wise.

        You mean not all Nigerians are above reproach?

        I mean not all Canadians are above making over-generalisations.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 16, 2023, 10:55:33 AM
        https://astralcodexten.substack.com/p/why-im-less-than-infinitely-hostile

        I like ACX but hadn't seen this article. Thanks for posting.

        This shifted my thinking (I should have realized more of this before, but didn't know as many examples and hadn't given it enough weight. Also appreciated the "few hundred interesting projects and long tail of 1,000 scams" frame, and the challenging but insightful comparison to education).

        That's an interesting and well written piece.

        And there's something for everyone. I like the article and most here will love the lively discussion below it   :-)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: the_gastropod on January 27, 2023, 02:51:53 PM
        https://astralcodexten.substack.com/p/why-im-less-than-infinitely-hostile

        This article ultimately gets to the point that many of us have been saying throughout this thread: crypto is a tool for regulatory arbitrage. And that's it.

        Between that, the author makes some pretty silly claims, like Vietnamese people use cryptocurrency because their banks suck. No. They are speculating on crypto much the same way virtually every other adopter is. 23% of Vietnamese people were engaged in play-to-earn video games like Axie Infinity (whose developer, incidentally, is based in Vietnam).

        And then the other major use-case is remittances. And they use cryptocurrencies for remittances not because they're technically superior or more efficient in any way to existing technology. They're using them to bypass local laws and regulations. Is this just? Maybe. But it's frustrating that this fact always seems get glossed over.

        We're talking about a tool designed, for no other reason, than to break the law. Is it useful in cases where it's handy to break the law? Sure. Does it—by design—also allow for massive perpetration of fraud and scams? You bet.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on January 27, 2023, 04:40:39 PM
        Yep.  I thought the author summed it up pretty well:

        Quote
        If nothing’s wrong with your country’s financial or political system, then you don’t need crypto. If you use crypto anyway, it will be worse than your regular financial system, because it’s trading off many things you need (efficiency, speed, safety, the good kinds of regulation) for something you don’t need (avoiding the bad kinds of regulation)...

        ...Over the past ten years, crypto has advanced. In 2010, it was probably 100x worse than the regular financial system. Now it’s maybe only 10x worse.

        Agreed.   Most people don't need crypto and it is worse than the money you are already using.  So there's not much of a use case there. 

        I do have a quibble with the Space Pen anecdote though. 

        Quote
        The space program has existed for more than fifty years, and mostly succeeded at reinventing things we already have on Earth, only worse. Remember the story of that special astronaut pen that cost $1 million? We already have pens on earth, for like $0.10, and they work better!

        In context, he's arguing crypto is for specialized applications, just like the space pen.   So what I'm saying is unrelated to his point.  But the story isn't true. The space pen was developed privately.   Secondly, the space pen is the bomb!   I used to work outdoors in a job that required lots of note taking.   I live in the PNW, so that means in the rain.   You can buy waterproof paper, that's not the problem.   The problem is no pen works on wet paper--except the space pen.   Absolutely essential for outdoor work of that type. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 30, 2023, 05:58:15 AM
        https://astralcodexten.substack.com/p/why-im-less-than-infinitely-hostile

        This article ultimately gets to the point that many of us have been saying throughout this thread: crypto is a tool for regulatory arbitrage. And that's it.

        Between that, the author makes some pretty silly claims, like Vietnamese people use cryptocurrency because their banks suck. No. They are speculating on crypto much the same way virtually every other adopter is. 23% of Vietnamese people were engaged in play-to-earn video games like Axie Infinity (whose developer, incidentally, is based in Vietnam).

        And then the other major use-case is remittances. And they use cryptocurrencies for remittances not because they're technically superior or more efficient in any way to existing technology. They're using them to bypass local laws and regulations. Is this just? Maybe. But it's frustrating that this fact always seems get glossed over.

        As usual, I'm only commenting re. Bitcoin . . .

        Who is glossing over the fact that Bitcoin can be used to bypass local laws and regulations ? It's a common promotional message that it can help people living under authoritarian/draconian regimes.

        Average transaction cost of sending remittances to Vietnam = 7% (https://data.worldbank.org/indicator/SI.RMT.COST.IB.ZS?locations=VN). That's a pretty good reason to use Bitcoin/Lightning.

        We're talking about a tool designed, for no other reason, than to break the law. Is it useful in cases where it's handy to break the law? Sure. Does it—by design—also allow for massive perpetration of fraud and scams? You bet.

        That's just ridiculous. Bitcoin was developed to address the problem of central banks issuing infinite fiat money. There is zero evidence to suggest it was developed by criminals solely for criminal purposes.


        46% of 2021 email traffic was spam (https://www.statista.com/statistics/420400/spam-email-traffic-share-annual/). Are you anti-email ?
        Social media a gold mine for scammers in 2021 (https://www.ftc.gov/news-events/data-visualizations/data-spotlight/2022/01/social-media-gold-mine-scammers-2021). Are you anti-socialMedia ?
        Robocalls that were fraudulent accounted for 34% of all calls in 2020 (https://www.enterpriseappstoday.com/stats/robocalls-statistics.html). Are you anti-telephony ?

        Every powerful/effective technology ever invented, from the first picking up of a rock to advanced AI, has been utilised by criminals. Are you opposed to everything ?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 30, 2023, 06:29:18 AM
        Yep.  I thought the author summed it up pretty well:

        Quote
        If nothing’s wrong with your country’s financial or political system, then you don’t need crypto. If you use crypto anyway, it will be worse than your regular financial system, because it’s trading off many things you need (efficiency, speed, safety, the good kinds of regulation) for something you don’t need (avoiding the bad kinds of regulation)...

        ...Over the past ten years, crypto has advanced. In 2010, it was probably 100x worse than the regular financial system. Now it’s maybe only 10x worse.

        Agreed.   Most people don't need crypto and it is worse than the money you are already using.  So there's not much of a use case there.

        Most people ? However you view it, a very large number of people are poorly served by existing financial and political systems.


        2021 Democracy_Index  (https://en.wikipedia.org/wiki/Democracy_Index)
        Type of regime         Countries     World population (%)
        Full democracies           21 (13%)        6%
        Flawed democracies      53 (32%)       39%
        Hybrid regimes             34 (20%)       17%
        Authoritarian regimes    59 (35%)       37%


        "A global comparison by Global Finance (2021) (https://blog.cfte.education/the-worlds-top-5-unbanked-countries-have-more-than-60-of-their-population-without-bank-accounts/) saw that in the Middle East and Africa 50% of the population is financially excluded, with South and Central America nearing 38%, Eastern Europe at 33% and Asia Pacific at 24%."


        https://tradingeconomics.com/country-list/corruption-index (https://tradingeconomics.com/country-list/corruption-index)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Stimpy on January 30, 2023, 09:48:51 AM
        Yep.  I thought the author summed it up pretty well:

        Quote
        If nothing’s wrong with your country’s financial or political system, then you don’t need crypto. If you use crypto anyway, it will be worse than your regular financial system, because it’s trading off many things you need (efficiency, speed, safety, the good kinds of regulation) for something you don’t need (avoiding the bad kinds of regulation)...

        ...Over the past ten years, crypto has advanced. In 2010, it was probably 100x worse than the regular financial system. Now it’s maybe only 10x worse.

        Agreed.   Most people don't need crypto and it is worse than the money you are already using.  So there's not much of a use case there.

        Most people ? However you view it, a very large number of people are poorly served by existing financial and political systems.


        2021 Democracy_Index  (https://en.wikipedia.org/wiki/Democracy_Index)
        Type of regime         Countries     World population (%)
        Full democracies           21 (13%)        6%
        Flawed democracies      53 (32%)       39%
        Hybrid regimes             34 (20%)       17%
        Authoritarian regimes    59 (35%)       37%


        "A global comparison by Global Finance (2021) (https://blog.cfte.education/the-worlds-top-5-unbanked-countries-have-more-than-60-of-their-population-without-bank-accounts/) saw that in the Middle East and Africa 50% of the population is financially excluded, with South and Central America nearing 38%, Eastern Europe at 33% and Asia Pacific at 24%."


        https://tradingeconomics.com/country-list/corruption-index (https://tradingeconomics.com/country-list/corruption-index)

        Cool stats.

        Now relate it to bitcoin and crypto in general cause I suspect....  The chart is something like this (Yes I am making this up cause I doubt there are readily available statistics on this):


        Type of regime         Countries     World population (%)      Crypto Avaliable Access (%)
        Full democracies           21 (13%)        6%      95%
        Flawed democracies      53 (32%)       39%      85%
        Hybrid regimes             34 (20%)       17%      55%
        Authoritarian regimes    59 (35%)       37%      >1%

        I doubt your average North Korean even knows what BTC is, let alone anyone who is not already in the privileged few in most of these regimes that are Authoritarian or worse.     Just cause you can say, "Well it a way to go around those regimes" doesn't mean that it can actually happen.   
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on January 30, 2023, 03:40:56 PM
        Type of regime         Countries     World population (%)      Crypto Avaliable Access (%)
        Full democracies           21 (13%)        6%      95%
        Flawed democracies      53 (32%)       39%      85%
        Hybrid regimes             34 (20%)       17%      55%
        Authoritarian regimes    59 (35%)       37%      >1%

        I doubt your average North Korean even knows what BTC is, let alone anyone who is not already in the privileged few in most of these regimes that are Authoritarian or worse.     Just cause you can say, "Well it a way to go around those regimes" doesn't mean that it can actually happen.

        Based on the number of countries classified as Authoritarian we can get a good sense of where the bar is between Authoritarian and Hybrid regime.

        The vast majority of people living in countries in the Authoritarian category are going to be in places like China, Vietnam, Iran, and Saudi Arabia: places with very little to no democratic input into government or lawmaking, but where people do indeed have sufficient information access to have heard about bitcoin.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on January 30, 2023, 03:46:30 PM
        We're talking about a tool designed, for no other reason, than to break the law. Is it useful in cases where it's handy to break the law? Sure. Does it—by design—also allow for massive perpetration of fraud and scams? You bet.

        That's just ridiculous. Bitcoin was developed to address the problem of central banks issuing infinite fiat money. There is zero evidence to suggest it was developed by criminals solely for criminal purposes.

        That's all well and good, but the fact remains that more than a decade after its invention Bitcoin is less useful for most legitimate transactions than fiat currencies. Its design is well-suited to facilitating illegitimate transactions though.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 30, 2023, 04:04:46 PM
        Yep.  I thought the author summed it up pretty well:

        Quote
        If nothing’s wrong with your country’s financial or political system, then you don’t need crypto. If you use crypto anyway, it will be worse than your regular financial system, because it’s trading off many things you need (efficiency, speed, safety, the good kinds of regulation) for something you don’t need (avoiding the bad kinds of regulation)...

        ...Over the past ten years, crypto has advanced. In 2010, it was probably 100x worse than the regular financial system. Now it’s maybe only 10x worse.

        Agreed.   Most people don't need crypto and it is worse than the money you are already using.  So there's not much of a use case there.

        Most people ? However you view it, a very large number of people are poorly served by existing financial and political systems.


        2021 Democracy_Index  (https://en.wikipedia.org/wiki/Democracy_Index)
        Type of regime         Countries     World population (%)
        Full democracies               21 (13%)        6%
        Flawed democracies          53 (32%)       39%
        Hybrid regimes                 34 (20%)       17%
        Authoritarian regimes        59 (35%)       37%


        "A global comparison by Global Finance (2021) (https://blog.cfte.education/the-worlds-top-5-unbanked-countries-have-more-than-60-of-their-population-without-bank-accounts/) saw that in the Middle East and Africa 50% of the population is financially excluded, with South and Central America nearing 38%, Eastern Europe at 33% and Asia Pacific at 24%."


        https://tradingeconomics.com/country-list/corruption-index (https://tradingeconomics.com/country-list/corruption-index)

        Cool stats.

        Now relate it to bitcoin and crypto in general cause I suspect....  The chart is something like this (Yes I am making this up cause I doubt there are readily available statistics on this):


        Type of regime         Countries     World population (%)      Crypto Avaliable Access (%)
        Full democracies               21 (13%)            6%                                       95%
        Flawed democracies          53 (32%)           39%                                      85%
        Hybrid regimes                 34 (20%)           17%                                      55%
        Authoritarian regimes        59 (35%)           37%                                      >1%

        I doubt your average North Korean even knows what BTC is, let alone anyone who is not already in the privileged few in most of these regimes that are Authoritarian or worse.     Just cause you can say, "Well it a way to go around those regimes" doesn't mean that it can actually happen.

        I very confidently predict that:
        Access to mobile phones and internet will get more widespread.
        Knowledge of Bitcoin will get more widespread.
        Bitcoin/Lightning wallets and platforms will get easier, better and more available, and thus more appealing and useful.

        Some people in these nations are using Bitcoin/Lightning now. Availability, knowledge and functionality are all increasing. The prospects look positive to me.

        Yeah, NK probably has further to go than most, but would you bet against knowledge and availability rising there - via Starlink, etc. ?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 30, 2023, 05:51:33 PM
        We're talking about a tool designed, for no other reason, than to break the law. Is it useful in cases where it's handy to break the law? Sure. Does it—by design—also allow for massive perpetration of fraud and scams? You bet.

        That's just ridiculous. Bitcoin was developed to address the problem of central banks issuing infinite fiat money. There is zero evidence to suggest it was developed by criminals solely for criminal purposes.

        That's all well and good, but the fact remains that more than a decade after its invention Bitcoin is less useful for most legitimate transactions than fiat currencies. Its design is well-suited to facilitating illegitimate transactions though.

        Yes, it has been more than a decade since a little group of cypher-punk nerds launched an entirely new and radically different money system that challenges 100's of years of history and $trillions of self-interested resistance to change. Bitcoin's doing pretty well all things considered, but there's a long way to go. Look at the progress in the past decade, and extend that forward another decade. Interesting times.

        As noted previously, criminals take advantage of every technology that gives them an edge.
        Also, note that criminals tend to be early-adopters. Armed With ChatGPT, Cybercriminals Build Malware And Plot Fake Girl Bots (https://www.forbes.com/sites/thomasbrewster/2023/01/06/chatgpt-cybercriminal-malware-female-chatbots/?sh=6d157c455534)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on January 30, 2023, 11:51:00 PM
        ... the fact remains that more than a decade after its invention Bitcoin is less useful for most legitimate transactions than fiat currencies. ...
        Yes, it has been more than a decade since a little group of cypher-punk nerds launched an entirely new and radically different money system that challenges 100's of years of history and $trillions of self-interested resistance to change. Bitcoin's doing pretty well all things considered, but there's a long way to go. Look at the progress in the past decade, and extend that forward another decade.
        ...
        When did mainstream awareness of Bitcoin start?  My approach tracks each time its market cap rose 10x.  The data from this link [1] goes back to 2013, the year Greyscale Bitcoin Trust was created, when Bitcoin had a $1 billion market cap (which is the number of BTC that exist times their price in USD).  My take is that Bitcoin awareness (mostly hatred) has been around about 5 years.

        Oct 2016 : reaches $10 billion
        Nov 2017 : reaches $100 billion
        2021-2022 : some spiking above $1 trillion

        Bitcoin hasn't just made forward progress, though : there's been backsliding and competition.  Before China banned Bitcoin, more than half of Bitcoin was mined in China (thanks to cheaper electricity).  There is a chance China reverses this [2].  Even without the ban, Bitcoin transactions have to go up against AliPay and WeChat, which are already used by 42-54% of those with mobile phones in China [3].  A faster, ubiquities competitor isn't competition I see Bitcoin overtaking.  Between competition and the ban, Bitcoin has lost ground in China.

        [1]
        https://www.globaldata.com/data-insights/financial-services/bitcoins-market-capitalization-history/
        [2]
        https://www.crypto-news-flash.com/adoption-or-the-end-china-to-start-to-tax-bitcoin-and-crypto-transactions-report/
        [3]
        https://www.enterpriseappstoday.com/stats/alipay-statistics.html
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on January 31, 2023, 01:52:30 AM
        We're talking about a tool designed, for no other reason, than to break the law. Is it useful in cases where it's handy to break the law? Sure. Does it—by design—also allow for massive perpetration of fraud and scams? You bet.

        That's just ridiculous. Bitcoin was developed to address the problem of central banks issuing infinite fiat money. There is zero evidence to suggest it was developed by criminals solely for criminal purposes.

        That's all well and good, but the fact remains that more than a decade after its invention Bitcoin is less useful for most legitimate transactions than fiat currencies. Its design is well-suited to facilitating illegitimate transactions though.

        Yes, it has been more than a decade since a little group of cypher-punk nerds launched an entirely new and radically different money system that challenges 100's of years of history and $trillions of self-interested resistance to change. Bitcoin's doing pretty well all things considered, but there's a long way to go. Look at the progress in the past decade, and extend that forward another decade. Interesting times.

        "A long way to go" is an understatement. I can't pay for my groceries or utilities or bus fare or preschool tuition or taxes or anything else in my life with Bitcoin. USD payments are expected for all of these things, and they work well. My donor advised fund will grudgingly accept Bitcoin donations over US$50k in value; anything less isn't worth their time to sort out. I remember back when Bitcoin was much newer I paid for a couple of Humble Bundles with it; seemed kind of novel to trade a virtual currency for virtual media. They've since phased that option out because Bitcoin just isn't as easy to deal with as regular money.

        To convince the masses to switch you need to show how the new technology is markedly better: there needs to be a "killer application" allowing someone to do something with the new technology that would have been too difficult with the old. Paying for my groceries is quite easy with USD!

        The main thing approaching a "killer app" that Bitcoin has going for it is the difficulty for governments to seize it when you perform a transaction they would rather you didn't make. For licit transactions the system is just set up to make it plenty easy to pay in fiat currency.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on January 31, 2023, 08:23:52 AM
        Bitcoin's doing pretty well all things considered, but there's a long way to go. Look at the progress in the past decade, and extend that forward another decade. Interesting times.

        What does "doing well" mean for Bitcoin? How is it doing well, or any better than it did in 2009? It's still as slow and expensive to use, with no anonymity or protection. Still deflationary. Still as energy wasteful. You still can't use if for 99% of daily needs, and when you can use it it's more hassle than fiat. For people in the developed world there's no (legit) scenario where BTC is better than the alternative. And actually; for illicit use cash is probably better anyway. So exactly what kind of progress has there been for BTC as a currency?
        You can buy bitcoin at regulated exchanges now? But what does that do for it as a currency? More easily acquiring a near-useless currency isn't what I'd call progress.
        Yes it has "advanced" as a speculative asset, in that the price has gone up. But that isn't what the point of bitcoin was supposed to be.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 31, 2023, 09:26:27 AM
        We're talking about a tool designed, for no other reason, than to break the law. Is it useful in cases where it's handy to break the law? Sure. Does it—by design—also allow for massive perpetration of fraud and scams? You bet.

        That's just ridiculous. Bitcoin was developed to address the problem of central banks issuing infinite fiat money. There is zero evidence to suggest it was developed by criminals solely for criminal purposes.

        That's all well and good, but the fact remains that more than a decade after its invention Bitcoin is less useful for most legitimate transactions than fiat currencies. Its design is well-suited to facilitating illegitimate transactions though.

        Yes, it has been more than a decade since a little group of cypher-punk nerds launched an entirely new and radically different money system that challenges 100's of years of history and $trillions of self-interested resistance to change. Bitcoin's doing pretty well all things considered, but there's a long way to go. Look at the progress in the past decade, and extend that forward another decade. Interesting times.

        "A long way to go" is an understatement. I can't pay for my groceries or utilities or bus fare or preschool tuition or taxes or anything else in my life with Bitcoin. USD payments are expected for all of these things, and they work well. My donor advised fund will grudgingly accept Bitcoin donations over US$50k in value; anything less isn't worth their time to sort out. I remember back when Bitcoin was much newer I paid for a couple of Humble Bundles with it; seemed kind of novel to trade a virtual currency for virtual media. They've since phased that option out because Bitcoin just isn't as easy to deal with as regular money.

        To convince the masses to switch you need to show how the new technology is markedly better: there needs to be a "killer application" allowing someone to do something with the new technology that would have been too difficult with the old. Paying for my groceries is quite easy with USD!

        The main thing approaching a "killer app" that Bitcoin has going for it is the difficulty for governments to seize it when you perform a transaction they would rather you didn't make. For licit transactions the system is just set up to make it plenty easy to pay in fiat currency.

        This is just the same "it's no use to me, therefore it's no use to anyone" argument again.

        My repeated response is: You're a wealthy westerner with easy access to the strongest currency and most reliable banking services in the world. You don't have a great need/urgency for change.

        The world is much bigger than lucky you and your grocer.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on January 31, 2023, 09:41:30 AM
        We're talking about a tool designed, for no other reason, than to break the law. Is it useful in cases where it's handy to break the law? Sure. Does it—by design—also allow for massive perpetration of fraud and scams? You bet.

        That's just ridiculous. Bitcoin was developed to address the problem of central banks issuing infinite fiat money. There is zero evidence to suggest it was developed by criminals solely for criminal purposes.

        That's all well and good, but the fact remains that more than a decade after its invention Bitcoin is less useful for most legitimate transactions than fiat currencies. Its design is well-suited to facilitating illegitimate transactions though.

        Yes, it has been more than a decade since a little group of cypher-punk nerds launched an entirely new and radically different money system that challenges 100's of years of history and $trillions of self-interested resistance to change. Bitcoin's doing pretty well all things considered, but there's a long way to go. Look at the progress in the past decade, and extend that forward another decade. Interesting times.

        "A long way to go" is an understatement. I can't pay for my groceries or utilities or bus fare or preschool tuition or taxes or anything else in my life with Bitcoin. USD payments are expected for all of these things, and they work well. My donor advised fund will grudgingly accept Bitcoin donations over US$50k in value; anything less isn't worth their time to sort out. I remember back when Bitcoin was much newer I paid for a couple of Humble Bundles with it; seemed kind of novel to trade a virtual currency for virtual media. They've since phased that option out because Bitcoin just isn't as easy to deal with as regular money.

        To convince the masses to switch you need to show how the new technology is markedly better: there needs to be a "killer application" allowing someone to do something with the new technology that would have been too difficult with the old. Paying for my groceries is quite easy with USD!

        The main thing approaching a "killer app" that Bitcoin has going for it is the difficulty for governments to seize it when you perform a transaction they would rather you didn't make. For licit transactions the system is just set up to make it plenty easy to pay in fiat currency.

        This is just the same "it's no use to me, therefore it's no use to anyone" argument again.

        My repeated response is: You're a wealthy westerner with easy access to the strongest currency and most reliable banking services in the world. You don't have a great need/urgency for change.

        The world is much bigger than lucky you and your grocer.

        In this great big world, I don't know if it's really all that much better to lose your crypto when the sketchy exchange you're using folds or is hacked vs an oppressive regime stealing your money.  It's still gone in both cases.

        Crypto is an area completely rotten with scammers and thieves and the crypto community isn't doing anything appreciable to improve safety.  All while pretending that it's somehow going to be the saviour of every oppressed person in the world.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on January 31, 2023, 10:19:21 AM
        We're talking about a tool designed, for no other reason, than to break the law. Is it useful in cases where it's handy to break the law? Sure. Does it—by design—also allow for massive perpetration of fraud and scams? You bet.

        That's just ridiculous. Bitcoin was developed to address the problem of central banks issuing infinite fiat money. There is zero evidence to suggest it was developed by criminals solely for criminal purposes.

        That's all well and good, but the fact remains that more than a decade after its invention Bitcoin is less useful for most legitimate transactions than fiat currencies. Its design is well-suited to facilitating illegitimate transactions though.

        Yes, it has been more than a decade since a little group of cypher-punk nerds launched an entirely new and radically different money system that challenges 100's of years of history and $trillions of self-interested resistance to change. Bitcoin's doing pretty well all things considered, but there's a long way to go. Look at the progress in the past decade, and extend that forward another decade. Interesting times.

        "A long way to go" is an understatement. I can't pay for my groceries or utilities or bus fare or preschool tuition or taxes or anything else in my life with Bitcoin. USD payments are expected for all of these things, and they work well. My donor advised fund will grudgingly accept Bitcoin donations over US$50k in value; anything less isn't worth their time to sort out. I remember back when Bitcoin was much newer I paid for a couple of Humble Bundles with it; seemed kind of novel to trade a virtual currency for virtual media. They've since phased that option out because Bitcoin just isn't as easy to deal with as regular money.

        To convince the masses to switch you need to show how the new technology is markedly better: there needs to be a "killer application" allowing someone to do something with the new technology that would have been too difficult with the old. Paying for my groceries is quite easy with USD!

        The main thing approaching a "killer app" that Bitcoin has going for it is the difficulty for governments to seize it when you perform a transaction they would rather you didn't make. For licit transactions the system is just set up to make it plenty easy to pay in fiat currency.

        This is just the same "it's no use to me, therefore it's no use to anyone" argument again.

        My repeated response is: You're a wealthy westerner with easy access to the strongest currency and most reliable banking services in the world. You don't have a great need/urgency for change.

        The world is much bigger than lucky you and your grocer.

        Tell me...in which countries does more than 1% of the population routinely use Bitcoin to purchase food?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 31, 2023, 11:32:07 AM
        We're talking about a tool designed, for no other reason, than to break the law. Is it useful in cases where it's handy to break the law? Sure. Does it—by design—also allow for massive perpetration of fraud and scams? You bet.

        That's just ridiculous. Bitcoin was developed to address the problem of central banks issuing infinite fiat money. There is zero evidence to suggest it was developed by criminals solely for criminal purposes.

        That's all well and good, but the fact remains that more than a decade after its invention Bitcoin is less useful for most legitimate transactions than fiat currencies. Its design is well-suited to facilitating illegitimate transactions though.

        Yes, it has been more than a decade since a little group of cypher-punk nerds launched an entirely new and radically different money system that challenges 100's of years of history and $trillions of self-interested resistance to change. Bitcoin's doing pretty well all things considered, but there's a long way to go. Look at the progress in the past decade, and extend that forward another decade. Interesting times.

        "A long way to go" is an understatement. I can't pay for my groceries or utilities or bus fare or preschool tuition or taxes or anything else in my life with Bitcoin. USD payments are expected for all of these things, and they work well. My donor advised fund will grudgingly accept Bitcoin donations over US$50k in value; anything less isn't worth their time to sort out. I remember back when Bitcoin was much newer I paid for a couple of Humble Bundles with it; seemed kind of novel to trade a virtual currency for virtual media. They've since phased that option out because Bitcoin just isn't as easy to deal with as regular money.

        To convince the masses to switch you need to show how the new technology is markedly better: there needs to be a "killer application" allowing someone to do something with the new technology that would have been too difficult with the old. Paying for my groceries is quite easy with USD!

        The main thing approaching a "killer app" that Bitcoin has going for it is the difficulty for governments to seize it when you perform a transaction they would rather you didn't make. For licit transactions the system is just set up to make it plenty easy to pay in fiat currency.

        This is just the same "it's no use to me, therefore it's no use to anyone" argument again.

        My repeated response is: You're a wealthy westerner with easy access to the strongest currency and most reliable banking services in the world. You don't have a great need/urgency for change.

        The world is much bigger than lucky you and your grocer.

        In this great big world, I don't know if it's really all that much better to lose your crypto when the sketchy exchange you're using folds or is hacked vs an oppressive regime stealing your money.  It's still gone in both cases.

        Crypto is an area completely rotten with scammers and thieves . . .

        I mostly agree

        . . . and the crypto community isn't doing anything appreciable to improve safety.

        The Bitcoin 'community', inasmuch as such a thing exists, is largely promoting "Bitcoin, not crypto" in 2023. There is a very strong "not your keys, not your coin", anti-crypto, anti-crypto-casino-exchanges, anti-VC-quick-profit-ponzi-shitcoin vibe among Bitcoiners, and that message is being pushed out. Also, several prominent Bitcoiners were warning about issues with FTX and Celcius, etc. some time before they blew up.

        Unfortunately, and predictably, many people ignore these messages because Bitcoiners are clearly not disinterested parties - they would say all that, wouldn't they.

        What would you like to see the honest players doing to clean up the crypto world ? The crooks running the casino-exchanges, launching ponzi-shitcoins, etc. are crooks - they don't care.

        All while pretending that it's somehow going to be the saviour of every oppressed person in the world.

        If Bitcoin helps them, that's great - I think it will. If it doesn't, they'll presumably keep looking for a better solution.
        It seems unlikely that poor and desperate people will waste much time/energy on anything that isn't of immediate and obvious benefit to them.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 31, 2023, 11:38:35 AM
        We're talking about a tool designed, for no other reason, than to break the law. Is it useful in cases where it's handy to break the law? Sure. Does it—by design—also allow for massive perpetration of fraud and scams? You bet.

        That's just ridiculous. Bitcoin was developed to address the problem of central banks issuing infinite fiat money. There is zero evidence to suggest it was developed by criminals solely for criminal purposes.

        That's all well and good, but the fact remains that more than a decade after its invention Bitcoin is less useful for most legitimate transactions than fiat currencies. Its design is well-suited to facilitating illegitimate transactions though.

        Yes, it has been more than a decade since a little group of cypher-punk nerds launched an entirely new and radically different money system that challenges 100's of years of history and $trillions of self-interested resistance to change. Bitcoin's doing pretty well all things considered, but there's a long way to go. Look at the progress in the past decade, and extend that forward another decade. Interesting times.

        "A long way to go" is an understatement. I can't pay for my groceries or utilities or bus fare or preschool tuition or taxes or anything else in my life with Bitcoin. USD payments are expected for all of these things, and they work well. My donor advised fund will grudgingly accept Bitcoin donations over US$50k in value; anything less isn't worth their time to sort out. I remember back when Bitcoin was much newer I paid for a couple of Humble Bundles with it; seemed kind of novel to trade a virtual currency for virtual media. They've since phased that option out because Bitcoin just isn't as easy to deal with as regular money.

        To convince the masses to switch you need to show how the new technology is markedly better: there needs to be a "killer application" allowing someone to do something with the new technology that would have been too difficult with the old. Paying for my groceries is quite easy with USD!

        The main thing approaching a "killer app" that Bitcoin has going for it is the difficulty for governments to seize it when you perform a transaction they would rather you didn't make. For licit transactions the system is just set up to make it plenty easy to pay in fiat currency.

        This is just the same "it's no use to me, therefore it's no use to anyone" argument again.

        My repeated response is: You're a wealthy westerner with easy access to the strongest currency and most reliable banking services in the world. You don't have a great need/urgency for change.

        The world is much bigger than lucky you and your grocer.

        Tell me...in which countries does more than 1% of the population routinely use Bitcoin to purchase food?

        I don't know. Maybe none. Ask me again in 2 years.

        I'm not claiming rampant adoption anywhere . .
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Villanelle on January 31, 2023, 12:07:58 PM
        We're talking about a tool designed, for no other reason, than to break the law. Is it useful in cases where it's handy to break the law? Sure. Does it—by design—also allow for massive perpetration of fraud and scams? You bet.

        That's just ridiculous. Bitcoin was developed to address the problem of central banks issuing infinite fiat money. There is zero evidence to suggest it was developed by criminals solely for criminal purposes.

        That's all well and good, but the fact remains that more than a decade after its invention Bitcoin is less useful for most legitimate transactions than fiat currencies. Its design is well-suited to facilitating illegitimate transactions though.

        Yes, it has been more than a decade since a little group of cypher-punk nerds launched an entirely new and radically different money system that challenges 100's of years of history and $trillions of self-interested resistance to change. Bitcoin's doing pretty well all things considered, but there's a long way to go. Look at the progress in the past decade, and extend that forward another decade. Interesting times.

        "A long way to go" is an understatement. I can't pay for my groceries or utilities or bus fare or preschool tuition or taxes or anything else in my life with Bitcoin. USD payments are expected for all of these things, and they work well. My donor advised fund will grudgingly accept Bitcoin donations over US$50k in value; anything less isn't worth their time to sort out. I remember back when Bitcoin was much newer I paid for a couple of Humble Bundles with it; seemed kind of novel to trade a virtual currency for virtual media. They've since phased that option out because Bitcoin just isn't as easy to deal with as regular money.

        To convince the masses to switch you need to show how the new technology is markedly better: there needs to be a "killer application" allowing someone to do something with the new technology that would have been too difficult with the old. Paying for my groceries is quite easy with USD!

        The main thing approaching a "killer app" that Bitcoin has going for it is the difficulty for governments to seize it when you perform a transaction they would rather you didn't make. For licit transactions the system is just set up to make it plenty easy to pay in fiat currency.

        This is just the same "it's no use to me, therefore it's no use to anyone" argument again.

        My repeated response is: You're a wealthy westerner with easy access to the strongest currency and most reliable banking services in the world. You don't have a great need/urgency for change.

        The world is much bigger than lucky you and your grocer.

        In this great big world, I don't know if it's really all that much better to lose your crypto when the sketchy exchange you're using folds or is hacked vs an oppressive regime stealing your money.  It's still gone in both cases.

        Crypto is an area completely rotten with scammers and thieves . . .

        I mostly agree

        . . . and the crypto community isn't doing anything appreciable to improve safety.

        The Bitcoin 'community', inasmuch as such a thing exists, is largely promoting "Bitcoin, not crypto" in 2023. There is a very strong "not your keys, not your coin", anti-crypto, anti-crypto-casino-exchanges, anti-VC-quick-profit-ponzi-shitcoin vibe among Bitcoiners, and that message is being pushed out. Also, several prominent Bitcoiners were warning about issues with FTX and Celcius, etc. some time before they blew up.

        Unfortunately, and predictably, many people ignore these messages because Bitcoiners are clearly not disinterested parties - they would say all that, wouldn't they.

        What would you like to see the honest players doing to clean up the crypto world ? The crooks running the casino-exchanges, launching ponzi-shitcoins, etc. are crooks - they don't care.

        All while pretending that it's somehow going to be the saviour of every oppressed person in the world.

        If Bitcoin helps them, that's great - I think it will. If it doesn't, they'll presumably keep looking for a better solution.
        It seems unlikely that poor and desperate people will waste much time/energy on anything that isn't of immediate and obvious benefit to them.

         Because no poor or desperate person every bought lottery tickets or put money on a craps table or joined a MLM? 

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on January 31, 2023, 12:08:46 PM
        This is just the same "it's no use to me, therefore it's no use to anyone" argument again.

        My repeated response is: You're a wealthy westerner with easy access to the strongest currency and most reliable banking services in the world. You don't have a great need/urgency for change.

        The world is much bigger than lucky you and your grocer.

        well... yes? When it comes to the personal finance decision of "should I get some BTC"; yes I only care about what works for me. I'm glad you at least admit that crypto is pointless for me, and everyone like me. So that would  mean also (I'd bet) every single person on this forum, 99% of reddit etc. Basically all 1.2 billion people living in the developed world. But how many of the crypto-evangelist are "westerners" vs people in the developing world?

        On the larger claim of "BTC will help oppressed people"...? When I see the Winkelwoss twins, Jack Dorsey and every cryto-bro suddenly show deep, heartwarming concern for the plight of people of sub-Saharan Afrika, when that just so happens to  also align with their personal financial interest...? My eyes rolled so hard I'm still recovering, and I had to pay 14 Eth to my optometrist (oh wait I can't!).

        Anyway, the idea that an unregulated, insecure, scam-ridden, technologically complex, slow (just 10 min to pay for that cab ride), expensive to use (what are gas fees up to now?), payment system is supposed to help people who can't afford shoes is obviously laughably stupid. Anyone who's not loaded up on BTC will see that the best solution is to use the systems we have. Hell, dropping dollar bills from orbit would probably be more efficient. I would think this would be obvious, but most people in the developed world aren't poor because "oppressive government take their money", it's because they have no money. In general, dictators take money from those who have it. So yes, I guess if you're an oligarch in an oppressive regime you do have a use for crypto. Congrats! We have a use case! (of course Putin's goons will just take a steel pipe to your knees until you give up your crypto wallet)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: JAYSLOL on January 31, 2023, 12:53:52 PM
        This is just the same "it's no use to me, therefore it's no use to anyone" argument again.

        My repeated response is: You're a wealthy westerner with easy access to the strongest currency and most reliable banking services in the world. You don't have a great need/urgency for change.

        The world is much bigger than lucky you and your grocer.

        Anyway, the idea that an unregulated, insecure, scam-ridden, technologically complex, slow (just 10 min to pay for that cab ride), expensive to use (what are gas fees up to now?), payment system is supposed to help people who can't afford shoes is obviously laughably stupid.

        All this 100%, and you forgot the kicker, it’s an open source technology that can be easily and cheaply replaced at any time with another coin/token if people so desire
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 31, 2023, 01:26:03 PM
        We're talking about a tool designed, for no other reason, than to break the law. Is it useful in cases where it's handy to break the law? Sure. Does it—by design—also allow for massive perpetration of fraud and scams? You bet.

        That's just ridiculous. Bitcoin was developed to address the problem of central banks issuing infinite fiat money. There is zero evidence to suggest it was developed by criminals solely for criminal purposes.

        That's all well and good, but the fact remains that more than a decade after its invention Bitcoin is less useful for most legitimate transactions than fiat currencies. Its design is well-suited to facilitating illegitimate transactions though.

        Yes, it has been more than a decade since a little group of cypher-punk nerds launched an entirely new and radically different money system that challenges 100's of years of history and $trillions of self-interested resistance to change. Bitcoin's doing pretty well all things considered, but there's a long way to go. Look at the progress in the past decade, and extend that forward another decade. Interesting times.

        "A long way to go" is an understatement. I can't pay for my groceries or utilities or bus fare or preschool tuition or taxes or anything else in my life with Bitcoin. USD payments are expected for all of these things, and they work well. My donor advised fund will grudgingly accept Bitcoin donations over US$50k in value; anything less isn't worth their time to sort out. I remember back when Bitcoin was much newer I paid for a couple of Humble Bundles with it; seemed kind of novel to trade a virtual currency for virtual media. They've since phased that option out because Bitcoin just isn't as easy to deal with as regular money.

        To convince the masses to switch you need to show how the new technology is markedly better: there needs to be a "killer application" allowing someone to do something with the new technology that would have been too difficult with the old. Paying for my groceries is quite easy with USD!

        The main thing approaching a "killer app" that Bitcoin has going for it is the difficulty for governments to seize it when you perform a transaction they would rather you didn't make. For licit transactions the system is just set up to make it plenty easy to pay in fiat currency.

        This is just the same "it's no use to me, therefore it's no use to anyone" argument again.

        My repeated response is: You're a wealthy westerner with easy access to the strongest currency and most reliable banking services in the world. You don't have a great need/urgency for change.

        The world is much bigger than lucky you and your grocer.

        In this great big world, I don't know if it's really all that much better to lose your crypto when the sketchy exchange you're using folds or is hacked vs an oppressive regime stealing your money.  It's still gone in both cases.

        Crypto is an area completely rotten with scammers and thieves . . .

        I mostly agree

        . . . and the crypto community isn't doing anything appreciable to improve safety.

        The Bitcoin 'community', inasmuch as such a thing exists, is largely promoting "Bitcoin, not crypto" in 2023. There is a very strong "not your keys, not your coin", anti-crypto, anti-crypto-casino-exchanges, anti-VC-quick-profit-ponzi-shitcoin vibe among Bitcoiners, and that message is being pushed out. Also, several prominent Bitcoiners were warning about issues with FTX and Celcius, etc. some time before they blew up.

        Unfortunately, and predictably, many people ignore these messages because Bitcoiners are clearly not disinterested parties - they would say all that, wouldn't they.

        What would you like to see the honest players doing to clean up the crypto world ? The crooks running the casino-exchanges, launching ponzi-shitcoins, etc. are crooks - they don't care.

        All while pretending that it's somehow going to be the saviour of every oppressed person in the world.

        If Bitcoin helps them, that's great - I think it will. If it doesn't, they'll presumably keep looking for a better solution.
        It seems unlikely that poor and desperate people will waste much time/energy on anything that isn't of immediate and obvious benefit to them.

         Because no poor or desperate person every bought lottery tickets or put money on a craps table or joined a MLM?

        That's a fair point.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 31, 2023, 01:42:02 PM
        This is just the same "it's no use to me, therefore it's no use to anyone" argument again.

        My repeated response is: You're a wealthy westerner with easy access to the strongest currency and most reliable banking services in the world. You don't have a great need/urgency for change.

        The world is much bigger than lucky you and your grocer.

        well... yes? When it comes to the personal finance decision of "should I get some BTC"; yes I only care about what works for me. I'm glad you at least admit that crypto is pointless for me, and everyone like me. So that would  mean also (I'd bet) every single person on this forum, 99% of reddit etc. Basically all 1.2 billion people living in the developed world. But how many of the crypto-evangelist are "westerners" vs people in the developing world?

        I acknowledged, as things stand, Bitcoin has no great use for you as a currency.
        It has possible use as an investment / store of value - depending on your outlook.

        On the larger claim of "BTC will help oppressed people"...? When I see the Winkelwoss twins, Jack Dorsey and every cryto-bro suddenly show deep, heartwarming concern for the plight of people of sub-Saharan Afrika, when that just so happens to  also align with their personal financial interest...? My eyes rolled so hard I'm still recovering, and I had to pay 14 Eth to my optometrist (oh wait I can't!).

        Anyway, the idea that an unregulated, insecure, scam-ridden, technologically complex, slow (just 10 min to pay for that cab ride), expensive to use (what are gas fees up to now?), payment system is supposed to help people who can't afford shoes is obviously laughably stupid. Anyone who's not loaded up on BTC will see that the best solution is to use the systems we have. Hell, dropping dollar bills from orbit would probably be more efficient. I would think this would be obvious, but most people in the developed world aren't poor because "oppressive government take their money", it's because they have no money. In general, dictators take money from those who have it. So yes, I guess if you're an oligarch in an oppressive regime you do have a use for crypto. Congrats! We have a use case! (of course Putin's goons will just take a steel pipe to your knees until you give up your crypto wallet)

        If you don't trust the views of rich white guys, what about those of someone closer to the ground ?

        What about this, published just a few hours ago: Bitcoin is Hope for Africa featuring Farida Nabourema (https://www.youtube.com/watch?v=GADLjltQbiY&ab_channel=NatalieBrunell)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on January 31, 2023, 01:53:52 PM
        This is just the same "it's no use to me, therefore it's no use to anyone" argument again.

        My repeated response is: You're a wealthy westerner with easy access to the strongest currency and most reliable banking services in the world. You don't have a great need/urgency for change.

        The world is much bigger than lucky you and your grocer.

        well... yes? When it comes to the personal finance decision of "should I get some BTC"; yes I only care about what works for me. I'm glad you at least admit that crypto is pointless for me, and everyone like me. So that would  mean also (I'd bet) every single person on this forum, 99% of reddit etc. Basically all 1.2 billion people living in the developed world. But how many of the crypto-evangelist are "westerners" vs people in the developing world?

        I acknowledged, as things stand, Bitcoin has no great use for you as a currency.
        It has possible use as an investment / store of value - depending on your outlook.

        On the larger claim of "BTC will help oppressed people"...? When I see the Winkelwoss twins, Jack Dorsey and every cryto-bro suddenly show deep, heartwarming concern for the plight of people of sub-Saharan Afrika, when that just so happens to  also align with their personal financial interest...? My eyes rolled so hard I'm still recovering, and I had to pay 14 Eth to my optometrist (oh wait I can't!).

        Anyway, the idea that an unregulated, insecure, scam-ridden, technologically complex, slow (just 10 min to pay for that cab ride), expensive to use (what are gas fees up to now?), payment system is supposed to help people who can't afford shoes is obviously laughably stupid. Anyone who's not loaded up on BTC will see that the best solution is to use the systems we have. Hell, dropping dollar bills from orbit would probably be more efficient. I would think this would be obvious, but most people in the developed world aren't poor because "oppressive government take their money", it's because they have no money. In general, dictators take money from those who have it. So yes, I guess if you're an oligarch in an oppressive regime you do have a use for crypto. Congrats! We have a use case! (of course Putin's goons will just take a steel pipe to your knees until you give up your crypto wallet)

        If you don't trust the views of rich white guys, what about those of someone closer to the ground ?

        What about this, published just a few hours ago: Bitcoin is Hope for Africa featuring Farida Nabourema (https://www.youtube.com/watch?v=GADLjltQbiY&t=2480s&ab_channel=NatalieBrunell)

        Ok I didn't listen to the whole thing, just skipped through what I thought was the relevant section. But all I heard were cryptobro talking points; decentralized, immutable, belongs to everyone, "stable" (LOL!). Nothing about the practical issues of how a nigerian farmer can set up a wallet and pay $50 gas fees and wait 20 min, to sell his harvest to... someone (?) with a currency that swings 20% in a day and is not accepted by his government?

        Can you give us a breakdown on how BTC will help people with no money, and how these practical problems are solved?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 31, 2023, 04:18:42 PM
        This is just the same "it's no use to me, therefore it's no use to anyone" argument again.

        My repeated response is: You're a wealthy westerner with easy access to the strongest currency and most reliable banking services in the world. You don't have a great need/urgency for change.

        The world is much bigger than lucky you and your grocer.

        well... yes? When it comes to the personal finance decision of "should I get some BTC"; yes I only care about what works for me. I'm glad you at least admit that crypto is pointless for me, and everyone like me. So that would  mean also (I'd bet) every single person on this forum, 99% of reddit etc. Basically all 1.2 billion people living in the developed world. But how many of the crypto-evangelist are "westerners" vs people in the developing world?

        I acknowledged, as things stand, Bitcoin has no great use for you as a currency.
        It has possible use as an investment / store of value - depending on your outlook.

        On the larger claim of "BTC will help oppressed people"...? When I see the Winkelwoss twins, Jack Dorsey and every cryto-bro suddenly show deep, heartwarming concern for the plight of people of sub-Saharan Afrika, when that just so happens to  also align with their personal financial interest...? My eyes rolled so hard I'm still recovering, and I had to pay 14 Eth to my optometrist (oh wait I can't!).

        Anyway, the idea that an unregulated, insecure, scam-ridden, technologically complex, slow (just 10 min to pay for that cab ride), expensive to use (what are gas fees up to now?), payment system is supposed to help people who can't afford shoes is obviously laughably stupid. Anyone who's not loaded up on BTC will see that the best solution is to use the systems we have. Hell, dropping dollar bills from orbit would probably be more efficient. I would think this would be obvious, but most people in the developed world aren't poor because "oppressive government take their money", it's because they have no money. In general, dictators take money from those who have it. So yes, I guess if you're an oligarch in an oppressive regime you do have a use for crypto. Congrats! We have a use case! (of course Putin's goons will just take a steel pipe to your knees until you give up your crypto wallet)

        If you don't trust the views of rich white guys, what about those of someone closer to the ground ?

        What about this, published just a few hours ago: Bitcoin is Hope for Africa featuring Farida Nabourema (https://www.youtube.com/watch?v=GADLjltQbiY&t=2480s&ab_channel=NatalieBrunell)

        Ok I didn't listen to the whole thing, just skipped through what I thought was the relevant section. But all I heard were cryptobro talking points; decentralized, immutable, belongs to everyone, "stable" (LOL!). Nothing about the practical issues of how a nigerian farmer can set up a wallet and pay $50 gas fees and wait 20 min, to sell his harvest to... someone (?) with a currency that swings 20% in a day and is not accepted by his government?

        What were you expecting ? Bitcoin is what Bitcoin is - and those are it's much-discussed features that she believes have value in her country and in much of Africa.

        Scoff away, but she seems like a pretty smart lady to me, and my guess is she knows far more about what might help her country/continent than you do, or I do.

        Can you give us a breakdown on how BTC will help people with no money, . . .

        No, I can't. To my knowledge, nobody has suggested it could help people with NO money.

        and how these practical problems are solved?

        The "practical problems" of "$50" and "gas fees" and "20 mins" are all complete nonsense. No solution required.
        Wallets and volatility are specifically addressed in the video.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on January 31, 2023, 05:06:17 PM
        This is just the same "it's no use to me, therefore it's no use to anyone" argument again.

        My repeated response is: You're a wealthy westerner with easy access to the strongest currency and most reliable banking services in the world. You don't have a great need/urgency for change.

        The world is much bigger than lucky you and your grocer.

        well... yes? When it comes to the personal finance decision of "should I get some BTC"; yes I only care about what works for me. I'm glad you at least admit that crypto is pointless for me, and everyone like me. So that would  mean also (I'd bet) every single person on this forum, 99% of reddit etc. Basically all 1.2 billion people living in the developed world. But how many of the crypto-evangelist are "westerners" vs people in the developing world?

        I acknowledged, as things stand, Bitcoin has no great use for you as a currency.
        It has possible use as an investment / store of value - depending on your outlook.

        On the larger claim of "BTC will help oppressed people"...? When I see the Winkelwoss twins, Jack Dorsey and every cryto-bro suddenly show deep, heartwarming concern for the plight of people of sub-Saharan Afrika, when that just so happens to  also align with their personal financial interest...? My eyes rolled so hard I'm still recovering, and I had to pay 14 Eth to my optometrist (oh wait I can't!).

        Anyway, the idea that an unregulated, insecure, scam-ridden, technologically complex, slow (just 10 min to pay for that cab ride), expensive to use (what are gas fees up to now?), payment system is supposed to help people who can't afford shoes is obviously laughably stupid. Anyone who's not loaded up on BTC will see that the best solution is to use the systems we have. Hell, dropping dollar bills from orbit would probably be more efficient. I would think this would be obvious, but most people in the developed world aren't poor because "oppressive government take their money", it's because they have no money. In general, dictators take money from those who have it. So yes, I guess if you're an oligarch in an oppressive regime you do have a use for crypto. Congrats! We have a use case! (of course Putin's goons will just take a steel pipe to your knees until you give up your crypto wallet)

        If you don't trust the views of rich white guys, what about those of someone closer to the ground ?

        What about this, published just a few hours ago: Bitcoin is Hope for Africa featuring Farida Nabourema (https://www.youtube.com/watch?v=GADLjltQbiY&t=2480s&ab_channel=NatalieBrunell)

        Ok I didn't listen to the whole thing, just skipped through what I thought was the relevant section. But all I heard were cryptobro talking points; decentralized, immutable, belongs to everyone, "stable" (LOL!). Nothing about the practical issues of how a nigerian farmer can set up a wallet and pay $50 gas fees and wait 20 min, to sell his harvest to... someone (?) with a currency that swings 20% in a day and is not accepted by his government?

        What were you expecting ? Bitcoin is what Bitcoin is - and those are it's much-discussed features that she believes have value in her country and in much of Africa.

        Scoff away, but she seems like a pretty smart lady to me, and my guess is she knows far more about what might help her country/continent than you do, or I do.

        Can you give us a breakdown on how BTC will help people with no money, . . .

        No, I can't. To my knowledge, nobody has suggested it could help people with NO money.

        and how these practical problems are solved?

        The "practical problems" of "$50" and "gas fees" and "20 mins" are all complete nonsense. No solution required.
        Wallets and volatility are specifically addressed in the video.

        I didn't hear any even a half decent attempt to address the concerns of wallets and volatility in the video.  Mostly the volatility response was that the same volatility and devaluation of African currencies that she's hoping will drive people to bitcoin mean that the volatility of bitcoin doesn't matter.  ???

        I did hear some total bullshit though.

        "[Bitcoin is] a currency that can be moved easily without creating any extra fees and constraints"

        Then she goes on to indicate how there are no conversion fees changing from her currency (franc) to bitcoin because it's "free money, and independent currency, a currency that's not created specifically to control people".

        She indicates that 70% of the people in her country do not have bank accounts, and thus would be perfect to convert over to using bitcoin.  But she completely glosses over the little point of exactly how to do this.  How are they going to convert their current cash holdings into bitcoin?  Can't transfer funds from their bank, obviously.  Later there's mention of magical technologies that will allow people without phone or computer access to easily and safely access bitcoin without risk.  I'd like to hear a lot more about that though, since it sounds like bullshit but no further discussion involved that point.  Instead she just says that bitcoin is like internet and electricity.  And we leave it there.

        She also doesn't address how the people who move their fortunes over to bitcoin are supposed to pay their taxes.  Or buy groceries.  Or buy anything, since bitcoin isn't commonly accepted anywhere in the country.  I guess the theory is that everyone will instantly switch over nationally?

        She also talks about how a huge problem for these African countries is that they can't pay their international debts.  They don't produce anything of value, so can't generate the money needed to pay their loans.  That's what's causing the devaluation of their currencies.  But she just ignores this completely in relation to bitcoin.  How does bitcoin fix these debts?  Well, it doesn't.  So the fundamental problem causing the poorness remains.

        She talks about how people in Africa now are buying land and cattle to transfer wealth to their children and hopes that they'll change from doing this to something so much safer and better protected - bitcoin.  But she doesn't even address the theft and fraud so common with bitcoin wallets.

        She's super excited about getting Africa into the environmental destruction required to mine bitcoin.  Doesn't seem to be aware the mining bitcoin will end and is not a long term thing.  She also (completely without evidence) says that bitcoin is much better for the environment than all other banking systems.

        This goes on and on.



        This is one of the most painfully stupid things I've ever sat through.  It's hard to imagine any reasonable person being swayed by this.  Was your post intended as a joke response?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on January 31, 2023, 05:19:35 PM
        Most people ? However you view it, a very large number of people are poorly served by existing financial and political systems.


        2021 Democracy_Index  (https://en.wikipedia.org/wiki/Democracy_Index)
        Type of regime         Countries     World population (%)
        Full democracies           21 (13%)        6%
        Flawed democracies      53 (32%)       39%
        Hybrid regimes             34 (20%)       17%
        Authoritarian regimes    59 (35%)       37%


        "A global comparison by Global Finance (2021) (https://blog.cfte.education/the-worlds-top-5-unbanked-countries-have-more-than-60-of-their-population-without-bank-accounts/) saw that in the Middle East and Africa 50% of the population is financially excluded, with South and Central America nearing 38%, Eastern Europe at 33% and Asia Pacific at 24%."


        https://tradingeconomics.com/country-list/corruption-index (https://tradingeconomics.com/country-list/corruption-index)

        So large total addressable market for Bitcoin then.   I've used part of this anecdote before, so forgive the repeat but it is relevant here.  In the late 2000s Vodaphone observed their Kenyan customers were send and receiving lots of cell phone minutes, basically using it as a form of currency.   So Vodaphone cooked up a service called M-Pesa where their customers could send and receive actual money, and even get cash at Vodaphone stores and other locations.   It was a big hit and in just a few years M-Pesa had millions of customers and began to spread to other countries.  In 2022, M-Pesa had 52 million customers who made $19 billion in transactions.

        Imitators followed and now mobile money is huge in Africa.  There are something like 500 million unique users who made nearly $700 billion in transactions last year, just in Africa.

        https://www.statista.com/topics/6770/mobile-money-in-africa/#topicOverview

        Clearly, this explosive growth demonstrates there a huge demand to send and receive money on mobile devices outside the traditional banking system.   But we're not seeing this S-type disruption happening with Bitcoin. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on February 01, 2023, 03:14:43 AM
        ... you forgot the kicker, it’s an open source technology that can be easily and cheaply replaced at any time with another coin/token if people so desire
        Not "if people desire", but if a majority of the blockchain nodes switch, which is by design.  If you create a few computers running your own blockchain, you are one of thousands of tiny coins that are mostly scams.  I hope people ignore that.

        If you instead run alternate software and mine BTC, your version of the open source software needs to have the same results as the rest of the blockchain.  If you do something different, the rest of the blockchain will fail to verify your contribution.  You will be wasting electricity just to be ignored by the rest of the blockchain.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: blue_green_sparks on February 01, 2023, 05:36:09 AM
        Bitcoin swings more, but it sure does move with the stock markets. I don't understand the correlation other than the market gives bitcoiners economic forecast perhaps?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on February 01, 2023, 09:24:23 AM
        This is just the same "it's no use to me, therefore it's no use to anyone" argument again.

        My repeated response is: You're a wealthy westerner with easy access to the strongest currency and most reliable banking services in the world. You don't have a great need/urgency for change.

        The world is much bigger than lucky you and your grocer.

        well... yes? When it comes to the personal finance decision of "should I get some BTC"; yes I only care about what works for me. I'm glad you at least admit that crypto is pointless for me, and everyone like me. So that would  mean also (I'd bet) every single person on this forum, 99% of reddit etc. Basically all 1.2 billion people living in the developed world. But how many of the crypto-evangelist are "westerners" vs people in the developing world?

        I acknowledged, as things stand, Bitcoin has no great use for you as a currency.
        It has possible use as an investment / store of value - depending on your outlook.

        On the larger claim of "BTC will help oppressed people"...? When I see the Winkelwoss twins, Jack Dorsey and every cryto-bro suddenly show deep, heartwarming concern for the plight of people of sub-Saharan Afrika, when that just so happens to  also align with their personal financial interest...? My eyes rolled so hard I'm still recovering, and I had to pay 14 Eth to my optometrist (oh wait I can't!).

        Anyway, the idea that an unregulated, insecure, scam-ridden, technologically complex, slow (just 10 min to pay for that cab ride), expensive to use (what are gas fees up to now?), payment system is supposed to help people who can't afford shoes is obviously laughably stupid. Anyone who's not loaded up on BTC will see that the best solution is to use the systems we have. Hell, dropping dollar bills from orbit would probably be more efficient. I would think this would be obvious, but most people in the developed world aren't poor because "oppressive government take their money", it's because they have no money. In general, dictators take money from those who have it. So yes, I guess if you're an oligarch in an oppressive regime you do have a use for crypto. Congrats! We have a use case! (of course Putin's goons will just take a steel pipe to your knees until you give up your crypto wallet)

        If you don't trust the views of rich white guys, what about those of someone closer to the ground ?

        What about this, published just a few hours ago: Bitcoin is Hope for Africa featuring Farida Nabourema (https://www.youtube.com/watch?v=GADLjltQbiY&t=2480s&ab_channel=NatalieBrunell)

        Ok I didn't listen to the whole thing, just skipped through what I thought was the relevant section. But all I heard were cryptobro talking points; decentralized, immutable, belongs to everyone, "stable" (LOL!). Nothing about the practical issues of how a nigerian farmer can set up a wallet and pay $50 gas fees and wait 20 min, to sell his harvest to... someone (?) with a currency that swings 20% in a day and is not accepted by his government?

        What were you expecting ? Bitcoin is what Bitcoin is - and those are it's much-discussed features that she believes have value in her country and in much of Africa.

        Scoff away, but she seems like a pretty smart lady to me, and my guess is she knows far more about what might help her country/continent than you do, or I do.

        Can you give us a breakdown on how BTC will help people with no money, . . .

        No, I can't. To my knowledge, nobody has suggested it could help people with NO money.

        and how these practical problems are solved?

        The "practical problems" of "$50" and "gas fees" and "20 mins" are all complete nonsense. No solution required.
        Wallets and volatility are specifically addressed in the video.

        I didn't hear any even a half decent attempt to address the concerns of wallets and volatility in the video.  Mostly the volatility response was that the same volatility and devaluation of African currencies that she's hoping will drive people to bitcoin mean that the volatility of bitcoin doesn't matter.  ???

        I did hear some total bullshit though.

        "[Bitcoin is] a currency that can be moved easily without creating any extra fees and constraints"

        Then she goes on to indicate how there are no conversion fees changing from her currency (franc) to bitcoin because it's "free money, and independent currency, a currency that's not created specifically to control people".

        She indicates that 70% of the people in her country do not have bank accounts, and thus would be perfect to convert over to using bitcoin.  But she completely glosses over the little point of exactly how to do this.  How are they going to convert their current cash holdings into bitcoin?  Can't transfer funds from their bank, obviously.  Later there's mention of magical technologies that will allow people without phone or computer access to easily and safely access bitcoin without risk.  I'd like to hear a lot more about that though, since it sounds like bullshit but no further discussion involved that point.  Instead she just says that bitcoin is like internet and electricity.  And we leave it there.

        She also doesn't address how the people who move their fortunes over to bitcoin are supposed to pay their taxes.  Or buy groceries.  Or buy anything, since bitcoin isn't commonly accepted anywhere in the country.  I guess the theory is that everyone will instantly switch over nationally?

        She also talks about how a huge problem for these African countries is that they can't pay their international debts.  They don't produce anything of value, so can't generate the money needed to pay their loans.  That's what's causing the devaluation of their currencies.  But she just ignores this completely in relation to bitcoin.  How does bitcoin fix these debts?  Well, it doesn't.  So the fundamental problem causing the poorness remains.

        She talks about how people in Africa now are buying land and cattle to transfer wealth to their children and hopes that they'll change from doing this to something so much safer and better protected - bitcoin.  But she doesn't even address the theft and fraud so common with bitcoin wallets.

        She's super excited about getting Africa into the environmental destruction required to mine bitcoin.  Doesn't seem to be aware the mining bitcoin will end and is not a long term thing.  She also (completely without evidence) says that bitcoin is much better for the environment than all other banking systems.

        This goes on and on.



        This is one of the most painfully stupid things I've ever sat through.  It's hard to imagine any reasonable person being swayed by this.  Was your post intended as a joke response?

        WOw! I didn't think anyone would watch that whole thing, good on you! Yes I also just heard a lot of buzzwords and little substance, surprise! Were coming up on 10 years now (?) of lofty promises, libertarian BS, "soon", etc of how this will revolutionize ... something..? somehow..? This week it crypto is great for: poor people/refugees/investors/oligarchs/oppressed populations > take your pick. We promise it's better than any alternative, we'll let you know how exactly anyday now..
        A quick google indicate the interviewer is a prolific crypto-shill.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: JAYSLOL on February 01, 2023, 09:36:54 AM
        ... you forgot the kicker, it’s an open source technology that can be easily and cheaply replaced at any time with another coin/token if people so desire
        Not "if people desire", but if a majority of the blockchain nodes switch, which is by design.  If you create a few computers running your own blockchain, you are one of thousands of tiny coins that are mostly scams.  I hope people ignore that.

        If you instead run alternate software and mine BTC, your version of the open source software needs to have the same results as the rest of the blockchain.  If you do something different, the rest of the blockchain will fail to verify your contribution.  You will be wasting electricity just to be ignored by the rest of the blockchain.

        I’m not talking about trying to hack the blockchain with my own Bitcoin, I’m saying anyone can make their own version of crypto.  So why would people 100% stick to the one that has arguably the worst ability to be an actual currency and  some of the highest energy usage?   Even though an identical coin (or better) can be created at any time by almost anyone that does the same function and doesn’t have to be a scam, even though of course that’s mostly what people use crypto for. 

        We’ve already been through all this and it looks like we are just going to go in circles with crypto promoters.  Crypto people say “by bitcoin, it’s the best it’s going to take over the world”, then as even a tiny fraction of adoption happens we can easily see it isn’t remotely suited for widespread adoption as a currency, bring that up, and Crypto people go “whoa, you don’t have to worry about that, that’s just bitcoin, Crypto is bigger than just bitcoin”, and then we get 5+ years of the biggest bull run of scams the world has ever seen in shitcoins and pump and dumps and NFTs and shady exchanges and hacks, and Crypto people go “well, what do you expect, you should have just stuck with the trusted Bitcoin this whole time, it’s great and it’s going to take over the world”.  Uh, no.  It literally can’t as a currency for reasons discussed over and over, so I’m not going to bet on that.  “But crypto is bigger than bitcoin”…. and round and round we go. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on February 01, 2023, 10:01:05 AM
        We’ve already been through all this and it looks like we are just going to go in circles with crypto promoters.  Crypto people say “by bitcoin, it’s the best it’s going to take over the world”, then as even a tiny fraction of adoption happens we can easily see it isn’t remotely suited for widespread adoption as a currency, bring that up, and Crypto people go “whoa, you don’t have to worry about that, that’s just bitcoin, Crypto is bigger than just bitcoin”, and then we get 5+ years of the biggest bull run of scams the world has ever seen in shitcoins and pump and dumps and NFTs and shady exchanges and hacks, and Crypto people go “well, what do you expect, you should have just stuck with the trusted Bitcoin this whole time, it’s great and it’s going to take over the world”.  Uh, no.  It literally can’t as a currency for reasons discussed over and over, so I’m not going to bet on that.  “But crypto is bigger than bitcoin”…. and round and round we go.
        An excellent point, and well-stated.

        Perhaps a follow-up question is why Bitcoin is still the most popular coin, despite being inferior? Certainly the inferior product sometimes wins due to marketing (i.e. Betamax vs VHS) but why would this be the case with something supposedly decentralized, where there's no one organization to do the marketing?*

        If crypto were an open market of ideas for solving financial problems, wouldn't the more competent options for solving the problems rise to the surface as they were developed? If crypto were a technology, wouldn't it develop, get better, and see waves of new products replacing the old products in popularity?

        It seems to be neither a solution-driven market nor a technology.

        *There is a media ecosystem of shills, but they could easily switch to shilling a technically superior cryptocoin if they wanted to. So why don't they? Aren't they worried about holding onto yesterday's tech?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: JAYSLOL on February 01, 2023, 10:37:43 AM
        We’ve already been through all this and it looks like we are just going to go in circles with crypto promoters.  Crypto people say “by bitcoin, it’s the best it’s going to take over the world”, then as even a tiny fraction of adoption happens we can easily see it isn’t remotely suited for widespread adoption as a currency, bring that up, and Crypto people go “whoa, you don’t have to worry about that, that’s just bitcoin, Crypto is bigger than just bitcoin”, and then we get 5+ years of the biggest bull run of scams the world has ever seen in shitcoins and pump and dumps and NFTs and shady exchanges and hacks, and Crypto people go “well, what do you expect, you should have just stuck with the trusted Bitcoin this whole time, it’s great and it’s going to take over the world”.  Uh, no.  It literally can’t as a currency for reasons discussed over and over, so I’m not going to bet on that.  “But crypto is bigger than bitcoin”…. and round and round we go.
        An excellent point, and well-stated.

        Perhaps a follow-up question is why Bitcoin is still the most popular coin, despite being inferior? Certainly the inferior product sometimes wins due to marketing (i.e. Betamax vs VHS) but why would this be the case with something supposedly decentralized, where there's no one organization to do the marketing?*

        If crypto were an open market of ideas for solving financial problems, wouldn't the more competent options for solving the problems rise to the surface as they were developed? If crypto were a technology, wouldn't it develop, get better, and see waves of new products replacing the old products in popularity?

        It seems to be neither a solution-driven market nor a technology.

        *There is a media ecosystem of shills, but they could easily switch to shilling a technically superior cryptocoin if they wanted to. So why don't they? Aren't they worried about holding onto yesterday's tech?

        Because Betamax and vhs weren’t sold as investments to people with the promise to get rich, they needed advertising dollars to back promotion, because nobody in their right mind would run around preaching about how much they love VHS and that it’s going to change the world if they weren’t paid to.  Bitcoin on the other hand, while decentralized, is treated as an investment, so no organization or advertising dollars are required for people to run around preaching the crypto gospel. 
        Why don’t people switch to a superior coin?  As long as public backlash to crypto is aimed at the shitcoin scams, NFT scams, hacks and exchange collapses rather than at Bitcoins inadequacy as what it’s promoted to being, people will stick with Bitcoin, and when that flips and and people face the truth of Bitcoin’s inadequacy, then crypto promoters and people that follow them will flip back to whatever Shiny New Alt Coins and Web 3.0 Super Hyped Blockchain Whatevers promise to fix all that and still be an investment to the moon, and when that all turns out to be even more of a scam than Bitcoin, well, you know the cycle
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on February 01, 2023, 11:01:22 AM
        The value of crypto is entirely driven by the number of people you can sell that crypto to.  Bitcoin is the most popular crypto because it was the first.  Being the first, it had the most people who initially became involved in it and had the largest market of greater fools to sell to.  That momentum is still the single greatest driving force behind it's acceptance.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: YttriumNitrate on February 01, 2023, 11:12:11 AM
        Perhaps a follow-up question is why Bitcoin is still the most popular coin, despite being inferior?
        I would argue that it's not inferior for its main use today of being a mechanism for betting, or being "a store of value" in tech bro speak.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on February 01, 2023, 11:20:09 AM
        I used to make that same argument, but as I thought about it I concluded the first mover advantage is a legitimate explanation.  The more people who use a particular currency,  then more people will want or need to use it.    Any replacement would have to have some clear advantage. 

        But that is also an argument against Bitcoin and crypto in general.  For most people the traditional banking system works just fine.  Bitcoin is actually harder.   There is no need to switch.

         I watched a portion of the video @LateStarter posted.  The interviewee was a political activist from Togo living in exile.  She uses Bitcoin as a way to send money to other political activists.   That sounds like a good use case--but the TAM is pretty small.  She waved away the volatility issue by saying some currencies are even more volatile.  But Togo's currency, the West African Franc, isn't one of those.   It is pretty stable, comparable to the dollar or Euro.   If political activists were saving their Bitcoin for something, they lost a lot of purchasing power.  Even for them, Bitcoin isn't an ideal solution.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: EverythingisNew on February 01, 2023, 11:23:28 AM
        Cathy Wood says Bitcoin could hit $1.5 million by 2030
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on February 01, 2023, 11:32:15 AM
        Tell me...in which countries does more than 1% of the population routinely use Bitcoin to purchase food?

        I don't know. Maybe none. Ask me again in 2 years.

        I'm not claiming rampant adoption anywhere . .

        Lol. Bitcoin has been around for 14 years. What bloody difference is another two going to make? Back when the technology was actually new I was absolutely willing to entertain the idea that it might find a common use case in (legal) commerce. It has had plenty of opportunity. While Bitcoin has found no shortage of speculators it's still searching for actual users.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: JAYSLOL on February 01, 2023, 11:44:13 AM
        Cathy Wood says Bitcoin could hit $1.5 million by 2030

        I don’t know who that is, but the name Cathy Wood sounds like the kind of made up name WhatsApp and Telegram scammers spam the YouTube comments section with lol. 

        <insert non-controversial word-salad comment from a spam account about investing>
        First reply - Yes the key to financial success is to have a good guide
        Second reply - Yes, I use Ms Cathy Wood, I gained $180,000 in four months with my initial $15,000 investment with her. 
        Third reply - Wow, I have heard much good things about Ms Cathy Wood from many people

        and on and on it goes lol.  I can’t believe people fall for that crap, and I also can’t believe YouTube hasn’t bothered to block them, but I guess since at least half of paid ads across social media are various degrees of scams and they don’t seem to care, then it makes sense they really don’t care what’s in the comments.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: JAYSLOL on February 01, 2023, 11:48:32 AM
        The value of crypto is entirely driven by the number of people you can sell that crypto to.  Bitcoin is the most popular crypto because it was the first.  Being the first, it had the most people who initially became involved in it and had the largest market of greater fools to sell to.  That momentum is still the single greatest driving force behind it's acceptance.

        Sooo… a decentralized Ponzi scheme. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: EverythingisNew on February 01, 2023, 11:53:43 AM
        Cathy Wood says Bitcoin could hit $1.5 million by 2030

        I don’t know who that is, but the name Cathy Wood sounds like the kind of made up name WhatsApp and Telegram scammers spam the YouTube comments section with lol. 

        <insert non-controversial word-salad comment from a spam account about investing>
        First reply - Yes the key to financial success is to have a good guide
        Second reply - Yes, I use Ms Cathy Wood, I gained $180,000 in four months with my initial $15,000 investment with her. 
        Third reply - Wow, I have heard much good things about Ms Cathy Wood from many people

        and on and on it goes lol.  I can’t believe people fall for that crap, and I also can’t believe YouTube hasn’t bothered to block them, but I guess since at least half of paid ads across social media are various degrees of scams and they don’t seem to care, then it makes sense they really don’t care what’s in the comments.

        Oops I spelled her name wrong: Cathie Wood. She is all over the news because she is a female investor. Her fund is Ark Invest (ARKK). I always find her advice and stock picks to be idiotic.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on February 01, 2023, 11:53:58 AM
        Cathy Wood says Bitcoin could hit $1.5 million by 2030

        Let's look at the five year performance of her flagship ETF, ARKK vs. the Nasdaq index

        Nasdaq:  78.9%
        AARK:   -0.2%

        I'm not sure Cathie Woods is a good source of investment advice. 
        ____________

        Edit:  I thought you were being serious!    I'll just leave this up there. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on February 01, 2023, 12:50:35 PM
        The value of crypto is entirely driven by the number of people you can sell that crypto to.  Bitcoin is the most popular crypto because it was the first.  Being the first, it had the most people who initially became involved in it and had the largest market of greater fools to sell to.  That momentum is still the single greatest driving force behind it's acceptance.

        Sooo… a decentralized Ponzi scheme.

        You're not supposed to remark on the nakedness of the emperor.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on February 01, 2023, 02:49:29 PM
        I used to make that same argument, but as I thought about it I concluded the first mover advantage is a legitimate explanation.  The more people who use a particular currency,  then more people will want or need to use it.    Any replacement would have to have some clear advantage. 
        First mover advantage seems to work best with brand names, which is perhaps the primary thing Bitcoin is. That's why we still tend to think "Tide" for laundry detergent and "Ziplock" for resealable plastic bags.

        For a technology, however, the new tends to displace the old. Yahoo! was the first mover in the search engine space, but they were quickly replaced by Google. MySpace was early to the social media game, but they were quickly replaced by Facebook, which is now being replaced by TikTok. So Bitcoin more resembles a brand than a technology.

        Bitcoin is turning 14 this year, has yet to be adopted by basically anyone for trade, and there are thousands of competing cryptocurrencies out there. Yet we're still talking about the Bitcoin brand.

        There are unbranded products, but Bitcoin might be the world's first brand without a product.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on February 01, 2023, 06:37:19 PM
        Tell me...in which countries does more than 1% of the population routinely use Bitcoin to purchase food?

        I don't know. Maybe none. Ask me again in 2 years.

        I'm not claiming rampant adoption anywhere . .

        Lol. Bitcoin has been around for 14 years. What bloody difference is another two going to make? Back when the technology was actually new I was absolutely willing to entertain the idea that it might find a common use case in (legal) commerce. It has had plenty of opportunity. While Bitcoin has found no shortage of speculators it's still searching for actual users.

        Routine use of Bitcoin to purchase food requires Lightning. Lightning hasn't been around for 14 years, it's still pretty new but it's developing fast. I think there's a pretty good chance that progress will be quite visible in 2 years - in developing nations.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on February 02, 2023, 12:14:53 AM
        Tell me...in which countries does more than 1% of the population routinely use Bitcoin to purchase food?

        I don't know. Maybe none. Ask me again in 2 years.

        I'm not claiming rampant adoption anywhere . .
        Lol. Bitcoin has been around for 14 years. What bloody difference is another two going to make? Back when the technology was actually new I was absolutely willing to entertain the idea that it might find a common use case in (legal) commerce. It has had plenty of opportunity. While Bitcoin has found no shortage of speculators it's still searching for actual users.
        Did you know about Bitcoin 14 years ago?  No, it was a hobby / computer program on one person's computers. If you go back that far you need to acknowledge how far it came from then.  I would interject my view from an earlier post, that mainstream awareness is only about 5 years old.

        When did mainstream awareness of Bitcoin start?  My approach tracks each time its market cap rose 10x.  The data from this link [1] goes back to 2013, the year Greyscale Bitcoin Trust was created, when Bitcoin had a $1 billion market cap (which is the number of BTC that exist times their price in USD).  My take is that Bitcoin awareness (mostly hatred) has been around about 5 years.

        Oct 2016 : reaches $10 billion
        Nov 2017 : reaches $100 billion
        2021-2022 : some spiking above $1 trillion

        [1]
        https://www.globaldata.com/data-insights/financial-services/bitcoins-market-capitalization-history/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on February 02, 2023, 12:21:50 AM
        ... you forgot the kicker, it’s an open source technology that can be easily and cheaply replaced at any time with another coin/token if people so desire
        Not "if people desire", but if a majority of the blockchain nodes switch, which is by design.  If you create a few computers running your own blockchain, you are one of thousands of tiny coins that are mostly scams.  I hope people ignore that.

        If you instead run alternate software and mine BTC, your version of the open source software needs to have the same results as the rest of the blockchain.  If you do something different, the rest of the blockchain will fail to verify your contribution.  You will be wasting electricity just to be ignored by the rest of the blockchain.

        I’m not talking about trying to hack the blockchain with my own Bitcoin, I’m saying anyone can make their own version of crypto.  So why would people 100% stick to the one that has arguably the worst ability to be an actual currency and  some of the highest energy usage?   Even though an identical coin (or better) can be created at any time by almost anyone that does the same function and doesn’t have to be a scam, even though of course that’s mostly what people use crypto for. 

        We’ve already been through all this and it looks like we are just going to go in circles with crypto promoters.  Crypto people say “by bitcoin, it’s the best it’s going to take over the world”, then as even a tiny fraction of adoption happens we can easily see it isn’t remotely suited for widespread adoption as a currency, bring that up, and Crypto people go “whoa, you don’t have to worry about that, that’s just bitcoin, Crypto is bigger than just bitcoin”, and then we get 5+ years of the biggest bull run of scams the world has ever seen in shitcoins and pump and dumps and NFTs and shady exchanges and hacks, and Crypto people go “well, what do you expect, you should have just stuck with the trusted Bitcoin this whole time, it’s great and it’s going to take over the world”.  Uh, no.  It literally can’t as a currency for reasons discussed over and over, so I’m not going to bet on that.  “But crypto is bigger than bitcoin”…. and round and round we go.
        To your first paragraph, on creating new coins to compete with Bitcoin, that has been done literally thousands of times [1].  This is not something new.

        Your second paragraph is filled with things I never said.  You can read what I said, not "Crypto people say".  Where did I say "by bitcoin" or "it’s going to take over the world"?  Can you quote any of the things you discuss in your second paragraph, or are you just inventing things to argue with yourself?

        [1]
        https://coinmarketcap.com/?page=89
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on February 02, 2023, 04:19:55 AM
        I didn't hear any even a half decent attempt to address the concerns of wallets and volatility in the video.  Mostly the volatility response was that the same volatility and devaluation of African currencies that she's hoping will drive people to bitcoin mean that the volatility of bitcoin doesn't matter.  ???

        I did hear some total bullshit though.

        "[Bitcoin is] a currency that can be moved easily without creating any extra fees and constraints"

        Then she goes on to indicate how there are no conversion fees changing from her currency (franc) to bitcoin [No she didn't - she said no such thing] because it's "free money, and independent currency, a currency that's not created specifically to control people".

        She indicates that 70% of the people in her country do not have bank accounts, and thus would be perfect to convert over to using bitcoin.  But she completely glosses over the little point of exactly how to do this.  How are they going to convert their current cash holdings into bitcoin?  Can't transfer funds from their bank, obviously.  Later there's mention of magical technologies that will allow people without phone or computer access to easily and safely access bitcoin without risk. [No there's not - there's no mention of any such thing]  I'd like to hear a lot more about that though, since it sounds like bullshit but no further discussion involved that point.  Instead she just says that bitcoin is like internet and electricity.  And we leave it there.

        She also doesn't address how the people who move their fortunes over to bitcoin are supposed to pay their taxes.  Or buy groceries.  Or buy anything, since bitcoin isn't commonly accepted anywhere in the country.  I guess the theory is that everyone will instantly switch over nationally? [No, there was no suggestion of immediate total adoption - people will still have fiat]

        She also talks about how a huge problem for these African countries is that they can't pay their international debts.  They don't produce anything of value, so can't generate the money needed to pay their loans.  That's what's causing the devaluation of their currencies.  But she just ignores this completely in relation to bitcoin.  How does bitcoin fix these debts?  Well, it doesn't.  So the fundamental problem causing the poorness remains. [No. Nobody claimed Bitcoin was a panacea for ALL ills. What is ?]

        She talks about how people in Africa now are buying land and cattle to transfer wealth to their children and hopes that they'll change from doing this to something so much safer and better protected - bitcoin.  But she doesn't even address the theft and fraud so common with bitcoin wallets.

        She's super excited about getting Africa into the environmental destruction [No, not so] required to mine bitcoin [with sustainable solar and hydro, and bringing electricity to those that have never had it].  Doesn't seem to be aware the mining bitcoin will end and is not a long term thing [No. Bitcoin rewards will end but 'mining' will continue].  She also (completely without evidence) says that bitcoin is much better for the environment than all other banking systems.

        This goes on and on.

        This is one of the most painfully stupid things I've ever sat through.  It's hard to imagine any reasonable person being swayed by this.  Was your post intended as a joke response?

        With respect, the above post does not demonstrate intellectual curiosity and is in no way an attempt to argue in good faith. It's very easy to construct strawmen or plain make stuff up but that's not intelligent discussion. It's little more than school playground name-calling.

        It is commonly asked in this topic "if Bitcoin's so great, why is it taking so long ?". I would suggest it's at least partly because the subject has become so emotive, and rational discussion is very difficult.
        In the wider world, the major media outlets are generally very negative about it - a search for "Bitcoin [major news outlet of your choice]" on Google News calls up a long list of tales about scams and losses and environmental outrage. That's all that most people see, and that's all they know about it, and Bitcoin=crypto=dogCoins=FTX=monkeyjpegs=cryptoBros=haveFunStayingPoor, etc. - it all looks the same, so the default attitude is to be very suspicious and/or hate on it. I guess that's just how it is - no point in sweating over it.
        Closer to home, I'm genuinely surprised at how difficult it has been to have respectful and rational discussion about it here - with the open-minded, norm-challenging and generally pretty smart MMM gang.

        Credit where it's due, the anti-Bitcoin campaign has, so far, been very effective.

        On the plus side, Bitcoin doesn't care. It keeps churning away, quietly expanding and advancing, applications keep developing and improving, . . .
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: JAYSLOL on February 02, 2023, 07:44:21 AM
        ... you forgot the kicker, it’s an open source technology that can be easily and cheaply replaced at any time with another coin/token if people so desire
        Not "if people desire", but if a majority of the blockchain nodes switch, which is by design.  If you create a few computers running your own blockchain, you are one of thousands of tiny coins that are mostly scams.  I hope people ignore that.

        If you instead run alternate software and mine BTC, your version of the open source software needs to have the same results as the rest of the blockchain.  If you do something different, the rest of the blockchain will fail to verify your contribution.  You will be wasting electricity just to be ignored by the rest of the blockchain.

        I’m not talking about trying to hack the blockchain with my own Bitcoin, I’m saying anyone can make their own version of crypto.  So why would people 100% stick to the one that has arguably the worst ability to be an actual currency and  some of the highest energy usage?   Even though an identical coin (or better) can be created at any time by almost anyone that does the same function and doesn’t have to be a scam, even though of course that’s mostly what people use crypto for. 

        We’ve already been through all this and it looks like we are just going to go in circles with crypto promoters.  Crypto people say “by bitcoin, it’s the best it’s going to take over the world”, then as even a tiny fraction of adoption happens we can easily see it isn’t remotely suited for widespread adoption as a currency, bring that up, and Crypto people go “whoa, you don’t have to worry about that, that’s just bitcoin, Crypto is bigger than just bitcoin”, and then we get 5+ years of the biggest bull run of scams the world has ever seen in shitcoins and pump and dumps and NFTs and shady exchanges and hacks, and Crypto people go “well, what do you expect, you should have just stuck with the trusted Bitcoin this whole time, it’s great and it’s going to take over the world”.  Uh, no.  It literally can’t as a currency for reasons discussed over and over, so I’m not going to bet on that.  “But crypto is bigger than bitcoin”…. and round and round we go.
        To your first paragraph, on creating new coins to compete with Bitcoin, that has been done literally thousands of times [1].  This is not something new.

        Your second paragraph is filled with things I never said.  You can read what I said, not "Crypto people say".  Where did I say "by bitcoin" or "it’s going to take over the world"?  Can you quote any of the things you discuss in your second paragraph, or are you just inventing things to argue with yourself?

        [1]
        https://coinmarketcap.com/?page=89
        Yes I know all about the many thousands of alt coins available, that’s why I brought it up.
        Yes I’m not literally quoting you in particular.  Never said I was.  My problem is I hear people moving the goal posts of the rationalization for crypto.  So, if you want to clarify your opinions so I’m not misquoting or lumping you in with what I hear from a lot of crypto folks, I’d love to hear you (and also others) share beliefs on the following
        - Is Bitcoin the cryptocurrency you are betting your own money on?  Why or why not?
        - If Bitcoin is not what you bet your own money on, what crypto is?  And why?
        - Is the value of crypto in the utility of blockchain technology or in the value of the coins themselves? 
        - Is Crypto predominantly a technology or a get rich scheme? 
        - If Crypto is a technology and NOT a get rich scheme, why invest in a particular coin?  Because of future market adoption and therefore demand?  Or? 
        - If Crypto is a technology and NOT a get rich scheme, why would people not switch to a superior coin or blockchain system over an established but inferior one when available? 
        - If Crypto is a technology and NOT a get rich scheme, why is there more emphasis on Bitcoin and other “investment” cryptocurrencies over the utility that stablecoins or other non-investment focused cryptocurrencies or blockchain technology could offer?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on February 02, 2023, 08:10:44 AM
        With respect, the above post does not demonstrate intellectual curiosity and is in no way an attempt to argue in good faith. It's very easy to construct strawmen or plain make stuff up but that's not intelligent discussion. It's little more than school playground name-calling.

        It is commonly asked in this topic "if Bitcoin's so great, why is it taking so long ?". I would suggest it's at least partly because the subject has become so emotive, and rational discussion is very difficult.
        In the wider world, the major media outlets are generally very negative about it - a search for "Bitcoin [major news outlet of your choice]" on Google News calls up a long list of tales about scams and losses and environmental outrage. That's all that most people see, and that's all they know about it, and Bitcoin=crypto=dogCoins=FTX=monkeyjpegs=cryptoBros=haveFunStayingPoor, etc. - it all looks the same, so the default attitude is to be very suspicious and/or hate on it. I guess that's just how it is - no point in sweating over it.
        Closer to home, I'm genuinely surprised at how difficult it has been to have respectful and rational discussion about it here - with the open-minded, norm-challenging and generally pretty smart MMM gang.

        Credit where it's due, the anti-Bitcoin campaign has, so far, been very effective.

        On the plus side, Bitcoin doesn't care. It keeps churning away, quietly expanding and advancing, applications keep developing and improving, . . .

        Ok then. Can you address the problems with using BTC as a currency? Slow/low bandwidth, concentration, insufficient technological access in developing nations, not widely adopted (chicken/egg). And why it's any better than almost every other effort to improve poor people's lives? You know; give people with no money, access to a highly volatile scam-currency that's a total PIA to use, and has extremely limited use anyway. VS I don't know; give them money ($$)? food?

        The reason for the snarky, and in your opinion, "not serious" discussion of crypto is because we've heard all this bullshit before, over and over and over and over and over and over and again. Perfectly legitimate points are raised; deflections and endless "you're FUDing!", "not serious!" come back, with zero actual repose to the most basic practical and logistical issues that are brought up. So no, most of use ("haters"..) don't really feel like engaging. It's just more fun to make fun of these delusional justifications for a seemingly endless (so far..) ponzi scheme with absolutely zero practical application (and thank god for that, as a world where BTC is the main currency sounds like a nightmare!)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on February 02, 2023, 08:18:13 AM
        - If Crypto is a technology and NOT a get rich scheme, why is there more emphasis on Bitcoin and other “investment” cryptocurrencies over the utility that stablecoins or other non-investment focused cryptocurrencies or blockchain technology could offer?

        To be fair, there is tons (millions$$) of hype around various stablecoins as well! Most of which have failed hard, for various reasons. (Unless of course the goal is to funnel "investor" money to the pyramid-top persons starting the scheme, paying insta-celebs to hype it, faking assets, etc. In that case some of them have been successful.)
        Just take a peek through coffeezilla's coverage of several of them. Hilarious stuff!
        https://www.youtube.com/results?search_query=coffeezilla+stablecoin

        Celsius: $9 billion owed/lost
        Luna:  $60 billion lost
        Tether/bitfinex: $10 billion lost (?unclear)
        Titan; promised 206% APY! Pumped by Mark Cuban, lost all his investments (Ok, I can support this one *golfclap) https://youtu.be/9DjeS4hTltI
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on February 02, 2023, 08:31:02 AM
        I didn't hear any even a half decent attempt to address the concerns of wallets and volatility in the video.  Mostly the volatility response was that the same volatility and devaluation of African currencies that she's hoping will drive people to bitcoin mean that the volatility of bitcoin doesn't matter.  ???

        I did hear some total bullshit though.

        Yep.  Bullshit - or 'demonstrably false' if cussing upsets delicate sensibilities.  Like this excerpt from the podcast:

        "Interestingly, when you look at all the various forms of money that we use today whether it is cash or whether it is the Visa cards for example, Bitcoin consumes the least amount of energy of all of them.  In fact, the production of cash and the transportation of cash and the distribution of cash requires 30 times more energy than bitcoin does."

        Which aligns rather poorly with reality:
        Quote
        BTC has nearly 3x environmental cost [than cash] per 1$ of value
        https://sites.tufts.edu/digitalplanet/how-green-is-the-greenback-an-analysis-of-the-environmental-costs-of-cash-in-the-united-states/ (https://sites.tufts.edu/digitalplanet/how-green-is-the-greenback-an-analysis-of-the-environmental-costs-of-cash-in-the-united-states/)

        Cash is currently higher in energy consumption overall , but that's only because bitcoin transactions are so comparatively rare.  The argument that bitcoin is lower energy cost than cash is therefore demonstrably bullshit false.


        "[Bitcoin is] a currency that can be moved easily without creating any extra fees and constraints"

        Then she goes on to indicate how there are no conversion fees changing from her currency (franc) to bitcoin [No she didn't - she said no such thing] because it's "free money, and independent currency, a currency that's not created specifically to control people".

        Yes she does.  Direct quote:
        "[Bitcoin is] um a currency that can uh be moved easily without creating any extra fees and constraints to the people because when you look at the countries that face the highest constraints on moving money is the African uh is it the people living in diaspora sending money back home because sometimes the remittance fees go as high as 20 percent consume 30 in both the fees and the uh um um the conversion rate.  So at that point I was like uh ah the person or the people who invested Bitcoin of [sic] having free money, having independent currency, a currency that is not created specifically by some people to control others."

        She very explicitly talks about the horrors of currency conversion rates when transferring money from African currencies to other denominations to send through banks, and in the same breath talks about how there are no fees associated with Bitcoin.  The only conclusion one can reasonably draw from this is that she believes the fees for currency conversion do not exist for Bitcoin.  Or that she's intentionally trying to make the traditional banking system seem worse than it is in an effort to push bitcoin.


        She indicates that 70% of the people in her country do not have bank accounts, and thus would be perfect to convert over to using bitcoin.  But she completely glosses over the little point of exactly how to do this.  How are they going to convert their current cash holdings into bitcoin?  Can't transfer funds from their bank, obviously.  Later there's mention of magical technologies that will allow people without phone or computer access to easily and safely access bitcoin without risk. [No there's not - there's no mention of any such thing]  I'd like to hear a lot more about that though, since it sounds like bullshit but no further discussion involved that point.  Instead she just says that bitcoin is like internet and electricity.  And we leave it there.

        "I actually forgot to mention one of the uh greatest products that was introduced at the conference is uh manchankura which is uh uh created by an uh amazing Bitcoin and uh developer we call him KG um it actually allows people to buy bitcoin as a USS USSD uh just like regular scratch cards where you can just type USSD codes and then boom you have the bitcoin in your wallet so in amazing solutions are being made and you're like wow this is so cool this is going to make it so much easier for everyone"

        Yes, there is regular mention and misrepresentation* of technology that will safely and easily allow African people to access bitcoin.  That's the whole underpinning of how the person being interviewed describes the shift to bitcoin happening across the continent.

        *It's the misrepresentation that makes the technology 'magical'.  Interesting that she fails to mention the 1% fee for anyone using this service.  Or the various hosting fees for moving bitcoin from a wallet to create a transaction.  Almost like there is a clear pro-bitcoin agenda being pushed.


        She also doesn't address how the people who move their fortunes over to bitcoin are supposed to pay their taxes.  Or buy groceries.  Or buy anything, since bitcoin isn't commonly accepted anywhere in the country.  I guess the theory is that everyone will instantly switch over nationally? [No, there was no suggestion of immediate total adoption - people will still have fiat]

        But then bitcoin would solve no problem at all.  All of the pie in the sky bitcoin related 'freedom' that is being discussed for African people being held hostage by their fiat currency fails to materialize if the people are still being held hostage by their fiat currency.


        She also talks about how a huge problem for these African countries is that they can't pay their international debts.  They don't produce anything of value, so can't generate the money needed to pay their loans.  That's what's causing the devaluation of their currencies.  But she just ignores this completely in relation to bitcoin.  How does bitcoin fix these debts?  Well, it doesn't.  So the fundamental problem causing the poorness remains. [No. Nobody claimed Bitcoin was a panacea for ALL ills. What is ?]

        I'm going to ignore your straw man here - I didn't claim that the person being interviewed made the statement you're railing against.

        The ills that the person being interviewed was describing though, the ones that she was giving as an example of the need to push everyone towards bitcoin . . . those all stem from this fundamental problem.  And bitcoin won't solve it.  This renders a the majority of her pro-bitcoin argument moot.


        She's super excited about getting Africa into the environmental destruction [No, not so] required to mine bitcoin [with sustainable solar and hydro, and bringing electricity to those that have never had it].

        No mention of solar is made in this discussion.  I encourage you to go back and listen carefully.  Hydro electricity in Kenya is mentioned, as is 'bringing electricity to those who have never had it' . . . but zero mention of details or realistic plans to do this comes up, which seems to be a theme here, and part of the reason that it was so very disappointing to listen to.

        Will bitcoin mining be done sustainably in Africa?  Maybe.  But no mention of how, why, the costs involved, the projects proposed to make this happen come up.  Will bitcoin mining result in electricity for poor people who couldn't afford it before?  Maybe?  But again, no discussion of any details/reasoning takes place.  Just the statement and expectance that we will all accept it like lemmings.  Not very convincing.


        Doesn't seem to be aware the mining bitcoin will end and is not a long term thing [No. Bitcoin rewards will end but 'mining' will continue].  She also (completely without evidence) says that bitcoin is much better for the environment than all other banking systems.

        This is certainly an unproven theory that bitcoin advocates believe.


        With respect, the above post does not demonstrate intellectual curiosity and is in no way an attempt to argue in good faith.

        I watched your video in good faith under the assumption that it was going to be relevant, factual, and informative.  Posting an hour and a half conversation between two people who appear to have little understanding of the topic being discussed and certainly no facts/data to support their theories is not an attempt to argue in good faith.


        It's very easy to construct strawmen or plain make stuff up but that's not intelligent discussion. It's little more than school playground name-calling.

        Agreed.  Stop using straw men.  If you're going to post a video, maybe quickly check through the video first to see if it's sourced and referenced with claims made being reasonably supported rather than made up with no evidence.  That video was intellectually very disappointing with little factual information available to debate.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on February 02, 2023, 10:51:12 AM
        Tell me...in which countries does more than 1% of the population routinely use Bitcoin to purchase food?

        I don't know. Maybe none. Ask me again in 2 years.

        I'm not claiming rampant adoption anywhere . .
        Lol. Bitcoin has been around for 14 years. What bloody difference is another two going to make? Back when the technology was actually new I was absolutely willing to entertain the idea that it might find a common use case in (legal) commerce. It has had plenty of opportunity. While Bitcoin has found no shortage of speculators it's still searching for actual users.
        Did you know about Bitcoin 14 years ago?  No, it was a hobby / computer program on one person's computers. If you go back that far you need to acknowledge how far it came from then.  I would interject my view from an earlier post, that mainstream awareness is only about 5 years old.

        My first Bitcoin transaction was in 2011. I read Satoshi Nakamoto's original paper and it seemed like an intriguing idea, so I decided to experiment a bit with it. At the time the Bitcoin Core wallet had a "mine Bitcoins" option you could click to have your CPU crank away at some hashes. If you got really lucky you could win 50 BTC. Even at the time that was kind of a fool's errand. I instead joined up with a mining pool with my relatively beefy CPU and earned some 0.02 BTC per day. After a few weeks of suffering degraded computer performance in exchange for <$1 (at the time) per day, I considered the experiment over and shut down the mining. I remember being able to put transactions on the chain in a relatively timely manner for no transaction fee because the capacity wasn't maxed out yet.

        So...I'm not exactly a newcomer to this space. I acknowledge that there's been a bunch of infrastructure built up around the trading/speculating side of things since that time. Traction for use as an actual currency has been slow enough that I'm not at all bullish on the matter.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on February 02, 2023, 11:25:55 AM
        First mover advantage seems to work best with brand names, which is perhaps the primary thing Bitcoin is. That's why we still tend to think "Tide" for laundry detergent and "Ziplock" for resealable plastic bags.

        For a technology, however, the new tends to displace the old. Yahoo! was the first mover in the search engine space, but they were quickly replaced by Google. MySpace was early to the social media game, but they were quickly replaced by Facebook, which is now being replaced by TikTok. So Bitcoin more resembles a brand than a technology.

        Bitcoin is turning 14 this year, has yet to be adopted by basically anyone for trade, and there are thousands of competing cryptocurrencies out there. Yet we're still talking about the Bitcoin brand.

        There are unbranded products, but Bitcoin might be the world's first brand without a product.

        I was trying to steel man the argument.  I was thinking of it more like VHS vs. Beta.   We all know the story.  Beta was the superior technology, but there were more and cheaper VHS players.   More VHS players meant more VHS movies.   More movies meant VHS was the better options for new consumers, and so on.   People chose to use VHS because people were already using VHS.  You could probably make that argument about CPM vs. DOS, as well.   Bitcoin is the biggest crypto by far, the most liquidity, most users, etc.    So if you want an economic system centered around crypto, that's the one to choose.   It is possible a new, better crypto could be created, but it won't be enough, just like Beta.   

        That said, something else has even a bigger first mover advantage:  The USD (at least where I live).   Everyone already accepts it, and the financial infrastructure works just fine for what I need it to do. Bitcoin isn't a better currency than the USD, it is worse.     Bitcoin provides no advantage for most people (including the unbanked) and so its use will always be limited to niche cases. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on February 02, 2023, 12:12:21 PM
        Yes I’m not literally quoting you in particular.  Never said I was.  My problem is I hear people moving the goal posts of the rationalization for crypto.  So, if you want to clarify your opinions so I’m not misquoting or lumping you in with what I hear from a lot of crypto folks, I’d love to hear you (and also others) share beliefs on the following
        - Is Bitcoin the cryptocurrency you are betting your own money on?  Why or why not?
        - If Bitcoin is not what you bet your own money on, what crypto is?  And why?
        You replied to my post, and then said things that had nothing to do with my post.  It would be clearer if you didn't do that in questions you address to everyone.

        The recent discussion has devolved back to people who hate crypto repeatedly calling it a fraud or ponzi scheme, so I don't see the point of providing my nuanced view.  Instead I need to oversimplify and be brief to avoid being quoted out of context.  I am currently "adding a low%" (thread title) of ETH, but not "adding a low%" of BTC.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on February 02, 2023, 12:39:02 PM
        I'd like to hear the nuanced view, if you don't mind.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on February 02, 2023, 12:40:56 PM
        Tell me...in which countries does more than 1% of the population routinely use Bitcoin to purchase food?

        I don't know. Maybe none. Ask me again in 2 years.

        I'm not claiming rampant adoption anywhere . .
        Lol. Bitcoin has been around for 14 years. What bloody difference is another two going to make? Back when the technology was actually new I was absolutely willing to entertain the idea that it might find a common use case in (legal) commerce. It has had plenty of opportunity. While Bitcoin has found no shortage of speculators it's still searching for actual users.
        Did you know about Bitcoin 14 years ago?  No, it was a hobby / computer program on one person's computers. If you go back that far you need to acknowledge how far it came from then.  I would interject my view from an earlier post, that mainstream awareness is only about 5 years old.

        My first Bitcoin transaction was in 2011. I read Satoshi Nakamoto's original paper and it seemed like an intriguing idea, so I decided to experiment a bit with it. At the time the Bitcoin Core wallet had a "mine Bitcoins" option you could click to have your CPU crank away at some hashes. If you got really lucky you could win 50 BTC. Even at the time that was kind of a fool's errand. I instead joined up with a mining pool with my relatively beefy CPU and earned some 0.02 BTC per day. After a few weeks of suffering degraded computer performance in exchange for <$1 (at the time) per day, I considered the experiment over and shut down the mining. I remember being able to put transactions on the chain in a relatively timely manner for no transaction fee because the capacity wasn't maxed out yet.

        So...I'm not exactly a newcomer to this space. I acknowledge that there's been a bunch of infrastructure built up around the trading/speculating side of things since that time. Traction for use as an actual currency has been slow enough that I'm not at all bullish on the matter.
        I asked "Did you know about Bitcoin 14 years ago?", not if you are "a newcomer" (your word).  My point is that when Bitcoin was unknown and unused 14 years ago, it was not realistic to expect things from it.  The price history of BTC on Yahoo Finance and even CoinDesk only goes back to Nov 2014, suggesting it still wasn't used much even then (Personally, I tried buying legal goods and services back at $250 per BTC, and found that very difficult).

        I believe when Bitcoin rose above $10 billion or maybe $100 billion market cap, the mainstream media finally noticed.  Both of those milestones were about 5 years ago, which is why I argue Bitcoin should be measured relative to the last 5 years.  And if you agree with that, then 2 years doesn't seem that long (unless you're watching C-span).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on February 02, 2023, 02:20:52 PM
        I'd like to hear the nuanced view, if you don't mind.
        I'll try it with as much controversy stripped out as possible.


        I suspect the future looks brighter for Ethereum than it does for Bitcoin.  Ethereum has lowered its energy usage by 99.95% through switching how it allows transactions to be verified.  Most new things, which would be controversial to mention, are being done on Ethereum.  On Bitcoin's blockchain, they need an entirely new transaction system to be adopted and trusted.  Meanwhile, Ethereum has 4x higher transaction counts (the number, not cash value) than Bitcoin.

        Younger generations have much greater numbers of people buying Bitcoin, and care about the environment in greater numbers.  Those beliefs are in conflict - holding both could be considered hypocrisy.  Maybe they can ignore that, or maybe that hypocrisy will drive many from BTC to ETH.

        My view represents disagreement with both sides of the debate.  Crypto haters may cheer any dislike of Bitcoin - but they hate other crypto as well.  Most crypto fans like Bitcoin, the #1 crypto currency.  They can point to the CBOE options exchange of Bitcoin futures, or ETFs based on those futures - neither of which ETH has going for it.  Ethereum, viewed in terms of mainstream acceptance, is a step backwards from Bitcoin.

        Since all of this adds up to thinking the future favors ETH and not BTC, I plan to hold zero BTC from here on.  I have been buying some ETH every week for the past few weeks, but it still represents a rounding error of my NW.  I do not expect Ethereum's "infinite supply" to matter, but if I'm wrong I'll lose in proportion to the % of ETH inflation.

        The larger idea, that ETH overtakes BTC for the #1 spot by market cap, is captured in a new term I learned: "the flippening".  This link has only a brief description - it is mostly graphs tracking progress of ETH overtaking BTC in various ways.
        https://www.blockchaincenter.net/en/flippening/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: JAYSLOL on February 02, 2023, 02:41:39 PM
        Yes I’m not literally quoting you in particular.  Never said I was.  My problem is I hear people moving the goal posts of the rationalization for crypto.  So, if you want to clarify your opinions so I’m not misquoting or lumping you in with what I hear from a lot of crypto folks, I’d love to hear you (and also others) share beliefs on the following
        - Is Bitcoin the cryptocurrency you are betting your own money on?  Why or why not?
        - If Bitcoin is not what you bet your own money on, what crypto is?  And why?
        You replied to my post, and then said things that had nothing to do with my post.  It would be clearer if you didn't do that in questions you address to everyone.

        The recent discussion has devolved back to people who hate crypto repeatedly calling it a fraud or ponzi scheme, so I don't see the point of providing my nuanced view.  Instead I need to oversimplify and be brief to avoid being quoted out of context.  I am currently "adding a low%" (thread title) of ETH, but not "adding a low%" of BTC.

        FWIW, my first reply was adding a comment to someone else’s post, which you replied to, so I replied back and expanded on why I added that comment, and even though I admittedly made some generalizations about things “crypto people” have said in my experience, it was never meant to be taken as me quoting you. 
        I don’t actually hate the technology of crypto as a tool, but for the relatively weak benefits I see compared to its downsides, I don’t think it’s a good thing overall for society in its current form. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: JAYSLOL on February 02, 2023, 02:54:20 PM
        I'd like to hear the nuanced view, if you don't mind.
        I'll try it with as much controversy stripped out as possible.


        I suspect the future looks brighter for Ethereum than it does for Bitcoin.  Ethereum has lowered its energy usage by 99.95% through switching how it allows transactions to be verified.  Most new things, which would be controversial to mention, are being done on Ethereum.  On Bitcoin's blockchain, they need an entirely new transaction system to be adopted and trusted.  Meanwhile, Ethereum has 4x higher transaction counts (the number, not cash value) than Bitcoin.

        Younger generations have much greater numbers of people buying Bitcoin, and care about the environment in greater numbers.  Those beliefs are in conflict - holding both could be considered hypocrisy.  Maybe they can ignore that, or maybe that hypocrisy will drive many from BTC to ETH.

        My view represents disagreement with both sides of the debate.  Crypto haters may cheer any dislike of Bitcoin - but they hate other crypto as well.  Most crypto fans like Bitcoin, the #1 crypto currency.  They can point to the CBOE options exchange of Bitcoin futures, or ETFs based on those futures - neither of which ETH has going for it.  Ethereum, viewed in terms of mainstream acceptance, is a step backwards from Bitcoin.

        Since all of this adds up to thinking the future favors ETH and not BTC, I plan to hold zero BTC from here on.  I have been buying some ETH every week for the past few weeks, but it still represents a rounding error of my NW.  I do not expect Ethereum's "infinite supply" to matter, but if I'm wrong I'll lose in proportion to the % of ETH inflation.

        The larger idea, that ETH overtakes BTC for the #1 spot by market cap, is captured in a new term I learned: "the flippening".  This link has only a brief description - it is mostly graphs tracking progress of ETH overtaking BTC in various ways.
        https://www.blockchaincenter.net/en/flippening/

        I appreciate hearing the more nuanced view, and I actually wouldn’t be surprised if you were right about ETH taking #1 at some point because of many of the points you bring up, but I guess my original reservations stands that if people are willing to abandon BTC for ETH, then what’s to stop them from abandoning ETH for ??? down the line when something else comes in? 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on February 02, 2023, 05:45:46 PM
        I didn't hear any even a half decent attempt to address the concerns of wallets and volatility in the video.  Mostly the volatility response was that the same volatility and devaluation of African currencies that she's hoping will drive people to bitcoin mean that the volatility of bitcoin doesn't matter.  ???

        I did hear some total bullshit though.

        Yep.  Bullshit - or 'demonstrably false' if cussing upsets delicate sensibilities.  Like this excerpt from the podcast:

        "Interestingly, when you look at all the various forms of money that we use today whether it is cash or whether it is the Visa cards for example, Bitcoin consumes the least amount of energy of all of them.  In fact, the production of cash and the transportation of cash and the distribution of cash requires 30 times more energy than bitcoin does."

        Which aligns rather poorly with reality:
        Quote
        BTC has nearly 3x environmental cost [than cash] per 1$ of value
        https://sites.tufts.edu/digitalplanet/how-green-is-the-greenback-an-analysis-of-the-environmental-costs-of-cash-in-the-united-states/ (https://sites.tufts.edu/digitalplanet/how-green-is-the-greenback-an-analysis-of-the-environmental-costs-of-cash-in-the-united-states/)

        Cash is currently higher in energy consumption overall , but that's only because bitcoin transactions are so comparatively rare.  The argument that bitcoin is lower energy cost than cash is therefore demonstrably bullshit false.


        No sensibilities were harmed. I was borrowing your text as a sort of header to to my reply.

        Yes, there were a couple of quite extreme and unsubstantiated statements re. energy. I'm not defending them. I've steered clear of most of the environmental discussions as the bs-factor looks extremely high on both sides. Bitcoin both eats the world and saves the world, and both sides have endless figures to prove it.
        I've glanced at that article and it looks pretty measured. I'll read it properly later - thanks.

        "[Bitcoin is] a currency that can be moved easily without creating any extra fees and constraints"

        Then she goes on to indicate how there are no conversion fees changing from her currency (franc) to bitcoin [No she didn't - she said no such thing] because it's "free money, and independent currency, a currency that's not created specifically to control people".

        Yes she does.  Direct quote:
        "[Bitcoin is] um a currency that can uh be moved easily without creating any extra fees and constraints to the people because when you look at the countries that face the highest constraints on moving money is the African uh is it the people living in diaspora sending money back home because sometimes the remittance fees go as high as 20 percent consume 30 in both the fees and the uh um um the conversion rate.  So at that point I was like uh ah the person or the people who invested Bitcoin of [sic] having free money, having independent currency, a currency that is not created specifically by some people to control others."

        She very explicitly talks about the horrors of currency conversion rates when transferring money from African currencies to other denominations to send through banks, and in the same breath talks about how there are no fees associated with Bitcoin.  The only conclusion one can reasonably draw from this is that she believes the fees for currency conversion do not exist for Bitcoin.  Or that she's intentionally trying to make the traditional banking system seem worse than it is in an effort to push bitcoin.

        I took it in the context of people receiving Bitcoin remittances and then spending Bitcoin. No CFA conversion = no conversion fee.

        She indicates that 70% of the people in her country do not have bank accounts, and thus would be perfect to convert over to using bitcoin.  But she completely glosses over the little point of exactly how to do this.  How are they going to convert their current cash holdings into bitcoin?  Can't transfer funds from their bank, obviously.  Later there's mention of magical technologies that will allow people without phone or computer access to easily and safely access bitcoin without risk. [No there's not - there's no mention of any such thing]  I'd like to hear a lot more about that though, since it sounds like bullshit but no further discussion involved that point.  Instead she just says that bitcoin is like internet and electricity.  And we leave it there.

        "I actually forgot to mention one of the uh greatest products that was introduced at the conference is uh manchankura which is uh uh created by an uh amazing Bitcoin and uh developer we call him KG um it actually allows people to buy bitcoin as a USS USSD uh just like regular scratch cards where you can just type USSD codes and then boom you have the bitcoin in your wallet so in amazing solutions are being made and you're like wow this is so cool this is going to make it so much easier for everyone"

        Yes, there is regular mention and misrepresentation* of technology that will safely and easily allow African people to access bitcoin.  That's the whole underpinning of how the person being interviewed describes the shift to bitcoin happening across the continent.

        *It's the misrepresentation that makes the technology 'magical'.  Interesting that she fails to mention the 1% fee for anyone using this service.  Or the various hosting fees for moving bitcoin from a wallet to create a transaction.  Almost like there is a clear pro-bitcoin agenda being pushed.

        My point was that she made no claims of 'without phone or computer access' technology.
        Well no, she didn't mention the 1% charge, but it was a chat about new 'exciting' things that are happening. Was it a carefully calculated/cunning omission ? I think she was just more interested in describing how people, esp. Africans themselves, are creatively using technology to overcome the many barriers that exist in Africa.
        They are both very clearly, explicitly and openly pro-Bitcoin - take it for what it is. Good luck finding much agenda-free stuff in this area.

        She also doesn't address how the people who move their fortunes over to bitcoin are supposed to pay their taxes.  Or buy groceries.  Or buy anything, since bitcoin isn't commonly accepted anywhere in the country.  I guess the theory is that everyone will instantly switch over nationally? [No, there was no suggestion of immediate total adoption - people will still have fiat]

        But then bitcoin would solve no problem at all.  All of the pie in the sky bitcoin related 'freedom' that is being discussed for African people being held hostage by their fiat currency fails to materialize if the people are still being held hostage by their fiat currency.

        I just don't get this all or nothing theory. Her goal for Togo is displace the CFA, but not in one fell swoop - as you noted, how on earth would/could that work ?
        A gradual transition seems perfectly logical and possible. Some people start to acquire Bitcoin. Some shops start to see value in accepting Bitcoin. More people start to acquire Bitcoin. More shops start to . . etc. And, gradually, the CFA is pushed aside.

        I let it go in my first response, but I did have a laugh at your objection to an activist, who's been frightened out of her country by threats of violence from an oppressive government/military, not placing a high priority on paying taxes to said regime :-)

        She also talks about how a huge problem for these African countries is that they can't pay their international debts.  They don't produce anything of value, so can't generate the money needed to pay their loans.  That's what's causing the devaluation of their currencies.  But she just ignores this completely in relation to bitcoin.  How does bitcoin fix these debts?  Well, it doesn't.  So the fundamental problem causing the poorness remains. [No. Nobody claimed Bitcoin was a panacea for ALL ills. What is ?]

        I'm going to ignore your straw man here - I didn't claim that the person being interviewed made the statement you're railing against.

        The ills that the person being interviewed was describing though, the ones that she was giving as an example of the need to push everyone towards bitcoin . . . those all stem from this fundamental problem.  And bitcoin won't solve it.  This renders a the majority of her pro-bitcoin argument moot.

        Oops, it's a fair cop! Reprimand accepted.

        I know very little about Togo and the CFA. Assuming what she says about the CFA is broadly true, then displacing it seems like a good step in the right direction.

        She's super excited about getting Africa into the environmental destruction [No, not so] required to mine bitcoin [with sustainable solar and hydro, and bringing electricity to those that have never had it].

        No mention of solar is made in this discussion.  I encourage you to go back and listen carefully.  Hydro electricity in Kenya is mentioned, as is 'bringing electricity to those who have never had it' . . . but zero mention of details or realistic plans to do this comes up, which seems to be a theme here, and part of the reason that it was so very disappointing to listen to.

        Will bitcoin mining be done sustainably in Africa?  Maybe.  But no mention of how, why, the costs involved, the projects proposed to make this happen come up.  Will bitcoin mining result in electricity for poor people who couldn't afford it before?  Maybe?  But again, no discussion of any details/reasoning takes place.  Just the statement and expectance that we will all accept it like lemmings.  Not very convincing.

        I thought I heard 'solar' but I'll take your word for it. It's struck out above.

        I believe Gridless (https://gridlesscompute.com/), or similar, is what she was referring to - and, yes, they are hydro-only.

        Doesn't seem to be aware the mining bitcoin will end and is not a long term thing [No. Bitcoin rewards will end but 'mining' will continue].  She also (completely without evidence) says that bitcoin is much better for the environment than all other banking systems.

        This is certainly an unproven theory that bitcoin advocates believe.

        It's a bit more than that. Barring any major protocol changes (pretty unlikely), Bitcoin is stone dead without miners. Of course, post 21M, strictly speaking, they won't 'mining' new Bitcoins, they will just be confirming transactions.

        With respect, the above post does not demonstrate intellectual curiosity and is in no way an attempt to argue in good faith.

        I watched your video in good faith under the assumption that it was going to be relevant, factual, and informative.  Posting an hour and a half conversation between two people who appear to have little understanding of the topic being discussed and certainly no facts/data to support their theories is not an attempt to argue in good faith.

        I don't think either of them have "little understanding". It was a reasonable discussion in it's own high level context. My reason for posting the video was simply to demonstrate that things are happening in the developing world and that local people are involved in driving it and developing it. I think it did that.

        I get that you want to dig into the details and learn exactly how these grand plans are supposed to happen, but that's a different question. There's plenty of information out there.

        It's very easy to construct strawmen or plain make stuff up but that's not intelligent discussion. It's little more than school playground name-calling.

        Agreed.  Stop using straw men.  If you're going to post a video, maybe quickly check through the video first to see if it's sourced and referenced with claims made being reasonably supported rather than made up with no evidence.  That video was intellectually very disappointing with little factual information available to debate.

        I've acknowledged my misdemeanour, and I'm hanging my head in shame.

        As above, it was posted as part of a broad discussion about whether or not Bitcoin is taking root as a currency in developing nations.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on February 02, 2023, 06:58:04 PM
        - If Crypto is a technology and NOT a get rich scheme, why is there more emphasis on Bitcoin and other “investment” cryptocurrencies over the utility that stablecoins or other non-investment focused cryptocurrencies or blockchain technology could offer?

        To be fair, there is tons (millions$$) of hype around various stablecoins as well! Most of which have failed hard, for various reasons. (Unless of course the goal is to funnel "investor" money to the pyramid-top persons starting the scheme, paying insta-celebs to hype it, faking assets, etc. In that case some of them have been successful.)
        Just take a peek through coffeezilla's coverage of several of them. Hilarious stuff!
        https://www.youtube.com/results?search_query=coffeezilla+stablecoin

        Celsius: $9 billion owed/lost
        Luna:  $60 billion lost
        Tether/bitfinex: $10 billion lost (?unclear)
        Titan; promised 206% APY! Pumped by Mark Cuban, lost all his investments (Ok, I can support this one *golfclap) https://youtu.be/9DjeS4hTltI

        And, speaking for Bitcoin only . . .

        The Bitcoin scene is quite heavy on Austrian Economics and is generally opposed to centrally controlled fiat currency debasement.

        From that perspective, Bitcoin (decentralised, 21M) offers potential utility, but even the most rock-solid USD stablecoin offers zero utility.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on February 03, 2023, 12:21:48 PM
        My first Bitcoin transaction was in 2011. I read Satoshi Nakamoto's original paper and it seemed like an intriguing idea, so I decided to experiment a bit with it. At the time the Bitcoin Core wallet had a "mine Bitcoins" option you could click to have your CPU crank away at some hashes. If you got really lucky you could win 50 BTC. Even at the time that was kind of a fool's errand. I instead joined up with a mining pool with my relatively beefy CPU and earned some 0.02 BTC per day. After a few weeks of suffering degraded computer performance in exchange for <$1 (at the time) per day, I considered the experiment over and shut down the mining. I remember being able to put transactions on the chain in a relatively timely manner for no transaction fee because the capacity wasn't maxed out yet.

        So...I'm not exactly a newcomer to this space. I acknowledge that there's been a bunch of infrastructure built up around the trading/speculating side of things since that time. Traction for use as an actual currency has been slow enough that I'm not at all bullish on the matter.
        I asked "Did you know about Bitcoin 14 years ago?", not if you are "a newcomer" (your word).  My point is that when Bitcoin was unknown and unused 14 years ago, it was not realistic to expect things from it.  The price history of BTC on Yahoo Finance and even CoinDesk only goes back to Nov 2014, suggesting it still wasn't used much even then (Personally, I tried buying legal goods and services back at $250 per BTC, and found that very difficult).

        I believe when Bitcoin rose above $10 billion or maybe $100 billion market cap, the mainstream media finally noticed.  Both of those milestones were about 5 years ago, which is why I argue Bitcoin should be measured relative to the last 5 years.  And if you agree with that, then 2 years doesn't seem that long (unless you're watching C-span).

        Five years is an eternity when it comes to mass-market technology adoption. Five years after the iPhone came out I was in the minority by not having a smartphone. Five years after the Mac, most personal computers used a graphical interface. Five years after the introduction of the first consumer web browser, school children across the country routinely used the web as a tool for class projects.

        That is, five years is an eternity when the technology is clearly better than what came before. Five years after the Kindle a lot of people still read paper books (and still do to this day) because the paperless experience seemed better to some and worse to others. The Kindle performs the same function as a paper book. Five years after the Tesla and people are still buying gasoline vehicles because at the end of the day an electric vehicle performs the same function as a gasoline vehicle. Same with VHS vs. Betamax: the two things perform the same function. People go with what's most convenient and cost-effective most of the time even if that means accepting a slightly lower level of quality.

        So where are we with Bitcoin? Even if we grant that the first few years of its existence can be written off as a research project (similar to Xerox Alto as a precursor to the Mac, or Tim Berners-Lee's research browser as a precursor to Mosaic and Netscape), there has been plenty of time after widespread mainstream attention for people to adopt Bitcoin into their daily lives. The problem is Bitcoin largely still performs the same function as incumbent financial services, and it has the disadvantage of being slower and more expensive to use for most transactions.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on February 03, 2023, 08:49:18 PM
        ...  My point is that when Bitcoin was unknown and unused 14 years ago, it was not realistic to expect things from it.  The price history of BTC on Yahoo Finance and even CoinDesk only goes back to Nov 2014, suggesting it still wasn't used much even then (Personally, I tried buying legal goods and services back at $250 per BTC, and found that very difficult).

        I believe when Bitcoin rose above $10 billion or maybe $100 billion market cap, the mainstream media finally noticed.  Both of those milestones were about 5 years ago, which is why I argue Bitcoin should be measured relative to the last 5 years.  And if you agree with that, then 2 years doesn't seem that long (unless you're watching C-span).
        Five years is an eternity when it comes to mass-market technology adoption. Five years after the iPhone came out I was in the minority by not having a smartphone. Five years after the Mac, most personal computers used a graphical interface. Five years after the introduction of the first consumer web browser, school children across the country routinely used the web as a tool for class projects.

        That is, five years is an eternity when the technology is clearly better than what came before. Five years after the Kindle a lot of people still read paper books (and still do to this day) because the paperless experience seemed better to some and worse to others. The Kindle performs the same function as a paper book. Five years after the Tesla and people are still buying gasoline vehicles because at the end of the day an electric vehicle performs the same function as a gasoline vehicle. Same with VHS vs. Betamax: the two things perform the same function. People go with what's most convenient and cost-effective most of the time even if that means accepting a slightly lower level of quality.

        So where are we with Bitcoin? Even if we grant that the first few years of its existence can be written off as a research project (similar to Xerox Alto as a precursor to the Mac, or Tim Berners-Lee's research browser as a precursor to Mosaic and Netscape), there has been plenty of time after widespread mainstream attention for people to adopt Bitcoin into their daily lives. The problem is Bitcoin largely still performs the same function as incumbent financial services, and it has the disadvantage of being slower and more expensive to use for most transactions.
        Personally I agree with your main idea that Bitcoin largely performs the same function as it did 5 years ago.  Bitcoin fans will argue we should wait for the Lightning network - but that's an entirely new thing I have to trust, and has to go through the phases of adoption.  And maybe that's the problem with Bitcoin: it is stuck in an early phase of adoption, rather than "Crossing the Chasm" as a book on the topic once laid out.

        And the year after releasing the Mac, Steve Jobs was pushed out of Apple, and the company began its slide downwards.  Within a decade, Apple was struggling, and I recall watching to see if it would go under (as a canary in a coal mine, where others would follow it).  Successful technology, but company at risk of collapse (before the 1990s bull market and iPhone).

        Comparing Bitcoin to Ethereum, I argue Bitcoin is overvalued.  Ethereum has various innovations built on it (various coins, digital receipts of artwork, etc) while Bitcoin has stayed the same.  Ethereum performs more transactions, and has a lower market cap.  So Bitcoin could be overvalued while Ethereum might not be.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on February 04, 2023, 06:47:39 PM
        ...  My point is that when Bitcoin was unknown and unused 14 years ago, it was not realistic to expect things from it.  The price history of BTC on Yahoo Finance and even CoinDesk only goes back to Nov 2014, suggesting it still wasn't used much even then (Personally, I tried buying legal goods and services back at $250 per BTC, and found that very difficult).

        I believe when Bitcoin rose above $10 billion or maybe $100 billion market cap, the mainstream media finally noticed.  Both of those milestones were about 5 years ago, which is why I argue Bitcoin should be measured relative to the last 5 years.  And if you agree with that, then 2 years doesn't seem that long (unless you're watching C-span).
        Five years is an eternity when it comes to mass-market technology adoption. Five years after the iPhone came out I was in the minority by not having a smartphone. Five years after the Mac, most personal computers used a graphical interface. Five years after the introduction of the first consumer web browser, school children across the country routinely used the web as a tool for class projects.

        That is, five years is an eternity when the technology is clearly better than what came before. Five years after the Kindle a lot of people still read paper books (and still do to this day) because the paperless experience seemed better to some and worse to others. The Kindle performs the same function as a paper book. Five years after the Tesla and people are still buying gasoline vehicles because at the end of the day an electric vehicle performs the same function as a gasoline vehicle. Same with VHS vs. Betamax: the two things perform the same function. People go with what's most convenient and cost-effective most of the time even if that means accepting a slightly lower level of quality.

        So where are we with Bitcoin? Even if we grant that the first few years of its existence can be written off as a research project (similar to Xerox Alto as a precursor to the Mac, or Tim Berners-Lee's research browser as a precursor to Mosaic and Netscape), there has been plenty of time after widespread mainstream attention for people to adopt Bitcoin into their daily lives. The problem is Bitcoin largely still performs the same function as incumbent financial services, and it has the disadvantage of being slower and more expensive to use for most transactions.
        Personally I agree with your main idea that Bitcoin largely performs the same function as it did 5 years ago.  Bitcoin fans will argue we should wait for the Lightning network - but that's an entirely new thing I have to trust, and has to go through the phases of adoption.  And maybe that's the problem with Bitcoin: it is stuck in an early phase of adoption, rather than "Crossing the Chasm" as a book on the topic once laid out.

        And the year after releasing the Mac, Steve Jobs was pushed out of Apple, and the company began its slide downwards.  Within a decade, Apple was struggling, and I recall watching to see if it would go under (as a canary in a coal mine, where others would follow it).  Successful technology, but company at risk of collapse (before the 1990s bull market and iPhone).

        Comparing Bitcoin to Ethereum, I argue Bitcoin is overvalued.  Ethereum has various innovations built on it (various coins, digital receipts of artwork, etc) while Bitcoin has stayed the same.  Ethereum performs more transactions, and has a lower market cap.  So Bitcoin could be overvalued while Ethereum might not be.

        Why is Bitcoin adoption slow, or slower than many think it should be ? Maybe . . .

        In the wealthy world:

        Main use-case now is speculation and/or store of value. Maybe in the future, a currency.

        I think the issue is that Bitcoin is radically different to anything seen before. On first hearing about it, people are naturally very sceptical: a bunch of bits having value ? that's absurd ! And almost everything they hear is lurid (and largely true) tales about all the scams and frauds that are rife in the crypto world. It's not very attractive - the barrier to entry is high. Consequently, only a few take the trouble to learn about it.

        Rough guess based on personal experience / anecdata:
        <10% of people have some understanding of Bitcoin - the theory, the tech, the mission, etc.
        >90% know virtually nothing about Bitcoin and just assume the entire space is all the same and is all just as terrible as they read/heard in the news headlines. Complacency and lethargy are not toooo damaging for wealthy folks - they continue to get by, so there's no great urgency for change.

        The iphone was an impressive advance in technology, but it wasn't a paradigm shift. Most people immediately started salivating on first sighting a shiny iphone. It's not a good comparison.

        In the poor world:

        Main use-case now is currency and store of value. Maybe with a bit of savings, some speculation.

        Bitcoin needs a Layer2, eg.  Lightning, to operate as a currency. Lightning is new, but it has now reached a stage where it can provide a useful service and things are beginning to happen.

        There is, quite naturally, a keen and active grass roots interest in finding an alternative to a terrible fiat currency and/or terrible banking. Complacency is low, and motivation is high. Watch this space.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on February 04, 2023, 07:18:54 PM
        I know a decent number of people who understand BtC just fine, but think it's a bad design and/or too volatile to ever work as a currency.

        It's a shame, if it weren't for the weirdo libertarian/goldbug aspect of the design that limits the number of coins, it could potentially be great. But it's not well designed for being a currency, yet sucks all the oxygen out of the room for things that might actually work. A shame, really.

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on February 04, 2023, 10:23:30 PM
        ...  My point is that when Bitcoin was unknown and unused 14 years ago, it was not realistic to expect things from it.  The price history of BTC on Yahoo Finance and even CoinDesk only goes back to Nov 2014, suggesting it still wasn't used much even then (Personally, I tried buying legal goods and services back at $250 per BTC, and found that very difficult).

        I believe when Bitcoin rose above $10 billion or maybe $100 billion market cap, the mainstream media finally noticed.  Both of those milestones were about 5 years ago, which is why I argue Bitcoin should be measured relative to the last 5 years.  And if you agree with that, then 2 years doesn't seem that long (unless you're watching C-span).
        Five years is an eternity when it comes to mass-market technology adoption. Five years after the iPhone came out I was in the minority by not having a smartphone. Five years after the Mac, most personal computers used a graphical interface. Five years after the introduction of the first consumer web browser, school children across the country routinely used the web as a tool for class projects.

        That is, five years is an eternity when the technology is clearly better than what came before. Five years after the Kindle a lot of people still read paper books (and still do to this day) because the paperless experience seemed better to some and worse to others. The Kindle performs the same function as a paper book. Five years after the Tesla and people are still buying gasoline vehicles because at the end of the day an electric vehicle performs the same function as a gasoline vehicle. Same with VHS vs. Betamax: the two things perform the same function. People go with what's most convenient and cost-effective most of the time even if that means accepting a slightly lower level of quality.

        So where are we with Bitcoin? Even if we grant that the first few years of its existence can be written off as a research project (similar to Xerox Alto as a precursor to the Mac, or Tim Berners-Lee's research browser as a precursor to Mosaic and Netscape), there has been plenty of time after widespread mainstream attention for people to adopt Bitcoin into their daily lives. The problem is Bitcoin largely still performs the same function as incumbent financial services, and it has the disadvantage of being slower and more expensive to use for most transactions.
        Personally I agree with your main idea that Bitcoin largely performs the same function as it did 5 years ago.  Bitcoin fans will argue we should wait for the Lightning network - but that's an entirely new thing I have to trust, and has to go through the phases of adoption.  And maybe that's the problem with Bitcoin: it is stuck in an early phase of adoption, rather than "Crossing the Chasm" as a book on the topic once laid out.

        And the year after releasing the Mac, Steve Jobs was pushed out of Apple, and the company began its slide downwards.  Within a decade, Apple was struggling, and I recall watching to see if it would go under (as a canary in a coal mine, where others would follow it).  Successful technology, but company at risk of collapse (before the 1990s bull market and iPhone).

        Comparing Bitcoin to Ethereum, I argue Bitcoin is overvalued.  Ethereum has various innovations built on it (various coins, digital receipts of artwork, etc) while Bitcoin has stayed the same.  Ethereum performs more transactions, and has a lower market cap.  So Bitcoin could be overvalued while Ethereum might not be.
        The iphone was an impressive advance in technology, but it wasn't a paradigm shift. Most people immediately started salivating on first sighting a shiny iphone. It's not a good comparison.

        In the poor world:
        Main use-case now is currency and store of value. Maybe with a bit of savings, some speculation.

        Bitcoin needs a Layer2, eg.  Lightning, to operate as a currency. Lightning is new, but it has now reached a stage where it can provide a useful service and things are beginning to happen.
        Your iPhone comment is strong enough to "trigger" me, partly because I strongly disagree with the statement, but also because I believe you're being reasonable and may listen.  The smart phone and internet are the largest paradigm shifts in the past 25 years.  Look at people on a bus 25 years ago and now - what do you see?  Cell phones.  Young people in school talking 25 years ago... now texting and sharing videos on their phones.  Smart phones, starting with the iPhone, have had an enormous impact and caused significant changes.  In case we're talking about different words, here is the first entry for paradigm:

        Quote
        1: EXAMPLE, PATTERN
        especially : an outstandingly clear or typical example or archetype
        https://www.merriam-webster.com/dictionary/paradigm
         
        We have some overlap in beliving Bitcoin can help countries with hyperinflation or repeated currency defaults.  Those are a subset of poor countries where a savings account in local currency may be higher risk than Bitcoin.  I think your effort is better spent getting others to agree with you that far, than convincing me further.  I'd consider myself in the 10% who have some understanding of Bitcoin, to save you some time.

        Many years ago, the Bitcoin Core Team had a schism, with one member arguing for larger block sizes, and the others arguing to wait for a Lightning Network type solution.  The thing is, everyone in agreement on Lightning all worked for the same company that was developing Lighting!  So much for decentralized, when their salaries and stock options resulted in group think on the Bitcoin Core Team.  So I may not be the target audience for Lightning Network, as I felt larger block sizes were the answer (and given Bitcoin's ramp up, I was probably wrong, unless block sizes could be extended 1000x without it being unreasonable).

        My past two posts both compare Ethereum to Bitcoin, because in my view Ethereum could have future potential while Bitcoin treads water.  I'm not aware of new coins on Bitcoin's blockchain, but I know that dozens (hundreds?) have been launched by borrowing from Ethereum's blockchain.  NFTs, controversial as they are, were launched on Ethereum's blockchain.  I'm less confident that DeFi has been partly based off Ethereum, and heard that DAO may use Ethereum.  Ethereum won't be involved in every single new effort, but it seems to be involved in most innovation attempts in crypto.  Add in proof of stake replacing proof of work, and I think there is a compelling argument that ETH should be valued more than BTC.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: shortduck on February 06, 2023, 10:09:36 AM
        I have it, but a very small %
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on February 06, 2023, 04:04:58 PM
        I know a decent number of people who understand BtC just fine, but think it's a bad design and/or too volatile to ever work as a currency.

        Absolutely. I wasn't conflating understanding with being a fan. Most posters in this topic are part of that 10% imo. [  They just don't understand it well enough yet  :-)  ]

        It's a shame, if it weren't for the weirdo libertarian/goldbug aspect of the design that limits the number of coins, it could potentially be great. But it's not well designed for being a currency, yet sucks all the oxygen out of the room for things that might actually work. A shame, really.

        -W

        I think it's largely the 'weirdo libertarian/goldbug aspect' that has given Bitcoin the power it has attained. I'm confident that we'll see it working well as a currency soon enough. Time will tell.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on February 06, 2023, 04:37:40 PM
        ...  My point is that when Bitcoin was unknown and unused 14 years ago, it was not realistic to expect things from it.  The price history of BTC on Yahoo Finance and even CoinDesk only goes back to Nov 2014, suggesting it still wasn't used much even then (Personally, I tried buying legal goods and services back at $250 per BTC, and found that very difficult).

        I believe when Bitcoin rose above $10 billion or maybe $100 billion market cap, the mainstream media finally noticed.  Both of those milestones were about 5 years ago, which is why I argue Bitcoin should be measured relative to the last 5 years.  And if you agree with that, then 2 years doesn't seem that long (unless you're watching C-span).
        Five years is an eternity when it comes to mass-market technology adoption. Five years after the iPhone came out I was in the minority by not having a smartphone. Five years after the Mac, most personal computers used a graphical interface. Five years after the introduction of the first consumer web browser, school children across the country routinely used the web as a tool for class projects.

        That is, five years is an eternity when the technology is clearly better than what came before. Five years after the Kindle a lot of people still read paper books (and still do to this day) because the paperless experience seemed better to some and worse to others. The Kindle performs the same function as a paper book. Five years after the Tesla and people are still buying gasoline vehicles because at the end of the day an electric vehicle performs the same function as a gasoline vehicle. Same with VHS vs. Betamax: the two things perform the same function. People go with what's most convenient and cost-effective most of the time even if that means accepting a slightly lower level of quality.

        So where are we with Bitcoin? Even if we grant that the first few years of its existence can be written off as a research project (similar to Xerox Alto as a precursor to the Mac, or Tim Berners-Lee's research browser as a precursor to Mosaic and Netscape), there has been plenty of time after widespread mainstream attention for people to adopt Bitcoin into their daily lives. The problem is Bitcoin largely still performs the same function as incumbent financial services, and it has the disadvantage of being slower and more expensive to use for most transactions.
        Personally I agree with your main idea that Bitcoin largely performs the same function as it did 5 years ago.  Bitcoin fans will argue we should wait for the Lightning network - but that's an entirely new thing I have to trust, and has to go through the phases of adoption.  And maybe that's the problem with Bitcoin: it is stuck in an early phase of adoption, rather than "Crossing the Chasm" as a book on the topic once laid out.

        And the year after releasing the Mac, Steve Jobs was pushed out of Apple, and the company began its slide downwards.  Within a decade, Apple was struggling, and I recall watching to see if it would go under (as a canary in a coal mine, where others would follow it).  Successful technology, but company at risk of collapse (before the 1990s bull market and iPhone).

        Comparing Bitcoin to Ethereum, I argue Bitcoin is overvalued.  Ethereum has various innovations built on it (various coins, digital receipts of artwork, etc) while Bitcoin has stayed the same.  Ethereum performs more transactions, and has a lower market cap.  So Bitcoin could be overvalued while Ethereum might not be.
        The iphone was an impressive advance in technology, but it wasn't a paradigm shift. Most people immediately started salivating on first sighting a shiny iphone. It's not a good comparison.

        In the poor world:
        Main use-case now is currency and store of value. Maybe with a bit of savings, some speculation.

        Bitcoin needs a Layer2, eg.  Lightning, to operate as a currency. Lightning is new, but it has now reached a stage where it can provide a useful service and things are beginning to happen.
        Your iPhone comment is strong enough to "trigger" me, partly because I strongly disagree with the statement, but also because I believe you're being reasonable and may listen.  The smart phone and internet are the largest paradigm shifts in the past 25 years.  Look at people on a bus 25 years ago and now - what do you see?  Cell phones.  Young people in school talking 25 years ago... now texting and sharing videos on their phones.  Smart phones, starting with the iPhone, have had an enormous impact and caused significant changes.  In case we're talking about different words, here is the first entry for paradigm:

        Quote
        1: EXAMPLE, PATTERN
        especially : an outstandingly clear or typical example or archetype
        https://www.merriam-webster.com/dictionary/paradigm

        We're speaking the same language but I still disagree with the specific iphone comparison. Many people already had mobile phones - the iphone was a 'just' a much better and sexier version of something we already had.

        Maybe Bitcoin is better compared to the mobile phone in general. The first commercial 1G network was launched in 1979 (https://en.wikipedia.org/wiki/Mobile_phone), and the iphone appeared in 2007. By that measure, 14 years in, we're currently in the clunky, simple, utilitarian Nokia 101 (http://www.mobilephonehistory.co.uk/nokia/nokia_101.php) era, and the whizz-bang sexy iphone era won't start until 2037. I'm more optimistic about the pace of future progress than that, but that's a fairer comparison imo.


        We have some overlap in beliving Bitcoin can help countries with hyperinflation or repeated currency defaults.  Those are a subset of poor countries where a savings account in local currency may be higher risk than Bitcoin.  I think your effort is better spent getting others to agree with you that far, than convincing me further.  I'd consider myself in the 10% who have some understanding of Bitcoin, to save you some time.

        Ha - I have little expectation of converting any posters here. I like to challenge the posts I think are wrong, and I like to have my own views challenged.

        Back to your point though, and I'm repeating myself, my expectation is that with time Bitcoin gets better (more established, less volatile and thus less risky) and most fiats get worse (more debased). If I'm right, the Bitcoin line on the 'useful as currency vs time' chart will progressively cross the lines of the fiats. Bolivar today, Peso next year, Dinar in 8 years, USD well maybe never but you get my point.

        Many years ago, the Bitcoin Core Team had a schism, with one member arguing for larger block sizes, and the others arguing to wait for a Lightning Network type solution.  The thing is, everyone in agreement on Lightning all worked for the same company that was developing Lighting!  So much for decentralized, when their salaries and stock options resulted in group think on the Bitcoin Core Team.  So I may not be the target audience for Lightning Network, as I felt larger block sizes were the answer (and given Bitcoin's ramp up, I was probably wrong, unless block sizes could be extended 1000x without it being unreasonable).

        My past two posts both compare Ethereum to Bitcoin, because in my view Ethereum could have future potential while Bitcoin treads water.  I'm not aware of new coins on Bitcoin's blockchain, but I know that dozens (hundreds?) have been launched by borrowing from Ethereum's blockchain.  NFTs, controversial as they are, were launched on Ethereum's blockchain.  I'm less confident that DeFi has been partly based off Ethereum, and heard that DAO may use Ethereum.  Ethereum won't be involved in every single new effort, but it seems to be involved in most innovation attempts in crypto.  Add in proof of stake replacing proof of work, and I think there is a compelling argument that ETH should be valued more than BTC.

        All reasonable points, but I've come to the opposite conclusion. I value Bitcoin's proof of work solidity, the small block facilitated decentralisation, and the stubborn resistance to (much) change / additional complexity. Bitcoin's value (imo) is largely based on it's simple, sturdy and resilient foundation. Additional (L2, etc.) complexity belongs on top of that sturdy foundation, without compromising/risking it.

        I was initially interested in Ethereum too but got turned away by it's centralised/centralising tendencies, especially the excessive influence of a small group of insiders and proof of stake. Also, a lot of risky fragile complexity at the base level.

        Who knows though ? It'll be interesting to watch.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on February 06, 2023, 06:24:48 PM
        Back to your point though, and I'm repeating myself, my expectation is that with time Bitcoin gets better (more established, less volatile and thus less risky) and most fiats get worse (more debased). If I'm right, the Bitcoin line on the 'useful as currency vs time' chart will progressively cross the lines of the fiats. Bolivar today, Peso next year, Dinar in 8 years, USD well maybe never but you get my point.

        I think you're conflating two separate concepts: utility as a currency and utility as an investment. For what it's worth, I think it's reasonably likely that 1 BTC will be worth more USD in a decade than it is now. So what? That has no bearing on how useful BTC is as a currency relative to USD. A useful currency is one in which the value is relatively stable over time (so that people can set their prices and sign contracts in terms of that currency), and one in which transactions can be completed simply and quickly. BTC is way too volatile. Even if the Lightning network solves the transaction cost/speed problem, nobody's going to sign a contract denominated in a currency whose purchasing power regularly swings back and forth 3x over the course of a year.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: BicycleB on February 06, 2023, 07:27:31 PM
        Back to your point though, and I'm repeating myself, my expectation is that with time Bitcoin gets better (more established, less volatile and thus less risky) and most fiats get worse (more debased). If I'm right, the Bitcoin line on the 'useful as currency vs time' chart will progressively cross the lines of the fiats. Bolivar today, Peso next year, Dinar in 8 years, USD well maybe never but you get my point.

        I think you're conflating two separate concepts: utility as a currency and utility as an investment. For what it's worth, I think it's reasonably likely that 1 BTC will be worth more USD in a decade than it is now. So what? That has no bearing on how useful BTC is as a currency relative to USD. A useful currency is one in which the value is relatively stable over time (so that people can set their prices and sign contracts in terms of that currency), and one in which transactions can be completed simply and quickly. BTC is way too volatile. Even if the Lightning network solves the transaction cost/speed problem, nobody's going to sign a contract denominated in a currency whose purchasing power regularly swings back and forth 3x over the course of a year.

        @seattlecyclone, what in your view will likely cause 1 BTC to be worth more USD in a decade than it is now?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on February 07, 2023, 01:08:38 AM
        Back to your point though, and I'm repeating myself, my expectation is that with time Bitcoin gets better (more established, less volatile and thus less risky) and most fiats get worse (more debased). If I'm right, the Bitcoin line on the 'useful as currency vs time' chart will progressively cross the lines of the fiats. Bolivar today, Peso next year, Dinar in 8 years, USD well maybe never but you get my point.

        I think you're conflating two separate concepts: utility as a currency and utility as an investment. For what it's worth, I think it's reasonably likely that 1 BTC will be worth more USD in a decade than it is now. So what? That has no bearing on how useful BTC is as a currency relative to USD. A useful currency is one in which the value is relatively stable over time (so that people can set their prices and sign contracts in terms of that currency), and one in which transactions can be completed simply and quickly. BTC is way too volatile. Even if the Lightning network solves the transaction cost/speed problem, nobody's going to sign a contract denominated in a currency whose purchasing power regularly swings back and forth 3x over the course of a year.

        @seattlecyclone, what in your view will likely cause 1 BTC to be worth more USD in a decade than it is now?

        Continued speculation. Note that my definition of "reasonably likely" isn't ">50% probability," it's more a statement of "I would be mostly unsurprised if this happened." In my view, any fundamental changes in the utility of a Bitcoin token explain little (if any) of the price swings in recent years. Given prior history I would hesitate to make any bets against the ability of the hype machine to bring in a new round of "greater fools" to pump the price up again and again. That's why I consider it reasonably likely that the price will increase. I also think it's reasonably likely that the price will decrease. The price of a Bitcoin has previously been something that defies most logical analysis, and I expect this trend to continue.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on February 07, 2023, 04:16:53 AM
        LateStarter - Interesting, it does seem internet browsers existed on phones, so your point about iPhone makes more sense.  Maybe the iPhone interface drove adoption?  Worldwide, I believe iPhone currently has a fairly small market share of a very large market.  So definite mitigating factors in calling iPhone a paradigm shift, when "phones with internet browsers" might be a clumsy but more accurate term.

        Also, did you forget to distort something or take it out of context?  :)  Thanks for not doing that - it is rare.

        You take the opposite view on Bitcoin small block size, and I agree that does give Bitcoin stability.  You said "small block size drives decentralization", which I don't understand - maybe you could expand on that?

        Five BTC mining pools account for 87.4% of the hashrate.  I speculate that the people in charge of each mining pool can make centralized decisions for Bitcoin, like which forks to accept.  Members of the mining pool need to be willing to switch if the pool makes a bad decision, and I suspect most people don't pay much attention and are not very involved.  So this may be where Bitcoin is centralized.  Last I checked, the Bitcoin core team & Lightning Network authors were the same small group of people.  Those are the areas where I argue Bitcoin has centralization.
        https://btc.com/stats/pool

        Ethereum has concentration of it's own from "proof of stake", with 64% of ETH staked by five entities.
        https://cointelegraph.com/news/64-of-staked-eth-controlled-by-five-entities-nansen

        I don't know which factors are associated with Bitcoin adoption, which in turn suggests which factors could drive Bitcoin growth of market cap.  One in your favor is age - younger people like Bitcoin more than older people.  As people grow up, they may stay loyal to Bitcoin, while younger people adopt it.  I speculate that hyperinflation + currency collapse increase Bitcoin adoption, and these factors are not likely to be big enough to drive growth.  There are likely other factors that I do not know about, and which could expand the discussion.  I also don't know the weight of each factor, which matters.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on February 07, 2023, 02:25:14 PM
        Back to your point though, and I'm repeating myself, my expectation is that with time Bitcoin gets better (more established, less volatile and thus less risky) and most fiats get worse (more debased). If I'm right, the Bitcoin line on the 'useful as currency vs time' chart will progressively cross the lines of the fiats. Bolivar today, Peso next year, Dinar in 8 years, USD well maybe never but you get my point.

        I think you're conflating two separate concepts: utility as a currency and utility as an investment. For what it's worth, I think it's reasonably likely that 1 BTC will be worth more USD in a decade than it is now. So what? That has no bearing on how useful BTC is as a currency relative to USD. A useful currency is one in which the value is relatively stable over time (so that people can set their prices and sign contracts in terms of that currency), and one in which transactions can be completed simply and quickly. BTC is way too volatile. Even if the Lightning network solves the transaction cost/speed problem, nobody's going to sign a contract denominated in a currency whose purchasing power regularly swings back and forth 3x over the course of a year.

        @seattlecyclone, what in your view will likely cause 1 BTC to be worth more USD in a decade than it is now?

        Continued speculation. Note that my definition of "reasonably likely" isn't ">50% probability," it's more a statement of "I would be mostly unsurprised if this happened." In my view, any fundamental changes in the utility of a Bitcoin token explain little (if any) of the price swings in recent years. Given prior history I would hesitate to make any bets against the ability of the hype machine to bring in a new round of "greater fools" to pump the price up again and again. That's why I consider it reasonably likely that the price will increase. I also think it's reasonably likely that the price will decrease. The price of a Bitcoin has previously been something that defies most logical analysis, and I expect this trend to continue.
        This whole conversation makes me think about why we gravitate to this particular subject rather than to far more concrete things. Cryptocurrencies are patterns stored on a network of servers representing intangible brands, spread virally by social media and financial media. They are described as "greater fool" investments with mysterious origins, rampant fraud, underlying technical limitations, a future utility that is purely speculative, and a complete lack of progress toward that future utility.

        That's my best elevator pitch to someone who just came out of a 10-year coma. It's 100% fuzziness and ambiguity.

        We could instead be talking about junk bonds or pharmaceutical micro-cap stocks and cut out 99% of the uncertainty. It would be a very concrete conversation about known facts, predictable systems and results, tangible assets backing the securities, and potential causes that will have known effects. All we'd have to solve for was the future performance of the companies, which is a cakewalk compared to predicting the future of cryptocurrency and then finding a way to profit from that.

        So why do we choose to talk/think about which way the dice will roll with cryptocurrencies when we could instead be attacking more tangible questions, and arguably be making a lot more progress generating investment plans?

        My theories:

        1) Because traditional financial assets are so concrete and tangible, we assume EMH applies and therefore we cannot have any advantage over the markets in valuing a stock or bond. If you cannot obtain an advantage, it makes sense to just B&H an index fund. However, if cryptocurrencies are an inefficient market, where information is not necessarily connected to the price, then perhaps - people think - they can obtain a competitive advantage in this market. It is rarely made clear what the hypothetical advantage would be though.

        2) Bitcoin had a run a long time ago (when markets were thin and public awareness was nil) where it gained thousands of percent in value, so people think that is possible again. There are few other imaginable investments other than lotto tickets where we can imagine that being possible. So people are multiplying infinitesimal odds against astronomical possibilities and arriving at a positive probability-weighted estimate. This is, of course, the extrapolation fallacy riding on the back of the performance-chasing fallacy. Instead of multiplying 1% odds against 5,000% returns, people should be considering how the possibility of a cryptocurrency functioning like a real currency declines every day that passes without expanded adoption for transactions.

        3) Human attention is captured by little bits of unexpected illogic, and so the illogical behavior of other people bidding up cryptocoins grabs our attention in a way that 9% yields on Bed Bath & Beyond bonds do not. The bond investor is making a risk/reward tradeoff based on their assessment of likely outcomes, incorporating all available information, but WTF is the cryptocurrency buyer doing? It's a mystery, and we love mysteries, so we cannot stop thinking about it. This is related to Cunningham's Law (https://meta.wikimedia.org/wiki/Cunningham%27s_Law#:~:text=Cunningham's%20Law%20states%20%22the%20best,the%20inventor%20of%20wiki%20software.) and the observation that TikTok content creators are intentionally inserting misspellings, mispronunciations, and factual errors (https://slate.com/technology/2023/02/tiktok-algorithm-engagement-hack-intentional-errors.html) into their videos because doing so increases engagement. The second article describes a surgeon who erroneously said a victim of a shotgun blast was suffering from buckshot when in fact it was bird shot. Thousands of people came out of nowhere to correct the doctor over and over again. The video went viral because it contained an error, which allowed people to be smarter than a doctor and show that they know something.  Maybe cryptocurrency was a meme intentionally or unintentionally designed to be talked about on the internet, with enough ambiguity so there is an argument on both sides, and plenty of reasons to make everyone feel like they're the smart ones correcting those who are wrong on the internet.

        I'm not adding a "low% of crypto" because none of these three possibilities make crypo assets a good investment. #1 is without basis, #2 is fallacious, and #3 suggests the crypto meme is a mind-virus, hacking our innate desire to make sense of our world to produce more engagement and propagation of itself. I'll stick to value-creating investments and US dollars.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on February 07, 2023, 04:43:16 PM
        Back to your point though, and I'm repeating myself, my expectation is that with time Bitcoin gets better (more established, less volatile and thus less risky) and most fiats get worse (more debased). If I'm right, the Bitcoin line on the 'useful as currency vs time' chart will progressively cross the lines of the fiats. Bolivar today, Peso next year, Dinar in 8 years, USD well maybe never but you get my point.

        I think you're conflating two separate concepts: utility as a currency and utility as an investment. For what it's worth, I think it's reasonably likely that 1 BTC will be worth more USD in a decade than it is now. So what? That has no bearing on how useful BTC is as a currency relative to USD. A useful currency is one in which the value is relatively stable over time (so that people can set their prices and sign contracts in terms of that currency), and one in which transactions can be completed simply and quickly. BTC is way too volatile. Even if the Lightning network solves the transaction cost/speed problem, nobody's going to sign a contract denominated in a currency whose purchasing power regularly swings back and forth 3x over the course of a year.

        Not really - I don't think the 2 things can be completely separated. A useful currency must have some utility as a store-of-value to be of any practical use - otherwise you have to run to the store with your wheelbarrow full of Reichsmarks while they can still pay for your groceries.

        Your point seems to be that Bitcoin is not a good currency today because it is volatile. I agree.

        My point was that I expect that volatility to decrease and other aspects also to improve, thus Bitcoin will progressively become a better currency over time.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on February 07, 2023, 05:32:02 PM
        ...
        This whole conversation makes me think about why we gravitate to this particular subject rather than to far more concrete things.
        ...
        We could instead be talking about junk bonds or pharmaceutical micro-cap stocks and cut out 99% of the uncertainty.
        You don't understand why people talk about crypto in the thread dedicated to talking about crypto?

        It sounds like you want to ignore crypto, but can't ignore this thread.  Maybe when this thread rises to the top, and people see it, that draws their attention.  A better solution might be a sticky crypto thread, so people can more easily ignore it if they choose.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on February 07, 2023, 05:37:46 PM
        LateStarter - Interesting, it does seem internet browsers existed on phones, so your point about iPhone makes more sense.  Maybe the iPhone interface drove adoption?  Worldwide, I believe iPhone currently has a fairly small market share of a very large market.  So definite mitigating factors in calling iPhone a paradigm shift, when "phones with internet browsers" might be a clumsy but more accurate term.

        Also, did you forget to distort something or take it out of context?  :)  Thanks for not doing that - it is rare.

        Right back at you :-)

        You take the opposite view on Bitcoin small block size, and I agree that does give Bitcoin stability.  You said "small block size drives decentralization", which I don't understand - maybe you could expand on that?

        One of the arguments against large blocks was that they make full nodes more expensive to operate - so fewer full nodes would exist.

        Five BTC mining pools account for 87.4% of the hashrate.  I speculate that the people in charge of each mining pool can make centralized decisions for Bitcoin, like which forks to accept.  Members of the mining pool need to be willing to switch if the pool makes a bad decision, and I suspect most people don't pay much attention and are not very involved.  So this may be where Bitcoin is centralized.  Last I checked, the Bitcoin core team & Lightning Network authors were the same small group of people.  Those are the areas where I argue Bitcoin has centralization.
        https://btc.com/stats/pool

        Possibly. I don't know enough about it to comment in detail. It's on my ToDo list.

        Ethereum has concentration of it's own from "proof of stake", with 64% of ETH staked by five entities.
        https://cointelegraph.com/news/64-of-staked-eth-controlled-by-five-entities-nansen

        I don't know which factors are associated with Bitcoin adoption, which in turn suggests which factors could drive Bitcoin growth of market cap.  One in your favor is age - younger people like Bitcoin more than older people.  As people grow up, they may stay loyal to Bitcoin, while younger people adopt it.  I speculate that hyperinflation + currency collapse increase Bitcoin adoption, and these factors are not likely to be big enough to drive growth.  There are likely other factors that I do not know about, and which could expand the discussion.  I also don't know the weight of each factor, which matters.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on February 07, 2023, 10:02:22 PM
        Back to your point though, and I'm repeating myself, my expectation is that with time Bitcoin gets better (more established, less volatile and thus less risky) and most fiats get worse (more debased). If I'm right, the Bitcoin line on the 'useful as currency vs time' chart will progressively cross the lines of the fiats. Bolivar today, Peso next year, Dinar in 8 years, USD well maybe never but you get my point.

        I think you're conflating two separate concepts: utility as a currency and utility as an investment. For what it's worth, I think it's reasonably likely that 1 BTC will be worth more USD in a decade than it is now. So what? That has no bearing on how useful BTC is as a currency relative to USD. A useful currency is one in which the value is relatively stable over time (so that people can set their prices and sign contracts in terms of that currency), and one in which transactions can be completed simply and quickly. BTC is way too volatile. Even if the Lightning network solves the transaction cost/speed problem, nobody's going to sign a contract denominated in a currency whose purchasing power regularly swings back and forth 3x over the course of a year.

        Not really - I don't think the 2 things can be completely separated. A useful currency must have some utility as a store-of-value to be of any practical use - otherwise you have to run to the store with your wheelbarrow full of Reichsmarks while they can still pay for your groceries.

        Sure. USD is a fine store of value in the short to medium term. I know my dollars will be worth basically the same amount in a month as they are worth today. I know my dollars will be worth slightly less in a year than they are worth today, and a bit less than that a year after that. This slow inflation does give me an incentive to not own very many dollars for the long run, and to instead invest most of my capital into productive assets. Seems like a good thing to me.

        Compare to Bitcoin where I don't know it will be worth basically the same amount in a month as it's worth today, and predicting what it will be worth even a year out is a fool's errand.

        Quote
        My point was that I expect that volatility to decrease...

        Why? What do you believe is driving Bitcoin's high volatility today, and what evidence do you have that these forces will subside in time?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on February 08, 2023, 08:06:19 AM
        A decrease in volatility would require speculation to basically cease, right?

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on February 08, 2023, 09:30:20 AM
        A decrease in volatility would require speculation to basically cease, right?

        -W

        Lack of speculation would force bitcoin to fall back on it's utility value - zero (or near zero).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: simonsez on February 08, 2023, 10:27:03 AM
        ...
        This whole conversation makes me think about why we gravitate to this particular subject rather than to far more concrete things.
        ...
        We could instead be talking about junk bonds or pharmaceutical micro-cap stocks and cut out 99% of the uncertainty.
        You don't understand why people talk about crypto in the thread dedicated to talking about crypto?

        It sounds like you want to ignore crypto, but can't ignore this thread.  Maybe when this thread rises to the top, and people see it, that draws their attention.  A better solution might be a sticky crypto thread, so people can more easily ignore it if they choose.
        I took it to mean in a general sociologically-curious context of what humans like to chat about (i.e. all of society with its possible modes of communications, not limited to one thread on the MMM forum) - NOT meaning "why are people continuing to talk about crypto in this specific crypto thread".
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on February 08, 2023, 10:30:40 AM
        ...
        This whole conversation makes me think about why we gravitate to this particular subject rather than to far more concrete things.
        ...
        We could instead be talking about junk bonds or pharmaceutical micro-cap stocks and cut out 99% of the uncertainty.
        You don't understand why people talk about crypto in the thread dedicated to talking about crypto?

        It sounds like you want to ignore crypto, but can't ignore this thread.  Maybe when this thread rises to the top, and people see it, that draws their attention.  A better solution might be a sticky crypto thread, so people can more easily ignore it if they choose.
        I took it to mean in a general sociologically-curious context of what humans like to chat about (i.e. all of society with its possible modes of communications, not limited to one thread on the MMM forum) - NOT meaning "why are people continuing to talk about crypto in this specific crypto thread".
        Correct @simonsez . I failed to more clearly define the "we".
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: YttriumNitrate on February 08, 2023, 10:47:20 AM
        A decrease in volatility would require speculation to basically cease, right? -W
        Much like traditional currencies, with enough leverage the speculation could continue. When 100x+ leverage is common in USD/EUR to Bitcoin trades, it'll be a good sign that Bitcoin has become a legitimate currency.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on February 08, 2023, 02:44:51 PM
        Back to your point though, and I'm repeating myself, my expectation is that with time Bitcoin gets better (more established, less volatile and thus less risky) and most fiats get worse (more debased). If I'm right, the Bitcoin line on the 'useful as currency vs time' chart will progressively cross the lines of the fiats. Bolivar today, Peso next year, Dinar in 8 years, USD well maybe never but you get my point.

        I think you're conflating two separate concepts: utility as a currency and utility as an investment. For what it's worth, I think it's reasonably likely that 1 BTC will be worth more USD in a decade than it is now. So what? That has no bearing on how useful BTC is as a currency relative to USD. A useful currency is one in which the value is relatively stable over time (so that people can set their prices and sign contracts in terms of that currency), and one in which transactions can be completed simply and quickly. BTC is way too volatile. Even if the Lightning network solves the transaction cost/speed problem, nobody's going to sign a contract denominated in a currency whose purchasing power regularly swings back and forth 3x over the course of a year.

        Not really - I don't think the 2 things can be completely separated. A useful currency must have some utility as a store-of-value to be of any practical use - otherwise you have to run to the store with your wheelbarrow full of Reichsmarks while they can still pay for your groceries.

        Sure. USD is a fine store of value in the short to medium term. I know my dollars will be worth basically the same amount in a month as they are worth today. I know my dollars will be worth slightly less in a year than they are worth today, and a bit less than that a year after that. This slow inflation does give me an incentive to not own very many dollars for the long run, and to instead invest most of my capital into productive assets. Seems like a good thing to me.

        Compare to Bitcoin where I don't know it will be worth basically the same amount in a month as it's worth today, and predicting what it will be worth even a year out is a fool's errand.

        Once again:
        Your point seems to be that Bitcoin is not a good currency today because it is volatile. I agree.

        I'm less enthusiastic about the 'benefits' of inflation, but that's a bit too much of a sidetrack here.

        My point was that I expect that volatility to decrease...

        Why? What do you believe is driving Bitcoin's high volatility today, and what evidence do you have that these forces will subside in time?

        It's still very speculative and attracts traders hopping in and out with leverage, etc. Also, there's been plenty of hot fresh money about in recent years.

        Greater adoption. Broader, more diverse adoption. Lightning/currency adoption. Institutional investment. Technology developments breaking barriers and adding further encouragement to all adoption. etc.

        I have no evidence to prove that these things will happen - it's just my expectation. However, if they do happen, a bigger/broader Bitcoin is very likely to be less volatile. I'm not holding my breath - it'll be a while.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on February 08, 2023, 03:21:34 PM
        Not really - I don't think the 2 things can be completely separated. A useful currency must have some utility as a store-of-value to be of any practical use - otherwise you have to run to the store with your wheelbarrow full of Reichsmarks while they can still pay for your groceries.

        Sure. USD is a fine store of value in the short to medium term. I know my dollars will be worth basically the same amount in a month as they are worth today. I know my dollars will be worth slightly less in a year than they are worth today, and a bit less than that a year after that. This slow inflation does give me an incentive to not own very many dollars for the long run, and to instead invest most of my capital into productive assets. Seems like a good thing to me.

        Compare to Bitcoin where I don't know it will be worth basically the same amount in a month as it's worth today, and predicting what it will be worth even a year out is a fool's errand.

        Once again:
        Your point seems to be that Bitcoin is not a good currency today because it is volatile. I agree.

        I'm less enthusiastic about the 'benefits' of inflation, but that's a bit too much of a sidetrack here.

        What I'm saying is that USD is currently a better store of value than Bitcoin. If I had put money into BTC a year ago, only half of that value would have been stored to the present moment. If I had kept it in cash over 90% of the value would have been stored. Will BTC be a better long-term store of value than USD? Maybe, maybe not. Way too soon to tell. It's not like gold that has thousands of years of history of being broadly valued across the human population.

        As to the benefits of inflation, a deflationary monetary policy encourages people to hoard their currency and delay most economic activity as long as possible because stuff will be cheaper tomorrow than today. Hyperinflation is really bad. Everyone can agree on that. Deflation isn't much better. Slow inflation isn't amazing, but it's better than the alternatives. Bitcoin's choice to be purposefully deflationary was just that: a choice, and not a particularly good one IMO.

        Quote
        My point was that I expect that volatility to decrease...

        Why? What do you believe is driving Bitcoin's high volatility today, and what evidence do you have that these forces will subside in time?

        It's still very speculative and attracts traders hopping in and out with leverage, etc. Also, there's been plenty of hot fresh money about in recent years.

        Greater adoption. Broader, more diverse adoption. Lightning/currency adoption. Institutional investment. Technology developments breaking barriers and adding further encouragement to all adoption. etc.

        I have no evidence to prove that these things will happen - it's just my expectation. However, if they do happen, a bigger/broader Bitcoin is very likely to be less volatile. I'm not holding my breath - it'll be a while.

        You seem to be asserting that Bitcoin will become less volatile, and in fact stable enough to be useful as a currency, as more people use and invest in it. It's not intuitively obvious to me that this would be the case. Bunches of people invest in the stock market and VTSAX is nowhere near stable enough to be a good backing for a currency. How has the volatility been trending over recent years as usage and investment has increased? Has it even been trending downward at all?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on February 08, 2023, 04:25:38 PM
        Yeah, it's not clear to me either how more people investing in bitcoin would stabilize it in any way. The stock market has far more participants than BtC and it's not particularly stable.

        BtC could have been designed to have a very slowly growing supply of coins, or a supply of coins designed to stay stable in relation to some basket of real world goods, which would have made it less attractive to hoard and more attractive to use for exchange. I am still baffled by the decision to design it with a fixed supply of coins.

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on February 08, 2023, 07:19:25 PM
        ...
        This whole conversation makes me think about why we gravitate to this particular subject rather than to far more concrete things.
        ...
        We could instead be talking about junk bonds or pharmaceutical micro-cap stocks and cut out 99% of the uncertainty.
        You don't understand why people talk about crypto in the thread dedicated to talking about crypto?

        It sounds like you want to ignore crypto, but can't ignore this thread.  Maybe when this thread rises to the top, and people see it, that draws their attention.  A better solution might be a sticky crypto thread, so people can more easily ignore it if they choose.
        I took it to mean in a general sociologically-curious context of what humans like to chat about (i.e. all of society with its possible modes of communications, not limited to one thread on the MMM forum) - NOT meaning "why are people continuing to talk about crypto in this specific crypto thread".
        Correct @simonsez . I failed to more clearly define the "we".
        If you agree that is off topic for this thread, then my point remains that this should be posted somewhere else rather than in a thread focused on crypto.

        And in a more general way, many people post in this thread who hate crypto, want to post their hate of crypto, and do not check that the same things have been brought up before.  Those posts, to me, are further evidence people post here just because the thread draws their attention, and not because they want to contribute.  Which is why I suggested it be sticky, and easier to ignore.
        https://forum.mrmoneymustache.com/forum-information-faqs/make-crypto-thread-sticky-(investor-alley)/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on February 09, 2023, 07:45:36 AM
        Yeah, it's not clear to me either how more people investing in bitcoin would stabilize it in any way. The stock market has far more participants than BtC and it's not particularly stable.

        BtC could have been designed to have a very slowly growing supply of coins, or a supply of coins designed to stay stable in relation to some basket of real world goods, which would have made it less attractive to hoard and more attractive to use for exchange. I am still baffled by the decision to design it with a fixed supply of coins.

        -W

        My guess is because it was designed by/for gold-standard enthusiasts.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: JAYSLOL on February 09, 2023, 10:48:00 AM
        ...
        This whole conversation makes me think about why we gravitate to this particular subject rather than to far more concrete things.
        ...
        We could instead be talking about junk bonds or pharmaceutical micro-cap stocks and cut out 99% of the uncertainty.
        You don't understand why people talk about crypto in the thread dedicated to talking about crypto?

        It sounds like you want to ignore crypto, but can't ignore this thread.  Maybe when this thread rises to the top, and people see it, that draws their attention.  A better solution might be a sticky crypto thread, so people can more easily ignore it if they choose.
        I took it to mean in a general sociologically-curious context of what humans like to chat about (i.e. all of society with its possible modes of communications, not limited to one thread on the MMM forum) - NOT meaning "why are people continuing to talk about crypto in this specific crypto thread".
        Correct @simonsez . I failed to more clearly define the "we".
        If you agree that is off topic for this thread, then my point remains that this should be posted somewhere else rather than in a thread focused on crypto.

        And in a more general way, many people post in this thread who hate crypto, want to post their hate of crypto, and do not check that the same things have been brought up before.  Those posts, to me, are further evidence people post here just because the thread draws their attention, and not because they want to contribute.  Which is why I suggested it be sticky, and easier to ignore.
        https://forum.mrmoneymustache.com/forum-information-faqs/make-crypto-thread-sticky-(investor-alley)/

        So… should crypto enthusiasts also not be able to post anything in support of crypto that has been posted already?  Or that rule only applies to those you disagree with?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on February 09, 2023, 12:54:34 PM
        Not really - I don't think the 2 things can be completely separated. A useful currency must have some utility as a store-of-value to be of any practical use - otherwise you have to run to the store with your wheelbarrow full of Reichsmarks while they can still pay for your groceries.

        Sure. USD is a fine store of value in the short to medium term. I know my dollars will be worth basically the same amount in a month as they are worth today. I know my dollars will be worth slightly less in a year than they are worth today, and a bit less than that a year after that. This slow inflation does give me an incentive to not own very many dollars for the long run, and to instead invest most of my capital into productive assets. Seems like a good thing to me.

        Compare to Bitcoin where I don't know it will be worth basically the same amount in a month as it's worth today, and predicting what it will be worth even a year out is a fool's errand.

        Once again:
        Your point seems to be that Bitcoin is not a good currency today because it is volatile. I agree.

        I'm less enthusiastic about the 'benefits' of inflation, but that's a bit too much of a sidetrack here.

        What I'm saying is that USD is currently a better store of value than Bitcoin. If I had put money into BTC a year ago, only half of that value would have been stored to the present moment. If I had kept it in cash over 90% of the value would have been stored. Will BTC be a better long-term store of value than USD? Maybe, maybe not. Way too soon to tell. It's not like gold that has thousands of years of history of being broadly valued across the human population.

        Over the past year ? Yes. What about the past month ? Or the past 3 years or 4 years or 6 years or whatever. You've focused on a specific interval that suits your argument and disregarded all others. That proves nothing, other than confirmation bias.

        Just about everyone in Bitcoin has said for a long while: if you're thinking in terms of <4 years, you're in for a rough ride.

        As to the benefits of inflation, a deflationary monetary policy encourages people to hoard their currency and delay most economic activity as long as possible because stuff will be cheaper tomorrow than today. Hyperinflation is really bad. Everyone can agree on that. Deflation isn't much better. Slow inflation isn't amazing, but it's better than the alternatives. Bitcoin's choice to be purposefully deflationary was just that: a choice, and not a particularly good one IMO.

        Bitcoin was designed to be disinflationary - not deflationary. In practise, lost coins will make it mildly deflationary.

        It's not been discussed in depth and I haven't scoured the world's libraries looking for it, but I've yet to see good evidence of this bad deflation scenario. The examples usually quoted are, eg. 1930's, ie. deflationary contractions following periods of irrational exuberance, eg. roaring 20's. The deflation is part of the bitter medicine in these cases - It's not the cause of the pain, it's part of the cure.

        Granted, a mildly deflationary world might make people/businesses more careful with money, but is that necessarily a bad thing ? In terms of business, investment and broad economic activity, it would only raise the bar. Good investments will still be good investments, mediocre investments might become poor investments, it should further discourage malinvestment.
        At a personal level, a longer-term frugal-minded outlook, less excessive spending, less rampant consumerism, etc. all sounds pretty Mustachian and environmentally-friendly to me.

        Also, would people actually delay purchases to any significant degree in practise ? Evidence ?
        People commonly choose to pay car+loanInterest now rather than delay, save and pay car-savingsInterest later. There's an easy 15%pa(?) 'deflationary' win on offer, but people don't/can't wait.

        My point was that I expect that volatility to decrease...
        Why? What do you believe is driving Bitcoin's high volatility today, and what evidence do you have that these forces will subside in time?

        It's still very speculative and attracts traders hopping in and out with leverage, etc. Also, there's been plenty of hot fresh money about in recent years.

        Greater adoption. Broader, more diverse adoption. Lightning/currency adoption. Institutional investment. Technology developments breaking barriers and adding further encouragement to all adoption. etc.

        I have no evidence to prove that these things will happen - it's just my expectation. However, if they do happen, a bigger/broader Bitcoin is very likely to be less volatile. I'm not holding my breath - it'll be a while.

        You seem to be asserting that Bitcoin will become less volatile, and in fact stable enough to be useful as a currency, as more people use and invest in it. It's not intuitively obvious to me that this would be the case. Bunches of people invest in the stock market and VTSAX is nowhere near stable enough to be a good backing for a currency. How has the volatility been trending over recent years as usage and investment has increased? Has it even been trending downward at all?

        Why is the SP500 less volatile than a penny stock ? It's the size, value, number of participants, different goals/timescales of those participants, etc. Most buys/sells are just swallowed up - relatively speaking.

        Do you think there are no fiat currencies more volatile than VTSAX ?

        Bitcoin volatility indicators, BVIN and BVOL both seem to show a broad/slow reduction in volatility. Make of that what you will. I'm not concluding much from it - the charts are a bit all over the place.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on February 09, 2023, 01:16:55 PM
        Why is the SP500 less volatile than a penny stock ? It's the size, value, number of participants, different goals/timescales of those participants, etc.

        The companies in the S&P are cut loose if they have less than a 13 billion dollar market cap, less than a quarter million trades in the past six months, and have negative earnings over four quarters.

        That alone helps an awful lot with volatility.  You get a broad collection of different companies where much of the chaff is cut away and newer strong companies are regularly added.

        Seems like that would tend to significantly reduce swings when compared with an 'all our eggs in one basket' approach of betting on any individual cryptocurrency.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on February 09, 2023, 02:10:45 PM
        Why is the SP500 less volatile than a penny stock ? It's the size, value, number of participants, different goals/timescales of those participants, etc.

        The companies in the S&P are cut loose if they have less than a 13 billion dollar market cap, less than a quarter million trades in the past six months, and have negative earnings over four quarters.

        That alone helps an awful lot with volatility.  You get a broad collection of different companies where much of the chaff is cut away and newer strong companies are regularly added.

        Seems like that would tend to significantly reduce swings when compared with an 'all our eggs in one basket' approach of betting on any individual cryptocurrency.

        Fair point, comparing an index to an individual company was careless.

        The point I intended to convey was: small cap stocks tend to be more volatile than large cap stocks  - for the same reasons in given my original post.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on February 09, 2023, 07:27:57 PM
        What I'm saying is that USD is currently a better store of value than Bitcoin. If I had put money into BTC a year ago, only half of that value would have been stored to the present moment. If I had kept it in cash over 90% of the value would have been stored. Will BTC be a better long-term store of value than USD? Maybe, maybe not. Way too soon to tell. It's not like gold that has thousands of years of history of being broadly valued across the human population.

        Over the past year ? Yes. What about the past month ? Or the past 3 years or 4 years or 6 years or whatever. You've focused on a specific interval that suits your argument and disregarded all others. That proves nothing, other than confirmation bias.

        Just about everyone in Bitcoin has said for a long while: if you're thinking in terms of <4 years, you're in for a rough ride.

        When I think of the term "store of value" I understand that concept to be all about mitigating downsides; upsides are pretty irrelevant. Stock in an early stage tech startup may be a good investment because it has a chance of multiplying many times in value, but it's a terrible store of value because it's more likely than not to go to zero within a decade.

        Time period factors into it as well. A dollar is a great store of value when you're looking at time periods of months or even a few years. You might lose a few percent every year, but if your time horizon is a small number of years the assurance you'll get most of your value back out can be worth it. By comparison, Bitcoin is a terrible store of value in the months-to-years range. It swings all over the place. "Rough ride" and "good store of value" are rarely synonymous.

        Expand the time period out to decades and USD is a bad store of value indeed. Pretty much any diversified investment will work better for this purpose. Will Bitcoin be a better store of value than USD if your time horizon is 10-50 years? There's much too little historical data to have any confidence in that.

        Quote
        You seem to be asserting that Bitcoin will become less volatile, and in fact stable enough to be useful as a currency, as more people use and invest in it. It's not intuitively obvious to me that this would be the case. Bunches of people invest in the stock market and VTSAX is nowhere near stable enough to be a good backing for a currency. How has the volatility been trending over recent years as usage and investment has increased? Has it even been trending downward at all?

        Why is the SP500 less volatile than a penny stock ? It's the size, value, number of participants, different goals/timescales of those participants, etc. Most buys/sells are just swallowed up - relatively speaking.

        Diversification and high market cap and high trading volume and active removal of destabilizing companies all factor into the S&P 500's relatively lower volatility. But even with a market cap 100x what Bitcoin has, the S&P 500 is way too volatile to use as a currency.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on February 10, 2023, 05:53:24 AM
        ...
        This whole conversation makes me think about why we gravitate to this particular subject rather than to far more concrete things.
        ...
        We could instead be talking about junk bonds or pharmaceutical micro-cap stocks and cut out 99% of the uncertainty.
        You don't understand why people talk about crypto in the thread dedicated to talking about crypto?

        It sounds like you want to ignore crypto, but can't ignore this thread.  Maybe when this thread rises to the top, and people see it, that draws their attention.  A better solution might be a sticky crypto thread, so people can more easily ignore it if they choose.
        I took it to mean in a general sociologically-curious context of what humans like to chat about (i.e. all of society with its possible modes of communications, not limited to one thread on the MMM forum) - NOT meaning "why are people continuing to talk about crypto in this specific crypto thread".
        Correct @simonsez . I failed to more clearly define the "we".
        If you agree that is off topic for this thread, then my point remains that this should be posted somewhere else rather than in a thread focused on crypto.

        And in a more general way, many people post in this thread who hate crypto, want to post their hate of crypto, and do not check that the same things have been brought up before.  Those posts, to me, are further evidence people post here just because the thread draws their attention, and not because they want to contribute.  Which is why I suggested it be sticky, and easier to ignore.
        https://forum.mrmoneymustache.com/forum-information-faqs/make-crypto-thread-sticky-(investor-alley)/
        So… should crypto enthusiasts also not be able to post anything in support of crypto that has been posted already?  Or that rule only applies to those you disagree with?
        You said "not be able to post", I didn't.  I did not bring up a "rule", so "that rule" refers to something you just invented to argue against.  Quote where I said it.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on February 12, 2023, 12:55:18 PM
        What I'm saying is that USD is currently a better store of value than Bitcoin. If I had put money into BTC a year ago, only half of that value would have been stored to the present moment. If I had kept it in cash over 90% of the value would have been stored. Will BTC be a better long-term store of value than USD? Maybe, maybe not. Way too soon to tell. It's not like gold that has thousands of years of history of being broadly valued across the human population.

        Over the past year ? Yes. What about the past month ? Or the past 3 years or 4 years or 6 years or whatever. You've focused on a specific interval that suits your argument and disregarded all others. That proves nothing, other than confirmation bias.

        Just about everyone in Bitcoin has said for a long while: if you're thinking in terms of <4 years, you're in for a rough ride.

        When I think of the term "store of value" I understand that concept to be all about mitigating downsides; upsides are pretty irrelevant. Stock in an early stage tech startup may be a good investment because it has a chance of multiplying many times in value, but it's a terrible store of value because it's more likely than not to go to zero within a decade.

        Time period factors into it as well. A dollar is a great store of value when you're looking at time periods of months or even a few years. You might lose a few percent every year, but if your time horizon is a small number of years the assurance you'll get most of your value back out can be worth it. By comparison, Bitcoin is a terrible store of value in the months-to-years range. It swings all over the place. "Rough ride" and "good store of value" are rarely synonymous.

        Expand the time period out to decades and USD is a bad store of value indeed. Pretty much any diversified investment will work better for this purpose. Will Bitcoin be a better store of value than USD if your time horizon is 10-50 years? There's much too little historical data to have any confidence in that.

        This discussion has wandered off track - so bringing it back:

        My original point you responded to:

        My point was that Bitcoin, today, is probably a better currency than the norm in some of the toughest countries - with poor fiats and poor banking, etc.
        I'm not comparing Bitcoin today to USD today. I explicitly said, for use as a currency, that Bitcoin will replace the "USD well maybe never".

        So has this and the point below addressed your disagreements with my post above ?

        I'm happy to discuss the broader, general aspects of Bitcoin as store of value vs USD, etc. but it would nice to wrap up one thing before moving on to the next.

        You seem to be asserting that Bitcoin will become less volatile, and in fact stable enough to be useful as a currency, as more people use and invest in it. It's not intuitively obvious to me that this would be the case. Bunches of people invest in the stock market and VTSAX is nowhere near stable enough to be a good backing for a currency. How has the volatility been trending over recent years as usage and investment has increased? Has it even been trending downward at all?

        Why is the SP500 less volatile than a penny stock ? It's the size, value, number of participants, different goals/timescales of those participants, etc. Most buys/sells are just swallowed up - relatively speaking.

        Diversification and high market cap and high trading volume and active removal of destabilizing companies all factor into the S&P 500's relatively lower volatility. But even with a market cap 100x what Bitcoin has, the S&P 500 is way too volatile to use as a currency.

        copy of my response to GuitarStv:

        Fair point, comparing an index to an individual company was careless.

        The point I intended to convey was: small cap stocks tend to be more volatile than large cap stocks  - for the same reasons in given my original post.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on February 12, 2023, 03:55:26 PM
        Sure, there probably exist a handful of minor national currencies that are more volatile than Bitcoin. That's a pretty low bar. People living in such countries often use other means of exchange, like when Zimbabwe's currency hyperinflated they started using foreign currencies (including US dollars and the rand from neighboring South Africa) instead. So yeah in such a situation people would definitely be open to using a currency other than the one their own government sponsors, but when that happens they tend to pick major currencies, not one that is only marginally more stable than the one they recently abandoned.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: okonumiyaki on February 18, 2023, 01:42:37 AM
        Re "The government can't take your bitcoin" and "hold in cold storage"

        Doesn't help.   Most governments will know what a bitcoin wallet looks like.  (and, at a guess, in Tate's case it looks a lot like money laundering.  I am thinking that unless he can show the BTC are squeaky clean, and all taxes paid on the income they represent, they won't be his BTC for much longer)

        https://coinmarketcap.com/alexandria/article/police-seized-nearly-dollar500000-in-btc-from-andrew-and-tristan-tate
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on February 18, 2023, 02:47:12 AM
        Re "The government can't take your bitcoin" and "hold in cold storage"

        Doesn't help.   Most governments will know what a bitcoin wallet looks like.  (and, at a guess, in Tate's case it looks a lot like money laundering.  I am thinking that unless he can show the BTC are squeaky clean, and all taxes paid on the income they represent, they won't be his BTC for much longer)

        https://coinmarketcap.com/alexandria/article/police-seized-nearly-dollar500000-in-btc-from-andrew-and-tristan-tate

        Tell us, what does a bitcoin wallet look like?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: bacchi on February 18, 2023, 07:06:12 PM
        Re "The government can't take your bitcoin" and "hold in cold storage"

        Doesn't help.   Most governments will know what a bitcoin wallet looks like.  (and, at a guess, in Tate's case it looks a lot like money laundering.  I am thinking that unless he can show the BTC are squeaky clean, and all taxes paid on the income they represent, they won't be his BTC for much longer)

        https://coinmarketcap.com/alexandria/article/police-seized-nearly-dollar500000-in-btc-from-andrew-and-tristan-tate

        Tell us, what does a bitcoin wallet look like?

        What government does okonumiyaki represent?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: okonumiyaki on February 18, 2023, 08:29:34 PM


        Tell us, what does a bitcoin wallet look like?

        Well, obvious enough that the Romanian police were able to confiscate it.  (though, it could have been that they were subpoenaed to disclose all assets, and so gave them up) 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on February 18, 2023, 09:06:22 PM


        Tell us, what does a bitcoin wallet look like?

        Well, obvious enough that the Romanian police were able to confiscate it.  (though, it could have been that they were subpoenaed to disclose all assets, and so gave them up)

        From the article you posted it reads like they have been able to seize a small proportion of his total crypto holdings, that would only be because he left the private keys to those wallets lying around for them to find.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on February 18, 2023, 10:26:23 PM
        Quote
        Mateea Petrescu, a spokesperson for Andrew Tate and his brother Tristan (who was also arrested ), told Decrypt that Romanian police also confiscated hardware wallets containing digital assets.

        Petrescu said Andrew Tate’s wallet contained five Bitcoin—today worth around $111,339. Tristan’s wallet held around 16 Bitcoin.

        In total, that’s $467,625 worth of the asset.
        https://decrypt.co/121308/andrew-tate-bitcoin-seized

        "Hardware wallets" are physical devices, so "confiscated" could simply mean Romanian police took possession of the physical devices.  Those typically have (potentially flawed) security preventing access to the private key.  I haven't seen any articles mention a transfer of BTC out of the Tate's hardware wallets.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on February 19, 2023, 12:07:37 AM
        Quote
        Mateea Petrescu, a spokesperson for Andrew Tate and his brother Tristan (who was also arrested ), told Decrypt that Romanian police also confiscated hardware wallets containing digital assets.

        Petrescu said Andrew Tate’s wallet contained five Bitcoin—today worth around $111,339. Tristan’s wallet held around 16 Bitcoin.

        In total, that’s $467,625 worth of the asset.
        https://decrypt.co/121308/andrew-tate-bitcoin-seized

        "Hardware wallets" are physical devices, so "confiscated" could simply mean Romanian police took possession of the physical devices.  Those typically have (potentially flawed) security preventing access to the private key.  I haven't seen any articles mention a transfer of BTC out of the Tate's hardware wallets.

        If all they have is the physical devices and don't have access to the private key, they haven't 'seized' anything as far as his crypto is concerned.  For all they know Tate could have already done a factory reset on those devices and has his seed phrase locked up in a swiss bank safe deposit box or some hiding place somewhere on earth that only he knows about.  The authorities probably know about some of his wallets, but likely he also has wallets that noone even knows are his.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on February 19, 2023, 09:13:03 AM
        Does the confiscation of wealth really matter?

        Tate is either not going to need the money in prison for human trafficking/rape or he's going to be exonerated and will get all his money back.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: bacchi on February 19, 2023, 09:20:57 AM
        Does the confiscation of wealth really matter?

        Tate is either not going to need the money in prison for human trafficking/rape or he's going to be exonerated and will get all his money back.

        If he ends up in the clinker, one of his acolytes can use his hidden BTC to fill up his commissary account.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on February 19, 2023, 05:29:29 PM
        Does the confiscation of wealth really matter?

        Tate is either not going to need the money in prison for human trafficking/rape or he's going to be exonerated and will get all his money back.
        If he ends up in the clinker, one of his acolytes can use his hidden BTC to fill up his commissary account.
        For the new "inmate" category in the "Investment Order" thread: yes, add "a low % crypto allocation".
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: okonumiyaki on February 19, 2023, 07:52:33 PM
        Quote
        Mateea Petrescu, a spokesperson for Andrew Tate and his brother Tristan (who was also arrested ), told Decrypt that Romanian police also confiscated hardware wallets containing digital assets.

        Petrescu said Andrew Tate’s wallet contained five Bitcoin—today worth around $111,339. Tristan’s wallet held around 16 Bitcoin.

        In total, that’s $467,625 worth of the asset.
        https://decrypt.co/121308/andrew-tate-bitcoin-seized

        "Hardware wallets" are physical devices, so "confiscated" could simply mean Romanian police took possession of the physical devices.  Those typically have (potentially flawed) security preventing access to the private key.  I haven't seen any articles mention a transfer of BTC out of the Tate's hardware wallets.

        If all they have is the physical devices and don't have access to the private key, they haven't 'seized' anything as far as his crypto is concerned.  For all they know Tate could have already done a factory reset on those devices and has his seed phrase locked up in a swiss bank safe deposit box or some hiding place somewhere on earth that only he knows about.  The authorities probably know about some of his wallets, but likely he also has wallets that noone even knows are his.

        I presume the court has sent him a notice to declare all assets.  Sure, he can lie, but as blockchain is traceable, that's risky.  Especially as they seem to be pretty serious about nailing him, so I wouldn't rule out an Al Capone style - 'we will send you to jail for tax evasion/ money laundering/ failing to disclose assets' if they can't get the trafficing cases to stick
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on February 23, 2023, 04:30:36 PM
        I presume the court has sent him a notice to declare all assets.  Sure, he can lie, but as blockchain is traceable, that's risky.  Especially as they seem to be pretty serious about nailing him, so I wouldn't rule out an Al Capone style - 'we will send you to jail for tax evasion/ money laundering/ failing to disclose assets' if they can't get the trafficing cases to stick

        A while back I heard an interview with Katie Haun, who was a federal prosecutor who later became a blockchain venture capitalist.  As a prosecutor, she prosecuted the Mt.Gox and Silk Road cases, and hence became an expert on crypto-crimes.   As it turns out, there were two undercover FBI agents working the Mt. Gox case who became corrupt (unknown to each other).   She was emphatic that they were busted and prosecuted because they were using Bitcoin.  Mind you, these were FBI agents who knew how crimes are investigated and even had access to information regarding the ongoing Mt. Gox investigation and they still couldn't cover their tracks.  I don't think a stooge like Andrew Tate has much of a chance. 

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Metalcat on February 24, 2023, 06:47:20 AM
        Does the confiscation of wealth really matter?

        Tate is either not going to need the money in prison for human trafficking/rape or he's going to be exonerated and will get all his money back.
        If he ends up in the clinker, one of his acolytes can use his hidden BTC to fill up his commissary account.
        For the new "inmate" category in the "Investment Order" thread: yes, add "a low % crypto allocation".

        Fuck that was funny.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on June 06, 2023, 07:37:52 AM
        Binance, Coinbase, Kraken, Binance.US and KuCoin... there's a hole where FTX used to be, but the other crypto exchanges can take up the slack.

        Binance / Binance.US - 13 charges for willfully misleading investors and operating illegally
        Coinbase - Charges for misleading investors and operating illegally
        Kraken - Shut down to settle after charges were brought for operating illegally
        KuCoin - Currently embroiled in NY state lawsuits for operating illegally

        . . . looks like the other crypto exchanges really did take up all the slack that FTX left!
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on June 06, 2023, 08:13:03 AM
        Does the confiscation of wealth really matter?

        Tate is either not going to need the money in prison for human trafficking/rape or he's going to be exonerated and will get all his money back.
        If he ends up in the clinker, one of his acolytes can use his hidden BTC to fill up his commissary account.
        For the new "inmate" category in the "Investment Order" thread: yes, add "a low % crypto allocation".

        Fuck that was funny.

        I say we need another subforum for "Illegal/immoral ways to FIRE"! A safe space where folks can discuss bitcoin and NFT scams, how to pump your penny stock, which states have the best prisons, how to accessorize your jumpsuit..
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Glenstache on June 06, 2023, 09:01:30 AM
        Does the confiscation of wealth really matter?

        Tate is either not going to need the money in prison for human trafficking/rape or he's going to be exonerated and will get all his money back.
        If he ends up in the clinker, one of his acolytes can use his hidden BTC to fill up his commissary account.
        For the new "inmate" category in the "Investment Order" thread: yes, add "a low % crypto allocation".

        Fuck that was funny.

        I say we need another subforum for "Illegal/immoral ways to FIRE"! A safe space where folks can discuss bitcoin and NFT scams, how to pump your penny stock, which states have the best prisons, how to accessorize your jumpsuit..
        I thought that was the Overheard on Facebook thread?

        Also, WTF was up with the outsized discussion of bitcoin, etc during the DeSantis announcement? Was it just a suck up to Elon & Friends as potential donors? Maybe he's just trying to emulated Trump some more and find an MLM angle for his campaign? https://www.coindesk.com/policy/2023/05/25/desantis-bitcoin-represents-a-threat-to-the-current-regime/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Paper Chaser on June 06, 2023, 09:06:22 AM
        Binance, Coinbase, Kraken, Binance.US and KuCoin... there's a hole where FTX used to be, but the other crypto exchanges can take up the slack.

        Binance / Binance.US - 13 charges for willfully misleading investors and operating illegally
        Coinbase - Charges for misleading investors and operating illegally
        Kraken - Shut down to settle after charges were brought for operating illegally
        KuCoin - Currently embroiled in NY state lawsuits for operating illegally

        . . . looks like the other crypto exchanges really did take up all the slack that FTX left!

        Slack from FTX? Nah, they've all been shady from the jump. Binance guys were knowingly doing illegal stuff back in 2018:
        (https://pbs.twimg.com/media/Fx3qBHTXsAUP8Xw?format=png&name=900x900)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on June 07, 2023, 06:48:19 AM
        If it's true that Binance and Coinbase have been acting illegally and misleading investors, etc., and I'm guessing a lot of it probably IS true, then great - as with SBF, fuck those guys - good riddance to bad rubbish. It would be wonderful to see the scammy exchanges and scammy cryptos exposed for what they are, and driven out. This is exactly what many Bitcoiners have been saying for a long time.

        There might be some short-term guilt_by_association damage but this is good for Bitcoin.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on June 07, 2023, 07:03:36 AM
        BTC-USD price dropped the day that story broke, then recovered within a day.
        https://finance.yahoo.com/quote/BTC-USD/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Stimpy on June 07, 2023, 07:51:00 AM
        So.... you do realize that the exchanges have made Crypto what it is right.   Fairly easy access, fairly easy to then go further in.  Heck when I first heard of bitcoin it was, go ask a friend to sell it to you.  Ok, maybe not quite that but getting it required hoop jumping.  Coinbase and equivalent eliminated that!

        IF the SEC sues them out of existence do you think the general public will stick around?  I don't. The Crypto bro's might keep going, but we will be back to the days of hoop jumping and I for one, even though I could probably do that, don't want to.  I expect MOST won't.  And yes there are foreign exchanges in Japan and other places but if the SEC kills them in America, I expect other nations will do similar.  Even if some survive in other countries, your average person in the US or other affected nations, aren't going to use them. 

        So enjoy it while it lasts, BTC and other coins will either go down to near zero level or stop existing if easy access goes away. Though probably not right away.  No other way to state it.  We shall just have to wait and see what happens and whether these crypto exchanges survive.
        (Full disclosure, yes I own some crypto.)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on June 07, 2023, 08:15:57 AM
        So pretty much every exchange is/was fraudulent? Is that where we're at with this?

        I guess I'm not really surprised. But it's infuriating that the original promise of crypto (get rid of the vampire squid credit card companies!) has failed so abjectly.

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on June 07, 2023, 08:37:09 AM
        So.... you do realize that the exchanges have made Crypto what it is right.

        I do realise that. And I think that the wider world of crypto is mostly an absolute shitshow, and a major corruption of / distraction from the Bitcoin project / mission.

        Fairly easy access, fairly easy to then go further in. Heck when I first heard of bitcoin it was, go ask a friend to sell it to you.  Ok, maybe not quite that but getting it required hoop jumping.  Coinbase and equivalent eliminated that!

        IF the SEC sues them out of existence do you think the general public will stick around?  I don't. The Crypto bro's might keep going, but we will be back to the days of hoop jumping and I for one, even though I could probably do that, don't want to.  I expect MOST won't.  And yes there are foreign exchanges in Japan and other places but if the SEC kills them in America, I expect other nations will do similar.  Even if some survive in other countries, your average person in the US or other affected nations, aren't going to use them. 

        So enjoy it while it lasts, BTC and other coins will either go down to near zero level or stop existing if easy access goes away. Though probably not right away.  No other way to state it.  We shall just have to wait and see what happens and whether these crypto exchanges survive.
        (Full disclosure, yes I own some crypto.)

        If Coinbase/Binance are found to be scammy and get punished and/or shut down, that must be a good thing - on the (bold?) assumption that the SEC plays a straight game.

        There are other easy ways into Bitcoin - Coinbase and Binance are not the only options.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on June 07, 2023, 08:45:56 AM
        So pretty much every exchange is/was fraudulent? Is that where we're at with this?

        I guess I'm not really surprised. But it's infuriating that the original promise of crypto (get rid of the vampire squid credit card companies!) has failed so abjectly.

        -W

        Failed ? It's far from over.

        Unscrupulous people will take unscrupulous advantage of any opportunities they spot, and there's been some terrific opportunities in this space for rogues. That's just the way it is.

        Scammy coins and scammy exchanges do not detract from the core Bitcoin project. Unfortunately, they do distract and confuse and obfuscate, etc. but things tend to become more clear with time. I can wait.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on June 07, 2023, 09:12:03 AM
        The core project, for all it's original flaws, was interesting. It is dead. When the space is 99% occupied by scammers and speculators, it's over.

        I will never be able to easily/cheaply pay/accept payment for anything with bitcoin and avoid credit card fees. Full stop.

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on June 07, 2023, 09:44:51 AM
        So.... you do realize that the exchanges have made Crypto what it is right.   Fairly easy access, fairly easy to then go further in.  Heck when I first heard of bitcoin it was, go ask a friend to sell it to you.  Ok, maybe not quite that but getting it required hoop jumping.  Coinbase and equivalent eliminated that!

        IF the SEC sues them out of existence do you think the general public will stick around?  I don't. The Crypto bro's might keep going, but we will be back to the days of hoop jumping and I for one, even though I could probably do that, don't want to.  I expect MOST won't.  And yes there are foreign exchanges in Japan and other places but if the SEC kills them in America, I expect other nations will do similar.  Even if some survive in other countries, your average person in the US or other affected nations, aren't going to use them. 

        So enjoy it while it lasts, BTC and other coins will either go down to near zero level or stop existing if easy access goes away. Though probably not right away.  No other way to state it.  We shall just have to wait and see what happens and whether these crypto exchanges survive.
        (Full disclosure, yes I own some crypto.)
        the original promise of crypto (get rid of the vampire squid credit card companies!) has failed so abjectly.
        I'm not surprised that the only business models which have proven profitable around crypto are scams. The product itself is less useful and less economically efficient than the dollar-based economy it is supposed to replace, and that's after, what? 13 years of development, attention, and extreme levels of investment? It has already failed as a usable product. No technical breakthrough is likely to happen in year 14 or 15 that will change things, so what's the point in holding out hope. Cold fusion and warp drives have better odds of a breakthrough at this point. Crypto is old tech that never really worked in the first place.

        How do you sell people a bad deal, if not by scamming them? The salesmen on car lots know this. The people running rent-to-own businesses know this. The people running check cashing and payday lending businesses know this. The people pump and dumping penny stocks on YouTube know this. Drug dealers know this too. Basically, if your product is a rip-off or bad for your client, certain tactics are usually required to profit from transactions involving the product.

        If the product works well for its customers, scammy business practices are generally not necessary. That's why the experience of buying apples and toilet paper at the grocery store is so different than the experience of buying a timeshare, a stake in a MLM scheme, or... as it turns out... a cryptocoin.

        Disclosure: Once received $25 worth of Ethereum through a PayPal promotion, and immediately sold it.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on June 07, 2023, 01:18:02 PM
        Back in the day, if you needed to buy some illegal drugs on the Silk Road you could simply mine some Bitcoin in your basement.  But now the reality is that it is hard to use Bitcoin without an exchange, bordering on impossible. 

        At this point, it is hard to name an exchange that hasn't been in legal trouble.    It takes a bit more tech savy/fuss to self-custody that most people want to put up with and the exchanges seem to all be criminal enterprises.  My unscientific observation is that the Normies who were formerly agnostic on Bitcoin now won't touch it with a ten foot pole.

        It all comes down to lack of use cases.   The vast majority of people have no real need for Bitcoin.  It is more difficult to buy/sell stuff with Bitcoin than traditional money.   It is definitely harder to store Bitcoin.  For the normies there aren't many advantages.    So the market seems to be limited to people who think Bitcoin will take over the world some day--and that number, I believe, is not growing for the reasons I mentioned. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on June 07, 2023, 01:58:48 PM
        I'm not surprised that the only business models which have proven profitable around crypto are scams.

        The VC model seems to work.   A13Z has raised billions for useless crypto projects, which skimming off hundreds of millions in fees. 

        On second though, that sounds like a scam too. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on June 07, 2023, 02:23:41 PM
        So pretty much every exchange is/was fraudulent? Is that where we're at with this?

        I guess I'm not really surprised. But it's infuriating that the original promise of crypto (get rid of the vampire squid credit card companies!) has failed so abjectly.

        -W

        Reading through Matt Levine's summary of the SEC's lawsuit against coinbase it sounds like the main thing coinbase is being accused of is listing some cyptocurrencies on their exchange that the SEC now argues should count as securities and be regulated like stocks.

        End it may be six of one/half a dozen of another I would describe the current situation as "operating (almost) any crypto exchange is now illegal" rather than "every cypto exchange is fraudulent."

        Some relevant excerpts below the spoilers tag.

        Spoiler: show

        Quote
        There are basically two ways for a crypto exchange to get in trouble with the SEC. The good way is that you get in trouble for running an illegal securities exchange. ... Just being a crypto exchange in the US is, in the SEC’s eyes, illegal. The bad way is that you get in trouble for stealing all the money. ... With Coinbase, I think the answer is obvious. Coinbase is, as crypto exchanges go, quite law-abiding. It is a US public company, incorporated in Delaware, listed on the Nasdaq. It went public in a direct listing in 2021, filing extensive disclosures with the SEC. Its financial statements are audited by Deloitte & Touche. Its business model seems to consist of taking money from customers, using the money to buy crypto, and keeping the crypto somewhere safe with the customers’ names on it. I hesitate to make any bold claims about any crypto actors, and I have been wrong before, but it is my impression that Coinbase does not steal the money.

        And in fact the SEC’s complaint against Coinbase is very dry and focused entirely on the fact that Coinbase did not register as a securities exchange. Again, in the SEC’s view, every crypto exchange is violating US securities law. But Coinbase is doing so politely and, relatively speaking, harmlessly. Not totally harmlessly — “Coinbase’s failure to register has deprived investors of significant protections, including inspection by the SEC, recordkeeping requirements, and safeguards against conflicts of interest,” says the SEC — but relatively.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: crimp on June 07, 2023, 03:09:47 PM
        I'm not surprised that the only business models which have proven profitable around crypto are scams.

        The VC model seems to work.   A13Z has raised billions for useless crypto projects, which skimming off hundreds of millions in fees. 

        On second though, that sounds like a scam too.

        The big actors make money on every play. My understanding from friends in the industry (and, frankly, what they’ll admit directly in interviews — I work in an adjacent field) is that the big investor/trading firms make deals to get a 20-40% discount off the ICO price in exchange for helping to market the “product” and making connections to other entities. They can exit enough of the position early to cover their initial bet and then use the knowledge they have about the broader ecosystem to decide whether to stay long or not after they help get the project off the ground. It’s an opportunity to push the risk elsewhere by getting immediate access to exit liquidity in the form of regular investors. This in addition to other profitable arrangements: https://fortune.com/crypto/2023/05/15/jump-trading-billion-propping-up-terra-algorithmic-stablecoin-collapsed/amp/

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on June 07, 2023, 11:19:45 PM
        I'm not surprised that the only business models which have proven profitable around crypto are scams.

        The VC model seems to work.   A13Z has raised billions for useless crypto projects, which skimming off hundreds of millions in fees. 

        On second though, that sounds like a scam too. 

        Crypto startups aren't finding it as easy to raise capital as they once were. I was at a gathering for angel investors recently that featured a panel discussion about AI, its uses in startups, and how to think about investing in startups that rely on LLM technology. As the emcee introduced the panel he mentioned how AI seems like the hot new thing of the year, comparing it to how every company a year or two ago was going after the "web3! blockchain!" craze. That drew a laugh, as though most of the folks in the room believe now (even if they didn't believe then) that blockchain isn't really a smart thing to bet on. The VCs are certainly taking their cut from the folks who bought into the hype though.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on June 08, 2023, 07:07:44 AM
        I'm not surprised that the only business models which have proven profitable around crypto are scams.

        The VC model seems to work.   A13Z has raised billions for useless crypto projects, which skimming off hundreds of millions in fees. 

        On second though, that sounds like a scam too. 

        Crypto startups aren't finding it as easy to raise capital as they once were. I was at a gathering for angel investors recently that featured a panel discussion about AI, its uses in startups, and how to think about investing in startups that rely on LLM technology. As the emcee introduced the panel he mentioned how AI seems like the hot new thing of the year, comparing it to how every company a year or two ago was going after the "web3! blockchain!" craze. That drew a laugh, as though most of the folks in the room believe now (even if they didn't believe then) that blockchain isn't really a smart thing to bet on. The VCs are certainly taking their cut from the folks who bought into the hype though.
        There's a definite fad cycle in tech. The best VCs know this and try to exit their stakes somewhere near the top.

        Dot-com
        Housing, 2002-2008
        Oil, 2002-2008
        BRICs
        FANGs
        Clean energy
        Augmented reality
        Crypto, 2015-2021
        Meme stocks
        Vegan meats
        Metaverse
        Housing, 2020-?
        AI

        Funny how it gets harder and harder to remember investment fads as they fade into history. The fad always starts after a big run up in prices, then the run up continues for a while as media attention grows, and then the growth fades until the fad doesn't perform as well as the indices, and then we rinse and repeat.

        There seems to be an alternation between intangible software-like things (dot-com, crypto, metaverse, AI) and hard physical things (oil, housing, vegan meats, electric cars). At any given time there seems to be an intangible fad and a tangible fad to choose from.

        It's also funny how the proprietors of the last fad always try to rebrand their products as the new fad. Thus, Apple's augmented reality goggles are being described as an AI appliance because they came out too late for the AR fad. Similarly a lot of crypto businesses tried to tag along with the metaverse fad, selling NFTs of digital real estate and so forth.

        It seems the fad cycle is accelerating. Fads that once lasted for years like the dot-com, BRICs, and crypto fads are being replaced by fads that last maybe a year or two, like meme stocks, the metaverse, and vegan meats. This is essentially the musical chairs music playing faster. The speed-up is driven by the habits of retail investors who are consuming ever-greater amounts of financial media and influencing each other in places like Reddit. Investors who lost money hopping on the latter end of previous fads are determined to hear about the new fad early and get out before it starts the inevitable decline. I.e. they are trying to sell at the same time as the VCs.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on June 08, 2023, 07:35:19 AM
        ChpBstrd - If housing is a "fad", it's one of the longest running ones.  I seem to recall people liking housing a lot between 2009-2019, when it didn't make your list.  More on topic for this crypto focused thread, you don't make an argument for crypto being a fad, or for that fad being over.

        Looking at BTC (+59% YTD) and ETH (+54% YTD) in 2023, the two largest crypto currencies have been recovering in 2023.  How do you reconcile that with calling them a fad that ended in 2021?  Do fads recover?

        https://finance.yahoo.com/quote/BTC-USD/
        https://finance.yahoo.com/quote/ETH-USD/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on June 08, 2023, 08:16:59 AM
        ChpBstrd - If housing is a "fad", it's one of the longest running ones.  I seem to recall people liking housing a lot between 2009-2019, when it didn't make your list.  More on topic for this crypto focused thread, you don't make an argument for crypto being a fad, or for that fad being over.
        The Case-Shiller home price index, when displayed as "percent change from year ago", looks like this. The housing bubble periods are apparent in the charts.
        (https://fred.stlouisfed.org/graph/fredgraph.png?g=15Xbm)
        Of course, if you were among the cohort of Mustachians or entrepreneurial types between 2009-2019, you probably did have a lot of people in your circle who liked housing a lot. And yes, that was a smart time to invest in hindsight, with very low mortgage rates, high cap rates, and falling unemployment.
        Quote
        Looking at BTC (+59% YTD) and ETH (+54% YTD) in 2023, the two largest crypto currencies have been recovering in 2023.  How do you reconcile that with calling them a fad that ended in 2021?  Do fads recover?
        Sure, fad investments can recover. Yahoo.com (formerly YHOO) went from being a $5.40 stock in late 2001 to being a $42 stock in 2006. That doesn't mean the dot-com fad wasn't over, that the media hadn't moved on, or that most people who invested in tech stocks at the height of the mania didn't lose money.
        https://www.advfn.com/stock-market/NASDAQ/YHOO/historical/more-historical-data?current=2&Date1=03/10/00&Date2=06/08/02 (https://www.advfn.com/stock-market/NASDAQ/YHOO/historical/more-historical-data?current=2&Date1=03/10/00&Date2=06/08/02)

        Also with crypto in particular, the price action does not capture the returns actually experienced by investors, because theft is so common.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: clarkfan1979 on June 08, 2023, 09:21:34 AM
        ChpBstrd - If housing is a "fad", it's one of the longest running ones.  I seem to recall people liking housing a lot between 2009-2019, when it didn't make your list.  More on topic for this crypto focused thread, you don't make an argument for crypto being a fad, or for that fad being over.

        Looking at BTC (+59% YTD) and ETH (+54% YTD) in 2023, the two largest crypto currencies have been recovering in 2023.  How do you reconcile that with calling them a fad that ended in 2021?  Do fads recover?

        https://finance.yahoo.com/quote/BTC-USD/
        https://finance.yahoo.com/quote/ETH-USD/

        I agree with @ChpBstrd on the overall emotional timeline of fad investments. Is Bitcoin a fad investment? That's probably a subjective question that we can debate for another 5 years. However, does Bitcoin fit the model of a fad investment? Yes it does.

        The original post was on September 6, 2021 which can be described as near the top of emotional confidence. If you want proof, just read the hundreds of comments from September to November 2021. According to an amateur google search, bitcoin closed at 52,663.90 on September 6, 2021. Today, Bitcoin is trading at 26,485.20. While Bitcoin might be on a rebound since January 1, 2023, it's down 49.7% since the original post. Can it recover? Maybe. However, at the moment, it's not even close.

        I personally do not believe that housing is a fad investment, although I will admit that it did have some emotional exuberance in 2021. Housing is tricky because the numbers are different for different cities and can also vary across different neighborhoods within the same city. At a national level, housing appears to be up by about 5% since September 6, 2021 (411K to 436K). Housing also appears to be down by about 9% (479K to 436K), from the peak (end of 2022). The lower price reflects affordability with higher interest rates, not desirability. People are paying more for housing in 2023 (mortgages & rents), which kind of makes it an all-time high. 

        The S & P 500 appears to be down by about 6% since September 6, 2021. Probably only down about 3% after factoring in dividends.

        Could you time the market with Bitcoin and make great returns? Definitely. It's currently up 60% since January 1, 2023. Could you time it poorly and be down 75%? Absolutely.   



         


         
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on June 08, 2023, 10:41:33 AM
        ChpBstrd - If housing is a "fad", it's one of the longest running ones.  I seem to recall people liking housing a lot between 2009-2019, when it didn't make your list.
        ...
        By "longest running" I meant people have liked having a roof over their heads for thousands of years.  I was poking fun at "living in a house" as a fad, but I edited out the hints of sarcasm to make my post (too) short.  People didn't live outdoors from 2009-2019, they liked living in a house.

        Search engines are not a fad.  Google provided a better product than Yahoo, and displaced it.  That doesn't make Yahoo a fad.  Social media isn't a fad because MySpace went out of business, nor will Facebook be a fad when TikTok / Roblox / ... displace it.

        If the claim is that 2015-2021 was "a fad" for the price of Bitcoin, why is 2022 the ending year?  The crash of 2018 was deeper than the 2022 crash, so why does a slightly smaller crash end a fad, while a deeper crash is in the middle of a fad?  We can go back to pre-history and cite Mt Gox, and make it three crashes.  At which point, do you claim Bitcoin is "three fads" or "a fad"?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on June 08, 2023, 11:32:56 AM
        ChpBstrd - If housing is a "fad", it's one of the longest running ones.  I seem to recall people liking housing a lot between 2009-2019, when it didn't make your list.
        ...
        By "longest running" I meant people have liked having a roof over their heads for thousands of years.  I was poking fun at "living in a house" as a fad, but I edited out the hints of sarcasm to make my post (too) short.  People didn't live outdoors from 2009-2019, they liked living in a house.

        Search engines are not a fad.  Google provided a better product than Yahoo, and displaced it.  That doesn't make Yahoo a fad.  Social media isn't a fad because MySpace went out of business, nor will Facebook be a fad when TikTok / Roblox / ... displace it.

        If the claim is that 2015-2021 was "a fad" for the price of Bitcoin, why is 2022 the ending year?  The crash of 2018 was deeper than the 2022 crash, so why does a slightly smaller crash end a fad, while a deeper crash is in the middle of a fad?  We can go back to pre-history and cite Mt Gox, and make it three crashes.  At which point, do you claim Bitcoin is "three fads" or "a fad"?
        I'll define an investment fad as a pricing trend that defies the norms of valuation and attracts a lot of media attention. So the dot-com bubble was a bubble because a lot of stocks with negative earnings were valued far higher than stocks with positive earnings had previously been priced, and the media breathlessly reported stories of dot-com millionaires. Similarly, houses are now being priced at many times higher than local incomes have traditionally supported, and that was also the case in Las Vegas circa 2007 and the media is all over a housing "shortage".

        Maybe it's not an on/off thing and more like a matter of degree. People invested in various things have an interest in them becoming the next fad, so there are always people and news stories talking about how exciting a particular investment is (except investments at the low end of the risk spectrum). There are still people excited about past fads and promoting them hoping for a comeback. There are still people hyping every one of the fads that have ever been. E.g. there are people on WallStreetBets still talking about Gamestop.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on June 09, 2023, 11:16:35 AM
        I think in a crypto thread, crypto should be the focus rather than various fads that are not on topic.

        Here is the dictionary definition of "fad":
        "a practice or interest followed for a time with exaggerated zeal"
        https://www.merriam-webster.com/dictionary/fad

        Claiming "Crypto, 2015-2021" was a fad requires those dates be "a time with exaggerated zeal".  From Wikipedia :

        "2013 boom and 2014–15 crash"
        "2017 boom and 2018 crash"
        https://en.wikipedia.org/wiki/Cryptocurrency_bubble

        2015 was the tail end of the "2014-2015 crash", and a crash doesn't make for "excessive zeal", which is the definition of a fad according to Meriam-Webster.  For the same reason, "2018 crash" should not be in the middle of the "2015-2021" date range because a crypto crash is not a fad.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on June 09, 2023, 11:27:44 AM
        Jesus, crypto peeps are the *definition* of excessive zeal...

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on June 10, 2023, 01:19:17 PM
        ChpBstrd - If housing is a "fad", it's one of the longest running ones.  I seem to recall people liking housing a lot between 2009-2019, when it didn't make your list.  More on topic for this crypto focused thread, you don't make an argument for crypto being a fad, or for that fad being over.

        The context was VC funding for crypto/blockchain, which is way, way down:

        Just eight venture capital funds focused on crypto had raised a combined $500 million globally as of May 16, according to a report from Fortune citing PitchBook data. That adds up to only 2.3% of the total value raised in 2022, and marks a 90% drop in the number of funds to receive financial backing.

        https://qz.com/venture-capital-funding-crypto-firms-plunge-in-2023-1850506521

        I'm certain the fad for blockchain/crpto in the VC world is over.  And it is clear why.   The thing that hasn't arisen out of all the blockchain hype is use cases.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on June 11, 2023, 09:29:25 AM
        The original post was on September 6, 2021 which can be described as near the top of emotional confidence. If you want proof, just read the hundreds of comments from September to November 2021. According to an amateur google search, bitcoin closed at 52,663.90 on September 6, 2021. Today, Bitcoin is trading at 26,485.20. While Bitcoin might be on a rebound since January 1, 2023, it's down 49.7% since the original post. Can it recover? Maybe. However, at the moment, it's not even close.
        I think you're underestimating the volatility of Bitcoin's price when you say the recovery is "not even close".  I count a number of calendar years when it at least doubled.

        Bitcoin's peak year was 2017, when opened on Jan 1 at $963.66 and closed on Dec 31 at a price of $14,156.40, a total gain of +1369%.  Does the highest percentage gain represent the emotional peak?  I think that could be a fair way to measure it.


        Could you time the market with Bitcoin and make great returns? Definitely. It's currently up 60% since January 1, 2023. Could you time it poorly and be down 75%? Absolutely.
        That's my view as well, on both counts.  But what I've seen is that most people will not hold both of those thoughts at the same time.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Stimpy on June 13, 2023, 09:30:39 AM
        The original post was on September 6, 2021 which can be described as near the top of emotional confidence. If you want proof, just read the hundreds of comments from September to November 2021. According to an amateur google search, bitcoin closed at 52,663.90 on September 6, 2021. Today, Bitcoin is trading at 26,485.20. While Bitcoin might be on a rebound since January 1, 2023, it's down 49.7% since the original post. Can it recover? Maybe. However, at the moment, it's not even close.
        I think you're underestimating the volatility of Bitcoin's price when you say the recovery is "not even close".  I count a number of calendar years when it at least doubled.

        Bitcoin's peak year was 2017, when opened on Jan 1 at $963.66 and closed on Dec 31 at a price of $14,156.40, a total gain of +1369%.  Does the highest percentage gain represent the emotional peak?  I think that could be a fair way to measure it.


        Could you time the market with Bitcoin and make great returns? Definitely. It's currently up 60% since January 1, 2023. Could you time it poorly and be down 75%? Absolutely.
        That's my view as well, on both counts.  But what I've seen is that most people will not hold both of those thoughts at the same time.

        To be fair, your correct, per my extremely rough count it at least doubled 7 times from July of 2010, went negative 4 times and roughly no where twice.  (Including this year at a no where... at least to date.)   I am assuming if it didn't at least double it went no where for the sake of this data.   So that is just above a 50% chance of doubling your money on any given year.... Not terrible odds.

        I will post my rough data below and it was obtained from: https://coinmarketcap.com/currencies/bitcoin/
        Mon-YearPriceD-N-NW
        Jul-2010.07-
        Jul-201114.11d
        Jul-20127neg
        Jul-201390d
        Jul-2014625d
        Jul-2015292neg
        Jul-2016624d
        Jul-20172560d
        Jul-20187400d
        Jul-201910100nw
        Jul-20209900neg
        Jul-202133100d
        Jul-202221030neg
        Jun-202325900nw
        And as far as up... from .06 to ~25k is quite a ways up over the ~13 years of data.  (You could argue from 0.00 but lets stick to the graph for ease). 

        Will it double again!   Maybe, but I have a feeling the boom is over.  Does that mean it won't go up?  No.  Does it mean it's going to the other moon?  (Zero if your unfamiliar.) No. 

        Personally I think if your putting your money in BTC your probably going to lose.  BUT I will admit, the possibility to go up is there.  AND I expect as do some crypto bros (at least the ones that are a little more rational...) that if it sticks around it's probably going to normalize.   What does that look like?  Don't know, but it's probably not going to go to the moon ever again.  Especially with the SEC's current push.... 

        Only time will tell.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on August 11, 2023, 04:08:20 PM
        I'm resurrecting this very tired thread to point out that we are no longer hearing very much about crypto in the media. At least I'm not. And we're not even talking about it on this thread anymore. It's like a fad that has suddenly passed.

        One would think low media coverage would correspond with a period of disappointing returns, but GBTC's year to date performance has been 142% and ETHE has returned 138%! Plus, you have the juicy trials of SBF and the spectacle of Coinbase/Binance fending off investigations while insisting everything is fine. You'd think the media would be all over it.

        Thoughts:

        1) These contradictory pieces of information - less interest and rising prices - contradict any narrative that bitcoin is a media-driven fad, and suggest a disconnect between crypto prices and media coverage. Price influences may only include artificial manipulation (e.g. self-selling to boost prices) and criminal demand.

        2) The demise of Silvergate and Silicon Valley Bank, on the heels of the FTX collapse, seems not to have meaningfully dented the rise of bitcoin prices. Of course, it's debatable whether any of these prices are real or manipulated, but they are what they are. But basically we can see the prices are not dependent upon linkages to financial institutions. Such institutions just got dynamited and crypto rose despite it.

        3) For people hunkering down in treasuries and CDs amid relentless rate hikes and recession expectations, maybe these "assets" now represent a leveraged call option on a soft landing or risk appetites returning. Because of the correlation to stock returns, a small long investment in GBTC or ETHE could offset the risk that a new bull market leaves the bears in the dust.

        4) I recently watched a video (https://www.youtube.com/watch?v=1c_XwNL__2Y) where it was explained that Twitter advertisers could pay 10x more to advertise in a way that prevents their ads from appearing next to objectionable content. Almost all blue-chip brands prefer to pay the higher price. Crypto content is so scammy that few corporate advertisers will touch it. So scammy advertisers are the only ones placing highly discounted ads next to crypto content. This observation may reflect a drying-up of the ad ecosystem for crypto promoters. If the ad money has dried up, and if the platforms are prioritizing content that can attract reputationally-aware advertisers willing to pay top dollar, then maybe the crypto pumpers are off to the next thing. As the overall crypto noise on social media has declined, the corporate media noise has declined too, because they mostly report what people are talking about on social media. Also, every media company is trying to avoid becoming the ghetto of advertising, where sketchy content targeting broke idiots is accompanied by sketchy ads sold at a loss. This is the explanation for why Twitter lost half its ad revenue; Musk's free-speech absolutism turned it into a swampland where corporate reputations fear to tread - i.e. another 4-chan. As other media companies learned from Twitter's mistake, they cut or demoted their own crypto content. So maybe the crypto bros are very excited but they can no longer get their posts and videos in front of a large audience.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on August 23, 2023, 06:33:23 AM
        I'm resurrecting this very tired thread to point out that we are no longer hearing very much about crypto in the media. At least I'm not. And we're not even talking about it on this thread anymore. It's like a fad that has suddenly passed.

        One would think low media coverage would correspond with a period of disappointing returns, but GBTC's year to date performance has been 142% and ETHE has returned 138%! Plus, you have the juicy trials of SBF and the spectacle of Coinbase/Binance fending off investigations while insisting everything is fine. You'd think the media would be all over it.

        Thoughts:

        1) These contradictory pieces of information - less interest and rising prices - contradict any narrative that bitcoin is a media-driven fad, and suggest a disconnect between crypto prices and media coverage. Price influences may only include artificial manipulation (e.g. self-selling to boost prices) and criminal demand.

        Meme-coins (and meme-stocks) require and feed off and encourage media coverage by definition. And again, pretty much by definition, they generate most of the media noise AND tend to be fads. It is blissfully quiet at the moment but, regrettably, it will probably all kick off again in time.

        Meanwhile, Bitcoin quietly carries on doing its thing - building its base, hashrate steadily climbing, applications developing, etc.

        2) The demise of Silvergate and Silicon Valley Bank, on the heels of the FTX collapse, seems not to have meaningfully dented the rise of bitcoin prices. Of course, it's debatable whether any of these prices are real or manipulated, but they are what they are. But basically we can see the prices are not dependent upon linkages to financial institutions. Such institutions just got dynamited and crypto rose despite it.

        Bitcoin was never dependent on these institutions, and their failures highlighted some of the foundational elements of Bitcoin, ie. self-custody, no requirement for trust, etc. The failures of these institutions were shrugged off - as expected.

        3) For people hunkering down in treasuries and CDs amid relentless rate hikes and recession expectations, maybe these "assets" now represent a leveraged call option on a soft landing or risk appetites returning. Because of the correlation to stock returns, a small long investment in GBTC or ETHE could offset the risk that a new bull market leaves the bears in the dust.

        Maybe. Bitcoin is certainly in its speculative growth stage and (imo) will be for a long time yet. With regard to Bitcoin, we're right back at the topic title - maybe a low% Bitcoin allocation is a good plan.

        4) I recently watched a video (https://www.youtube.com/watch?v=1c_XwNL__2Y) where it was explained that Twitter advertisers could pay 10x more to advertise in a way that prevents their ads from appearing next to objectionable content. Almost all blue-chip brands prefer to pay the higher price. Crypto content is so scammy that few corporate advertisers will touch it. So scammy advertisers are the only ones placing highly discounted ads next to crypto content. This observation may reflect a drying-up of the ad ecosystem for crypto promoters. If the ad money has dried up, and if the platforms are prioritizing content that can attract reputationally-aware advertisers willing to pay top dollar, then maybe the crypto pumpers are off to the next thing. As the overall crypto noise on social media has declined, the corporate media noise has declined too, because they mostly report what people are talking about on social media. Also, every media company is trying to avoid becoming the ghetto of advertising, where sketchy content targeting broke idiots is accompanied by sketchy ads sold at a loss. This is the explanation for why Twitter lost half its ad revenue; Musk's free-speech absolutism turned it into a swampland where corporate reputations fear to tread - i.e. another 4-chan. As other media companies learned from Twitter's mistake, they cut or demoted their own crypto content. So maybe the crypto bros are very excited but they can no longer get their posts and videos in front of a large audience.

        I hope you're right. I'm as opposed to scammy meme pumping BS as you are.


        My main comment on this post is that I think it's a naive mistake to discuss Bitcoin and broader "crypto" in the same breath as if they were all the same thing. The gulf between Bitcoin and ShibaInu/monkeyJpegs (and those that respectively enthuse about them) is as big as that between Index Funds and GME/AMC meme stocks (and those that respectively enthuse about them).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: clarkfan1979 on August 23, 2023, 08:46:19 AM
        I'm resurrecting this very tired thread to point out that we are no longer hearing very much about crypto in the media. At least I'm not. And we're not even talking about it on this thread anymore. It's like a fad that has suddenly passed.

        One would think low media coverage would correspond with a period of disappointing returns, but GBTC's year to date performance has been 142% and ETHE has returned 138%! Plus, you have the juicy trials of SBF and the spectacle of Coinbase/Binance fending off investigations while insisting everything is fine. You'd think the media would be all over it.

        Thoughts:

        1) These contradictory pieces of information - less interest and rising prices - contradict any narrative that bitcoin is a media-driven fad, and suggest a disconnect between crypto prices and media coverage. Price influences may only include artificial manipulation (e.g. self-selling to boost prices) and criminal demand.

        2) The demise of Silvergate and Silicon Valley Bank, on the heels of the FTX collapse, seems not to have meaningfully dented the rise of bitcoin prices. Of course, it's debatable whether any of these prices are real or manipulated, but they are what they are. But basically we can see the prices are not dependent upon linkages to financial institutions. Such institutions just got dynamited and crypto rose despite it.

        3) For people hunkering down in treasuries and CDs amid relentless rate hikes and recession expectations, maybe these "assets" now represent a leveraged call option on a soft landing or risk appetites returning. Because of the correlation to stock returns, a small long investment in GBTC or ETHE could offset the risk that a new bull market leaves the bears in the dust.

        4) I recently watched a video (https://www.youtube.com/watch?v=1c_XwNL__2Y) where it was explained that Twitter advertisers could pay 10x more to advertise in a way that prevents their ads from appearing next to objectionable content. Almost all blue-chip brands prefer to pay the higher price. Crypto content is so scammy that few corporate advertisers will touch it. So scammy advertisers are the only ones placing highly discounted ads next to crypto content. This observation may reflect a drying-up of the ad ecosystem for crypto promoters. If the ad money has dried up, and if the platforms are prioritizing content that can attract reputationally-aware advertisers willing to pay top dollar, then maybe the crypto pumpers are off to the next thing. As the overall crypto noise on social media has declined, the corporate media noise has declined too, because they mostly report what people are talking about on social media. Also, every media company is trying to avoid becoming the ghetto of advertising, where sketchy content targeting broke idiots is accompanied by sketchy ads sold at a loss. This is the explanation for why Twitter lost half its ad revenue; Musk's free-speech absolutism turned it into a swampland where corporate reputations fear to tread - i.e. another 4-chan. As other media companies learned from Twitter's mistake, they cut or demoted their own crypto content. So maybe the crypto bros are very excited but they can no longer get their posts and videos in front of a large audience.

        Interesting post on how the media influences crypto. My personal opinion is that the media amplifies the true effect. If crypto is on a run, the media can amplify it. If crypto is falling, the media can amplify a fall as well. I think the FTX media coverage amplified the fall of crypto and now the prices are regressing back toward their true mean.

        Media can also influence stock prices. However, people can use balance sheets from companies as an anchor. With crypto there is no balance sheet to use as an anchor. It's 100% speculation. As a result, I think the media influences crypto prices more than stock prices.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on August 23, 2023, 10:07:56 AM
        I have added an extremely low allocation - a negative one.  I hold $0 in crypto currencies, and today shorted a company that depends on crypto to stay in business.  My theory is that falling markets will take crypto down with it.  That's what happened in 2022 and in March 2020.  Market drops seem to take crypto along for the ride, so I view that as the strongest influence on crypto prices.

        Personally I still view Ethereum as more interesting than Bitcoin.  Both are unproven technologies where fans say give it time, and detractors say that time is up.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on August 23, 2023, 12:23:32 PM
        Bitcoin was never dependent on these institutions, and their failures highlighted some of the foundational elements of Bitcoin, ie. self-custody, no requirement for trust, etc. The failures of these institutions were shrugged off - as expected.

        Their existence also highlighted the failures of some of the foundational elements of Bitcoin.   Try this as an experiment:   Go to Bitcoin Beach or someplace where Bitcoin is widely understood, and try to make a peer-to-peer Bitcoin transaction for a cup of coffee and a sandwich.   You can't do it.  You have to use a third-party app.   I just checked and the Bitcoin Conference in Amsterdam accepts deposits in Bitcoin--also only using a third party app.   So even Bitcoin maxis don't accept peer-to-peer Bitcoin transactions.   So if you want to use Bitcoin was money, it is extremely difficult to do so without a third party, which also means you can't self-custody all of your Bitcoin.   And while self-custody isn't hard, it isn't particularly easy either and there are some clear downsides.   That along with the transaction problem is why the third party exchanges exist in the first place (or existed in some cases).  To put it another way, if Bitcoin worked well in the first place there would be no need for exchanges. 

        There is a narrative that Bitcoin is gradually expanding and as it expands there will be more and more demand,  driving the price inevitably upwards.   But I'm not sure if that is happening (the increasing demand).   It seems like around 2015 a number of companies jumped on the bandwagon and started accepting Bitcoin (through apps).    I can't say for sure, but it seems like that number is declining.   Companies like Expedia, Steam, and Wikipedia all eventually stopped accepting crypto.    I don't see much energy for acceptance anymore.  Could be wrong, but I'm not seeing it. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on August 24, 2023, 08:46:24 AM
        4) I recently watched a video (https://www.youtube.com/watch?v=1c_XwNL__2Y) where it was explained that Twitter advertisers could pay 10x more to advertise in a way that prevents their ads from appearing next to objectionable content. Almost all blue-chip brands prefer to pay the higher price. Crypto content is so scammy that few corporate advertisers will touch it. So scammy advertisers are the only ones placing highly discounted ads next to crypto content. This observation may reflect a drying-up of the ad ecosystem for crypto promoters. If the ad money has dried up, and if the platforms are prioritizing content that can attract reputationally-aware advertisers willing to pay top dollar, then maybe the crypto pumpers are off to the next thing. As the overall crypto noise on social media has declined, the corporate media noise has declined too, because they mostly report what people are talking about on social media. Also, every media company is trying to avoid becoming the ghetto of advertising, where sketchy content targeting broke idiots is accompanied by sketchy ads sold at a loss. This is the explanation for why Twitter lost half its ad revenue; Musk's free-speech absolutism turned it into a swampland where corporate reputations fear to tread - i.e. another 4-chan. As other media companies learned from Twitter's mistake, they cut or demoted their own crypto content. So maybe the crypto bros are very excited but they can no longer get their posts and videos in front of a large audience.

        At least from watching coffezilla's investigations, it's my sense that most crypto/NFT pumping occurs via paying influencers to promote it, usually undisclosed. It don't think standard sidebar ads are that influential in comparison. Some instagrammer gets $100,000, or a few cents per impression in twitter ads..?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on August 24, 2023, 09:03:19 AM
        4) I recently watched a video (https://www.youtube.com/watch?v=1c_XwNL__2Y) where it was explained that Twitter advertisers could pay 10x more to advertise in a way that prevents their ads from appearing next to objectionable content. Almost all blue-chip brands prefer to pay the higher price. Crypto content is so scammy that few corporate advertisers will touch it. So scammy advertisers are the only ones placing highly discounted ads next to crypto content. This observation may reflect a drying-up of the ad ecosystem for crypto promoters. If the ad money has dried up, and if the platforms are prioritizing content that can attract reputationally-aware advertisers willing to pay top dollar, then maybe the crypto pumpers are off to the next thing. As the overall crypto noise on social media has declined, the corporate media noise has declined too, because they mostly report what people are talking about on social media. Also, every media company is trying to avoid becoming the ghetto of advertising, where sketchy content targeting broke idiots is accompanied by sketchy ads sold at a loss. This is the explanation for why Twitter lost half its ad revenue; Musk's free-speech absolutism turned it into a swampland where corporate reputations fear to tread - i.e. another 4-chan. As other media companies learned from Twitter's mistake, they cut or demoted their own crypto content. So maybe the crypto bros are very excited but they can no longer get their posts and videos in front of a large audience.

        At least from watching coffezilla's investigations, it's my sense that most crypto/NFT pumping occurs via paying influencers to promote it, usually undisclosed. It don't think standard sidebar ads are that influential in comparison. Some instagrammer gets $100,000, or a few cents per impression in twitter ads..?
        But who would pay the influencers? Someone would have to corner the market for a crypto asset for them to escape a game theory outcome where it is more profitable not to cooperate with the other crypto owners, and to instead rely on those others to pay the costs of pumping the asset.

        E.g. if I own 40% of Poopcoin, and you own 40%, which of us is responsible for paying the $100k to pump it? We could certainly collude and find ways to verify each others' cooperation, but notice how 20% of any effect will be enjoyed by freeloaders. Once ownership is more spread out it would become impossible for the incentives to stay aligned.

        I think it's far more likely the influencers are selling their own ads and product placements, or at least building audiences so they can do so in the future. Some of these advertisers will be crypto-adjacent for-profit services, but overall it doesn't make sense to pump an asset that is widely owned and expect to personally profit. It would be like me going on YouTube to talk about how great Pfizer stock is and expecting my commentary to boost the price of a $205B corporation owned by millions of people.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on August 24, 2023, 09:38:04 AM
        4) I recently watched a video (https://www.youtube.com/watch?v=1c_XwNL__2Y) where it was explained that Twitter advertisers could pay 10x more to advertise in a way that prevents their ads from appearing next to objectionable content. Almost all blue-chip brands prefer to pay the higher price. Crypto content is so scammy that few corporate advertisers will touch it. So scammy advertisers are the only ones placing highly discounted ads next to crypto content. This observation may reflect a drying-up of the ad ecosystem for crypto promoters. If the ad money has dried up, and if the platforms are prioritizing content that can attract reputationally-aware advertisers willing to pay top dollar, then maybe the crypto pumpers are off to the next thing. As the overall crypto noise on social media has declined, the corporate media noise has declined too, because they mostly report what people are talking about on social media. Also, every media company is trying to avoid becoming the ghetto of advertising, where sketchy content targeting broke idiots is accompanied by sketchy ads sold at a loss. This is the explanation for why Twitter lost half its ad revenue; Musk's free-speech absolutism turned it into a swampland where corporate reputations fear to tread - i.e. another 4-chan. As other media companies learned from Twitter's mistake, they cut or demoted their own crypto content. So maybe the crypto bros are very excited but they can no longer get their posts and videos in front of a large audience.

        At least from watching coffezilla's investigations, it's my sense that most crypto/NFT pumping occurs via paying influencers to promote it, usually undisclosed. It don't think standard sidebar ads are that influential in comparison. Some instagrammer gets $100,000, or a few cents per impression in twitter ads..?
        But who would pay the influencers? Someone would have to corner the market for a crypto asset for them to escape a game theory outcome where it is more profitable not to cooperate with the other crypto owners, and to instead rely on those others to pay the costs of pumping the asset.

        E.g. if I own 40% of Poopcoin, and you own 40%, which of us is responsible for paying the $100k to pump it? We could certainly collude and find ways to verify each others' cooperation, but notice how 20% of any effect will be enjoyed by freeloaders. Once ownership is more spread out it would become impossible for the incentives to stay aligned.

        I think it's far more likely the influencers are selling their own ads and product placements, or at least building audiences so they can do so in the future. Some of these advertisers will be crypto-adjacent for-profit services, but overall it doesn't make sense to pump an asset that is widely owned and expect to personally profit. It would be like me going on YouTube to talk about how great Pfizer stock is and expecting my commentary to boost the price of a $205B corporation owned by millions of people.

        nono, that's not how they do it. Check out some of Coffee's videos if you haven't. A gang of "bros", sometimes already influential people with an audience, get together and plan a new crypto/nft project. For example the Logan Paul thing. They "pre-sell" (i.e. split up) coins to their buddies, pay influencers to promote the "launch". Then they sell it to the public, and dump their shares when the price rises (well, rises from zero). The people paying the promoters already own the majority, and all agree to pay to pump the price, so they can offload it. You're right, they won't pay to "pump the stock" after it's selling on the general market.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on August 24, 2023, 10:15:48 AM
        4) I recently watched a video (https://www.youtube.com/watch?v=1c_XwNL__2Y) where it was explained that Twitter advertisers could pay 10x more to advertise in a way that prevents their ads from appearing next to objectionable content. Almost all blue-chip brands prefer to pay the higher price. Crypto content is so scammy that few corporate advertisers will touch it. So scammy advertisers are the only ones placing highly discounted ads next to crypto content. This observation may reflect a drying-up of the ad ecosystem for crypto promoters. If the ad money has dried up, and if the platforms are prioritizing content that can attract reputationally-aware advertisers willing to pay top dollar, then maybe the crypto pumpers are off to the next thing. As the overall crypto noise on social media has declined, the corporate media noise has declined too, because they mostly report what people are talking about on social media. Also, every media company is trying to avoid becoming the ghetto of advertising, where sketchy content targeting broke idiots is accompanied by sketchy ads sold at a loss. This is the explanation for why Twitter lost half its ad revenue; Musk's free-speech absolutism turned it into a swampland where corporate reputations fear to tread - i.e. another 4-chan. As other media companies learned from Twitter's mistake, they cut or demoted their own crypto content. So maybe the crypto bros are very excited but they can no longer get their posts and videos in front of a large audience.

        At least from watching coffezilla's investigations, it's my sense that most crypto/NFT pumping occurs via paying influencers to promote it, usually undisclosed. It don't think standard sidebar ads are that influential in comparison. Some instagrammer gets $100,000, or a few cents per impression in twitter ads..?
        But who would pay the influencers? Someone would have to corner the market for a crypto asset for them to escape a game theory outcome where it is more profitable not to cooperate with the other crypto owners, and to instead rely on those others to pay the costs of pumping the asset.

        E.g. if I own 40% of Poopcoin, and you own 40%, which of us is responsible for paying the $100k to pump it? We could certainly collude and find ways to verify each others' cooperation, but notice how 20% of any effect will be enjoyed by freeloaders. Once ownership is more spread out it would become impossible for the incentives to stay aligned.

        I think it's far more likely the influencers are selling their own ads and product placements, or at least building audiences so they can do so in the future. Some of these advertisers will be crypto-adjacent for-profit services, but overall it doesn't make sense to pump an asset that is widely owned and expect to personally profit. It would be like me going on YouTube to talk about how great Pfizer stock is and expecting my commentary to boost the price of a $205B corporation owned by millions of people.
        nono, that's not how they do it. Check out some of Coffee's videos if you haven't. A gang of "bros", sometimes already influential people with an audience, get together and plan a new crypto/nft project. For example the Logan Paul thing. They "pre-sell" (i.e. split up) coins to their buddies, pay influencers to promote the "launch". Then they sell it to the public, and dump their shares when the price rises (well, rises from zero). The people paying the promoters already own the majority, and all agree to pay to pump the price, so they can offload it. You're right, they won't pay to "pump the stock" after it's selling on the general market.
        I see what you're saying, and yes that makes sense. I think crypto assets start this way, but we can't easily apply this explanation to anything after the rug-pull has been completed.

        Maybe it's possible for influencers to launch coordinated pumps of already-distributed assets, sort of like the old pump and dump strategies with microcap stocks. You'd need thin trading volumes and cheap ways to distribute information. The influencers have the latter, just like the email/fax pump and dumpers, so what about the former? Bitcoin may seem like a liquid market, but Forbes' 2022 estimate about over half of transactions being fake (https://www.forbes.com/sites/javierpaz/2022/08/26/more-than-half-of-all-bitcoin-trades-are-fake/?sh=7491f6681f78) may have been an understatement. The P&Ders can't coordinate their wash sales, because that would lead to a prisoner's dilemma where everyone would try to front-run everyone else to the exit. However they probably can affect flows of new money into the system - at least when the media companies aren't blocking them.     
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Glenstache on August 24, 2023, 11:18:34 PM
        Sooo.... what we're saying is that crypto is largely speculative and subject to manipulation due to the lack of regulation?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on August 25, 2023, 07:58:31 AM
        Sooo.... what we're saying is that crypto is largely speculative and subject to manipulation due to the lack of regulation?
        Of course.

        The issue is we can't explain the ups and downs of an already-distributed asset with a rug-pull explanation. After the rug pull, the asset would plummet to nearly no value*. And now it seems crypto can rise without media / social media attention, so there goes another possible explanation.

        We need an explanation that fits the observed data and also allows for the wash-sellers and pump-and-dumpers to make at least a semi-consistent profit that keeps them in business. E.g. the social media influencers can earn cash through advertisements without ever taking on the risk of owning crypto assets or requiring inflows of new money into crypto assets. They can fake their data about being exposed to crypto assets too. In contrast, the pump-and-dumpers and wash sellers are in constant competition with one another and exposed to the risk of crypto-assets, so to stay in business they need to corner the market, attract new fiat currency by manipulating crypto price movements, and sell at the right time.

        To some extent, people would be attracted to work and take risks in the crypto economy even if it was a zero net sum game (which it is). Online sports gambling, poker, and options/futures speculation are zero net sum games of chance, and people are flocking to them for the entertainment value. Lotteries actually have a negative net sum for players, and yet Americans spend billions on tickets. The game of being a crypto asset manipulator has perhaps become something similar, since laws against fraud are not being consistently enforced against such people. 

        *The rug-pull explanation is actually all the explanation needed for many obscure penny cryptos and NFTs dumped on the market in recent years and abandoned by virtually everyone.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on August 25, 2023, 09:16:43 AM
        Sooo.... what we're saying is that crypto is largely speculative and subject to manipulation due to the lack of regulation?

        (https://imgflip.com/s/meme/Always-Has-Been.png)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on August 25, 2023, 09:42:24 PM
        Sooo.... what we're saying is that crypto is largely speculative and subject to manipulation due to the lack of regulation?
        Of course.
        I'd say "largely speculative" is a good description of your conversation.  Why do you two think $1.8 million taken by Logan Paul defines "crypto"?

        Is the stock market is a scam because penny stocks can be pumped and dumped?  That's what you're doing here, with crypto.  Stick with Bitcoin (market cap $500 billion) and Ethereum ($200 billion) and you won't see these influencer pump and dump scams.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on August 29, 2023, 02:15:20 PM
        Saw an interesting article about Bitcoin miners the other day:   

        Quote
        Data retrieved by Finbold from CompaniesMarketCap shows that the 16 publicly traded Bitcoin mining companies have accumulated over $4.47 billion in losses in the past 12 consecutive months (TTM)....

        ...The average mining cost is calculated by Cambridge University and plotted in a chart by MacroMicro. On August 27, it registered an average cost of $45,877 per mined BTC, against a spot price of $26,089 on the same day — accounting for a loss of $19,588 per unit of the leading cryptocurrency produced coins.



        https://finbold.com/16-bitcoin-mining-companies-have-4-47-billion-in-losses-in-a-year/

        If you look at the full MacroMini chart, it looks like Bitcoin mining has been mostly unprofitable the whole data series.

        https://en.macromicro.me/charts/29435/bitcoin-production-total-cost
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on August 29, 2023, 06:36:47 PM
        . . .

        If you look at the full MacroMini chart, it looks like Bitcoin mining has been mostly unprofitable the whole data series.

        https://en.macromicro.me/charts/29435/bitcoin-production-total-cost

        You think ? I'm not seeing that at all.

        If I look at that full MacroMini chart, it looks like Bitcoin mining has probably been profitable over any period > 2yrs.
        It looks like most days were unprofitable, but many of the good days were very good days.*

        * purely according to that chart - taking it at face value
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on August 30, 2023, 06:36:24 AM
        Cambridge University is the source of the data used in that article.

        Quote
        The Cambridge Bitcoin Electricity Consumption Index (CBECI) provides an up-to-date estimate of the Bitcoin network’s daily electricity load. The underlying techno-economic model is based on a bottom-up approach initially developed by Marc Bevand  in 2017 that uses the profitability threshold of different types of mining equipment as the starting point.

        Given that the exact electricity consumption cannot be determined, the CBECI provides a hypothetical range consisting of a hypothetical lower bound  (floor) and a hypothetical  upper bound  (ceiling) estimate. Within the boundaries of this range, a  best-guess  estimate is calculated to provide a more realistic figure that approximates Bitcoin’s real electricity consumption.
        https://ccaf.io/cbnsi/cbeci/methodology

        The article states "accounting for a loss of $19,588 per unit", as though this is an accounting exercise that gives precision down to the last dollar.  But the source of their data uses words like "estimate" and "cannot be determined" for electricity costs.  Where did a "best-guess estimate" become something with certainty down to the last dollar?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on August 30, 2023, 10:02:13 AM
        You think ? I'm not seeing that at all.

        If I look at that full MacroMini chart, it looks like Bitcoin mining has probably been profitable over any period > 2yrs.
        It looks like most days were unprofitable, but many of the good days were very good days.*

        * purely according to that chart - taking it at face value

        I agree that for periods when it is profitable it appears to be very profitable.  So it could well be that more money has been made than lost.  It isn't consistently profitable, for sure. 

        Cambridge University is the source of the data used in that article.

        Quote
        The article states "accounting for a loss of $19,588 per unit", as though this is an accounting exercise that gives precision down to the last dollar.  But the source of their data uses words like "estimate" and "cannot be determined" for electricity costs.  Where did a "best-guess estimate" become something with certainty down to the last dollar?

        Yes, it seems that it would be better expressed as a range.  Still, based on what we know from publicly traded miners, it has been an awfully tough year.  I would expect to see further consolidation (in deed, that seems inevitable), especially as the next halving occurs sometime next spring.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on August 30, 2023, 06:29:47 PM
        Cambridge University is the source of the data used in that article.

        Quote
        The Cambridge Bitcoin Electricity Consumption Index (CBECI) provides an up-to-date estimate of the Bitcoin network’s daily electricity load. The underlying techno-economic model is based on a bottom-up approach initially developed by Marc Bevand  in 2017 that uses the profitability threshold of different types of mining equipment as the starting point.

        Given that the exact electricity consumption cannot be determined, the CBECI provides a hypothetical range consisting of a hypothetical lower bound  (floor) and a hypothetical  upper bound  (ceiling) estimate. Within the boundaries of this range, a  best-guess  estimate is calculated to provide a more realistic figure that approximates Bitcoin’s real electricity consumption.
        https://ccaf.io/cbnsi/cbeci/methodology

        The article states "accounting for a loss of $19,588 per unit", as though this is an accounting exercise that gives precision down to the last dollar.  But the source of their data uses words like "estimate" and "cannot be determined" for electricity costs.  Where did a "best-guess estimate" become something with certainty down to the last dollar?

        Also note that the "loss of $19,588 per unit" concerns the estimated activity from one single day - taken from a chart that clearly shows significant day-to-day volatility, particularly in recent weeks.

        If we generously assume that the only reason they selected the 27th August was because it was the most recent day, a re-print/update published right now would read as follows:

        "The average mining cost is calculated by Cambridge University and plotted in a chart by MacroMicro (https://en.macromicro.me/charts/29435/bitcoin-production-total-cost). On August 27 29, it registered an average cost of $45,877 $26,699 per mined BTC, against a spot price of $26,089 $27,727 on the same day — accounting for a loss profit of $19,588 $1,028 per unit of the leading cryptocurrency produced coins."

        A completely different story   (and just as statistically meaningless and pointless as the original . . . ).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on August 31, 2023, 09:33:17 AM
        I dug into Marathon Digital Holdings ($MARA) to see what a real bitcoin mining company experienced in the recent past.  Overall, they had $132M revenues on $143M in costs over the past 6 months.  The costs include energy, hosting, equipment aging, and "other".  The revenues came from block rewards, block transaction fees, and rewards from lending hashrate to other mining pools.  But overall, they had a 7.5% loss when comparing revenues vs costs.



        ---  stop here if you think Bitcoin and/or math is a waste of your time  ---


        Assuming block rewards were 100% BTC, and the average price of $25,000 over the first 6 months of 2023, I calculate roughly 4200 BTC mined.  Dividing, I get $21,000 per BTC for "energy, hosting and other" costs.

        On page 4 of their 10-Q I found "Cost of revenues - energy, hosting and other".
        https://ir.mara.com/sec-filings/all-sec-filings/content/0001493152-23-027174/0001493152-23-027174.pdf#page=4

        For 2023 Q2 : $55.2 M costs
        Q2 + Q1 - Q2 (Q1): $88.6M - $55.2M = $33.4M

        On page 18, I found their revenues from bitcoin mining.  This includes running their own private mining pool ("Operator") and lending their hashrate to other mining pools for rewards ("Participant").
        https://ir.mara.com/sec-filings/all-sec-filings/content/0001493152-23-027174/0001493152-23-027174.pdf#page=18

        2023 Q2: $81.8M
        Q2 + Q1 - Q2 (Q1): $132.9M - $81.8M = $51.1M

        Putting all of this together, I get:
        2023 Q1: $51.1M revenue versus $33.4M "energy, hosting and other" costs
        2023 Q2: $81.8M revenue versus $55.2M "energy, hosting and other" costs
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on August 31, 2023, 10:40:11 AM
        I dug into Marathon Digital Holdings ($MARA) to see what a real bitcoin mining company experienced in the recent past.  Overall, they had $132M revenues on $143M in costs over the past 6 months.  The costs include energy, hosting, equipment aging, and "other".  The revenues came from block rewards, block transaction fees, and rewards from lending hashrate to other mining pools.  But overall, they had a 7.5% loss when comparing revenues vs costs.



        ---  stop here if you think Bitcoin and/or math is a waste of your time  ---


        Assuming block rewards were 100% BTC, and the average price of $25,000 over the first 6 months of 2023, I calculate roughly 4200 BTC mined.  Dividing, I get $21,000 per BTC for "energy, hosting and other" costs.

        On page 4 of their 10-Q I found "Cost of revenues - energy, hosting and other".
        https://ir.mara.com/sec-filings/all-sec-filings/content/0001493152-23-027174/0001493152-23-027174.pdf#page=4

        For 2023 Q2 : $55.2 M costs
        Q2 + Q1 - Q2 (Q1): $88.6M - $55.2M = $33.4M

        On page 18, I found their revenues from bitcoin mining.  This includes running their own private mining pool ("Operator") and lending their hashrate to other mining pools for rewards ("Participant").
        https://ir.mara.com/sec-filings/all-sec-filings/content/0001493152-23-027174/0001493152-23-027174.pdf#page=18

        2023 Q2: $81.8M
        Q2 + Q1 - Q2 (Q1): $132.9M - $81.8M = $51.1M

        Putting all of this together, I get:
        2023 Q1: $51.1M revenue versus $33.4M "energy, hosting and other" costs
        2023 Q2: $81.8M revenue versus $55.2M "energy, hosting and other" costs
        I suspect this calculation is sensitive to any assumptions we make about the price they are able to obtain for their cryptos. MARA had $62M of "other long term assets" on their most recent balance sheet, down from $714M in 3Q2022 - are these crypto assets?

        For at least a year, MARA has had nothing but negative operating earnings, negative net earnings, negative free cash flow from operations, negative free cash flow from investing, and negative YTD total cash flows. According to the cash flow statements, MARA funds itself though the sale of its own stock. Are they holding crypto-assets in addition to being dependent upon the sale of their own stock while incinerating cash? It would seem like they'd need to sell a bitcoin the moment they mined it to meet their cash flow needs, but I'm probably wrong about that, because why would anyone buy this $2.2B money pit stock based on the dollar fundamentals if it didn't represent a claim on possible future bitcoins?

        That is to say, if MARA is holding crypto in inventory, it is a different investment than if it sells its product almost immediately to cover expenses.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on September 01, 2023, 07:06:58 AM
        From their 10-Q and an article online, I believe MARA holds 12,500 Bitcoin with a current value of about $340 million.  What confuses me is the comparison to their market cap of $2.4 billion ... I don't see why they should move in sync with a bitcoin fund like GBTC.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on September 01, 2023, 07:50:00 AM
        From their 10-Q and an article online, I believe MARA holds 12,500 Bitcoin with a current value of about $340 million.  What confuses me is the comparison to their market cap of $2.4 billion ... I don't see why they should move in sync with a bitcoin fund like GBTC.
        Yea that's a very good question. I suppose shares of MARA represents a claim on crypto assets that will be mined at a future time, and the current price is the best estimate of what crypto assets will be worth in the future? Sort of like how the value of an oil company goes up and down with the price of oil even though they haven't extracted oil from the ground yet.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on September 01, 2023, 08:11:15 AM
        From their 10-Q and an article online, I believe MARA holds 12,500 Bitcoin with a current value of about $340 million.  What confuses me is the comparison to their market cap of $2.4 billion ... I don't see why they should move in sync with a bitcoin fund like GBTC.
        Yea that's a very good question. I suppose shares of MARA represents a claim on crypto assets that will be mined at a future time, and the current price is the best estimate of what crypto assets will be worth in the future? Sort of like how the value of an oil company goes up and down with the price of oil even though they haven't extracted oil from the ground yet.
        It's funny seeing seeing dividend discount model and Bitcoin mentioned together.  I don't think there's many value investors in crypto!  If you want to hear colorful insults directed towards crypto, famed value investor Charlie Munger is a good choice (Buffet is a bit more diplomatic)

        From memory, about $700M to $800M of $MARA's assets are Bitcoin mining equipment, and then there's roughly $350M in Bitcoin.  The links I posted can help those who want to track down the last bit of their asset value, but I recall the total was $1.3 billion.  Maybe the gap between that and their $2.4 billion market cap reflects bitcoin mining in the future, and potential price jumps in Bitcoin.  But it doesn't add up to me.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on September 01, 2023, 08:13:23 AM
        In other news, a spot Bitcoin ETF is getting closer.  The SEC lost a lawsuit on the grounds it was arbitrary and unfair in blocking spot ETFs but allowing futures ETFs.
        https://techcrunch.com/2023/08/31/grayscale-wins-lawsuit-against-sec-while-the-agency-settles-first-nft-case-and-friend-tech-hype-crashes/

        I actually think this won't change much for Bitcoin.  The existing leader, Grayscale Bitcoin Trust, will remain the leader.  They'll be easier to buy and sell for $0/trade in people's brokerage accounts, but I don't see them losing a battle against new ETFs.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on September 01, 2023, 09:02:30 AM
        It's funny seeing seeing dividend discount model and Bitcoin mentioned together.  I don't think there's many value investors in crypto!  If you want to hear colorful insults directed towards crypto, famed value investor Charlie Munger is a good choice (Buffet is a bit more diplomatic)
        Yea, I'm really stretching homo economicus to the breaking point here, trying to find some excuse within the bounds of rationality when perhaps I should have moved on the the behavioral sciences for an explanation.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 01, 2023, 04:12:15 PM
        Happy Birthday Bitcoin - 15 years old today.

        My, how you've grown . . .
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 04, 2023, 11:22:09 AM
        Worth noting on this thread that SBF was found guilty on all 7 criminal counts this week. I've been following the case, very dramatic. SBF and his team tried to make it seem complicated, and really wanted to tell a story about lack of hedging and incompetence. Whereas the prosecution told a story of straightforward fraud and conspiracy.

        While not exclusively about crypto, it's a good reminder of what happens when companies like FTX believe they operate outside the reach of regulators.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: clarkfan1979 on November 06, 2023, 05:52:16 PM
        Dumb money is really preaching a Bitcoin rally because it's currently up 110% YTD. However, if you compare the current price to the price from the day of the original post, it's down 34%.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 07, 2023, 05:32:44 AM
        Dumb money is really preaching a Bitcoin rally because it's currently up 110% YTD. However, if you compare the current price to the price from the day of the original post, it's down 34%.
        That would be dumb money like BlackRock, Fidelity, Investco, ...
        https://www.coindesk.com/consensus-magazine/2023/06/21/a-straightforward-explanation-for-why-financial-giants-want-to-issue-a-spot-bitcoin-etf/

        ... all of whom are creating Bitcoin ETFs, if the SEC lets them.  The SEC lost a court case, which suggests they have to allow Bitcoin ETFs.  So far, the SEC has just done nothing.  But that's the reason for a surge in BTC price in October (from $27k to $35k).

        If you think anything gaining +110% YTD involves dumb money, are you shorting Facebook's stock (META +153% YTD)?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on November 07, 2023, 10:55:21 AM
        Bitcoin and the crypto movement grew in part as a response to the 2008 banking and the associated problems with big institutional banking.   At first blush, the benefits seem large.  Bitcoin is a peer-to-peer, cashless transaction system.    You do not need a bank to hold your Bitcoin, which could be a huge benefit for the hundreds of millions if not billions of the unbanked.  It also makes it  more difficult for the government or other entity to seize your Bitcoin, and you do not need a third party to make transactions.  All the transactions are immutably recorded on the blockchain and cannot be falsified.   Transactions can be conducted across international borders with no additional expense.  Bitcoin cannot be debased or manipulated by any central bank or government. 

        Sounds good, right?  But has it grown?   I mean, within say the last five to ten years?  Anecdotally, it doesn't seem that any more businesses accept Bitcoin than back then, and the number might even have gone down.  And of those businesses that you've heard of that do accept Bitcoin, all use a third-party servicer like Bitpay to facilitate the transactions. 

        El Salvador treats Bitcoin as legal tender, but by all accounts actual adoption is extremely low.   Custody is facilitated by a government controlled app, which again means there is typically no self-custody and no trustless transactions.  Bitcoin ATMs typically have higher fees than regular ATMs.   Remittances via Bitcoin--which was a major selling point of El Salvador's plan--are a rounding error of the total and dropping. 

        All of these exchange collapses (FTX, Celsius, Genesis/Gemini, etc.) show that the institutions that have grown up around crypto lacked internal controls to ensure client's interests are safeguarded.  Therefore, there is a lot of excitement in the crypto space about the likely SEC approval of Bitcoin ETFs.     This will allow Wall Street investment banks to hold Bitcoin, and let retail investors speculate on the price without having to deal with self-custody, yet get the assurance of government oversight and regulation.

        So we've seen that Bitcoin specifically and crypto in general have grown into something that looks identical to the traditional banking and finance system.   Customer's assets are held in the institution's name, transactions take place off the blockchain, and are regulated by the government.

        So it raises the question:  What do you need Bitcoin for? 




        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on November 07, 2023, 11:03:24 AM
        That would be dumb money like BlackRock, Fidelity, Investco, ...

        Keep in mind though, for the most part it isn't their money.   They want to take customer's money, package that into ETFs, and then make money on the trades.  As we saw with FTX, the brokerage side of crypto is extremely lucrative.   This allows Wall Street investment houses to get a piece of that action.   Getting into bed with Wall Street is what crypto is all about, right? 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on November 07, 2023, 11:09:45 AM
        So it raises the question:  What do you need Bitcoin for?

        I've tried to get an answer to this a few times, including here. But usually it just ends up as hand-wavy, borderline conspiracy stuff, or variations of "line goes up".  Maybe that's good enough for some, but I'm gonna pass on BTC as any part of my portfolio
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 07, 2023, 12:15:16 PM
        So it raises the question:  What do you need Bitcoin for?
        Dumb money is really preaching a Bitcoin rally because it's currently up 110% YTD. However, if you compare the current price to the price from the day of the original post, it's down 34%.
        That would be dumb money like BlackRock, Fidelity, Investco, ...
        https://www.coindesk.com/consensus-magazine/2023/06/21/a-straightforward-explanation-for-why-financial-giants-want-to-issue-a-spot-bitcoin-etf/

        ... all of whom are creating Bitcoin ETFs, if the SEC lets them.  The SEC lost a court case, which suggests they have to allow Bitcoin ETFs.  So far, the SEC has just done nothing.  But that's the reason for a surge in BTC price in October (from $27k to $35k).

        If you think anything gaining +110% YTD involves dumb money, are you shorting Facebook's stock (META +153% YTD)?
        Without an ETF, there are few ways for regular investors to short crypto. Given the huge demand for ways to short crypto, there are large premiums available to harvest, and that attracts more investors. E.g. if you want to sell a put on crypto to win the large premium, you need to offset your risk by going long crypto - ideally in the same liquid asset for which you sold the put.

        So demand for a way to short crypto is a reason the world needs a long crypto ETF with an options market. The market participants don't have to believe in crypto any more than a person harvesting theta on SPY puts every week needs to have an opinion on the direction of the market next week.

        Of course, the world needs another Bitcoin fund like the world needs another sports gambling site, but where there is demand there will be supply.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on November 07, 2023, 02:32:53 PM
        I've tried to get an answer to this a few times, including here. But usually it just ends up as hand-wavy, borderline conspiracy stuff, or variations of "line goes up".  Maybe that's good enough for some, but I'm gonna pass on BTC as any part of my portfolio

        One thing I forgot to discuss in my prior post was banking the unbanked, which would appear to be an ideal use case for Bitcoin.   But about the same time Bitcoin was invented, Vodaphone noticed its costumers in Kenya were sending and receiving cell phone minutes as a form of payment.   So Vodaphone created mobile money, which allows users to send and receive money via their cell phones without the use of a bank.   Since then the use of mobile money has exploded, with the number of accounts well over a billion with annual transaction values of well over $1 trillion.  Growth continues in double digits every year. 

        Clearly, there is enormous global demand in this area, and the demand is not being filled by Bitcoin.   I mentioned this before (back when there were only a few hundred million mobile money users), and the responses are along the lines of "few understand" and "have fun staying poor."  Oh, the other popular response was “If you don't believe it or don't get it, I don't have the time to try to convince you, sorry.”   

        But clearly, somebody should have been taking the time to explain it because a billion potential Bitcoin users are using something else.   
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on November 07, 2023, 03:03:12 PM
        I've tried to get an answer to this a few times, including here. But usually it just ends up as hand-wavy, borderline conspiracy stuff, or variations of "line goes up".  Maybe that's good enough for some, but I'm gonna pass on BTC as any part of my portfolio

        One thing I forgot to discuss in my prior post was banking the unbanked, which would appear to be an ideal use case for Bitcoin.   But about the same time Bitcoin was invented, Vodaphone noticed its costumers in Kenya were sending and receiving cell phone minutes as a form of payment.   So Vodaphone created mobile money, which allows users to send and receive money via their cell phones without the use of a bank.   Since then the use of mobile money has exploded, with the number of accounts well over a billion with annual transaction values of well over $1 trillion.  Growth continues in double digits every year. 

        Clearly, there is enormous global demand in this area, and the demand is not being filled by Bitcoin.   I mentioned this before (back when there were only a few hundred million mobile money users), and the responses are along the lines of "few understand" and "have fun staying poor."  Oh, the other popular response was “If you don't believe it or don't get it, I don't have the time to try to convince you, sorry.”   

        But clearly, somebody should have been taking the time to explain it because a billion potential Bitcoin users are using something else.

        Munecat's excellent video on the whole...nonsense discusses this "bank the unbanked" bullshit well
        https://youtu.be/u-sNSjS8cq0?si=z1ihtBrfpnW20Bvp&t=2626
        Anarcho-capitalists reddit tech-bros are suddenly extremely! concerned about malnourished farmers in rural africa! Yeah right... not buying it.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on November 08, 2023, 02:48:06 AM
        (https://i.redd.it/12fj767rf1zb1.jpg)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 08, 2023, 05:58:08 AM
        If you asked people on the sidewalk if crypto looks identical to the banking system, I don't think it would pass the laugh test.  But I liked the dig at crypto's goal of getting in bed with Wall Street.  It's also fair to say those firms are collecting fees - perhaps from dumb money investors.

        Bitcoin was more like people's hobby in its early years - not a technology on which people developed anything.  I wouldn't count those years, but rather would start when it hit mainstream awareness (maybe around 2017, when Grayscale Bitcoin Trust $GBTC was created).
        ---

        Attacking what "some crypto bros"[quoting the video] believe about "malnourished farmers" sounds like a fake argument to me.
        ---

        The joke about a Bitcoin CEO raising prices is cute... but can we please leave that poor guy alone?  He's one in a long list of not-Satoshi-Nakamoto, and he suffered a lot over one journalist noting his name matched (Nakamoto is a more popular name than you migt think).
        https://en.wikipedia.org/wiki/Satoshi_Nakamoto
        https://en.wikipedia.org/wiki/Nakamoto
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 08, 2023, 06:27:43 AM
        So it raises the question:  What do you need Bitcoin for?
        Dumb money is really preaching a Bitcoin rally because it's currently up 110% YTD. However, if you compare the current price to the price from the day of the original post, it's down 34%.
        That would be dumb money like BlackRock, Fidelity, Investco, ...
        https://www.coindesk.com/consensus-magazine/2023/06/21/a-straightforward-explanation-for-why-financial-giants-want-to-issue-a-spot-bitcoin-etf/

        ... all of whom are creating Bitcoin ETFs, if the SEC lets them.  The SEC lost a court case, which suggests they have to allow Bitcoin ETFs.  So far, the SEC has just done nothing.  But that's the reason for a surge in BTC price in October (from $27k to $35k).

        If you think anything gaining +110% YTD involves dumb money, are you shorting Facebook's stock (META +153% YTD)?
        Without an ETF, there are few ways for regular investors to short crypto. Given the huge demand for ways to short crypto, there are large premiums available to harvest, and that attracts more investors. E.g. if you want to sell a put on crypto to win the large premium, you need to offset your risk by going long crypto - ideally in the same liquid asset for which you sold the put.

        So demand for a way to short crypto is a reason the world needs a long crypto ETF with an options market. The market participants don't have to believe in crypto any more than a person harvesting theta on SPY puts every week needs to have an opinion on the direction of the market next week.

        Of course, the world needs another Bitcoin fund like the world needs another sports gambling site, but where there is demand there will be supply.
        When the SEC allows it, competition for creating Bitcoin ETFs will start.  Unfortunately for everyone else, GBTC starts $22 billion ahead if they convert to an ETF.  That seems like a really huge lead to me, although maybe a battle over expense ratios will ensue.

        Investors can already buy put and call options on BITO, a Bitcoin Futures ETF.  Its performance (+63% in 12 months) trails Bitcoin-USD (+91%) and GBTC (+166%) significantly.  The most likely loser is $BITO in this battle.  In my experience, iShares is one of the best companies at fostering an options market, so their ETF might have a chance against GBTC.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on November 08, 2023, 11:45:57 AM
        If you asked people on the sidewalk if crypto looks identical to the banking system, I don't think it would pass the laugh test. 

        You think?   Let's say you had a co-worker who was new to crypto and wanted to regularly buy Bitcoin and regularly spend it on normal consumer goods.  How would you explain to him how to get started?   It is pretty tough to buy Bitcoin without using an exchange--which is just another word for broker.   In fact, I'll argue that there wouldn't be enough liquidity for Bitcoin to be usable without the exchanges.   So first thing is to buy Bitcoin on an exchange.  That's starting to look like traditional finance already.  Then, while he can self-custody (akin to maybe putting cash in a shoebox under the bed), it is a lot easier if he uses a custodial wallet on the exchange.  Which is just like having a bank account.   Then when it comes time to buy consumer goods like groceries from Whole Foods or electronics from Newegg, he must use a payment processor like Bitpay.  Which again, from a functional perspective is just like using a bank.

        So from a consumer-facing perspective, your co-worker is buying and spending Bitcoin using financial institutions that function the same way as traditional banks and brokerages. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 08, 2023, 12:01:35 PM
        If you asked people on the sidewalk if crypto looks identical to the banking system, I don't think it would pass the laugh test. 

        You think?   Let's say you had a co-worker who was new to crypto and wanted to regularly buy Bitcoin and regularly spend it on normal consumer goods.  How would you explain to him how to get started?   It is pretty tough to buy Bitcoin without using an exchange--which is just another word for broker.   In fact, I'll argue that there wouldn't be enough liquidity for Bitcoin to be usable without the exchanges.   So first thing is to buy Bitcoin on an exchange.  That's starting to look like traditional finance already.  Then, while he can self-custody (akin to maybe putting cash in a shoebox under the bed), it is a lot easier if he uses a custodial wallet on the exchange.  Which is just like having a bank account.   Then when it comes time to buy consumer goods like groceries from Whole Foods or electronics from Newegg, he must use a payment processor like Bitpay.  Which again, from a functional perspective is just like using a bank.

        So from a consumer-facing perspective, your co-worker is buying and spending Bitcoin using financial institutions that function the same way as traditional banks and brokerages.

        I objected to your claim crypto "looks identical" (*), and I think "functions the same" is also inaccurate.  You mentioned explaining crypto to a co-worker - but you don't have to explain traditional banking to co-workers.  That knowledge gap isn't the same.

        You brought up self-custody, which is another example: if you lose your wallet number or secret, your crypto is lost.  That's not true if you lose your bank account number or PIN code.

        If you do nothing with a bank account in USD, it will not double or lose 2/3rds of its value in 12 months.  Both have happened to BTC-USD prices in the past few years - it is not just like having a bank account.


        (*)
        So we've seen that Bitcoin specifically and crypto in general have grown into something that looks identical to the traditional banking and finance system.   Customer's assets are held in the institution's name, transactions take place off the blockchain, and are regulated by the government.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 08, 2023, 01:06:12 PM
        No, they are not identical in every detail. But they have the same shape, which is why they "look identical." This is why SBF was convicted of securities fraud and commodities fraud. If it looks like a duck, swims like a duck, and quacks like a duck...

        The crypto folks are funny. They love talking about providing banking services for the world's unbanked. But when regulators come sniffing it's all "no, we aren't a bank!" Pick a lane!
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on November 09, 2023, 03:35:33 AM
        As the bitcoin price increases during the next 4 year cycle it will be interesting to read the bitcoin haters desperate cope here as it develops into full blown cognitive dissonance.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 09, 2023, 08:45:22 AM
        @Juan Ponce de León I genuinely wish you all the best. I don't care if BTC goes up or down since, on principle, I'm never gonna buy into it.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on November 09, 2023, 10:07:41 AM
        @Juan Ponce de León I genuinely wish you all the best. I don't care if BTC goes up or down since, on principle, I'm never gonna buy into it.

        Thank you sir good luck with your future endeavours.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 09, 2023, 11:33:27 AM
        No, they are not identical in every detail. But they have the same shape, which is why they "look identical." This is why SBF was convicted of securities fraud and commodities fraud. If it looks like a duck, swims like a duck, and quacks like a duck...

        The crypto folks are funny. They love talking about providing banking services for the world's unbanked. But when regulators come sniffing it's all "no, we aren't a bank!" Pick a lane!
        You're clearly replying to my post, so where did I claim crypto was "about providing banking services for the world's unbanked"?  Where did I claim crypto was a bank?

        The frauds you mention relate to "FTX investors" - venture capitalists, not retail bank clients.

        SBF was convicted of
        "... conspiracy to commit securities fraud and conspiracy to commit commodities fraud against FTX investors, ..."
        https://www.cnbc.com/2023/11/02/sam-bankman-fried-found-guilty-on-all-seven-criminal-fraud-counts.html
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Stimpy on November 09, 2023, 11:47:41 AM
        As the bitcoin price increases during the next 4 year cycle it will be interesting to read the bitcoin haters desperate cope here as it develops into full blown cognitive dissonance.

        My good sir, your dreaming.   I believe if you look in the history of this forum... you'll find OTHER crypto threads with similar sentiment, I assure you, there will be no one coping over this.  Only laughter at how ridiculous it all is.  We won't all be "poor", trust me on that one.

        I expect most of the coping will be coming from the BTC, and other crypto holders, when it crashes in spectacular fashion, as it seems to always do.   This Tulip bulb market seems to have ebbs and flows and I am certain some of us will profit from the foolishness of it.   But I am also certain, most those will.... get out again, when the bulbs seem a little too good to be true...

        Anyway, I do wish you good luck on your investment.  I hold just enough to let the wheel roll, but not enough to care one iota what happens.   Such is the way to be when in Las Vegas.....  I mean the crypto market.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on November 09, 2023, 12:07:09 PM
        As the bitcoin price increases during the next 4 year cycle it will be interesting to read the bitcoin haters desperate cope here as it develops into full blown cognitive dissonance.

        My good sir, your dreaming.   I believe if you look in the history of this forum... you'll find OTHER crypto threads with similar sentiment, I assure you, there will be no one coping over this.  Only laughter at how ridiculous it all is.  We won't all be "poor", trust me on that one.

        I expect most of the coping will be coming from the BTC, and other crypto holders, when it crashes in spectacular fashion, as it seems to always do.   This Tulip bulb market seems to have ebbs and flows and I am certain some of us will profit from the foolishness of it.   But I am also certain, most those will.... get out again, when the bulbs seem a little too good to be true...

        Anyway, I do wish you good luck on your investment.  I hold just enough to let the wheel roll, but not enough to care one iota what happens.   Such is the way to be when in Las Vegas.....  I mean the crypto market.

        Oh yes you're so right.  It will 'crash' for sure.  2016 it crashed to $200.  2019 it crashed to $3000.  2022 it crashed to $15000.  Have you noticed anything about these crashes yet???
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on November 09, 2023, 12:18:28 PM
        As the bitcoin price increases during the next 4 year cycle it will be interesting to read the bitcoin haters desperate cope here as it develops into full blown cognitive dissonance.

        You're confusing "hate" with "observation."    It doesn't make any sense to hate Bitcoin anymore than it makes sense to hate baseball cards or other collectables.    A couple posts above, I listed out the basic premise and purported benefits of Bitcoin (self-custody, not controllable by a central bank or government, peer-to-peer transactions, immutable blockchain etc.).     But the mileposts that Bitcoin Maxis use to show evidence of growing adoption, like BTC ETFs or using Flexa to buy a latte', all include removing self-custody and moving the transactions off the blockchain, eliminating most of the purported benefits.  Other purported benefits/use cases like banking the unbanked and international renitences have never gained traction. 

        In other words, the premise of Bitcoin does not match the observable reality of Bitcoin.   That's not a cause for hate or anything.  It is just an observation.   

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 09, 2023, 01:11:47 PM
        No, they are not identical in every detail. But they have the same shape, which is why they "look identical." This is why SBF was convicted of securities fraud and commodities fraud. If it looks like a duck, swims like a duck, and quacks like a duck...

        The crypto folks are funny. They love talking about providing banking services for the world's unbanked. But when regulators come sniffing it's all "no, we aren't a bank!" Pick a lane!
        You're clearly replying to my post, so where did I claim crypto was "about providing banking services for the world's unbanked"?  Where did I claim crypto was a bank?

        The frauds you mention relate to "FTX investors" - venture capitalists, not retail bank clients.

        SBF was convicted of
        "... conspiracy to commit securities fraud and conspiracy to commit commodities fraud against FTX investors, ..."
        https://www.cnbc.com/2023/11/02/sam-bankman-fried-found-guilty-on-all-seven-criminal-fraud-counts.html

        Only my first paragraph is referring to you. By crypto folks I mean well known advocates such as Jack Dorsey and SBF (https://markets.businessinsider.com/news/currencies/ftxs-sam-bankman-fried-changes-lives-crypto-clarity-us-regulators-2021-12).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: erjkism on November 09, 2023, 02:34:02 PM
        @Juan Ponce de León I genuinely wish you all the best. I don't care if BTC goes up or down since, on principle, I'm never gonna buy into it.

        what principles specifically?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: erjkism on November 09, 2023, 02:46:14 PM
        I think there will be a huge crypto bubble in the next few years, with bitcoin doing very well, but with coins proclaiming utility in relation to artificial intelligence dominating.  Whether any of these coins will have any actual usefulness in AI is unclear, but that probably won't stop them from exploding in price.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 09, 2023, 02:53:54 PM
        I think there will be a huge crypto bubble in the next few years, with bitcoin doing very well, but with coins proclaiming utility in relation to artificial intelligence dominating.  Whether any of these coins will have any actual usefulness in AI is unclear, but that probably won't stop them from exploding in price.
        Can you help me imagine how an AI would use a cryptocoin?

        My first idea is to start an investment AI, and then behind the scenes influence it to run pump and dump cryptocurrency scams on its followers while claiming cover from the SEC's current vagueness about whether they're securities. My second best idea is to use the AI to monitor real-time social media sentiment and hop into and out of cryptocurrencies accordingly. Yes, one could substitute stocks here, but stocks have the pesky problem of being connected to fundamentals such as earnings reports or economic statistics. My third best idea is to use an AI to create millions of fake social media accounts and post info to trick the second type of AI into buying crypto, under cover of legal gray zones. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Stimpy on November 09, 2023, 02:58:15 PM
        Oh yes you're so right.  It will 'crash' for sure.  2016 it crashed to $200.  2019 it crashed to $3000.  2022 it crashed to $15000.  Have you noticed anything about these crashes yet???
        You mean other then the crashes are getting bigger, the losses wider, and the chance of doubling dropping?  And many many other things but lets keep it simple.

        IF you invested at the peak, your still out half your money right now, heck investing up to roughly April 2022, your still at a loss.   Now, being nice and assuming people averaged up...  (I know one of my friends did) we can assume your breaking even or close, if followed the usual advice here for timings of investing.   ie. Constant, consistent, investments be the market up or down.

        Or you could be like some of the others, holding and hoping, and not investing more.  Pending on when you invested, you may be fine, you maybe "poor".  (Yup I know people in this boat too.)

        Or you could be like the rest of the public in general, they saw it drop and got out, many of them at a loss and have lost their appetite till.... possibly now?  These people are losers in the game and realistically, will probably remain so, even if they get back in. 

        No one said money can't be made, as I said, play the ebbs and flows.   Eventually, it will stabilize or die, it's only use is....  well, no use other then the greater sucker.   So yes, invest.  I still wish you the best in your adventure and hope your not the one with diamond hands on the final show.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 09, 2023, 02:59:40 PM
        I think there will be a huge crypto bubble in the next few years, with bitcoin doing very well, but with coins proclaiming utility in relation to artificial intelligence dominating.  Whether any of these coins will have any actual usefulness in AI is unclear, but that probably won't stop them from exploding in price.
        Can you help me imagine how an AI would use a cryptocoin?

        My first idea is to start an investment AI, and then behind the scenes influence it to run pump and dump cryptocurrency scams on its followers while claiming cover from the SEC's current vagueness about whether they're securities. My second best idea is to use the AI to monitor real-time social media sentiment and hop into and out of cryptocurrencies accordingly. Yes, one could substitute stocks here, but stocks have the pesky problem of being connected to fundamentals such as earnings reports or economic statistics. My third best idea is to use an AI to create millions of fake social media accounts and post info to trick the second type of AI into buying crypto, under cover of legal gray zones. 

        They won't have anything to do with AI.  The whole crypto space has always been sold on buzzwords and scam rather than substance or application.  AI is a big tech buzzword right now, so I'd be shocked if there aren't dozens of crypto bros launching their new 'AI' coins.  And I'd be just as shocked if they don't end up going the way of NFTs.

        Worst case for crypto would be if we have any real sort of serious economic contraction . . . then I suspect that most will abandon their useless and worthless facsimiles of value in much greater numbers than did with the very mild recent financial concerns that caused the recent bitcoin collapse.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: erjkism on November 09, 2023, 03:26:27 PM
        I think there will be a huge crypto bubble in the next few years, with bitcoin doing very well, but with coins proclaiming utility in relation to artificial intelligence dominating.  Whether any of these coins will have any actual usefulness in AI is unclear, but that probably won't stop them from exploding in price.
        Can you help me imagine how an AI would use a cryptocoin?

        My first idea is to start an investment AI, and then behind the scenes influence it to run pump and dump cryptocurrency scams on its followers while claiming cover from the SEC's current vagueness about whether they're securities. My second best idea is to use the AI to monitor real-time social media sentiment and hop into and out of cryptocurrencies accordingly. Yes, one could substitute stocks here, but stocks have the pesky problem of being connected to fundamentals such as earnings reports or economic statistics. My third best idea is to use an AI to create millions of fake social media accounts and post info to trick the second type of AI into buying crypto, under cover of legal gray zones.

        Those ideas would probably be successful, and I bet you people are beginning to implement similar ideas right now.

        From what I have seen, the idea among crypto bros is that AI should be decentralized.  There are a couple projects out there claiming to be developing such things, although i am highly skeptical of their practical uses.

        Secondly, this decentralized AI will theoretically require lots of stored data for it to draw upon.  A decentralized data storing system, of which there are already a few, might claim to be vital for this theoretical decentralized AI and get a lot of hype. I am also skeptical about the practicality of this, but I think that such coins could pump hard like they did in 2021.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: erjkism on November 09, 2023, 03:31:23 PM
        I think there will be a huge crypto bubble in the next few years, with bitcoin doing very well, but with coins proclaiming utility in relation to artificial intelligence dominating.  Whether any of these coins will have any actual usefulness in AI is unclear, but that probably won't stop them from exploding in price.
        Can you help me imagine how an AI would use a cryptocoin?

        My first idea is to start an investment AI, and then behind the scenes influence it to run pump and dump cryptocurrency scams on its followers while claiming cover from the SEC's current vagueness about whether they're securities. My second best idea is to use the AI to monitor real-time social media sentiment and hop into and out of cryptocurrencies accordingly. Yes, one could substitute stocks here, but stocks have the pesky problem of being connected to fundamentals such as earnings reports or economic statistics. My third best idea is to use an AI to create millions of fake social media accounts and post info to trick the second type of AI into buying crypto, under cover of legal gray zones. 

        They won't have anything to do with AI.  The whole crypto space has always been sold on buzzwords and scam rather than substance or application.  AI is a big tech buzzword right now, so I'd be shocked if there aren't dozens of crypto bros launching their new 'AI' coins.  And I'd be just as shocked if they don't end up going the way of NFTs.

        Worst case for crypto would be if we have any real sort of serious economic contraction . . . then I suspect that most will abandon their useless and worthless facsimiles of value in much greater numbers than did with the very mild recent financial concerns that caused the recent bitcoin collapse.

        if we get any economic contraction, the government will come to the rescue and print money like they did for COVID. That worked out pretty well for risk assets.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on November 09, 2023, 03:36:34 PM
        Oh yes you're so right.  It will 'crash' for sure.  2016 it crashed to $200.  2019 it crashed to $3000.  2022 it crashed to $15000.  Have you noticed anything about these crashes yet???
        You mean other then the crashes are getting bigger, the losses wider, and the chance of doubling dropping?  And many many other things but lets keep it simple.

        IF you invested at the peak, your still out half your money right now, heck investing up to roughly April 2022, your still at a loss.   Now, being nice and assuming people averaged up...  (I know one of my friends did) we can assume your breaking even or close, if followed the usual advice here for timings of investing.   ie. Constant, consistent, investments be the market up or down.

        Or you could be like some of the others, holding and hoping, and not investing more.  Pending on when you invested, you may be fine, you maybe "poor".  (Yup I know people in this boat too.)

        Or you could be like the rest of the public in general, they saw it drop and got out, many of them at a loss and have lost their appetite till.... possibly now?  These people are losers in the game and realistically, will probably remain so, even if they get back in. 

        No one said money can't be made, as I said, play the ebbs and flows.   Eventually, it will stabilize or die, it's only use is....  well, no use other then the greater sucker.   So yes, invest.  I still wish you the best in your adventure and hope your not the one with diamond hands on the final show.

        Let me put if for you quite simply.  I believe bitcoin will always go on to make a greater ATH.  I believe in Bitcoin as a store of value, I don't believe there is ever going to be an ultimate 'top' for bitcoin because I believe the printed out of thin air fiat currencies we value it in will always devalue over time, this is what ultimately drives capital towards the harder asset which is Bitcoin, the only asset which humans cannot increase the supply of.  Let me say it again, there is no top for bitcoin because there is no bottom for fiat, fiat will always be printed into infinity.

        Now, you can argue the timing of peoples investments all you like, yes the people who bought the last ATH are currently 'at loss', but the next ATH will come around and at that moment, nominally the amount of people 'at loss' at the next ATH will be zero.  Yes there will be another 'crash' at some stage, yes people will be at 'loss' for a year or two, but IMO the value of bitcoin will always eventually go up vs printed fiat currencies inflating away their value over time.  This is really all I have to say on the matter as all of this has been covered in the past I'm sure.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on November 09, 2023, 03:47:30 PM
        They won't have anything to do with AI.  The whole crypto space has always been sold on buzzwords and scam rather than substance or application.  AI is a big tech buzzword right now, so I'd be shocked if there aren't dozens of crypto bros launching their new 'AI' coins.  And I'd be just as shocked if they don't end up going the way of NFTs.

        One of the promises of some NFTs was that copyright would travel with the NFT itself.   In theory that's possible.  But copyrights are transferred off the blockchain.    Unless the buyer and copyright holder signed a legal contract transferring rights to the buyer, then the copyright remains with the copyright holder, regardless of who owns the token.   This exactly the way it works with other creative works too, of course.  Which means you don't need the NFT for anything.   Once the cryptoworld figured that out, the price of NFTs went way, way, way, down.   

        Crypto projects fall into two categories:  1) solutions for problems that already have better solutions, or 2) solutions for problems that don't exist.  AI coin is the latter.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: erjkism on November 09, 2023, 03:52:38 PM
        Oh yes you're so right.  It will 'crash' for sure.  2016 it crashed to $200.  2019 it crashed to $3000.  2022 it crashed to $15000.  Have you noticed anything about these crashes yet???
        You mean other then the crashes are getting bigger, the losses wider, and the chance of doubling dropping?  And many many other things but lets keep it simple.

        IF you invested at the peak, your still out half your money right now, heck investing up to roughly April 2022, your still at a loss.   Now, being nice and assuming people averaged up...  (I know one of my friends did) we can assume your breaking even or close, if followed the usual advice here for timings of investing.   ie. Constant, consistent, investments be the market up or down.

        Or you could be like some of the others, holding and hoping, and not investing more.  Pending on when you invested, you may be fine, you maybe "poor".  (Yup I know people in this boat too.)

        Or you could be like the rest of the public in general, they saw it drop and got out, many of them at a loss and have lost their appetite till.... possibly now?  These people are losers in the game and realistically, will probably remain so, even if they get back in. 

        No one said money can't be made, as I said, play the ebbs and flows.   Eventually, it will stabilize or die, it's only use is....  well, no use other then the greater sucker.   So yes, invest.  I still wish you the best in your adventure and hope your not the one with diamond hands on the final show.

        Let me put if for you quite simply.  I believe bitcoin will always go on to make a greater ATH.  I believe in Bitcoin as a store of value, I don't believe there is ever going to be an ultimate 'top' for bitcoin because I believe the printed out of thin air fiat currencies we value it in will always devalue over time, this is what ultimately drives capital towards the harder asset which is Bitcoin, the only asset which humans cannot increase the supply of.  Let me say it again, there is no top for bitcoin because there is no bottom for fiat, fiat will always be printed into infinity.

        Now, you can argue the timing of peoples investments all you like, yes the people who bought the last ATH are currently 'at loss', but the next ATH will come around and at that moment, nominally the amount of people 'at loss' at the next ATH will be zero.  Yes there will be another 'crash' at some stage, yes people will be at 'loss' for a year or two, but IMO the value of bitcoin will always eventually go up vs printed fiat currencies inflating away their value over time.  This is really all I have to say on the matter as all of this has been covered in the past I'm sure.

        the 21 million number may actually have to change at some point.

        I think the major concern long term is the sustainability of bitcoin's security mechanism. As the issuance of bitcoin continues to decrease, miners will have to be incentivized not by block rewards but rather by fees.  This may not actually work.  There is some discussion of even solving this problem by increasing the hard cap of 21 million, but the hard cap is the major selling point of bitcoin.  Because of this problem, I think bitcoin basically has to either go to $1 million eventually or it will die.  However, we should still be able to get at least one more big pump out of it before that problem hits.

        https://www.lynalden.com/bitcoin-security-modeling/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on November 09, 2023, 03:57:34 PM
        @Juan Ponce de León I genuinely wish you all the best. I don't care if BTC goes up or down since, on principle, I'm never gonna buy into it.

        what principles specifically?

        For me it's the principle that I shouldn't invest in things that don't have any good reason to increase in value.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 09, 2023, 05:13:20 PM
        On the last day of October, I closed a short position on a crypto stock (Marathon Digital Holdings).  Until I sold, I had a slightly negative exposure to crypto.  I have a suspicion I'm the only one here who has shorted crypto stocks.

        I have a vague plan to short crypto again once the excitement and prices peak, but that isn't a very strong case.  The recent price gains are driven by stories like this one about possible Bitcoin ETFs:

        "The U.S. Securities and Exchange Commission (SEC) has opened talks with Grayscale Investments on the details of the company's application to convert its trust product GBTC to a spot bitcoin exchange traded product (ETF), according to a person familiar with the back-and-forth, which could have momentous implications for the crypto industry."
        https://www.coindesk.com/policy/2023/11/08/us-sec-said-to-open-talks-with-grayscale-on-spot-bitcoin-etf-push/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 09, 2023, 07:17:35 PM
        @Juan Ponce de León I genuinely wish you all the best. I don't care if BTC goes up or down since, on principle, I'm never gonna buy into it.

        what principles specifically?

        For me it's the principle that I shouldn't invest in things that don't have any good reason to increase in value.

        And environmental reasons. BTC consumes an appalling amount of energy.

        These are the big principles that make BTC a non-starter for me.

        On a more practical level, crypto has issues similar to gold (which I also don't buy). I either have to self host, which means physically securing assets which can be risky. Or I have someone else host it for me, and the crypto industry doesn't exactly have a great record. So a bunch of risk and hassle for what? For me it doesn't solve any problems, only creates new ones.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 09, 2023, 07:56:00 PM
        On the last day of October, I closed a short position on a crypto stock (Marathon Digital Holdings).  Until I sold, I had a slightly negative exposure to crypto.  I have a suspicion I'm the only one here who has shorted crypto stocks.

        I have a vague plan to short crypto again once the excitement and prices peak, but that isn't a very strong case.  The recent price gains are driven by stories like this one about possible Bitcoin ETFs:

        "The U.S. Securities and Exchange Commission (SEC) has opened talks with Grayscale Investments on the details of the company's application to convert its trust product GBTC to a spot bitcoin exchange traded product (ETF), according to a person familiar with the back-and-forth, which could have momentous implications for the crypto industry."
        https://www.coindesk.com/policy/2023/11/08/us-sec-said-to-open-talks-with-grayscale-on-spot-bitcoin-etf-push/
        I briefly bought a put on a crypto fund last year. It decayed with extraordinary speed and I sold for a loss.

        Here was the error of my ways: I reasoned that crypto had no fundamental utility, so the price would go down. The critical thinking question I should have asked myself was "given that it has no fundamental utility now, and never had any fundamental utility, why is it currently selling for any price at all?"

        The answer is people are willing to pay some amount of money for crypto for reasons that have nothing - zero - to do with the purported utility of the tokens. That is true today and it might be true in the future.

        Thus the fallacy is to short something that is not at all priced on fundamentals, for fundamentals reasons. Logic, observation, reasoning - throw all that shit out the window. The price of cryptocurrencies is not related to any one of these things. To short crypto because it has no present or future as a real currency is like trying to create an intellectual model to explain the motions of the ball in a roulette wheel at a casino. The whole point of a roulette/crypto investment is to be unreasonable, to detach outcome from process quality.

        This is a completely different game than using a reason-based process to short a company you can observe having deteriorating financials, obsolete products, poor quality management, or exposure to specific risks. You're likely to win the company bet, but winning a crypto short is a matter of pure luck.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: erjkism on November 09, 2023, 08:30:06 PM
        @Juan Ponce de León I genuinely wish you all the best. I don't care if BTC goes up or down since, on principle, I'm never gonna buy into it.

        what principles specifically?

        For me it's the principle that I shouldn't invest in things that don't have any good reason to increase in value.

        And environmental reasons. BTC consumes an appalling amount of energy.

        These are the big principles that make BTC a non-starter for me.

        On a more practical level, crypto has issues similar to gold (which I also don't buy). I either have to self host, which means physically securing assets which can be risky. Or I have someone else host it for me, and the crypto industry doesn't exactly have a great record. So a bunch of risk and hassle for what? For me it doesn't solve any problems, only creates new ones.

        Bitcoin does increase in value, whether or not you think it "doesn't have a good reason" doesn't matter, the market declares the value

        "If you believe that Bitcoin offers no utility beyond serving as a ponzi scheme or a device for money laundering, then it would only be logical to conclude that consuming any amount of energy is wasteful. If you are one of the tens of millions of individuals worldwide using it as a tool to escape monetary repression, inflation, or capital controls, you most likely think that the energy is extremely well spent. Whether you feel Bitcoin has a valid claim on society’s resources boils down to how much value you think Bitcoin creates for society."

         https://hbr.org/2021/05/how-much-energy-does-bitcoin-actually-consume
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 09, 2023, 09:01:51 PM
        @Juan Ponce de León I genuinely wish you all the best. I don't care if BTC goes up or down since, on principle, I'm never gonna buy into it.

        what principles specifically?

        For me it's the principle that I shouldn't invest in things that don't have any good reason to increase in value.

        And environmental reasons. BTC consumes an appalling amount of energy.

        These are the big principles that make BTC a non-starter for me.

        On a more practical level, crypto has issues similar to gold (which I also don't buy). I either have to self host, which means physically securing assets which can be risky. Or I have someone else host it for me, and the crypto industry doesn't exactly have a great record. So a bunch of risk and hassle for what? For me it doesn't solve any problems, only creates new ones.

        Bitcoin does increase in value, whether or not you think it "doesn't have a good reason" doesn't matter, the market declares the value

        "If you believe that Bitcoin offers no utility beyond serving as a ponzi scheme or a device for money laundering, then it would only be logical to conclude that consuming any amount of energy is wasteful. If you are one of the tens of millions of individuals worldwide using it as a tool to escape monetary repression, inflation, or capital controls, you most likely think that the energy is extremely well spent. Whether you feel Bitcoin has a valid claim on society’s resources boils down to how much value you think Bitcoin creates for society."

         https://hbr.org/2021/05/how-much-energy-does-bitcoin-actually-consume

        I'm not effected by any of those things. I have no need to consume huge amounts of energy for BTC.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 10, 2023, 08:20:29 AM
        @Juan Ponce de León I genuinely wish you all the best. I don't care if BTC goes up or down since, on principle, I'm never gonna buy into it.

        what principles specifically?

        For me it's the principle that I shouldn't invest in things that don't have any good reason to increase in value.

        And environmental reasons. BTC consumes an appalling amount of energy.

        These are the big principles that make BTC a non-starter for me.

        On a more practical level, crypto has issues similar to gold (which I also don't buy). I either have to self host, which means physically securing assets which can be risky. Or I have someone else host it for me, and the crypto industry doesn't exactly have a great record. So a bunch of risk and hassle for what? For me it doesn't solve any problems, only creates new ones.

        Bitcoin does increase in value, whether or not you think it "doesn't have a good reason" doesn't matter, the market declares the value

        "If you believe that Bitcoin offers no utility beyond serving as a ponzi scheme or a device for money laundering, then it would only be logical to conclude that consuming any amount of energy is wasteful. If you are one of the tens of millions of individuals worldwide using it as a tool to escape monetary repression, inflation, or capital controls, you most likely think that the energy is extremely well spent. Whether you feel Bitcoin has a valid claim on society’s resources boils down to how much value you think Bitcoin creates for society."

         https://hbr.org/2021/05/how-much-energy-does-bitcoin-actually-consume

        If we're judging crypto's ability to help unbanked folks with an alternative way of sending or buying money, it seems like quite a failure thus far.

        Only 12% of crypto users are unbanked (https://pro.morningconsult.com/analyst-reports/state-of-cryptocurrency (https://pro.morningconsult.com/analyst-reports/state-of-cryptocurrency)) and the majority of them are heavy users of traditional banking.  Only 16% of crypto users say that they use it to send money or buy things, while 66% say that they use crypto “as a way to make money rather than send it”.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on November 10, 2023, 10:44:11 AM
        Let me put if for you quite simply.  I believe bitcoin will always go on to make a greater ATH.  I believe in Bitcoin as a store of value, I don't believe there is ever going to be an ultimate 'top' for bitcoin because I believe the printed out of thin air fiat currencies we value it in will always devalue over time, this is what ultimately drives capital towards the harder asset which is Bitcoin, the only asset which humans cannot increase the supply of.  Let me say it again, there is no top for bitcoin because there is no bottom for fiat, fiat will always be printed into infinity.

        Now, you can argue the timing of peoples investments all you like, yes the people who bought the last ATH are currently 'at loss', but the next ATH will come around and at that moment, nominally the amount of people 'at loss' at the next ATH will be zero.  Yes there will be another 'crash' at some stage, yes people will be at 'loss' for a year or two, but IMO the value of bitcoin will always eventually go up vs printed fiat currencies inflating away their value over time.  This is really all I have to say on the matter as all of this has been covered in the past I'm sure.

        Sure, this is true; there's a limited supply of BTC. Just as there's a limited supply of gold, MTG cards, or used tissues signed by Tom Hanks.. But it doesn't follow that the value of those things will go up forever. They also need to have a utility, otherwise you're just paying for the novelty of owning something, which has a pretty limited market. And the ability, and experience, of using BTC to pay for things is, honestly, pretty shit. The uses cases where BTC is "better" than electronic or hard cash is very small, even less if you exclude criminal activity. Even if you can use BTC to pay at Newegg or whatever, there's almost never a good reason why you would if you also have $. And finally, not being able to use it to pay your taxes pretty much kills the cycle of use for a currency. Unless that changes you'll need dollars (or your local currency) at some point.

        But yeah, go bet on the "fiat currency will collapse" theory, it's been going strong for decades already.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Glenstache on November 10, 2023, 10:53:03 AM
        To me it seems like the primary value is a "money" that fits libertarian ideals of decoupling from government. This is also its primary drawback as many users of financial systems really like things like regulation and stability. It appears that the integration with the global financial system requires a middle man and decoupling of the blockchain from transactions thus making it a bit of a niche item. Ironically, the value proposition for BTC is fundamentally the same as all other currencies in that it has value to the extent that people *believe* it has value. The fiat currencies have value because they are widely used and agreed upon as a source of value. The ability to adjust the supply of money through central banks is a feature, not a bug. That is not to say that the ability to change supply cannot be mismanaged, but it has incredible power to smooth economic turbulence at a macro level.

        In my mind, BTC is worse than gold because there is a fundamental value there for making things (electronics, gaudy jewelery). BTC is a store of wealth strictly to the extent that people believe it is. The exceptional volatility is a natural outcome of this fundamental characteristic. To say that BTC has no top because fiat currencies have no bottom is useful as a metric only to the extent that BTC is values in fiat-dollars/euros/clams; this undermines the concept of it useful as a stand alone monetary tool.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on November 10, 2023, 12:19:45 PM
        Bitcoin does increase in value, whether or not you think it "doesn't have a good reason" doesn't matter, the market declares the value

        Sure, there are lots of things that have increased in value that I nevertheless didn't invest in because I had no particular belief beforehand that I should expect them to increase in value. Bitcoin is one in a long list of such items.

        Let me put if for you quite simply.  I believe bitcoin will always go on to make a greater ATH.  I believe in Bitcoin as a store of value, I don't believe there is ever going to be an ultimate 'top' for bitcoin because I believe the printed out of thin air fiat currencies we value it in will always devalue over time, this is what ultimately drives capital towards the harder asset which is Bitcoin, the only asset which humans cannot increase the supply of.  Let me say it again, there is no top for bitcoin because there is no bottom for fiat, fiat will always be printed into infinity.

        Now, you can argue the timing of peoples investments all you like, yes the people who bought the last ATH are currently 'at loss', but the next ATH will come around and at that moment, nominally the amount of people 'at loss' at the next ATH will be zero.  Yes there will be another 'crash' at some stage, yes people will be at 'loss' for a year or two, but IMO the value of bitcoin will always eventually go up vs printed fiat currencies inflating away their value over time.  This is really all I have to say on the matter as all of this has been covered in the past I'm sure.

        Sure, this is true; there's a limited supply of BTC. Just as there's a limited supply of gold, MTG cards, or used tissues signed by Tom Hanks.. But it doesn't follow that the value of those things will go up forever. They also need to have a utility, otherwise you're just paying for the novelty of owning something, which has a pretty limited market. And the ability, and experience, of using BTC to pay for things is, honestly, pretty shit. The uses cases where BTC is "better" than electronic or hard cash is very small, even less if you exclude criminal activity. Even if you can use BTC to pay at Newegg or whatever, there's almost never a good reason why you would if you also have $. And finally, not being able to use it to pay your taxes pretty much kills the cycle of use for a currency. Unless that changes you'll need dollars (or your local currency) at some point.

        But yeah, go bet on the "fiat currency will collapse" theory, it's been going strong for decades already.

        This. The supply of gold, for example, is fairly stable. There are mines that increase this supply by 1-2% every year, but that lags behind fiat inflation and also behind population growth. Is holding gold better than holding cash under your mattress? Sure. It's widely recognized as a good store of value. Its purchasing power remains relatively stable over time. There's much less of a case for why it should increase in real value over time (not nominal fiat-denominated value, but real value in terms of purchasing power).

        I see Bitcoin-proponents often come back to the comparison with inflationary fiat currencies as though that proves Bitcoin is worth investing in. No. Nobody should consider fiat currency an investment. Everyone knows it will be worth less in a few years than it is worth now. "Likely a better investment than a known bad investment" is a pretty low bar to clear, and gives us next to no information about whether it's actually a good investment.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: mistymoney on November 10, 2023, 01:17:11 PM
        Let me put if for you quite simply.  I believe bitcoin will always go on to make a greater ATH.  I believe in Bitcoin as a store of value, I don't believe there is ever going to be an ultimate 'top' for bitcoin because I believe the printed out of thin air fiat currencies we value it in will always devalue over time, this is what ultimately drives capital towards the harder asset which is Bitcoin, the only asset which humans cannot increase the supply of.  Let me say it again, there is no top for bitcoin because there is no bottom for fiat, fiat will always be printed into infinity.

        Now, you can argue the timing of peoples investments all you like, yes the people who bought the last ATH are currently 'at loss', but the next ATH will come around and at that moment, nominally the amount of people 'at loss' at the next ATH will be zero.  Yes there will be another 'crash' at some stage, yes people will be at 'loss' for a year or two, but IMO the value of bitcoin will always eventually go up vs printed fiat currencies inflating away their value over time.  This is really all I have to say on the matter as all of this has been covered in the past I'm sure.

        Sure, this is true; there's a limited supply of BTC. Just as there's a limited supply of gold, MTG cards, or used tissues signed by Tom Hanks.. But it doesn't follow that the value of those things will go up forever. They also need to have a utility, otherwise you're just paying for the novelty of owning something, which has a pretty limited market. And the ability, and experience, of using BTC to pay for things is, honestly, pretty shit. The uses cases where BTC is "better" than electronic or hard cash is very small, even less if you exclude criminal activity. Even if you can use BTC to pay at Newegg or whatever, there's almost never a good reason why you would if you also have $. And finally, not being able to use it to pay your taxes pretty much kills the cycle of use for a currency. Unless that changes you'll need dollars (or your local currency) at some point.

        But yeah, go bet on the "fiat currency will collapse" theory, it's been going strong for decades already.

        How is btc not a fiat currrency? Except for the part about being backed by a government, there are no physical assets such as gold or silver to support it. Is btc calling itself a physical commodity?

        I'm not getting this....I thought fiat meant we are all going to pretend this has value to facilitate buy and sell stuff without bartering.....isn't btc the definition of we are all going to pretend....and there isn't even a government entity to back it up.

        What am I missing?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 10, 2023, 02:25:36 PM
        Let me put if for you quite simply.  I believe bitcoin will always go on to make a greater ATH.  I believe in Bitcoin as a store of value, I don't believe there is ever going to be an ultimate 'top' for bitcoin because I believe the printed out of thin air fiat currencies we value it in will always devalue over time, this is what ultimately drives capital towards the harder asset which is Bitcoin, the only asset which humans cannot increase the supply of.  Let me say it again, there is no top for bitcoin because there is no bottom for fiat, fiat will always be printed into infinity.

        Now, you can argue the timing of peoples investments all you like, yes the people who bought the last ATH are currently 'at loss', but the next ATH will come around and at that moment, nominally the amount of people 'at loss' at the next ATH will be zero.  Yes there will be another 'crash' at some stage, yes people will be at 'loss' for a year or two, but IMO the value of bitcoin will always eventually go up vs printed fiat currencies inflating away their value over time.  This is really all I have to say on the matter as all of this has been covered in the past I'm sure.

        Sure, this is true; there's a limited supply of BTC. Just as there's a limited supply of gold, MTG cards, or used tissues signed by Tom Hanks.. But it doesn't follow that the value of those things will go up forever. They also need to have a utility, otherwise you're just paying for the novelty of owning something, which has a pretty limited market. And the ability, and experience, of using BTC to pay for things is, honestly, pretty shit. The uses cases where BTC is "better" than electronic or hard cash is very small, even less if you exclude criminal activity. Even if you can use BTC to pay at Newegg or whatever, there's almost never a good reason why you would if you also have $. And finally, not being able to use it to pay your taxes pretty much kills the cycle of use for a currency. Unless that changes you'll need dollars (or your local currency) at some point.

        But yeah, go bet on the "fiat currency will collapse" theory, it's been going strong for decades already.

        How is btc not a fiat currrency? Except for the part about being backed by a government, there are no physical assets such as gold or silver to support it. Is btc calling itself a physical commodity?

        I'm not getting this....I thought fiat meant we are all going to pretend this has value to facilitate buy and sell stuff without bartering.....isn't btc the definition of we are all going to pretend....and there isn't even a government entity to back it up.

        What am I missing?

        'fiat currency' is issued by a government by definition.  This is different from non-fiat currency (like the scrip that was issued by mining companies to keep employees dependent and destitute), or if I started making 'Steve Bucks'.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on November 10, 2023, 02:31:03 PM
        Let me put if for you quite simply.  I believe bitcoin will always go on to make a greater ATH.  I believe in Bitcoin as a store of value, I don't believe there is ever going to be an ultimate 'top' for bitcoin because I believe the printed out of thin air fiat currencies we value it in will always devalue over time, this is what ultimately drives capital towards the harder asset which is Bitcoin, the only asset which humans cannot increase the supply of.  Let me say it again, there is no top for bitcoin because there is no bottom for fiat, fiat will always be printed into infinity.

        Now, you can argue the timing of peoples investments all you like, yes the people who bought the last ATH are currently 'at loss', but the next ATH will come around and at that moment, nominally the amount of people 'at loss' at the next ATH will be zero.  Yes there will be another 'crash' at some stage, yes people will be at 'loss' for a year or two, but IMO the value of bitcoin will always eventually go up vs printed fiat currencies inflating away their value over time.  This is really all I have to say on the matter as all of this has been covered in the past I'm sure.

        Sure, this is true; there's a limited supply of BTC. Just as there's a limited supply of gold, MTG cards, or used tissues signed by Tom Hanks.. But it doesn't follow that the value of those things will go up forever. They also need to have a utility, otherwise you're just paying for the novelty of owning something, which has a pretty limited market. And the ability, and experience, of using BTC to pay for things is, honestly, pretty shit. The uses cases where BTC is "better" than electronic or hard cash is very small, even less if you exclude criminal activity. Even if you can use BTC to pay at Newegg or whatever, there's almost never a good reason why you would if you also have $. And finally, not being able to use it to pay your taxes pretty much kills the cycle of use for a currency. Unless that changes you'll need dollars (or your local currency) at some point.

        But yeah, go bet on the "fiat currency will collapse" theory, it's been going strong for decades already.

        How is btc not a fiat currrency? Except for the part about being backed by a government, there are no physical assets such as gold or silver to support it. Is btc calling itself a physical commodity?

        I'm not getting this....I thought fiat meant we are all going to pretend this has value to facilitate buy and sell stuff without bartering.....isn't btc the definition of we are all going to pretend....and there isn't even a government entity to back it up.

        What am I missing?

        yes I agree, but didn't even bother bring that up. BTC is pretty much the definition of fiat. It only has "value" (using that very loosely!) because everyone agree it does. Even though you can barely buy anything with it, nobody gets paid a salary in it, it can take hours to convert to dollars, and (except a handful) no government accepts it.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 10, 2023, 04:55:56 PM
        yes I agree, but didn't even bother bring that up. BTC is pretty much the definition of fiat. It only has "value" (using that very loosely!) because everyone agree it does. Even though you can barely buy anything with it, nobody gets paid a salary in it, it can take hours to convert to dollars, and (except a handful) no government accepts it.

        Don't essentially all of those same arguments apply to gold though?

        Gold has value only because a lot of people agree it does.
        I don't know anywhere outside of an old western movie I could show up with a sack of gold dust and buy anything directly.
        I don't know anyone who gets paid a salary in gold.
        It can take days or weeks to covert gold to dollars.
        Governments typically don't accept it as payment for taxes.

        Now I'm not arguing people should be buying bitcoin or gold. But I don't think these particular set of features make bitcoin look any worse than gold, yet people treat gold as the opposite of fiat money.

        Gold's main advantage over bitcoin is a longer track record of people continuing to agree it has value. 
        Bitcoin's main advantage over gold is that self custody is a lot easier/cheaper, particularly if you move around a lot.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 10, 2023, 06:07:57 PM
        @Juan Ponce de León I genuinely wish you all the best. I don't care if BTC goes up or down since, on principle, I'm never gonna buy into it.

        what principles specifically?

        For me it's the principle that I shouldn't invest in things that don't have any good reason to increase in value.

        And environmental reasons. BTC consumes an appalling amount of energy.

        These are the big principles that make BTC a non-starter for me.

        On a more practical level, crypto has issues similar to gold (which I also don't buy). I either have to self host, which means physically securing assets which can be risky. Or I have someone else host it for me, and the crypto industry doesn't exactly have a great record. So a bunch of risk and hassle for what? For me it doesn't solve any problems, only creates new ones.

        Bitcoin does increase in value, whether or not you think it "doesn't have a good reason" doesn't matter, the market declares the value

        "If you believe that Bitcoin offers no utility beyond serving as a ponzi scheme or a device for money laundering, then it would only be logical to conclude that consuming any amount of energy is wasteful. If you are one of the tens of millions of individuals worldwide using it as a tool to escape monetary repression, inflation, or capital controls, you most likely think that the energy is extremely well spent. Whether you feel Bitcoin has a valid claim on society’s resources boils down to how much value you think Bitcoin creates for society."

         https://hbr.org/2021/05/how-much-energy-does-bitcoin-actually-consume

        If we're judging crypto's ability to help unbanked folks with an alternative way of sending or buying money, it seems like quite a failure thus far.

        Only 12% of crypto users are unbanked (https://pro.morningconsult.com/analyst-reports/state-of-cryptocurrency (https://pro.morningconsult.com/analyst-reports/state-of-cryptocurrency)) and the majority of them are heavy users of traditional banking.  Only 16% of crypto users say that they use it to send money or buy things, while 66% say that they use crypto “as a way to make money rather than send it”.

        Eh ?

        The fact (taken at face value) that more banked than unbanked hold crypto says absolutely nothing about "crypto's ability to help unbanked folks with an alternative way of sending or buying money".
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 10, 2023, 07:18:15 PM
        "Fiat money is a type of currency that is not backed by a commodity, such as gold or silver."
        https://en.wikipedia.org/wiki/Fiat_money

        "Yes, virtual currencies, such as Bitcoin, have been determined to be commodities under the Commodity Exchange Act (CEA)"
        [PDF] https://www.cftc.gov/sites/default/files/2019-12/oceo_bitcoinbasics0218.pdf
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on November 10, 2023, 08:15:30 PM
        Bitcoin's main advantage over gold is that self custody is a lot easier/cheaper, particularly if you move around a lot.

        Is it though? A million dollars worth of gold weighs about 16 kg and occupies less than a liter of volume. Should be easy enough to secure that in any residence, and transporting it from one residence to another is also a fairly simple task.

        Self-custody of Bitcoins is not significantly easier, at least if you don't want your coins to die with you. If you want to make sure that your heirs have access to your crypto wallet when you die, but not until then, you need to make sure the keys are written down somewhere, which comes with all the same physical security challenges inherent with storing a liter of gold.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 10, 2023, 08:39:33 PM
        All things being equal, I would rather fly -- whether domestically or internationally -- with a bitcoin seed phrase memorized than show up to the airport with a liter of gold in my carry on (although I agree, $1M of gold would still fit within the carry-on allowance). I'll acknowledge that may be a personal preference rather a universal one though.

        A wallet key or a bunch of gold coins/bars in a bank safe deposit box or home safe are going to be about equally secure. Bitcoin also offers options like multi-signature setups that require 2 out of 3 keys in order to access the wallet. That lets your heirs lose any one of three written down keys without losing access to you bitcoins. And anyone who finds or steals one of three written down keys still wouldn't gain access to your bitcoin wallet. To me the latter seems more secure, but again that may be a personal preference rather than a universal truth.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 10, 2023, 11:36:10 PM
        Bitcoin and the crypto movement grew in part as a response to the 2008 banking and the associated problems with big institutional banking.   At first blush, the benefits seem large.  Bitcoin is a peer-to-peer, cashless transaction system.    You do not need a bank to hold your Bitcoin, which could be a huge benefit for the hundreds of millions if not billions of the unbanked.  It also makes it  more difficult for the government or other entity to seize your Bitcoin, and you do not need a third party to make transactions.  All the transactions are immutably recorded on the blockchain and cannot be falsified.   Transactions can be conducted across international borders with no additional expense.  Bitcoin cannot be debased or manipulated by any central bank or government. 

        Sounds good, right?  But has it grown?   I mean, within say the last five to ten years?  Anecdotally, it doesn't seem that any more businesses accept Bitcoin than back then, and the number might even have gone down.  And of those businesses that you've heard of that do accept Bitcoin, all use a third-party servicer like Bitpay to facilitate the transactions.

        That's your sole measure of growth ?

        I'm not expecting to see widespread adoption of Bitcoin/Lightning for day-to-day transactions in developed nations for a while yet - there's no great urgency for it. I'd be pleased to see it but I'm losing zero sleep over it's absence - it's a non-issue.

        If a business sees benefits in using Bitpay, so be it - it's a choice - it's up to them. It wouldn't affect me as a buyer using my own Bitcoin/Lightning wallet - I don't see the problem.

        El Salvador treats Bitcoin as legal tender, but by all accounts actual adoption is extremely low.   Custody is facilitated by a government controlled app, which again means there is typically no self-custody and no trustless transactions.  Bitcoin ATMs typically have higher fees than regular ATMs.   Remittances via Bitcoin--which was a major selling point of El Salvador's plan--are a rounding error of the total and dropping.

        Can't comment. I have no direct experience/info and most sources seem to be pretty biased one way or the other.

        All of these exchange collapses (FTX, Celsius, Genesis/Gemini, etc.) show that the institutions that have grown up around crypto lacked internal controls to ensure client's interests are safeguarded.  Therefore, there is a lot of excitement in the crypto space about the likely SEC approval of Bitcoin ETFs.     This will allow Wall Street investment banks to hold Bitcoin, and let retail investors speculate on the price without having to deal with self-custody, yet get the assurance of government oversight and regulation.

        Can you link to some evidence for this excitement among retail investors for using a Bitcoin ETF in preference to self-custodying Bitcoin ?

        The ETFs haven't come about because of FTX, etc. The driver for ETFs is institutional investors (that can't access Bitcoin directly) wanting Bitcoin exposure via an accessible conventional instrument. The excitement (justified or otherwise) is based on the expectation that institutional money will come flooding into Bitcoin - albeit, indirectly.

        So we've seen that Bitcoin specifically and crypto in general have grown into something that looks identical to the traditional banking and finance system.   Customer's assets are held in the institution's name, transactions take place off the blockchain and are regulated by the government.

        Not so. Not at all.  An ETF is an ETF.  Bitcoin is still Bitcoin.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: deborah on November 11, 2023, 01:42:09 AM
        Last time I was at an airport they said that your carry on bags were limited to 7kg.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on November 11, 2023, 02:02:46 AM
        Last time I was at an airport they said that your carry on bags were limited to 7kg.

        I have to say I've never flown on an airline that cared about the weight of your carry-on suitcase. Size, yes; weight, no. But in that case you could take your US$1 million of gold, put nearly half of it in your carry-on suitcase, stick the rest (~500 mL volume) in your backpack and/or pockets, no big deal. Are they going to weigh the clothes on your back too?

        Regarding the possibility of splitting your Bitcoin key three ways and only requiring two, yeah I think that may be a personal preference. Would you rather fail in the direction of making your wealth disappear if your heirs forget the secrets or not? If two out of three kids can't remember their part of my safe combination they can still spend an afternoon drilling holes in the thing until they can get the gold out. If two out of three kids lose their part of my Bitcoin keys, tough luck, their inheritance just went up in smoke.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 11, 2023, 09:22:25 AM
        Let me put if for you quite simply.  I believe bitcoin will always go on to make a greater ATH.  I believe in Bitcoin as a store of value, I don't believe there is ever going to be an ultimate 'top' for bitcoin because I believe the printed out of thin air fiat currencies we value it in will always devalue over time, this is what ultimately drives capital towards the harder asset which is Bitcoin, the only asset which humans cannot increase the supply of.  Let me say it again, there is no top for bitcoin because there is no bottom for fiat, fiat will always be printed into infinity.

        Now, you can argue the timing of peoples investments all you like, yes the people who bought the last ATH are currently 'at loss', but the next ATH will come around and at that moment, nominally the amount of people 'at loss' at the next ATH will be zero.  Yes there will be another 'crash' at some stage, yes people will be at 'loss' for a year or two, but IMO the value of bitcoin will always eventually go up vs printed fiat currencies inflating away their value over time.  This is really all I have to say on the matter as all of this has been covered in the past I'm sure.

        Sure, this is true; there's a limited supply of BTC. Just as there's a limited supply of gold, MTG cards, or used tissues signed by Tom Hanks.. But it doesn't follow that the value of those things will go up forever. They also need to have a utility, otherwise you're just paying for the novelty of owning something, which has a pretty limited market.

        Utility is in the eye of the beholder. Don't conflate "I see no utility" or "it has no utility for me" with "it has no utility".

        Also, it might be instructive to review how the gold, MTG and TomHanksTissues markets behaved once ETFs and institutional money got involved. Oh, just gold then . . . so maybe those tired old 'novelty' comparisons should be retired.

        And the ability, and experience, of using BTC to pay for things is, honestly, pretty shit. The uses cases where BTC is "better" than electronic or hard cash is very small, even less if you exclude criminal activity. Even if you can use BTC to pay at Newegg or whatever, there's almost never a good reason why you would if you also have $. And finally, not being able to use it to pay your taxes pretty much kills the cycle of use for a currency. Unless that changes you'll need dollars (or your local currency) at some point.

        What's the trend ? Who invests based only on how things are today ?

        And again again again . . . Few people are working on solving the virtually non-existent day-to-day transaction problems experienced by the average wealthy comfortable American. The fact that you can't use Bitcoin to buy your morning coffee or whatever is utterly irrelevant to almost all Bitcoiners. You're 'tilting at a windmill'.

        But yeah, go bet on the "fiat currency will collapse" theory, it's been going strong for decades already.

        That part of the bet is generally: fiat currency will collapse be continually debased. It's been going strong for decades already.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 11, 2023, 09:34:20 AM
        Last time I was at an airport they said that your carry on bags were limited to 7kg.

        I have to say I've never flown on an airline that cared about the weight of your carry-on suitcase. Size, yes; weight, no. But in that case you could take your US$1 million of gold, put nearly half of it in your carry-on suitcase, stick the rest (~500 mL volume) in your backpack and/or pockets, no big deal. Are they going to weigh the clothes on your back too?

        Regarding the possibility of splitting your Bitcoin key three ways and only requiring two, yeah I think that may be a personal preference. Would you rather fail in the direction of making your wealth disappear if your heirs forget the secrets or not? If two out of three kids can't remember their part of my safe combination they can still spend an afternoon drilling holes in the thing until they can get the gold out. If two out of three kids lose their part of my Bitcoin keys, tough luck, their inheritance just went up in smoke.

        Drill a hole in the bars and put them on a chain.  Then wear the chain around your neck.  I've never seen airlines care about jewelry weight.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 11, 2023, 09:36:41 AM
        Having looked it up... the largest gold bar is "400 troy ounces".  Two of them would fit side by side under a Macbook, lifting it 2 inches.  That 55 pounds of gold would be worth about $1.7 million, or slightly less than the cost of the Macbook.  ;)

        Is the +38% jump in Bitcoin's price (in 1 month) entirely from expectations of a Bitcoin ETF?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 11, 2023, 02:52:49 PM
        Today I watched a Cornell panel discussion on proposed IRS 1099 reporting rules for crypto. I remember when it was believed crypto was out of reach of regulators. And now these crypto advocate panel members are calling this an existential crisis. The guy at 13:40 (https://youtu.be/o8LhTxXLzG4?feature=shared&t=820) is particularly entertaining, as he complains about intermediaries and centralization being the antithesis of the movement. Clever algorithms in the virtual world are not outside the reach of governments, because we live an embodied life in the physical world. It's like when the nihilists in The Big Lebowski protest that it's not fair (https://www.youtube.com/watch?v=TNChSF5nqJs) when their ransom scheme doesn't work out, lol.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: clifp on November 11, 2023, 03:25:38 PM


        So it raises the question:  What do you need Bitcoin for?

        Buying drugs, or machine guns, hiring a hitman to take out your wife, business partner, or Donald Trump, a place to store embezzled funds, the applications for bitcoin are quite numerous for criminals.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 11, 2023, 06:59:18 PM


        So it raises the question:  What do you need Bitcoin for?

        Buying drugs, or machine guns, hiring a hitman to take out your wife, business partner, or Donald Trump, a place to store embezzled funds, the applications for bitcoin are quite numerous for criminals.

        It's not even good for that. The public blockchain combined with other digital fingerprints means it's way more traceable than cash. Here's an interesting interview about the myth of crypto anonymity: https://www.wired.com/story/gadget-lab-podcast-585/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Stimpy on November 13, 2023, 09:04:26 AM


        So it raises the question:  What do you need Bitcoin for?

        Buying drugs, or machine guns, hiring a hitman to take out your wife, business partner, or Donald Trump, a place to store embezzled funds, the applications for bitcoin are quite numerous for criminals.

        Ah yes, the greatest asset to Bitcoin, not being able to identify who owns it.... at least till you need to cash it out to usd, or spend it at a known entity that may or may not know you, or insert one of MANY various scenarios where you can be anonymous till your not.  AND if you don't believe me... See the history of the Silk road.

        It is both the greatest strength and greatest weakness of bitcoin.   I am aware there are "untraceable" crypto's out there, but... none of those are main stream and lets be honest.  If you cash out to lets say, BTC and then to USD for one of those....  I would expect a knock on the door pending various other factors, obviously.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 13, 2023, 09:43:36 AM


        So it raises the question:  What do you need Bitcoin for?

        Buying drugs, or machine guns, hiring a hitman to take out your wife, business partner, or Donald Trump, a place to store embezzled funds, the applications for bitcoin are quite numerous for criminals.

        Ah yes, the greatest asset to Bitcoin, not being able to identify who owns it.... at least till you need to cash it out to usd, or spend it at a known entity that may or may not know you, or insert one of MANY various scenarios where you can be anonymous till your not.  AND if you don't believe me... See the history of the Silk road.

        It is both the greatest strength and greatest weakness of bitcoin.   I am aware there are "untraceable" crypto's out there, but... none of those are main stream and lets be honest.  If you cash out to lets say, BTC and then to USD for one of those....  I would expect a knock on the door pending various other factors, obviously.

        Yep. Which is why I chuckle when talk turns to crypto as a means to flee a repressive government. In some cases, sure, but only if the government in question isn't technologically sophisticated. Buying crypto in the US generally requires exchanges/brokers with KYC requirements, and moving large amounts of crypto in ways to avoid KYC is a likely to attract unwanted attention from the feds. It the US becomes repressive it's highly probable they figure out who owns what crypto. If a private key or seed phrase is physically stored somewhere, they'll find it. And even if the seed phrase is only in your head, they can use physical coercion to pry it from you... what good is a million bucks worth of crypto if you're sitting in a prison cell with no way to access it?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 13, 2023, 11:37:57 AM
        So it raises the question:  What do you need Bitcoin for?
        Buying drugs, or machine guns, hiring a hitman to take out your wife, business partner, or Donald Trump, a place to store embezzled funds, the applications for bitcoin are quite numerous for criminals.
        Ah yes, the greatest asset to Bitcoin, not being able to identify who owns it.... at least till you need to cash it out to usd, or spend it at a known entity that may or may not know you, or insert one of MANY various scenarios where you can be anonymous till your not.  AND if you don't believe me... See the history of the Silk road.

        It is both the greatest strength and greatest weakness of bitcoin.   I am aware there are "untraceable" crypto's out there, but... none of those are main stream and lets be honest.  If you cash out to lets say, BTC and then to USD for one of those....  I would expect a knock on the door pending various other factors, obviously.
        Yep. Which is why I chuckle when talk turns to crypto as a means to flee a repressive government. In some cases, sure, but only if the government in question isn't technologically sophisticated. Buying crypto in the US generally requires exchanges/brokers with KYC requirements, and moving large amounts of crypto in ways to avoid KYC is a likely to attract unwanted attention from the feds. It the US becomes repressive it's highly probable they figure out who owns what crypto. If a private key or seed phrase is physically stored somewhere, they'll find it. And even if the seed phrase is only in your head, they can use physical coercion to pry it from you... what good is a million bucks worth of crypto if you're sitting in a prison cell with no way to access it?
        When such situations arose in the past, offshore accounts - often in another currency - have proven to be reliable ways for wealthy people to escape transitions to authoritarianism like in fascist/communist Europe, hyperinflating Argentina, the collapse of Venezuela, Russia's descent into authoritarianism, various wars in Africa, Syria, Iraq, etc. In this way, ending up penniless due to geopolitical changes would require the simultaneous collapse of two civilizations instead of just one's own. So again we are back to the question of what crypto can do that a fiat currency and traditional bank account cannot.

        Arguably, an offshore bank offers refugees a better option than crypto because in addition to an online portal, one can show up at the teller's window in the foreign country, present ID, and obtain cash. Free access to crypto, OTOH, assumes the existence of internet connections which are not monitored by the government. In a place like China, Russia, India, or many others, logging into a crypto exchange essentially requires the permission and observation by the government agents running the great firewall. As such closed internets become more common, one's ability to use crypto to escape authoritarianism is reduced. In the exact scenario feared by people who worry about authoritarianism in the US, the internet would probably cease to be free - just as it is not free in vast swaths of the world. A future internet that is fragmented and monitored raises questions about the future function of crypto assets and how one would trade them.

        Fiat currencies, meanwhile, have a relatively good record of being recognized even when authoritarian governments take over. Currencies like the Turkish lira, the Russian ruble, or the Egyptian pound outlasted democracy in those countries and were freely exchanged throughout the transition to authoritarian rule. Yes, they would go on to lose a lot of value, but they were nonetheless freely traded at times when governments were rounding up and torturing political prisoners. The exception is of course communism, in which bank assets were seized or obliterated. Even then, a Swiss bank account and current passport was usually the better answer compared to a treasure chest of gold and gems.

        The core issue is this: A repressive government would have to smash its own economy and its own corrupt incentive structure if it eliminated the currency or closed off the economy. By keeping the economy the relatively open, they negate a key source of popular discontent. Authoritarian governments have no similar incentives to protect markets for cryptocurrencies.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 13, 2023, 06:16:13 PM
        So it raises the question:  What do you need Bitcoin for?
        Buying drugs, or machine guns, hiring a hitman to take out your wife, business partner, or Donald Trump, a place to store embezzled funds, the applications for bitcoin are quite numerous for criminals.
        Ah yes, the greatest asset to Bitcoin, not being able to identify who owns it.... at least till you need to cash it out to usd, or spend it at a known entity that may or may not know you, or insert one of MANY various scenarios where you can be anonymous till your not.  AND if you don't believe me... See the history of the Silk road.

        It is both the greatest strength and greatest weakness of bitcoin.   I am aware there are "untraceable" crypto's out there, but... none of those are main stream and lets be honest.  If you cash out to lets say, BTC and then to USD for one of those....  I would expect a knock on the door pending various other factors, obviously.
        Yep. Which is why I chuckle when talk turns to crypto as a means to flee a repressive government. In some cases, sure, but only if the government in question isn't technologically sophisticated. Buying crypto in the US generally requires exchanges/brokers with KYC requirements, and moving large amounts of crypto in ways to avoid KYC is a likely to attract unwanted attention from the feds. It the US becomes repressive it's highly probable they figure out who owns what crypto. If a private key or seed phrase is physically stored somewhere, they'll find it. And even if the seed phrase is only in your head, they can use physical coercion to pry it from you... what good is a million bucks worth of crypto if you're sitting in a prison cell with no way to access it?

        I'm not in the 'fleeing authoritarianism' camp, but I think the idea is to ensure you flee before things get to the 'prison cell' and 'physical coercion' stage.

        When such situations arose in the past, offshore accounts - often in another currency - have proven to be reliable ways for wealthy people to escape transitions to authoritarianism like in fascist/communist Europe, hyperinflating Argentina, the collapse of Venezuela, Russia's descent into authoritarianism, various wars in Africa, Syria, Iraq, etc. In this way, ending up penniless due to geopolitical changes would require the simultaneous collapse of two civilizations instead of just one's own. So again we are back to the question of what crypto can do that a fiat currency and traditional bank account cannot.

        Arguably, an offshore bank offers refugees a better option than crypto because in addition to an online portal, one can show up at the teller's window in the foreign country, present ID, and obtain cash. Free access to crypto, OTOH, assumes the existence of internet connections which are not monitored by the government. In a place like China, Russia, India, or many others, logging into a crypto exchange essentially requires the permission and observation by the government agents running the great firewall. As such closed internets become more common, one's ability to use crypto to escape authoritarianism is reduced. In the exact scenario feared by people who worry about authoritarianism in the US, the internet would probably cease to be free - just as it is not free in vast swaths of the world. A future internet that is fragmented and monitored raises questions about the future function of crypto assets and how one would trade them.

        Fiat currencies, meanwhile, have a relatively good record of being recognized even when authoritarian governments take over. Currencies like the Turkish lira, the Russian ruble, or the Egyptian pound outlasted democracy in those countries and were freely exchanged throughout the transition to authoritarian rule. Yes, they would go on to lose a lot of value, but they were nonetheless freely traded at times when governments were rounding up and torturing political prisoners. The exception is of course communism, in which bank assets were seized or obliterated. Even then, a Swiss bank account and current passport was usually the better answer compared to a treasure chest of gold and gems.

        The core issue is this: A repressive government would have to smash its own economy and its own corrupt incentive structure if it eliminated the currency or closed off the economy. By keeping the economy the relatively open, they negate a key source of popular discontent. Authoritarian governments have no similar incentives to protect markets for cryptocurrencies.

        So, in summary:
        It's easier to escape authoritarianism today with an Offshore Bank Account than it would be in some imaginary dystopian future with Crypto.

        That seems a rather pointless claim to make.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 13, 2023, 06:44:47 PM
        So it raises the question:  What do you need Bitcoin for?
        Buying drugs, or machine guns, hiring a hitman to take out your wife, business partner, or Donald Trump, a place to store embezzled funds, the applications for bitcoin are quite numerous for criminals.
        Ah yes, the greatest asset to Bitcoin, not being able to identify who owns it.... at least till you need to cash it out to usd, or spend it at a known entity that may or may not know you, or insert one of MANY various scenarios where you can be anonymous till your not.  AND if you don't believe me... See the history of the Silk road.

        It is both the greatest strength and greatest weakness of bitcoin.   I am aware there are "untraceable" crypto's out there, but... none of those are main stream and lets be honest.  If you cash out to lets say, BTC and then to USD for one of those....  I would expect a knock on the door pending various other factors, obviously.
        Yep. Which is why I chuckle when talk turns to crypto as a means to flee a repressive government. In some cases, sure, but only if the government in question isn't technologically sophisticated. Buying crypto in the US generally requires exchanges/brokers with KYC requirements, and moving large amounts of crypto in ways to avoid KYC is a likely to attract unwanted attention from the feds. It the US becomes repressive it's highly probable they figure out who owns what crypto. If a private key or seed phrase is physically stored somewhere, they'll find it. And even if the seed phrase is only in your head, they can use physical coercion to pry it from you... what good is a million bucks worth of crypto if you're sitting in a prison cell with no way to access it?

        I'm not in the 'fleeing authoritarianism' camp, but I think the idea is to ensure you flee before things get to the 'prison cell' and 'physical coercion' stage.

        If you're leaving early enough there's no need to sneak out with crypto. But if, say, capital controls are in place, then data from Chainalysis (or whatever) will have already been utilized to compile a database of those that own substantial crypto assets. US border agents check this database at passport control and refuse (or detain) those in the system. Having crypto assets makes you a target in this scenario.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 14, 2023, 05:51:45 AM
        So it raises the question:  What do you need Bitcoin for?
        Buying drugs, or machine guns, hiring a hitman to take out your wife, business partner, or Donald Trump, a place to store embezzled funds, the applications for bitcoin are quite numerous for criminals.
        Ah yes, the greatest asset to Bitcoin, not being able to identify who owns it.... at least till you need to cash it out to usd, or spend it at a known entity that may or may not know you, or insert one of MANY various scenarios where you can be anonymous till your not.  AND if you don't believe me... See the history of the Silk road.

        It is both the greatest strength and greatest weakness of bitcoin.   I am aware there are "untraceable" crypto's out there, but... none of those are main stream and lets be honest.  If you cash out to lets say, BTC and then to USD for one of those....  I would expect a knock on the door pending various other factors, obviously.
        Yep. Which is why I chuckle when talk turns to crypto as a means to flee a repressive government. In some cases, sure, but only if the government in question isn't technologically sophisticated. Buying crypto in the US generally requires exchanges/brokers with KYC requirements, and moving large amounts of crypto in ways to avoid KYC is a likely to attract unwanted attention from the feds. It the US becomes repressive it's highly probable they figure out who owns what crypto. If a private key or seed phrase is physically stored somewhere, they'll find it. And even if the seed phrase is only in your head, they can use physical coercion to pry it from you... what good is a million bucks worth of crypto if you're sitting in a prison cell with no way to access it?

        I'm not in the 'fleeing authoritarianism' camp, but I think the idea is to ensure you flee before things get to the 'prison cell' and 'physical coercion' stage.

        If you're leaving early enough there's no need to sneak out with crypto. But if, say, capital controls are in place, then data from Chainalysis (or whatever) will have already been utilized to compile a database of those that own substantial crypto assets. US border agents check this database at passport control and refuse (or detain) those in the system. Having crypto assets makes you a target in this scenario.

        As I suggested, I haven't given this extreme scenario a whole lot of thought - this isn't a future I'm anticipating . . .

        However . . . I can very effectively cover my existing Bitcoin on-chain tracks with mixing, etc. if I choose. Border control might strongly suspect I still have some Bitcoin but they can't know for sure. Also, there are ways to acquire Bitcoin with zero KYC, eg. peer-to-peer cash exchange, and if onerous controls are in place you can be sure that (black market) service will become widely available - supply will meet demand. Border Control won't know I own that Bitcoin. I think some Bitcoin stored in my head would be at least as effective as any other potential solution if the world goes completely to shit. If things get bad enough that mixed or zero-KYC Bitcoin don't help, I think all bets are off.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 14, 2023, 06:57:39 AM
        Or the government (any government really) could say that mixing or evading controls is prima facia evidence of money laundering, tax evasion, or other criminal intent. They could put a hold on your passport and say you can't leave the country until you account for that mixing transaction you did four or five years ago.

        This scenario would make sense, as crime remains the only semi-functional use case for crypto and the US government is sweeping up records of crypto trades like they're personal emails or something.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 14, 2023, 07:22:40 AM
        So it raises the question:  What do you need Bitcoin for?
        Buying drugs, or machine guns, hiring a hitman to take out your wife, business partner, or Donald Trump, a place to store embezzled funds, the applications for bitcoin are quite numerous for criminals.
        Ah yes, the greatest asset to Bitcoin, not being able to identify who owns it.... at least till you need to cash it out to usd, or spend it at a known entity that may or may not know you, or insert one of MANY various scenarios where you can be anonymous till your not.  AND if you don't believe me... See the history of the Silk road.

        It is both the greatest strength and greatest weakness of bitcoin.   I am aware there are "untraceable" crypto's out there, but... none of those are main stream and lets be honest.  If you cash out to lets say, BTC and then to USD for one of those....  I would expect a knock on the door pending various other factors, obviously.
        Yep. Which is why I chuckle when talk turns to crypto as a means to flee a repressive government. In some cases, sure, but only if the government in question isn't technologically sophisticated. Buying crypto in the US generally requires exchanges/brokers with KYC requirements, and moving large amounts of crypto in ways to avoid KYC is a likely to attract unwanted attention from the feds. It the US becomes repressive it's highly probable they figure out who owns what crypto. If a private key or seed phrase is physically stored somewhere, they'll find it. And even if the seed phrase is only in your head, they can use physical coercion to pry it from you... what good is a million bucks worth of crypto if you're sitting in a prison cell with no way to access it?

        I'm not in the 'fleeing authoritarianism' camp, but I think the idea is to ensure you flee before things get to the 'prison cell' and 'physical coercion' stage.

        If you're leaving early enough there's no need to sneak out with crypto. But if, say, capital controls are in place, then data from Chainalysis (or whatever) will have already been utilized to compile a database of those that own substantial crypto assets. US border agents check this database at passport control and refuse (or detain) those in the system. Having crypto assets makes you a target in this scenario.

        As I suggested, I haven't given this extreme scenario a whole lot of thought - this isn't a future I'm anticipating . . .

        However . . . I can very effectively cover my existing Bitcoin on-chain tracks with mixing, etc. if I choose. Border control might strongly suspect I still have some Bitcoin but they can't know for sure. Also, there are ways to acquire Bitcoin with zero KYC, eg. peer-to-peer cash exchange, and if onerous controls are in place you can be sure that (black market) service will become widely available - supply will meet demand. Border Control won't know I own that Bitcoin. I think some Bitcoin stored in my head would be at least as effective as any other potential solution if the world goes completely to shit. If things get bad enough that mixed or zero-KYC Bitcoin don't help, I think all bets are off.

        A bitcoin private key is a 64 digit hex code . . . something like this:
        E9873D79C6D87DC0FB6A5778633389F4453213303DA61F20BD67FC233AA3

        I'd be willing to wager the the average person would have difficulty memorizing and recalling something like this under stress.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 14, 2023, 07:25:36 AM
        Or the government (any government really) could say that mixing or evading controls is prima facia evidence of money laundering, tax evasion, or other criminal intent. They could put a hold on your passport and say you can't leave the country until you account for that mixing transaction you did four or five years ago.

        They could. Likewise with your Offshore Bank Account and the several kg of gold around your neck, etc.

        This scenario would make sense, as crime remains the only semi-functional use case for crypto and the US government is sweeping up records of crypto trades like they're personal emails or something.

        Why do you assume that any desire for monetary anonymity/privacy or freedom is synonymous with ill-intent ?

        Do you feel the same about free speech ? After all, most of us probably don't say much that offends many - we don't really need it. The main beneficiaries of free speech are people that say objectionable things, so it's a bad thing - right ?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 14, 2023, 07:27:55 AM
        So it raises the question:  What do you need Bitcoin for?
        Buying drugs, or machine guns, hiring a hitman to take out your wife, business partner, or Donald Trump, a place to store embezzled funds, the applications for bitcoin are quite numerous for criminals.
        Ah yes, the greatest asset to Bitcoin, not being able to identify who owns it.... at least till you need to cash it out to usd, or spend it at a known entity that may or may not know you, or insert one of MANY various scenarios where you can be anonymous till your not.  AND if you don't believe me... See the history of the Silk road.

        It is both the greatest strength and greatest weakness of bitcoin.   I am aware there are "untraceable" crypto's out there, but... none of those are main stream and lets be honest.  If you cash out to lets say, BTC and then to USD for one of those....  I would expect a knock on the door pending various other factors, obviously.
        Yep. Which is why I chuckle when talk turns to crypto as a means to flee a repressive government. In some cases, sure, but only if the government in question isn't technologically sophisticated. Buying crypto in the US generally requires exchanges/brokers with KYC requirements, and moving large amounts of crypto in ways to avoid KYC is a likely to attract unwanted attention from the feds. It the US becomes repressive it's highly probable they figure out who owns what crypto. If a private key or seed phrase is physically stored somewhere, they'll find it. And even if the seed phrase is only in your head, they can use physical coercion to pry it from you... what good is a million bucks worth of crypto if you're sitting in a prison cell with no way to access it?

        I'm not in the 'fleeing authoritarianism' camp, but I think the idea is to ensure you flee before things get to the 'prison cell' and 'physical coercion' stage.

        If you're leaving early enough there's no need to sneak out with crypto. But if, say, capital controls are in place, then data from Chainalysis (or whatever) will have already been utilized to compile a database of those that own substantial crypto assets. US border agents check this database at passport control and refuse (or detain) those in the system. Having crypto assets makes you a target in this scenario.

        As I suggested, I haven't given this extreme scenario a whole lot of thought - this isn't a future I'm anticipating . . .

        However . . . I can very effectively cover my existing Bitcoin on-chain tracks with mixing, etc. if I choose. Border control might strongly suspect I still have some Bitcoin but they can't know for sure. Also, there are ways to acquire Bitcoin with zero KYC, eg. peer-to-peer cash exchange, and if onerous controls are in place you can be sure that (black market) service will become widely available - supply will meet demand. Border Control won't know I own that Bitcoin. I think some Bitcoin stored in my head would be at least as effective as any other potential solution if the world goes completely to shit. If things get bad enough that mixed or zero-KYC Bitcoin don't help, I think all bets are off.

        A bitcoin private key is a 64 digit hex code . . . something like this:
        E9873D79C6D87DC0FB6A5778633389F4453213303DA61F20BD67FC233AA3

        I'd be willing to wager the the average person would have difficulty memorizing and recalling something like this under stress.

        https://www.google.com/search?q=seed+phrase (https://www.google.com/search?q=seed+phrase)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Stimpy on November 14, 2023, 08:14:27 AM
        So it raises the question:  What do you need Bitcoin for?
        Buying drugs, or machine guns, hiring a hitman to take out your wife, business partner, or Donald Trump, a place to store embezzled funds, the applications for bitcoin are quite numerous for criminals.
        Ah yes, the greatest asset to Bitcoin, not being able to identify who owns it.... at least till you need to cash it out to usd, or spend it at a known entity that may or may not know you, or insert one of MANY various scenarios where you can be anonymous till your not.  AND if you don't believe me... See the history of the Silk road.

        It is both the greatest strength and greatest weakness of bitcoin.   I am aware there are "untraceable" crypto's out there, but... none of those are main stream and lets be honest.  If you cash out to lets say, BTC and then to USD for one of those....  I would expect a knock on the door pending various other factors, obviously.
        Yep. Which is why I chuckle when talk turns to crypto as a means to flee a repressive government. In some cases, sure, but only if the government in question isn't technologically sophisticated. Buying crypto in the US generally requires exchanges/brokers with KYC requirements, and moving large amounts of crypto in ways to avoid KYC is a likely to attract unwanted attention from the feds. It the US becomes repressive it's highly probable they figure out who owns what crypto. If a private key or seed phrase is physically stored somewhere, they'll find it. And even if the seed phrase is only in your head, they can use physical coercion to pry it from you... what good is a million bucks worth of crypto if you're sitting in a prison cell with no way to access it?

        I'm not in the 'fleeing authoritarianism' camp, but I think the idea is to ensure you flee before things get to the 'prison cell' and 'physical coercion' stage.

        If you're leaving early enough there's no need to sneak out with crypto. But if, say, capital controls are in place, then data from Chainalysis (or whatever) will have already been utilized to compile a database of those that own substantial crypto assets. US border agents check this database at passport control and refuse (or detain) those in the system. Having crypto assets makes you a target in this scenario.

        As I suggested, I haven't given this extreme scenario a whole lot of thought - this isn't a future I'm anticipating . . .

        However . . . I can very effectively cover my existing Bitcoin on-chain tracks with mixing, etc. if I choose. Border control might strongly suspect I still have some Bitcoin but they can't know for sure. Also, there are ways to acquire Bitcoin with zero KYC, eg. peer-to-peer cash exchange, and if onerous controls are in place you can be sure that (black market) service will become widely available - supply will meet demand. Border Control won't know I own that Bitcoin. I think some Bitcoin stored in my head would be at least as effective as any other potential solution if the world goes completely to shit. If things get bad enough that mixed or zero-KYC Bitcoin don't help, I think all bets are off.

        A bitcoin private key is a 64 digit hex code . . . something like this:
        E9873D79C6D87DC0FB6A5778633389F4453213303DA61F20BD67FC233AA3

        I'd be willing to wager the the average person would have difficulty memorizing and recalling something like this under stress.

        https://www.google.com/search?q=seed+phrase (https://www.google.com/search?q=seed+phrase)

        And 12, up to 24 random words would be easier to memorize under stress how?   I can say for a fact I am not under stress and it would take me some time to remember all of the word for one wallet.  And if you have multiple wallets.....  forget about it.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 14, 2023, 08:19:11 AM
        So it raises the question:  What do you need Bitcoin for?
        Buying drugs, or machine guns, hiring a hitman to take out your wife, business partner, or Donald Trump, a place to store embezzled funds, the applications for bitcoin are quite numerous for criminals.
        Ah yes, the greatest asset to Bitcoin, not being able to identify who owns it.... at least till you need to cash it out to usd, or spend it at a known entity that may or may not know you, or insert one of MANY various scenarios where you can be anonymous till your not.  AND if you don't believe me... See the history of the Silk road.

        It is both the greatest strength and greatest weakness of bitcoin.   I am aware there are "untraceable" crypto's out there, but... none of those are main stream and lets be honest.  If you cash out to lets say, BTC and then to USD for one of those....  I would expect a knock on the door pending various other factors, obviously.
        Yep. Which is why I chuckle when talk turns to crypto as a means to flee a repressive government. In some cases, sure, but only if the government in question isn't technologically sophisticated. Buying crypto in the US generally requires exchanges/brokers with KYC requirements, and moving large amounts of crypto in ways to avoid KYC is a likely to attract unwanted attention from the feds. It the US becomes repressive it's highly probable they figure out who owns what crypto. If a private key or seed phrase is physically stored somewhere, they'll find it. And even if the seed phrase is only in your head, they can use physical coercion to pry it from you... what good is a million bucks worth of crypto if you're sitting in a prison cell with no way to access it?

        I'm not in the 'fleeing authoritarianism' camp, but I think the idea is to ensure you flee before things get to the 'prison cell' and 'physical coercion' stage.

        If you're leaving early enough there's no need to sneak out with crypto. But if, say, capital controls are in place, then data from Chainalysis (or whatever) will have already been utilized to compile a database of those that own substantial crypto assets. US border agents check this database at passport control and refuse (or detain) those in the system. Having crypto assets makes you a target in this scenario.

        As I suggested, I haven't given this extreme scenario a whole lot of thought - this isn't a future I'm anticipating . . .

        However . . . I can very effectively cover my existing Bitcoin on-chain tracks with mixing, etc. if I choose. Border control might strongly suspect I still have some Bitcoin but they can't know for sure. Also, there are ways to acquire Bitcoin with zero KYC, eg. peer-to-peer cash exchange, and if onerous controls are in place you can be sure that (black market) service will become widely available - supply will meet demand. Border Control won't know I own that Bitcoin. I think some Bitcoin stored in my head would be at least as effective as any other potential solution if the world goes completely to shit. If things get bad enough that mixed or zero-KYC Bitcoin don't help, I think all bets are off.

        A bitcoin private key is a 64 digit hex code . . . something like this:
        E9873D79C6D87DC0FB6A5778633389F4453213303DA61F20BD67FC233AA3

        I'd be willing to wager the the average person would have difficulty memorizing and recalling something like this under stress.

        https://www.google.com/search?q=seed+phrase (https://www.google.com/search?q=seed+phrase)

        Having a computer generate a phrase for you is going to be better to remember . . . but doesn't really solve the problem.

        hotel obvious agent lecture gadget evil jealous keen fragile before damp clarify

        How many times a week do you check that your memory of this computer generated seed phrase is correct?  How many people will actually follow through on that well enough that it's available when they need it?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 14, 2023, 08:49:47 AM
        So it raises the question:  What do you need Bitcoin for?
        Buying drugs, or machine guns, hiring a hitman to take out your wife, business partner, or Donald Trump, a place to store embezzled funds, the applications for bitcoin are quite numerous for criminals.
        Ah yes, the greatest asset to Bitcoin, not being able to identify who owns it.... at least till you need to cash it out to usd, or spend it at a known entity that may or may not know you, or insert one of MANY various scenarios where you can be anonymous till your not.  AND if you don't believe me... See the history of the Silk road.

        It is both the greatest strength and greatest weakness of bitcoin.   I am aware there are "untraceable" crypto's out there, but... none of those are main stream and lets be honest.  If you cash out to lets say, BTC and then to USD for one of those....  I would expect a knock on the door pending various other factors, obviously.
        Yep. Which is why I chuckle when talk turns to crypto as a means to flee a repressive government. In some cases, sure, but only if the government in question isn't technologically sophisticated. Buying crypto in the US generally requires exchanges/brokers with KYC requirements, and moving large amounts of crypto in ways to avoid KYC is a likely to attract unwanted attention from the feds. It the US becomes repressive it's highly probable they figure out who owns what crypto. If a private key or seed phrase is physically stored somewhere, they'll find it. And even if the seed phrase is only in your head, they can use physical coercion to pry it from you... what good is a million bucks worth of crypto if you're sitting in a prison cell with no way to access it?

        I'm not in the 'fleeing authoritarianism' camp, but I think the idea is to ensure you flee before things get to the 'prison cell' and 'physical coercion' stage.

        If you're leaving early enough there's no need to sneak out with crypto. But if, say, capital controls are in place, then data from Chainalysis (or whatever) will have already been utilized to compile a database of those that own substantial crypto assets. US border agents check this database at passport control and refuse (or detain) those in the system. Having crypto assets makes you a target in this scenario.

        As I suggested, I haven't given this extreme scenario a whole lot of thought - this isn't a future I'm anticipating . . .

        However . . . I can very effectively cover my existing Bitcoin on-chain tracks with mixing, etc. if I choose. Border control might strongly suspect I still have some Bitcoin but they can't know for sure. Also, there are ways to acquire Bitcoin with zero KYC, eg. peer-to-peer cash exchange, and if onerous controls are in place you can be sure that (black market) service will become widely available - supply will meet demand. Border Control won't know I own that Bitcoin. I think some Bitcoin stored in my head would be at least as effective as any other potential solution if the world goes completely to shit. If things get bad enough that mixed or zero-KYC Bitcoin don't help, I think all bets are off.

        It's already the case, in the US at least, that avoiding KYC is likely a violation of money laundering laws. Attempting to conceal the movement of larger amounts of money into/within cryto is a very bad idea.

        Monero tries to maintain privacy on the blockchain by mixing, along with other strategies. It hasn't worked, and it's estimated that perhaps 90% of monero is traceable, which is increasing over time as tracers improve their algorithms.

        I think it's probably fair to say that crypto, including privacy focused ones, are far more traceable than plain ol' cash.

        And this is what's so ironic about the tech-libertarians: Their conviction is that technology will free us from the tyranny of governments, when in fact it has created the tools and infrastructure to enable state surveillance on a scale beyond what history has ever seen.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 14, 2023, 10:40:22 AM
        So it raises the question:  What do you need Bitcoin for?
        Buying drugs, or machine guns, hiring a hitman to take out your wife, business partner, or Donald Trump, a place to store embezzled funds, the applications for bitcoin are quite numerous for criminals.
        Ah yes, the greatest asset to Bitcoin, not being able to identify who owns it.... at least till you need to cash it out to usd, or spend it at a known entity that may or may not know you, or insert one of MANY various scenarios where you can be anonymous till your not.  AND if you don't believe me... See the history of the Silk road.

        It is both the greatest strength and greatest weakness of bitcoin.   I am aware there are "untraceable" crypto's out there, but... none of those are main stream and lets be honest.  If you cash out to lets say, BTC and then to USD for one of those....  I would expect a knock on the door pending various other factors, obviously.
        Yep. Which is why I chuckle when talk turns to crypto as a means to flee a repressive government. In some cases, sure, but only if the government in question isn't technologically sophisticated. Buying crypto in the US generally requires exchanges/brokers with KYC requirements, and moving large amounts of crypto in ways to avoid KYC is a likely to attract unwanted attention from the feds. It the US becomes repressive it's highly probable they figure out who owns what crypto. If a private key or seed phrase is physically stored somewhere, they'll find it. And even if the seed phrase is only in your head, they can use physical coercion to pry it from you... what good is a million bucks worth of crypto if you're sitting in a prison cell with no way to access it?

        I'm not in the 'fleeing authoritarianism' camp, but I think the idea is to ensure you flee before things get to the 'prison cell' and 'physical coercion' stage.

        If you're leaving early enough there's no need to sneak out with crypto. But if, say, capital controls are in place, then data from Chainalysis (or whatever) will have already been utilized to compile a database of those that own substantial crypto assets. US border agents check this database at passport control and refuse (or detain) those in the system. Having crypto assets makes you a target in this scenario.

        As I suggested, I haven't given this extreme scenario a whole lot of thought - this isn't a future I'm anticipating . . .

        However . . . I can very effectively cover my existing Bitcoin on-chain tracks with mixing, etc. if I choose. Border control might strongly suspect I still have some Bitcoin but they can't know for sure. Also, there are ways to acquire Bitcoin with zero KYC, eg. peer-to-peer cash exchange, and if onerous controls are in place you can be sure that (black market) service will become widely available - supply will meet demand. Border Control won't know I own that Bitcoin. I think some Bitcoin stored in my head would be at least as effective as any other potential solution if the world goes completely to shit. If things get bad enough that mixed or zero-KYC Bitcoin don't help, I think all bets are off.

        A bitcoin private key is a 64 digit hex code . . . something like this:
        E9873D79C6D87DC0FB6A5778633389F4453213303DA61F20BD67FC233AA3

        I'd be willing to wager the the average person would have difficulty memorizing and recalling something like this under stress.

        https://www.google.com/search?q=seed+phrase (https://www.google.com/search?q=seed+phrase)

        And 12, up to 24 random words would be easier to memorize under stress how?   I can say for a fact I am not under stress and it would take me some time to remember all of the word for one wallet.  And if you have multiple wallets.....  forget about it.

        You think remembering 12/24 random words is no easier than remembering 64 random hex characters ? That's plain ridiculous.

        You probably don't need multiple wallets but it's still manageable. There's plenty of methods that can help you memorise random words, eg. make up a story including the words in the right sequence - make it bright, exaggerated, shocking, emotional, etc. to help it stick, etc.

        And you'd only need to memorise it under stress if you acquired the wallet at the last minute. Any Bitcoiners prepping to flee authoritarianism are probably more organised than that.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 14, 2023, 10:42:33 AM
        So it raises the question:  What do you need Bitcoin for?
        Buying drugs, or machine guns, hiring a hitman to take out your wife, business partner, or Donald Trump, a place to store embezzled funds, the applications for bitcoin are quite numerous for criminals.
        Ah yes, the greatest asset to Bitcoin, not being able to identify who owns it.... at least till you need to cash it out to usd, or spend it at a known entity that may or may not know you, or insert one of MANY various scenarios where you can be anonymous till your not.  AND if you don't believe me... See the history of the Silk road.

        It is both the greatest strength and greatest weakness of bitcoin.   I am aware there are "untraceable" crypto's out there, but... none of those are main stream and lets be honest.  If you cash out to lets say, BTC and then to USD for one of those....  I would expect a knock on the door pending various other factors, obviously.
        Yep. Which is why I chuckle when talk turns to crypto as a means to flee a repressive government. In some cases, sure, but only if the government in question isn't technologically sophisticated. Buying crypto in the US generally requires exchanges/brokers with KYC requirements, and moving large amounts of crypto in ways to avoid KYC is a likely to attract unwanted attention from the feds. It the US becomes repressive it's highly probable they figure out who owns what crypto. If a private key or seed phrase is physically stored somewhere, they'll find it. And even if the seed phrase is only in your head, they can use physical coercion to pry it from you... what good is a million bucks worth of crypto if you're sitting in a prison cell with no way to access it?

        I'm not in the 'fleeing authoritarianism' camp, but I think the idea is to ensure you flee before things get to the 'prison cell' and 'physical coercion' stage.

        If you're leaving early enough there's no need to sneak out with crypto. But if, say, capital controls are in place, then data from Chainalysis (or whatever) will have already been utilized to compile a database of those that own substantial crypto assets. US border agents check this database at passport control and refuse (or detain) those in the system. Having crypto assets makes you a target in this scenario.

        As I suggested, I haven't given this extreme scenario a whole lot of thought - this isn't a future I'm anticipating . . .

        However . . . I can very effectively cover my existing Bitcoin on-chain tracks with mixing, etc. if I choose. Border control might strongly suspect I still have some Bitcoin but they can't know for sure. Also, there are ways to acquire Bitcoin with zero KYC, eg. peer-to-peer cash exchange, and if onerous controls are in place you can be sure that (black market) service will become widely available - supply will meet demand. Border Control won't know I own that Bitcoin. I think some Bitcoin stored in my head would be at least as effective as any other potential solution if the world goes completely to shit. If things get bad enough that mixed or zero-KYC Bitcoin don't help, I think all bets are off.

        A bitcoin private key is a 64 digit hex code . . . something like this:
        E9873D79C6D87DC0FB6A5778633389F4453213303DA61F20BD67FC233AA3

        I'd be willing to wager the the average person would have difficulty memorizing and recalling something like this under stress.

        https://www.google.com/search?q=seed+phrase (https://www.google.com/search?q=seed+phrase)

        Having a computer generate a phrase for you is going to be better to remember . . . but doesn't really solve the problem.

        hotel obvious agent lecture gadget evil jealous keen fragile before damp clarify

        How many times a week do you check that your memory of this computer generated seed phrase is correct?  How many people will actually follow through on that well enough that it's available when they need it?

        I have little problem remembering my DOB, NI Number, bank card PIN numbers, email addresses, phone numbers, multiple passwords, car reg, combination lock numbers, etc. and all sorts of random stuff. If I've got a decent sum locked away behind a seed-phrase, I'll make damned sure I remember it.

        And, as above, any Bitcoiners that are prepping to 'flee authoritarianism' are probably well prepared.
        In all but the most immediate and catastrophic scenarios, any Bitcoiner using cold storage could probably review their seed-phrase before destroying their record of it and heading for the border.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 14, 2023, 10:44:06 AM
        So it raises the question:  What do you need Bitcoin for?
        Buying drugs, or machine guns, hiring a hitman to take out your wife, business partner, or Donald Trump, a place to store embezzled funds, the applications for bitcoin are quite numerous for criminals.
        Ah yes, the greatest asset to Bitcoin, not being able to identify who owns it.... at least till you need to cash it out to usd, or spend it at a known entity that may or may not know you, or insert one of MANY various scenarios where you can be anonymous till your not.  AND if you don't believe me... See the history of the Silk road.

        It is both the greatest strength and greatest weakness of bitcoin.   I am aware there are "untraceable" crypto's out there, but... none of those are main stream and lets be honest.  If you cash out to lets say, BTC and then to USD for one of those....  I would expect a knock on the door pending various other factors, obviously.
        Yep. Which is why I chuckle when talk turns to crypto as a means to flee a repressive government. In some cases, sure, but only if the government in question isn't technologically sophisticated. Buying crypto in the US generally requires exchanges/brokers with KYC requirements, and moving large amounts of crypto in ways to avoid KYC is a likely to attract unwanted attention from the feds. It the US becomes repressive it's highly probable they figure out who owns what crypto. If a private key or seed phrase is physically stored somewhere, they'll find it. And even if the seed phrase is only in your head, they can use physical coercion to pry it from you... what good is a million bucks worth of crypto if you're sitting in a prison cell with no way to access it?

        I'm not in the 'fleeing authoritarianism' camp, but I think the idea is to ensure you flee before things get to the 'prison cell' and 'physical coercion' stage.

        If you're leaving early enough there's no need to sneak out with crypto. But if, say, capital controls are in place, then data from Chainalysis (or whatever) will have already been utilized to compile a database of those that own substantial crypto assets. US border agents check this database at passport control and refuse (or detain) those in the system. Having crypto assets makes you a target in this scenario.

        As I suggested, I haven't given this extreme scenario a whole lot of thought - this isn't a future I'm anticipating . . .

        However . . . I can very effectively cover my existing Bitcoin on-chain tracks with mixing, etc. if I choose. Border control might strongly suspect I still have some Bitcoin but they can't know for sure. Also, there are ways to acquire Bitcoin with zero KYC, eg. peer-to-peer cash exchange, and if onerous controls are in place you can be sure that (black market) service will become widely available - supply will meet demand. Border Control won't know I own that Bitcoin. I think some Bitcoin stored in my head would be at least as effective as any other potential solution if the world goes completely to shit. If things get bad enough that mixed or zero-KYC Bitcoin don't help, I think all bets are off.

        It's already the case, in the US at least, that avoiding KYC is likely a violation of money laundering laws. Attempting to conceal the movement of larger amounts of money into/within cryto is a very bad idea.

        Monero tries to maintain privacy on the blockchain by mixing, along with other strategies. It hasn't worked, and it's estimated that perhaps 90% of monero is traceable, which is increasing over time as tracers improve their algorithms.

        I think it's probably fair to say that crypto, including privacy focused ones, are far more traceable than plain ol' cash.

        And this is what's so ironic about the tech-libertarians: Their conviction is that technology will free us from the tyranny of governments, when in fact it has created the tools and infrastructure to enable state surveillance on a scale beyond what history has ever seen.

        Is it illegal for me to pay a builder $50k in cash for replacing my roof in the US ?
        Is it illegal for me to buy $50k of Bitcoin peer-to-peer (non-KYC) in the US ?

        In any case, the scenario being discussed here is fleeing an authoritarian regime. That being the case, I DGAF about any money laundering laws - the gloves are off.
        And, good luck fleeing said authoritarian regime with your suitcase full of "plain ol' cash".
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Stimpy on November 14, 2023, 11:04:23 AM
        Is it illegal for me to pay a builder $50k in cash for replacing my roof in the US ?
        Is it illegal for me to buy $50k of Bitcoin peer-to-peer (non-KYC) in the US ?

        In any case, the scenario being discussed here is fleeing an authoritarian regime. That being the case, I DGAF about any money laundering laws - the gloves are off.
        And, good luck fleeing said authoritarian regime with your suitcase full of "plain ol' cash".

        No one, with actual wealth, fleeing an authoritarian regime, is carrying a suit case full of cash.   As said here.   Foreign accounts, probably foreign real estate, ect are already there and waiting.  China, specifically those fleeing Hong Kong, is a good example of recent events where THIS HAPPENED.  Was it the extreme case.... No.  But it's close enough. 
        And to be clear some of those didn't get out with anything.  Not sure how they could have, given the great fire wall and China's actively acting against Crypto but assuming it could have gotten all over to a BTC wallet....  AND assuming they memorized all the keys/key phrases.    it honestly is hard to spend BTC when your a refugee with little or no internet access.

        No one, as of yet, is going after you for having BTC or any other crypto.  AND I hope no one ever does so long as your not breaking the law.  However, since it's tracked, your every move could be watched if someone choose to do so.   Just be aware.  BTC isn't your friend if your running from something.  That is all there is to say.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 14, 2023, 11:55:48 AM
        Is it illegal for me to pay a builder $50k in cash for replacing my roof in the US ?
        Is it illegal for me to buy $50k of Bitcoin peer-to-peer (non-KYC) in the US ?

        In any case, the scenario being discussed here is fleeing an authoritarian regime. That being the case, I DGAF about any money laundering laws - the gloves are off.
        And, good luck fleeing said authoritarian regime with your suitcase full of "plain ol' cash".

        No one, with actual wealth, fleeing an authoritarian regime, is carrying a suit case full of cash.

        I agree. That was just my response to FINate's (out of context) statement that " . . crypto, including privacy focused ones, are far more traceable than plain ol' cash."

        As said here.   Foreign accounts, probably foreign real estate, ect are already there and waiting.  China, specifically those fleeing Hong Kong, is a good example of recent events where THIS HAPPENED.  Was it the extreme case.... No.  But it's close enough. 
        And to be clear some of those didn't get out with anything.  Not sure how they could have, given the great fire wall and China's actively acting against Crypto but assuming it could have gotten all over to a BTC wallet....  AND assuming they memorized all the keys/key phrases.    it honestly is hard to spend BTC when your a refugee with little or no internet access.

        Yet another ludicrous apples vs oranges comparison.

        At your destination, your foreign accounts and your foreign real estate, etc. are all 'there and waiting'. How lovely and cosy for you.
        At my destination, I haven't even got internet access !

        I mean, come on, it's laughable . . .

        No one, as of yet, is going after you for having BTC or any other crypto.  AND I hope no one ever does so long as your not breaking the law.  However, since it's tracked, your every move could be watched if someone choose to do so.   Just be aware.  BTC isn't your friend if your running from something.  That is all there is to say.

        You think 'they' can't trace your foreign accounts and foreign real estate or anything else of any consequence ?

        It's difficult to hide any significant property from a powerful and determined tracker. I maintain that it's probably easier to hide (and retain control of) Bitcoin than any conventional asset.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on November 14, 2023, 03:01:12 PM
        Let me put if for you quite simply.  I believe bitcoin will always go on to make a greater ATH.  I believe in Bitcoin as a store of value, I don't believe there is ever going to be an ultimate 'top' for bitcoin because I believe the printed out of thin air fiat currencies we value it in will always devalue over time, this is what ultimately drives capital towards the harder asset which is Bitcoin, the only asset which humans cannot increase the supply of.  Let me say it again, there is no top for bitcoin because there is no bottom for fiat, fiat will always be printed into infinity.

        Now, you can argue the timing of peoples investments all you like, yes the people who bought the last ATH are currently 'at loss', but the next ATH will come around and at that moment, nominally the amount of people 'at loss' at the next ATH will be zero.  Yes there will be another 'crash' at some stage, yes people will be at 'loss' for a year or two, but IMO the value of bitcoin will always eventually go up vs printed fiat currencies inflating away their value over time.  This is really all I have to say on the matter as all of this has been covered in the past I'm sure.

        Sure, this is true; there's a limited supply of BTC. Just as there's a limited supply of gold, MTG cards, or used tissues signed by Tom Hanks.. But it doesn't follow that the value of those things will go up forever. They also need to have a utility, otherwise you're just paying for the novelty of owning something, which has a pretty limited market.

        Utility is in the eye of the beholder. Don't conflate "I see no utility" or "it has no utility for me" with "it has no utility".

        Ok. so what is the utility of BTC? Now? and in the future?
        What problem does it solve (I assume debasing of fiat?)? How does it solve that, i.e. how will having lots of BTC help me in that situation?
        Will we all at some point decide that dollar is worthless and start doing all transactions in BTC? MY boss will pay me btc, i'll buy milk in btc? Is this adopted by the state, or a barter economy? Feel free to correct and educate me here, I'm really curious.

        If this is the case, the way I see it this will then come about in two ways;
        - we switch suddenly; every BTC-bro instantly become wealthy as they have the only currency. The other 97% of the population have zero wealth overnight..
        - there is a transition, were $ convert to BTC. Like the Euro I guess.

        scenario 1 I'm already screwed. And far fetched, since any policy that toss 90% of the population into instant poverty seems rather unlikely
        Scenario 2 it doesn't matter. I'll just hang onto dollars and wait.

        In either case I don't see the point in hording BTC now.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 14, 2023, 03:13:38 PM
        So it raises the question:  What do you need Bitcoin for?
        Buying drugs, or machine guns, hiring a hitman to take out your wife, business partner, or Donald Trump, a place to store embezzled funds, the applications for bitcoin are quite numerous for criminals.
        Ah yes, the greatest asset to Bitcoin, not being able to identify who owns it.... at least till you need to cash it out to usd, or spend it at a known entity that may or may not know you, or insert one of MANY various scenarios where you can be anonymous till your not.  AND if you don't believe me... See the history of the Silk road.

        It is both the greatest strength and greatest weakness of bitcoin.   I am aware there are "untraceable" crypto's out there, but... none of those are main stream and lets be honest.  If you cash out to lets say, BTC and then to USD for one of those....  I would expect a knock on the door pending various other factors, obviously.
        Yep. Which is why I chuckle when talk turns to crypto as a means to flee a repressive government. In some cases, sure, but only if the government in question isn't technologically sophisticated. Buying crypto in the US generally requires exchanges/brokers with KYC requirements, and moving large amounts of crypto in ways to avoid KYC is a likely to attract unwanted attention from the feds. It the US becomes repressive it's highly probable they figure out who owns what crypto. If a private key or seed phrase is physically stored somewhere, they'll find it. And even if the seed phrase is only in your head, they can use physical coercion to pry it from you... what good is a million bucks worth of crypto if you're sitting in a prison cell with no way to access it?

        I'm not in the 'fleeing authoritarianism' camp, but I think the idea is to ensure you flee before things get to the 'prison cell' and 'physical coercion' stage.

        If you're leaving early enough there's no need to sneak out with crypto. But if, say, capital controls are in place, then data from Chainalysis (or whatever) will have already been utilized to compile a database of those that own substantial crypto assets. US border agents check this database at passport control and refuse (or detain) those in the system. Having crypto assets makes you a target in this scenario.

        As I suggested, I haven't given this extreme scenario a whole lot of thought - this isn't a future I'm anticipating . . .

        However . . . I can very effectively cover my existing Bitcoin on-chain tracks with mixing, etc. if I choose. Border control might strongly suspect I still have some Bitcoin but they can't know for sure. Also, there are ways to acquire Bitcoin with zero KYC, eg. peer-to-peer cash exchange, and if onerous controls are in place you can be sure that (black market) service will become widely available - supply will meet demand. Border Control won't know I own that Bitcoin. I think some Bitcoin stored in my head would be at least as effective as any other potential solution if the world goes completely to shit. If things get bad enough that mixed or zero-KYC Bitcoin don't help, I think all bets are off.

        It's already the case, in the US at least, that avoiding KYC is likely a violation of money laundering laws. Attempting to conceal the movement of larger amounts of money into/within cryto is a very bad idea.

        Monero tries to maintain privacy on the blockchain by mixing, along with other strategies. It hasn't worked, and it's estimated that perhaps 90% of monero is traceable, which is increasing over time as tracers improve their algorithms.

        I think it's probably fair to say that crypto, including privacy focused ones, are far more traceable than plain ol' cash.

        And this is what's so ironic about the tech-libertarians: Their conviction is that technology will free us from the tyranny of governments, when in fact it has created the tools and infrastructure to enable state surveillance on a scale beyond what history has ever seen.

        Is it illegal for me to pay a builder $50k in cash for replacing my roof in the US ?
        Is it illegal for me to buy $50k of Bitcoin peer-to-peer (non-KYC) in the US ?

        In any case, the scenario being discussed here is fleeing an authoritarian regime. That being the case, I DGAF about any money laundering laws - the gloves are off.
        And, good luck fleeing said authoritarian regime with your suitcase full of "plain ol' cash".

        If you go to a US bank, which is KYC, and withdraw $50k this is all fine and legal, but the bank must report the transaction to the federal government. Attempting to spit withdrawals into smaller chucks (less then $10k) to avoid reporting can get you into trouble. This isn't theoretical, it has happened to people.

        Then for the roofing business, their cash transactions over $10k have to be reported to the IRS on Form 8300, which includes the information of the person that the cash came from. So if you pay $50k cash for a new roof you can be sure the IRS will be interested who is paying with so much cash and where it came from. Starting in 2024 crypto will also be subject to Form 8300.

        Paying for stuff in cash or crypto is fine. But like I said, trying to avoid KYC and/or moving stuff around with the intention of hiding things will likely cause problems.

        ETA: for the record, I don't think a suitcase of cash is a good escape plan either. Like others have mentioned, offshore accounts are probably the better way (though the US also requires reporting on these, the same reporting is required for large crypto holdings). I'm generally not a fan of these worst case plans and it seems mostly like people living in fear. My point is just that public blockchains are way more traceable than cash.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Stimpy on November 15, 2023, 07:47:34 AM
        Is it illegal for me to pay a builder $50k in cash for replacing my roof in the US ?
        Is it illegal for me to buy $50k of Bitcoin peer-to-peer (non-KYC) in the US ?

        In any case, the scenario being discussed here is fleeing an authoritarian regime. That being the case, I DGAF about any money laundering laws - the gloves are off.
        And, good luck fleeing said authoritarian regime with your suitcase full of "plain ol' cash".

        No one, with actual wealth, fleeing an authoritarian regime, is carrying a suit case full of cash.

        I agree. That was just my response to FINate's (out of context) statement that " . . crypto, including privacy focused ones, are far more traceable than plain ol' cash."

        As said here.   Foreign accounts, probably foreign real estate, ect are already there and waiting.  China, specifically those fleeing Hong Kong, is a good example of recent events where THIS HAPPENED.  Was it the extreme case.... No.  But it's close enough. 
        And to be clear some of those didn't get out with anything.  Not sure how they could have, given the great fire wall and China's actively acting against Crypto but assuming it could have gotten all over to a BTC wallet....  AND assuming they memorized all the keys/key phrases.    it honestly is hard to spend BTC when your a refugee with little or no internet access.

        Yet another ludicrous apples vs oranges comparison.

        At your destination, your foreign accounts and your foreign real estate, etc. are all 'there and waiting'. How lovely and cosy for you.
        At my destination, I haven't even got internet access !

        I mean, come on, it's laughable . . .

        No one, as of yet, is going after you for having BTC or any other crypto.  AND I hope no one ever does so long as your not breaking the law.  However, since it's tracked, your every move could be watched if someone choose to do so.   Just be aware.  BTC isn't your friend if your running from something.  That is all there is to say.

        You think 'they' can't trace your foreign accounts and foreign real estate or anything else of any consequence ?

        It's difficult to hide any significant property from a powerful and determined tracker. I maintain that it's probably easier to hide (and retain control of) Bitcoin than any conventional asset.

        Never said internet wasn't available.  But little to no access means exactly that.   It might cost something and.... you have BTC to trade.   No one is taking it.  Also, not apples and oranges.  Real life.  Crypto didn't save them.

         And traceable.  Yes, we have the proof of that given how many extremely rich have tried to hide their money but someone found it....   So, while you can make it hard to trace, it's never impossible just near.  It is just MUCH easier to trace on the block chain.  Would it matter if your in a country that realistically isn't going to arrest you and sent you back without a good reason?  No.  Let it be traced.  It just means, if they want you, they know where your at.  Who ever "they" are.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 15, 2023, 07:52:24 AM

        Is it illegal for me to pay a builder $50k in cash for replacing my roof in the US ?
        Is it illegal for me to buy $50k of Bitcoin peer-to-peer (non-KYC) in the US ?

        In any case, the scenario being discussed here is fleeing an authoritarian regime. That being the case, I DGAF about any money laundering laws - the gloves are off.
        And, good luck fleeing said authoritarian regime with your suitcase full of "plain ol' cash".

        If you go to a US bank, which is KYC, and withdraw $50k this is all fine and legal, but the bank must report the transaction to the federal government. Attempting to spit withdrawals into smaller chucks (less then $10k) to avoid reporting can get you into trouble. This isn't theoretical, it has happened to people.

        Then for the roofing business, their cash transactions over $10k have to be reported to the IRS on Form 8300, which includes the information of the person that the cash came from. So if you pay $50k cash for a new roof you can be sure the IRS will be interested who is paying with so much cash and where it came from. Starting in 2024 crypto will also be subject to Form 8300.

        Paying for stuff in cash or crypto is fine. But like I said, trying to avoid KYC and/or moving stuff around with the intention of hiding things will likely cause problems.

        Fair enough, but that doesn't change my view that Bitcoin is at least as good as any conventional asset for fleeing.

        ETA: for the record, I don't think a suitcase of cash is a good escape plan either. Like others have mentioned, offshore accounts are probably the better way (though the US also requires reporting on these, the same reporting is required for large crypto holdings). I'm generally not a fan of these worst case plans and it seems mostly like people living in fear.

        So, broadly speaking, the problems being discussed are universal to all significant assets - we agree.
        I don't live in fear and have no plans to flee. I was simply responding to the claim that Bitcoin was a useless vehicle if . . .

        My point is just that public blockchains are way more traceable than cash.

        Except, as you described, in large amounts when the authorities actively take an interest.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 15, 2023, 08:13:38 AM
        Suppose the scenario arises where all the types of people who own crypto need to flee their country - presumably the US.

        They're all heading to Europe, Canada, or the Caribbean where they need cash to set up their apartment, pay immigration lawyers, and buy a mattress to lay on the floor. Thus they're all selling their crypto at the same time.

        The sudden wave of selling depletes the value of the crypto to near nothing. This seems like the endgame of using crypto to escape one country and set up shop in another.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 15, 2023, 08:26:17 AM

        Is it illegal for me to pay a builder $50k in cash for replacing my roof in the US ?
        Is it illegal for me to buy $50k of Bitcoin peer-to-peer (non-KYC) in the US ?

        In any case, the scenario being discussed here is fleeing an authoritarian regime. That being the case, I DGAF about any money laundering laws - the gloves are off.
        And, good luck fleeing said authoritarian regime with your suitcase full of "plain ol' cash".

        If you go to a US bank, which is KYC, and withdraw $50k this is all fine and legal, but the bank must report the transaction to the federal government. Attempting to spit withdrawals into smaller chucks (less then $10k) to avoid reporting can get you into trouble. This isn't theoretical, it has happened to people.

        Then for the roofing business, their cash transactions over $10k have to be reported to the IRS on Form 8300, which includes the information of the person that the cash came from. So if you pay $50k cash for a new roof you can be sure the IRS will be interested who is paying with so much cash and where it came from. Starting in 2024 crypto will also be subject to Form 8300.

        Paying for stuff in cash or crypto is fine. But like I said, trying to avoid KYC and/or moving stuff around with the intention of hiding things will likely cause problems.

        Fair enough, but that doesn't change my view that Bitcoin is at least as good as any conventional asset for fleeing.

        ETA: for the record, I don't think a suitcase of cash is a good escape plan either. Like others have mentioned, offshore accounts are probably the better way (though the US also requires reporting on these, the same reporting is required for large crypto holdings). I'm generally not a fan of these worst case plans and it seems mostly like people living in fear.

        So, broadly speaking, the problems being discussed are universal to all significant assets - we agree.
        I don't live in fear and have no plans to flee. I was simply responding to the claim that Bitcoin was a useless vehicle if . . .

        My point is just that public blockchains are way more traceable than cash.

        Except, as you described, in large amounts when the authorities actively take an interest.

        And... we've come full-circle back to the question "what is it good for?" And by this I mean what value does it uniquely provide that other assets cannot? Bitcoin being "at least as good as any conventional asset for fleeing" is another way of saying it has failed its primary goals. Not anonymous. Not beyond the reach of government control. Not actually trust-less or disintermediated when used in the real world.

        If I were worried about the US going full authoritarian, I would establish a bank account in Switzerland or some other non-extradition country. And I would keep a modest stash of physical cash on hand for use while making my escape and maybe bribing people along the way.

        If I were buying illicit contraband (say drugs or whatever) and wanted complete privacy, I would absolutely pay in physical cash, rather than having a forever record of my transactions on a blockchain.
         
        So it's sorta like other assets, but worse. A pain in the ass to use in normal commerce. Requires additional paperwork/reporting for tax purposes. And all my activity is public and can very likely be traced. From my view, the only thing it's good for is speculating on the value of BTC, e.g. line goes up.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 15, 2023, 08:29:07 AM
        Is it illegal for me to pay a builder $50k in cash for replacing my roof in the US ?
        Is it illegal for me to buy $50k of Bitcoin peer-to-peer (non-KYC) in the US ?

        In any case, the scenario being discussed here is fleeing an authoritarian regime. That being the case, I DGAF about any money laundering laws - the gloves are off.
        And, good luck fleeing said authoritarian regime with your suitcase full of "plain ol' cash".

        No one, with actual wealth, fleeing an authoritarian regime, is carrying a suit case full of cash.

        I agree. That was just my response to FINate's (out of context) statement that " . . crypto, including privacy focused ones, are far more traceable than plain ol' cash."

        As said here.   Foreign accounts, probably foreign real estate, ect are already there and waiting.  China, specifically those fleeing Hong Kong, is a good example of recent events where THIS HAPPENED.  Was it the extreme case.... No.  But it's close enough. 
        And to be clear some of those didn't get out with anything.  Not sure how they could have, given the great fire wall and China's actively acting against Crypto but assuming it could have gotten all over to a BTC wallet....  AND assuming they memorized all the keys/key phrases.    it honestly is hard to spend BTC when your a refugee with little or no internet access.

        Yet another ludicrous apples vs oranges comparison.

        At your destination, your foreign accounts and your foreign real estate, etc. are all 'there and waiting'. How lovely and cosy for you.
        At my destination, I haven't even got internet access !

        I mean, come on, it's laughable . . .

        No one, as of yet, is going after you for having BTC or any other crypto.  AND I hope no one ever does so long as your not breaking the law.  However, since it's tracked, your every move could be watched if someone choose to do so.   Just be aware.  BTC isn't your friend if your running from something.  That is all there is to say.

        You think 'they' can't trace your foreign accounts and foreign real estate or anything else of any consequence ?

        It's difficult to hide any significant property from a powerful and determined tracker. I maintain that it's probably easier to hide (and retain control of) Bitcoin than any conventional asset.

        Never said internet wasn't available.  But little to no access means exactly that.   It might cost something and.... you have BTC to trade.   No one is taking it.  Also, not apples and oranges.  Real life.  Crypto didn't save them.

         And traceable.  Yes, we have the proof of that given how many extremely rich have tried to hide their money but someone found it....   So, while you can make it hard to trace, it's never impossible just near.  It is just MUCH easier to trace on the block chain.  Would it matter if your in a country that realistically isn't going to arrest you and sent you back without a good reason?  No.  Let it be traced.  It just means, if they want you, they know where your at.  Who ever "they" are.

        Hilarious.

        You're still imagining me showing up with nothing but the clothes on my back (hopefully) and a seed-phrase in my head, and no other forward-planning whatsoever.
        Meanwhile, you've spent significant time and energy buying foreign real estate and arranging and funding foreign bank accounts.
        It's apples and oranges through and through - and it's laughable.

        And, regardless of all the above, your foreign bank accounts and foreign real estate are almost certainly more traceable than my Bitcoin, and waaaaay less mobile. If I'm screwed, we're all screwed.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 15, 2023, 08:45:14 AM
        Suppose the scenario arises where all the types of people who own crypto need to flee their country - presumably the US.

        They're all heading to Europe, Canada, or the Caribbean where they need cash to set up their apartment, pay immigration lawyers, and buy a mattress to lay on the floor. Thus they're all selling their crypto at the same time.

        The sudden wave of selling depletes the value of the crypto to near nothing. This seems like the endgame of using crypto to escape one country and set up shop in another.

        Suppose an asteroid hit me in the eye and I couldn't see to type my seed-phrase . . . .

        Please - enough of the dystopian fantasies - LOL . . .
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 15, 2023, 09:41:53 AM
        Suppose the scenario arises where all the types of people who own crypto need to flee their country - presumably the US.

        They're all heading to Europe, Canada, or the Caribbean where they need cash to set up their apartment, pay immigration lawyers, and buy a mattress to lay on the floor. Thus they're all selling their crypto at the same time.

        The sudden wave of selling depletes the value of the crypto to near nothing. This seems like the endgame of using crypto to escape one country and set up shop in another.
        Suppose an asteroid hit me in the eye and I couldn't see to type my seed-phrase . . . .

        Please - enough of the dystopian fantasies - LOL . . .
        So... back to all the real-world applications that are occurring right now to streamline transactions, reduce energy usage, enhance privacy, enhance security, and bring reliable banking services to poor people? I thought it was late 2023 and we've been through all that already, and are falling back on what-if explanations?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Stimpy on November 15, 2023, 10:13:13 AM
        Hilarious.

        You're still imagining me showing up with nothing but the clothes on my back (hopefully) and a seed-phrase in my head, and no other forward-planning whatsoever.
        Meanwhile, you've spent significant time and energy buying foreign real estate and arranging and funding foreign bank accounts.
        It's apples and oranges through and through - and it's laughable.

        And, regardless of all the above, your foreign bank accounts and foreign real estate are almost certainly more traceable than my Bitcoin, and waaaaay less mobile. If I'm screwed, we're all screwed.

        Not sure what part about "This happened" (Not the I put it all in crypto part, or at least that wasn't mentioned by those in this situation.)  you don't get.  But ok.   Hilarious.

        Also, Panama Papers.  Look it up.  Quite intriguing read imo.   Either way, I'll stick to what I have.  Some small percent for gambling and if I feel I need to run...  Crypto won't be my saving grace, as it's not.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 15, 2023, 11:56:16 AM
        Suppose the scenario arises where all the types of people who own crypto need to flee their country - presumably the US.

        They're all heading to Europe, Canada, or the Caribbean where they need cash to set up their apartment, pay immigration lawyers, and buy a mattress to lay on the floor. Thus they're all selling their crypto at the same time.

        The sudden wave of selling depletes the value of the crypto to near nothing. This seems like the endgame of using crypto to escape one country and set up shop in another.
        Suppose an asteroid hit me in the eye and I couldn't see to type my seed-phrase . . . .

        Please - enough of the dystopian fantasies - LOL . . .
        So... back to all the real-world applications that are occurring right now to streamline transactions, reduce energy usage, enhance privacy, enhance security, and bring reliable banking services to poor people? I thought it was late 2023 and we've been through all that already, and are falling back on what-if explanations?

        1974 TCP/IP
        1989 HTTP
        1991 WWW
        2004 Web 2.0
        ???? Web 3.0 ?
        = 49 years


        1979 1G
        1979 brief case
        1983 brick
        1991 2G
        1999 Blackberry
        2001 3G
        2007 Iphone
        2009 4G
        2021 5G
        = 44 years


        2008 Bitcoin White Paper
        2009 Genesis block
        2009 Bitcoin market cap < $1
        2010 Pizza Day
        2015 Lightning White Paper
        2018 Lightning Pizza Day
        2023 Bitcoin owners = 219 million (Techopedia)
        2023 Bitcoin market cap = $700B
        ???? Spot ETFs ?
        = 15 years


        Rome wasn't built in a day. I think it's ticking along ok.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 15, 2023, 12:06:58 PM

        Is it illegal for me to pay a builder $50k in cash for replacing my roof in the US ?
        Is it illegal for me to buy $50k of Bitcoin peer-to-peer (non-KYC) in the US ?

        In any case, the scenario being discussed here is fleeing an authoritarian regime. That being the case, I DGAF about any money laundering laws - the gloves are off.
        And, good luck fleeing said authoritarian regime with your suitcase full of "plain ol' cash".

        If you go to a US bank, which is KYC, and withdraw $50k this is all fine and legal, but the bank must report the transaction to the federal government. Attempting to spit withdrawals into smaller chucks (less then $10k) to avoid reporting can get you into trouble. This isn't theoretical, it has happened to people.

        Then for the roofing business, their cash transactions over $10k have to be reported to the IRS on Form 8300, which includes the information of the person that the cash came from. So if you pay $50k cash for a new roof you can be sure the IRS will be interested who is paying with so much cash and where it came from. Starting in 2024 crypto will also be subject to Form 8300.

        Paying for stuff in cash or crypto is fine. But like I said, trying to avoid KYC and/or moving stuff around with the intention of hiding things will likely cause problems.

        Fair enough, but that doesn't change my view that Bitcoin is at least as good as any conventional asset for fleeing.

        ETA: for the record, I don't think a suitcase of cash is a good escape plan either. Like others have mentioned, offshore accounts are probably the better way (though the US also requires reporting on these, the same reporting is required for large crypto holdings). I'm generally not a fan of these worst case plans and it seems mostly like people living in fear.

        So, broadly speaking, the problems being discussed are universal to all significant assets - we agree.
        I don't live in fear and have no plans to flee. I was simply responding to the claim that Bitcoin was a useless vehicle if . . .

        My point is just that public blockchains are way more traceable than cash.

        Except, as you described, in large amounts when the authorities actively take an interest.

        And... we've come full-circle back to the question "what is it good for?" And by this I mean what value does it uniquely provide that other assets cannot? Bitcoin being "at least as good as any conventional asset for fleeing" is another way of saying it has failed its primary goals. Not anonymous. Not beyond the reach of government control. Not actually trust-less or disintermediated when used in the real world.

        "at least as good as" = "as good as or better". It's generally less traceable and more portable and more universally useful than the conventional alternatives we've discussed - imo. That said, it's not perfect.

        If I were worried about the US going full authoritarian, I would establish a bank account in Switzerland or some other non-extradition country. And I would keep a modest stash of physical cash on hand for use while making my escape and maybe bribing people along the way.

        I might do something similar. Also, some carefully acquired and mixed, etc. Bitcoin.

        If I were buying illicit contraband (say drugs or whatever) and wanted complete privacy, I would absolutely pay in physical cash, rather than having a forever record of my transactions on a blockchain.

        Yeah, cash would probably be better - less so as distance between me and the seller increases.

        So it's sorta like other assets, but worse. A pain in the ass to use in normal commerce. Requires additional paperwork/reporting for tax purposes. And all my activity is public and can very likely be traced. From my view, the only thing it's good for is speculating on the value of BTC, e.g. line goes up.

        My expectation is that it will become a very good store of value and unit of account. However, it won't be those things until it's much bigger. Also, I expect it to become a regular means of exchange for some, though probably not all in my lifetime, if ever.
        Meanwhile, I am speculating that it will eventually get there - it will continue to get more widely adopted by individuals, institutions and maybe nations too - and yes, that the number will, consequently, continue to go up as things progress.


        If you really want to understand the broader Bitcoiner view, read Saifedean Amous' The Bitcoin Standard, listen to The Saylor Series (at least episodes 1-13), read Jeff Booth's The Price of Tomorrow and his Finding Signal In A Noisy World article, read Lyn Alden's Broken Money. I would expect everyone here to find them interesting even if they disagree with them. At least you'll get to properly understand where a good many Bitcoiners are coming from.
        It really is about much more than 'number go up' for many people. Unfortunately, it's just not possible to condense 3 books and a 20 hour discussion into a few pithy forum posts - especially against a barrage of determined opposition.

        And please feel free to recommend some material I should look at to challenge my libertarian, hard money, etc. leanings. I'm genuinely interested. I've read quite a bit but I just don't get bigGov and MMT, etc. - it seems like total bullshit - but I'm more than happy to read more. I freely acknowledge that I could be wrong.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on November 15, 2023, 01:08:13 PM
        So... back to all the real-world applications that are occurring right now to streamline transactions, reduce energy usage, enhance privacy, enhance security, and bring reliable banking services to poor people? I thought it was late 2023 and we've been through all that already, and are falling back on what-if explanations?

        I think there was a bit of target fixation on a hypothetical scenario.    If I need to flee across borders in some future dystopian scenario maybe Bitcoin is the way best. Shoot, I have no idea.
          Not something I've thought about.    What about the real scenarios?  For example, how is Bitcoin functioning as a peer-to-peer electronic cash transaction system?   Are people using it to make payments the way it was designed to do?   

        To become adopted outside of niche speculators, Bitcoin needs to do something better than the regular financial system for some reasonably large percentage of normal users.   

        Bitcoin is objectively worse as a payment system for regular transactions. So not that. 
        Third party providers like Bitpay make it a lot better, but are not peer-to-peer (the reason for Bitcoin) and add an additional friction layer, which means they are worse too.
        Since Bitcoin was created, other solutions to bank the unbanked have exploded in popularity (approaching a billion users).   This lack of adoption indicates Bitcoin is not a good solution for this problem despite the huge potential market.     
        Crypto remittances from the US to foreign countries are a tiny fraction of the total, which indicates Bitcoin is not a good solution for this problem either.


        Crypto maxis argue one day the Lightning Network will come along and fix many of these problems.  But it hasn't.   It is still a hypothetical solution.   
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 15, 2023, 01:46:22 PM
        Hilarious.

        You're still imagining me showing up with nothing but the clothes on my back (hopefully) and a seed-phrase in my head, and no other forward-planning whatsoever.
        Meanwhile, you've spent significant time and energy buying foreign real estate and arranging and funding foreign bank accounts.
        It's apples and oranges through and through - and it's laughable.

        And, regardless of all the above, your foreign bank accounts and foreign real estate are almost certainly more traceable than my Bitcoin, and waaaaay less mobile. If I'm screwed, we're all screwed.

        Not sure what part about "This happened" (Not the I put it all in crypto part, or at least that wasn't mentioned by those in this situation.)  you don't get.  But ok.   Hilarious.

        Also, Panama Papers.  Look it up.  Quite intriguing read imo.   Either way, I'll stick to what I have.  Some small percent for gambling and if I feel I need to run...  Crypto won't be my saving grace, as it's not.

        What am I supposed to do with a vague reference to "This happened". It's not even clear what's supposed to have happened - it certainly wasn't supported by any context or detail or evidence, etc.

        I've read several reports in recent years about people escaping from Syria and, more recently, Ukraine with Bitcoin . . . So what, it's just hearsay unless I unearth and share some good evidence.

        Rest assured, I have no plans to flee anywhere. I have no expectation of needing a 'saving grace'. This is waaaaay down on my personal list of concerns and Bitcoin use cases.
        I didn't initiate this discussion to champion Bitcoin as the perfect fleeing vehicle. I was simply responding to FINate's claim that Bitcoin was useless in a fleeing scenario.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Stimpy on November 15, 2023, 03:58:13 PM
        Hilarious.

        You're still imagining me showing up with nothing but the clothes on my back (hopefully) and a seed-phrase in my head, and no other forward-planning whatsoever.
        Meanwhile, you've spent significant time and energy buying foreign real estate and arranging and funding foreign bank accounts.
        It's apples and oranges through and through - and it's laughable.

        And, regardless of all the above, your foreign bank accounts and foreign real estate are almost certainly more traceable than my Bitcoin, and waaaaay less mobile. If I'm screwed, we're all screwed.

        Not sure what part about "This happened" (Not the I put it all in crypto part, or at least that wasn't mentioned by those in this situation.)  you don't get.  But ok.   Hilarious.

        Also, Panama Papers.  Look it up.  Quite intriguing read imo.   Either way, I'll stick to what I have.  Some small percent for gambling and if I feel I need to run...  Crypto won't be my saving grace, as it's not.

        What am I supposed to do with a vague reference to "This happened". It's not even clear what's supposed to have happened - it certainly wasn't supported by any context or detail or evidence, etc.

        I've read several reports in recent years about people escaping from Syria and, more recently, Ukraine with Bitcoin . . . So what, it's just hearsay unless I unearth and share some good evidence.

        Rest assured, I have no plans to flee anywhere. I have no expectation of needing a 'saving grace'. This is waaaaay down on my personal list of concerns and Bitcoin use cases.
        I didn't initiate this discussion to champion Bitcoin as the perfect fleeing vehicle. I was simply responding to FINate's claim that Bitcoin was useless in a fleeing scenario.

        I'll be honest, it's been what 4 years since all that.   I'd try to dig up the stories but, really don't care to, especially given the time passage.  Hearsay, sure.   For those more recent ones you've read, that is fleeing war, I assume, more so then tyrants. Though the difference is probably fleeting at best.   I am certain someone HAS run with btc in their stash, though I doubt it was new wallet under duress.  But I am also certain that many of them didn't do such a thing.  Who came out ahead.  Probably none of the refugees who didn't already have something set up before hand.

        Either way, it IS useless more often to not in a fleeing scenario, there will always an exception, cause humanity is.... weird.  (In a good way!)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 15, 2023, 04:06:55 PM
        If you really want to understand the broader Bitcoiner view, read Saifedean Amous' The Bitcoin Standard, listen to The Saylor Series (at least episodes 1-13), read Jeff Booth's The Price of Tomorrow and his Finding Signal In A Noisy World article, read Lyn Alden's Broken Money. I would expect everyone here to find them interesting even if they disagree with them. At least you'll get to properly understand where a good many Bitcoiners are coming from.
        It really is about much more than 'number go up' for many people. Unfortunately, it's just not possible to condense 3 books and a 20 hour discussion into a few pithy forum posts - especially against a barrage of determined opposition.

        And please feel free to recommend some material I should look at to challenge my libertarian, hard money, etc. leanings. I'm genuinely interested. I've read quite a bit but I just don't get bigGov and MMT, etc. - it seems like total bullshit - but I'm more than happy to read more. I freely acknowledge that I could be wrong.

        I have a CS degree, worked in BigTech for 2 decades, have spent a fair amount of time with encryption technology generally, and have read various crypto whitepapers. Honestly, I'm not going to spent a bunch of time reading more about BTC.

        If you're serious about challenging your hard money leanings, then I would suggest A Monetary History of the United States, 1867-1960 (https://press.princeton.edu/books/paperback/9780691003542/a-monetary-history-of-the-united-states-1867-1960). Not easy reading, took me quite some time to work through it, but it goes into granular detail on how hard money contributed to multiple economic depressions until the Federal Reserve was created and then learned how to manage the supply of money. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 15, 2023, 04:36:54 PM
        Hilarious.

        You're still imagining me showing up with nothing but the clothes on my back (hopefully) and a seed-phrase in my head, and no other forward-planning whatsoever.
        Meanwhile, you've spent significant time and energy buying foreign real estate and arranging and funding foreign bank accounts.
        It's apples and oranges through and through - and it's laughable.

        And, regardless of all the above, your foreign bank accounts and foreign real estate are almost certainly more traceable than my Bitcoin, and waaaaay less mobile. If I'm screwed, we're all screwed.

        Not sure what part about "This happened" (Not the I put it all in crypto part, or at least that wasn't mentioned by those in this situation.)  you don't get.  But ok.   Hilarious.

        Also, Panama Papers.  Look it up.  Quite intriguing read imo.   Either way, I'll stick to what I have.  Some small percent for gambling and if I feel I need to run...  Crypto won't be my saving grace, as it's not.

        What am I supposed to do with a vague reference to "This happened". It's not even clear what's supposed to have happened - it certainly wasn't supported by any context or detail or evidence, etc.

        I've read several reports in recent years about people escaping from Syria and, more recently, Ukraine with Bitcoin . . . So what, it's just hearsay unless I unearth and share some good evidence.

        Rest assured, I have no plans to flee anywhere. I have no expectation of needing a 'saving grace'. This is waaaaay down on my personal list of concerns and Bitcoin use cases.
        I didn't initiate this discussion to champion Bitcoin as the perfect fleeing vehicle. I was simply responding to FINate's claim that Bitcoin was useless in a fleeing scenario.

        I'll be honest, it's been what 4 years since all that.   I'd try to dig up the stories but, really don't care to, especially given the time passage.  Hearsay, sure.   For those more recent ones you've read, that is fleeing war, I assume, more so then tyrants. Though the difference is probably fleeting at best.   I am certain someone HAS run with btc in their stash, though I doubt it was new wallet under duress.  But I am also certain that many of them didn't do such a thing.  Who came out ahead.  Probably none of the refugees who didn't already have something set up before hand.

        Either way, it IS useless more often to not in a fleeing scenario, there will always an exception, cause humanity is.... weird.  (In a good way!)

        Nothing here has persuaded me AT ALL that Bitcoin is useless in a fleeing scenario.

        Again, if I've got time enough to prepare by buying foreign real estate and setting up and funding foreign bank accounts, I've got PLENTY of time to find to some non-KYC Bitcoin, memorise my seed-phrase, and do some mixing or whatever and set something up at my intended destination if I thought it necessary.

        And again, if time is very short, and "they" are breathing down my neck, I have virtually ZERO chance of quickly and discreetly buying foreign real estate or setting up and funding foreign bank accounts. I have at least some chance of taking my Bitcoin with me.

        I guess we'll have to agree to disagree because this is going nowhere. Out.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 15, 2023, 05:02:34 PM
        If you really want to understand the broader Bitcoiner view, read Saifedean Amous' The Bitcoin Standard, listen to The Saylor Series (at least episodes 1-13), read Jeff Booth's The Price of Tomorrow and his Finding Signal In A Noisy World article, read Lyn Alden's Broken Money. I would expect everyone here to find them interesting even if they disagree with them. At least you'll get to properly understand where a good many Bitcoiners are coming from.
        It really is about much more than 'number go up' for many people. Unfortunately, it's just not possible to condense 3 books and a 20 hour discussion into a few pithy forum posts - especially against a barrage of determined opposition.

        And please feel free to recommend some material I should look at to challenge my libertarian, hard money, etc. leanings. I'm genuinely interested. I've read quite a bit but I just don't get bigGov and MMT, etc. - it seems like total bullshit - but I'm more than happy to read more. I freely acknowledge that I could be wrong.

        I have a CS degree, worked in BigTech for 2 decades, have spent a fair amount of time with encryption technology generally, and have read various crypto whitepapers. Honestly, I'm not going to spent a bunch of time reading more about BTC.

        Fair enough, but you'll have to excuse me if I remind of this reluctance when you next bemoan that "From my view, the only thing it's good for is speculating on the value of BTC, e.g. line goes up".

        The drive and enthusiasm for the project has very little to do with CS or the intricacies of the encryption technology - it's great technology and it's very interesting in it's own right but it's not the 'point'.

        If you're serious about challenging your hard money leanings, then I would suggest A Monetary History of the United States, 1867-1960 (https://press.princeton.edu/books/paperback/9780691003542/a-monetary-history-of-the-united-states-1867-1960). Not easy reading, took me quite some time to work through it, but it goes into granular detail on how hard money contributed to multiple economic depressions until the Federal Reserve was created and then learned how to manage the supply of money.

        I am serious. Thanks, I'll add it to my giant TBR list.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 16, 2023, 04:02:36 PM
        Let me put if for you quite simply.  I believe bitcoin will always go on to make a greater ATH.  I believe in Bitcoin as a store of value, I don't believe there is ever going to be an ultimate 'top' for bitcoin because I believe the printed out of thin air fiat currencies we value it in will always devalue over time, this is what ultimately drives capital towards the harder asset which is Bitcoin, the only asset which humans cannot increase the supply of.  Let me say it again, there is no top for bitcoin because there is no bottom for fiat, fiat will always be printed into infinity.

        Now, you can argue the timing of peoples investments all you like, yes the people who bought the last ATH are currently 'at loss', but the next ATH will come around and at that moment, nominally the amount of people 'at loss' at the next ATH will be zero.  Yes there will be another 'crash' at some stage, yes people will be at 'loss' for a year or two, but IMO the value of bitcoin will always eventually go up vs printed fiat currencies inflating away their value over time.  This is really all I have to say on the matter as all of this has been covered in the past I'm sure.

        Sure, this is true; there's a limited supply of BTC. Just as there's a limited supply of gold, MTG cards, or used tissues signed by Tom Hanks.. But it doesn't follow that the value of those things will go up forever. They also need to have a utility, otherwise you're just paying for the novelty of owning something, which has a pretty limited market.

        Utility is in the eye of the beholder. Don't conflate "I see no utility" or "it has no utility for me" with "it has no utility".

        Ok. so what is the utility of BTC? Now? and in the future?
        What problem does it solve (I assume debasing of fiat?)? How does it solve that, i.e. how will having lots of BTC help me in that situation?
        Will we all at some point decide that dollar is worthless and start doing all transactions in BTC? MY boss will pay me btc, i'll buy milk in btc? Is this adopted by the state, or a barter economy? Feel free to correct and educate me here, I'm really curious.

        If this is the case, the way I see it this will then come about in two ways;
        - we switch suddenly; every BTC-bro instantly become wealthy as they have the only currency. The other 97% of the population have zero wealth overnight..
        - there is a transition, were $ convert to BTC. Like the Euro I guess.

        scenario 1 I'm already screwed. And far fetched, since any policy that toss 90% of the population into instant poverty seems rather unlikely
        Scenario 2 it doesn't matter. I'll just hang onto dollars and wait.

        In either case I don't see the point in hording BTC now.

        I meant to reply to this but lost track of it yesterday . .

        You seem to be anticipating some sort of managed switchover or managed transition. I don't see that at all.

        As I wrote in a reply to FINate yesterday:

        "My expectation is that it will become a very good store of value and unit of account. However, it won't be those things until it's much bigger. Also, I expect it to become a regular means of exchange for some, though probably not all in my lifetime, if ever.
        Meanwhile, I am speculating that it will eventually get there (store of value / unit of account) - it will continue to get more widely adopted by individuals, institutions and maybe nations too - and yes, that the number will, consequently, continue to go up as things progress.
        "

        This is an organic growth of Bitcoin - a gradual (probably S-curve) voluntary transition, one step at a time, one person at a time, one institution at a time, 1% allocation at a time, etc. . . .

        The reason to buy/hold some Bitcoin now is that the conversion rate is currently $35k = 1BTC.
        If the above pans out, in 5 years, 10 years, or whatever:
           $35k will only buy a small fraction of 1BTC;
           The purchasing power of 1BTC today (a decent car) will be greatly increased (a decent house?).
           

        Also note: You have repeated a common misunderstanding with "The other 97% of the population have zero wealth overnight.."

        The latest latecomers to Bitcoin will lose zero purchasing power in the act of transferring their fiat to Bitcoin. Example: You have $1M in 2030, and $1M could buy a Ferrari - you transfer it to Bitcoin - your Bitcoin will buy that same Ferrari (even if $1M = just 1BTC).
        You will have missed out on the purchasing power gains you could have made by buying that 1BTC today for $35k, but Bitcoin hasn't taken anything away from you. You just made a bad decision today.
        Of course, I could be wrong, it could all go to zero. In which case, you made a good decision today.

        If inflation/debasement continues to be a problem, your $1M (and equivalent BTC) might only buy a Prius in 2030. Again, Bitcoin hasn't taken anything away from you - the $ took it.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 17, 2023, 07:50:50 AM
        Crypto will continue to have a lasting negative impact on the environment as long as it's based on wasteful (by design) proof of work.  That's what it's taking from everyone regardless of pricing whims.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 17, 2023, 11:57:42 AM
        Crypto will continue to have a lasting negative impact on the environment as long as it's based on wasteful (by design) proof of work.  That's what it's taking from everyone regardless of pricing whims.

        Bitcoin was not designed to 'waste' energy. Whether or not Bitcoin's energy usage is 'wasteful' is just a matter of opinion.

        In my opinion, the benefits of proof-of-work significantly outweigh the costs = not a waste.

        Bitcoin = 0.23% of worldwide energy production (https://ccaf.io/cbnsi/cbeci/comparisons). Scrap Bitcoin and save the world ? It's a rounding error.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: frugledoc on November 17, 2023, 12:13:21 PM
        Crypto will continue to have a lasting negative impact on the environment as long as it's based on wasteful (by design) proof of work.  That's what it's taking from everyone regardless of pricing whims.

        Bitcoin was not designed to 'waste' energy. Whether or not Bitcoin's energy usage is 'wasteful' is just a matter of opinion.

        In my opinion, the benefits of proof-of-work significantly outweigh the costs = not a waste.

        Bitcoin = 0.23% of worldwide energy production (https://ccaf.io/cbnsi/cbeci/comparisons). Scrap Bitcoin and save the world ? It's a rounding error.

        It’s not a matter of opinion, it’s fact.  Bitcoin is basically a cult, it’s not too late to get out.  Go to r/Buttcoin if you need help.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Glenstache on November 17, 2023, 12:16:30 PM
        Crypto will continue to have a lasting negative impact on the environment as long as it's based on wasteful (by design) proof of work.  That's what it's taking from everyone regardless of pricing whims.

        Bitcoin was not designed to 'waste' energy. Whether or not Bitcoin's energy usage is 'wasteful' is just a matter of opinion.

        In my opinion, the benefits of proof-of-work significantly outweigh the costs = not a waste.

        Bitcoin = 0.23% of worldwide energy production (https://ccaf.io/cbnsi/cbeci/comparisons). Scrap Bitcoin and save the world ? It's a rounding error.

        The total electricity consumptiuon of Los Angeles County in 2022 was 68.5 TWh (https://ecdms.energy.ca.gov/elecbycounty.aspx)
        The estimated annual energy consumption of BTC in 2022 was 95.5 TWh (from your link)

        Comparing to global energy use and having anything but a near-zero percentage indicates that the demand is huge. And total energy demand includes energy use for things not including electricity production, such as driving cars.

        In this case, would we say that Los Angeles has a small electricity demand footprint? Is powering all of Los Angeles nearly 1.5x still seem small?

        Wheter BTC is worth the energy consumption is subjective and maybe or maybe isn't worth it. However, it is not debateable that it does use a fuckton of electricity.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 17, 2023, 12:28:00 PM
        Whether or not you think bitcoin is a waste of energy based on usefulness is one thing.

        What you can't argue though, is that bitcoin was literally designed to waste energy.  That's what proof of work is.  It requires the waste of energy to generate encrypted hex numbers - solving the hash.  Proof of work requires that nodes on a network provide evidence that they have wasted energy through expended computational power in order to achieve (theoretically) decentralized consensus.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: index on November 17, 2023, 12:58:12 PM
        I remain skeptical the governments of the world willingly give up their ability print their own currency and would prevent the rise of an alternate currency. In 1933 the US government confiscated gold. What is to stop governments from confiscating or outlawing the transfer and possession of BTC? The dollar is backed by a lot of guns.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on November 17, 2023, 01:43:57 PM
        I remain skeptical the governments of the world willingly give up their ability print their own currency and would prevent the rise of an alternate currency. In 1933 the US government confiscated gold. What is to stop governments from confiscating or outlawing the transfer and possession of BTC? The dollar is backed by a lot of guns.

        I'm skeptical too, but not for those reasons.   In the US, and all other countries as far as I know, you have to pay wages and taxes in legal tender.    That pretty much means alternate currencies can't arise in any meaningful way because you must have legal tender to pay taxes.   

        Another reason is the reason why the US confiscated gold in 1933.  It was because the Federal Reserve needed to increase the money supply, but did not have enough gold reserves to do so.  The US isn't on the Bitcoin standard, so it doesn't need to do that any more than it needs to confiscate stocks or bonds. 

        But if those reasons weren't enough the biggest obstacle is that for Bitcoin to become accepted as a currency in any meaningful way, it needs to function just as well or better than regular money.  And it objectively doesn't.   Even in niche applications where Bitcoin seemingly has the biggest advantages like cross-border payments and unbanked populations, Bitcoin penetration has been extremely small.   
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 17, 2023, 02:44:55 PM
        Whether or not you think bitcoin is a waste of energy based on usefulness is one thing.

        What you can't argue though, is that bitcoin was literally designed to waste energy.  That's what proof of work is.  It requires the waste of energy to generate encrypted hex numbers - solving the hash.  Proof of work requires that nodes on a network provide evidence that they have wasted energy through expended computational power in order to achieve (theoretically) decentralized consensus.

        You can argue that solving the hash, in itself, provides no benefit, but that's missing the point - it's not about solving the hash per se. By doing the work required to solve the hash, the nodes build a 'wall of energy' behind which Bitcoin is secure. Building that 'wall of energy' to secure Bitcoin is the point. The energy wasn't wasted despite the fact that all the nodes did was discover some 'random' hex number.

        I could argue that going out for a bike ride is a waste of energy - you start from home and you end up back home, but I'm missing the point - it's not about getting somewhere else. By doing the work required to cycle out and back again, you're burning fat and building your muscles, etc. Keeping fit and healthy is the point. The energy wasn't wasted despite the fact that all you did was ride around in a circle and got nowhere.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 17, 2023, 03:12:12 PM
        Crypto will continue to have a lasting negative impact on the environment as long as it's based on wasteful (by design) proof of work.  That's what it's taking from everyone regardless of pricing whims.

        Bitcoin was not designed to 'waste' energy. Whether or not Bitcoin's energy usage is 'wasteful' is just a matter of opinion.

        In my opinion, the benefits of proof-of-work significantly outweigh the costs = not a waste.

        Bitcoin = 0.23% of worldwide energy production (https://ccaf.io/cbnsi/cbeci/comparisons). Scrap Bitcoin and save the world ? It's a rounding error.

        The total electricity consumptiuon of Los Angeles County in 2022 was 68.5 TWh (https://ecdms.energy.ca.gov/elecbycounty.aspx)
        The estimated annual energy consumption of BTC in 2022 was 95.5 TWh (from your link)

        Comparing to global energy use and having anything but a near-zero percentage indicates that the demand is huge. And total energy demand includes energy use for things not including electricity production, such as driving cars.

        In this case, would we say that Los Angeles has a small electricity demand footprint? Is powering all of Los Angeles nearly 1.5x still seem small?

        Wheter BTC is worth the energy consumption is subjective and maybe or maybe isn't worth it. However, it is not debateable that it does use a fuckton of electricity.

        Show me where I claimed that Bitcoin doesn't use a lot of electricity.

        My point was that the bleating about Bitcoin destroying the planet is often overblown - it's 0.23% of the total energy 'problem'. If saving the planet is really your goal, your attention should be on the bigger things. Seems to me that saving the planet often isn't the goal here - complaining about Bitcoin is the real goal, and any jab will do . . .
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 17, 2023, 04:11:18 PM
        I remain skeptical the governments of the world willingly give up their ability print their own currency and would prevent the rise of an alternate currency. In 1933 the US government confiscated gold. What is to stop governments from confiscating or outlawing the transfer and possession of BTC? The dollar is backed by a lot of guns.

        How would this work in practise ? Presumably, a significant% of the population would have to have a significant% of their assets in Bitcoin to warrant such drastic action. I doubt it would go down well with the populace. And, presumably, any action would have to be heavy handed to be effective.

        Fuck that government - that's outright authoritarian repression. Looks like we'd better restart the fleeing scenarios discussion . . .
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 17, 2023, 04:22:25 PM
        I remain skeptical the governments of the world willingly give up their ability print their own currency and would prevent the rise of an alternate currency. In 1933 the US government confiscated gold. What is to stop governments from confiscating or outlawing the transfer and possession of BTC? The dollar is backed by a lot of guns.

        I'm skeptical too, but not for those reasons.   In the US, and all other countries as far as I know, you have to pay wages and taxes in legal tender.    That pretty much means alternate currencies can't arise in any meaningful way because you must have legal tender to pay taxes.

        Wages ? That's a new one on me.
        Note my many posts saying that I don't foresee the demise of the USD (or any other significant currency) for many years, if ever. Bitcoin doesn't need to replace the USD. Bitcoin and USD, etc. can co-exist for a looong time. No issues with paying taxes - use your USD/GBP/whatever.

        Another reason is the reason why the US confiscated gold in 1933.  It was because the Federal Reserve needed to increase the money supply, but did not have enough gold reserves to do so.  The US isn't on the Bitcoin standard, so it doesn't need to do that any more than it needs to confiscate stocks or bonds. 

        But if those reasons weren't enough the biggest obstacle is that for Bitcoin to become accepted as a currency in any meaningful way, it needs to function just as well or better than regular money.  And it objectively doesn't.   Even in niche applications where Bitcoin seemingly has the biggest advantages like cross-border payments and unbanked populations, Bitcoin penetration has been extremely small.

        Still focused on 'means of exchange' ? Speculation on growth - leading to Store of Value and Unit of Account is where it's at, especially for us fortunate ones in the wealthier nations.
        The 'means of exchange' will start, and is starting, in the poorer places - they need something better than their weak currencies asap. I haven't tried to track progress recently and a quick look revealed the usual vague 'crypto' references and lots of both-ways bias. Actual progress being made in this area ? I don't know.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 17, 2023, 10:41:14 PM
        Whether or not you think bitcoin is a waste of energy based on usefulness is one thing.

        What you can't argue though, is that bitcoin was literally designed to waste energy.  That's what proof of work is.  It requires the waste of energy to generate encrypted hex numbers - solving the hash.  Proof of work requires that nodes on a network provide evidence that they have wasted energy through expended computational power in order to achieve (theoretically) decentralized consensus.
        A blockchain reward goes to the winner.  The other nodes do not "provide evidence that they have wasted energy".  They lose silently, without providing any evidence they did so.  The energy did not get thrown away, as you keep claiming with the word "waste", but rather went to securing the blockchain.  Bitcoin mining has to run at scale, at full speed, to prevent any smaller set of computers from creating a fake blockchain.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 18, 2023, 08:32:51 AM
        Whether or not you think bitcoin is a waste of energy based on usefulness is one thing.

        What you can't argue though, is that bitcoin was literally designed to waste energy.  That's what proof of work is.  It requires the waste of energy to generate encrypted hex numbers - solving the hash.  Proof of work requires that nodes on a network provide evidence that they have wasted energy through expended computational power in order to achieve (theoretically) decentralized consensus.
        A blockchain reward goes to the winner.  The other nodes do not "provide evidence that they have wasted energy".  They lose silently, without providing any evidence they did so.  The energy did not get thrown away, as you keep claiming with the word "waste", but rather went to securing the blockchain.  Bitcoin mining has to run at scale, at full speed, to prevent any smaller set of computers from creating a fake blockchain.

        No, waste is an accurate word. Very close to 100% of the energy used by a CPU gets converted to heat. There's no physical end product coming out the end of a computer, just information. The heat generated is considered "waste heat" and it's a huge problem for data centers. A lot has gone into how to move all this waste heat, which is why large data centers are often located near bodies of cold water. Bitcoin's 95.5 TWh of energy consumption in 2022 pretty much all went up in heat. Physically speaking, it's no different than running a huge army of space heaters. Yes, it solved some math problems along the way and secured the block chain, but is that really worth the enormous energy expenditure?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 18, 2023, 01:11:48 PM
        Whether or not you think bitcoin is a waste of energy based on usefulness is one thing.

        What you can't argue though, is that bitcoin was literally designed to waste energy.  That's what proof of work is.  It requires the waste of energy to generate encrypted hex numbers - solving the hash.  Proof of work requires that nodes on a network provide evidence that they have wasted energy through expended computational power in order to achieve (theoretically) decentralized consensus.
        A blockchain reward goes to the winner.  The other nodes do not "provide evidence that they have wasted energy".  They lose silently, without providing any evidence they did so.  The energy did not get thrown away, as you keep claiming with the word "waste", but rather went to securing the blockchain.  Bitcoin mining has to run at scale, at full speed, to prevent any smaller set of computers from creating a fake blockchain.

        No, waste is an accurate word. Very close to 100% of the energy used by a CPU gets converted to heat. There's no physical end product coming out the end of a computer, just information. The heat generated is considered "waste heat" and it's a huge problem for data centers. A lot has gone into how to move all this waste heat, which is why large data centers are often located near bodies of cold water. Bitcoin's 95.5 TWh of energy consumption in 2022 pretty much all went up in heat. Physically speaking, it's no different than running a huge army of space heaters. Yes, it solved some math problems along the way and secured the block chain, but is that really worth the enormous energy expenditure?
        Which is more likely: cpus use 0% energy, or you're confused?

        https://forums.tomshardware.com/threads/what-is-the-average-cpu-power-effeciency.3548098/
        https://en.wikipedia.org/wiki/Thermal_design_power
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 18, 2023, 01:54:19 PM
        Whether or not you think bitcoin is a waste of energy based on usefulness is one thing.

        What you can't argue though, is that bitcoin was literally designed to waste energy.  That's what proof of work is.  It requires the waste of energy to generate encrypted hex numbers - solving the hash.  Proof of work requires that nodes on a network provide evidence that they have wasted energy through expended computational power in order to achieve (theoretically) decentralized consensus.
        A blockchain reward goes to the winner.  The other nodes do not "provide evidence that they have wasted energy".  They lose silently, without providing any evidence they did so.  The energy did not get thrown away, as you keep claiming with the word "waste", but rather went to securing the blockchain.  Bitcoin mining has to run at scale, at full speed, to prevent any smaller set of computers from creating a fake blockchain.

        No, waste is an accurate word. Very close to 100% of the energy used by a CPU gets converted to heat. There's no physical end product coming out the end of a computer, just information. The heat generated is considered "waste heat" and it's a huge problem for data centers. A lot has gone into how to move all this waste heat, which is why large data centers are often located near bodies of cold water. Bitcoin's 95.5 TWh of energy consumption in 2022 pretty much all went up in heat. Physically speaking, it's no different than running a huge army of space heaters. Yes, it solved some math problems along the way and secured the block chain, but is that really worth the enormous energy expenditure?
        Which is more likely: cpus use 0% energy, or you're confused?

        https://forums.tomshardware.com/threads/what-is-the-average-cpu-power-effeciency.3548098/
        https://en.wikipedia.org/wiki/Thermal_design_power

        You do realize that the forum thread you posted proves my point, right?

        Quote
        CPUs are approximately 100% efficient at converting power to heat - practically every watt going under the IHS will ultimately come out as heat, though a small part of it will be dissipated by the PCB, traces and whatever is connected at the end of IO lanes.

        Unless the goal of Bitcoin is to be a giant distributed resistive heater, all the "efficient" heat is waste heat.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 18, 2023, 06:21:08 PM
        Whether or not you think bitcoin is a waste of energy based on usefulness is one thing.

        What you can't argue though, is that bitcoin was literally designed to waste energy.  That's what proof of work is.  It requires the waste of energy to generate encrypted hex numbers - solving the hash.  Proof of work requires that nodes on a network provide evidence that they have wasted energy through expended computational power in order to achieve (theoretically) decentralized consensus.
        A blockchain reward goes to the winner.  The other nodes do not "provide evidence that they have wasted energy".  They lose silently, without providing any evidence they did so.  The energy did not get thrown away, as you keep claiming with the word "waste", but rather went to securing the blockchain.  Bitcoin mining has to run at scale, at full speed, to prevent any smaller set of computers from creating a fake blockchain.

        No, waste is an accurate word. Very close to 100% of the energy used by a CPU gets converted to heat. There's no physical end product coming out the end of a computer, just information. The heat generated is considered "waste heat" and it's a huge problem for data centers. A lot has gone into how to move all this waste heat, which is why large data centers are often located near bodies of cold water. Bitcoin's 95.5 TWh of energy consumption in 2022 pretty much all went up in heat. Physically speaking, it's no different than running a huge army of space heaters. Yes, it solved some math problems along the way and secured the block chain, but is that really worth the enormous energy expenditure?

        It's obviously true that Bitcoin mining results in some waste heat. That's true for all computing processes** - whether CPU, abacus or synapse, etc. In fact, it's true for every aspect of the entirety of human action since the dawn of time. EVERYTHING we do results in some waste energy. The point you are making is a truism, it's a non-point.

        The only interesting question is whether Bitcoin nets out as 'a waste of energy', ie. whether the output is more valuable than the total energy input -  and that's a subjective question.


        Also, compare:
        The structure of Fort Knox is the consequence of a big expenditure of energy, and the only reason that much energy was expended was to ensure that no wannabe gold thieves could break in without a correspondingly big expenditure of energy - an amount that's generally out of reach. A simple fence would have cost far less energy to build, but it would also require far less energy to breach - an amount that's widely available. The fact that the construction of Fort Knox required a big expenditure of energy is not a problem, it's not a failing - it's the whole point. Fort Knox is a big wall of security energy that could only be breached by a big force of attack energy.

        I'll go out on a limb and state a general rule that:
        Only a high energy defence can reliably resist high energy attacks.



        **
        Electricity generation worldwide in 2022 = 30,000 TWh (https://www.statista.com/statistics/270281/electricity-generation-worldwide/)
        Computers, data centers and networks consume 10% of the world's electricity. (https://en.wikipedia.org/wiki/IT_energy_management)
        3,000 TWh 'wasted' on "just information".
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 18, 2023, 09:16:15 PM
        Whether or not you think bitcoin is a waste of energy based on usefulness is one thing.

        What you can't argue though, is that bitcoin was literally designed to waste energy.  That's what proof of work is.  It requires the waste of energy to generate encrypted hex numbers - solving the hash.  Proof of work requires that nodes on a network provide evidence that they have wasted energy through expended computational power in order to achieve (theoretically) decentralized consensus.
        A blockchain reward goes to the winner.  The other nodes do not "provide evidence that they have wasted energy".  They lose silently, without providing any evidence they did so.  The energy did not get thrown away, as you keep claiming with the word "waste", but rather went to securing the blockchain.  Bitcoin mining has to run at scale, at full speed, to prevent any smaller set of computers from creating a fake blockchain.

        No, waste is an accurate word. Very close to 100% of the energy used by a CPU gets converted to heat. There's no physical end product coming out the end of a computer, just information. The heat generated is considered "waste heat" and it's a huge problem for data centers. A lot has gone into how to move all this waste heat, which is why large data centers are often located near bodies of cold water. Bitcoin's 95.5 TWh of energy consumption in 2022 pretty much all went up in heat. Physically speaking, it's no different than running a huge army of space heaters. Yes, it solved some math problems along the way and secured the block chain, but is that really worth the enormous energy expenditure?

        It's obviously true that Bitcoin mining results in some waste heat. That's true for all computing processes** - whether CPU, abacus or synapse, etc. In fact, it's true for every aspect of the entirety of human action since the dawn of time. EVERYTHING we do results in some waste energy. The point you are making is a truism, it's a non-point.

        The only interesting question is whether Bitcoin nets out as 'a waste of energy', ie. whether the output is more valuable than the total energy input -  and that's a subjective question.


        Also, compare:
        The structure of Fort Knox is the consequence of a big expenditure of energy, and the only reason that much energy was expended was to ensure that no wannabe gold thieves could break in without a correspondingly big expenditure of energy - an amount that's generally out of reach. A simple fence would have cost far less energy to build, but it would also require far less energy to breach - an amount that's widely available. The fact that the construction of Fort Knox required a big expenditure of energy is not a problem, it's not a failing - it's the whole point. Fort Knox is a big wall of security energy that could only be breached by a big force of attack energy.

        I'll go out on a limb and state a general rule that:
        Only a high energy defence can reliably resist high energy attacks.



        **
        Electricity generation worldwide in 2022 = 30,000 TWh (https://www.statista.com/statistics/270281/electricity-generation-worldwide/)
        Computers, data centers and networks consume 10% of the world's electricity. (https://en.wikipedia.org/wiki/IT_energy_management)
        3,000 TWh 'wasted' on "just information".

        Yes, all computing requires energy. As the number of computations increases, so does the energy consumption. None of this is in dispute.

        By definition, then, Proof of Work is designed to consume energy (https://en.wikipedia.org/wiki/Proof_of_work).

        Quote
        Proof of work (PoW) is a form of cryptographic proof in which one party (the prover) proves to others (the verifiers) that a certain amount of a specific computational effort has been expended.

        What really matters is how efficiently these computational cycles are being used. So it's sensible to compare the energy expenditure per transaction . A single BTC transaction consumes around 703 kWh, whereas 100,000 VISA transactions requires around 149 kWh (source (https://www.statista.com/statistics/881541/bitcoin-energy-consumption-transaction-comparison-visa/)). The efficiency difference is just astounding, with BTC transactions consuming 471,812 times the energy of a VISA transaction. Can you really tell us that you think this isn't horribly wasteful?

        ETA: To help put these numbers into perspective, a dishwasher uses around 1.5 kWh per load. Which means a BTC transaction uses around 466 dishwasher loads of electricity. My household does about one load of dishes per day, so a single BTC transaction uses more electricity than my household of 4 uses doing dishes for a year. Com'on, that's grotesque.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 19, 2023, 12:44:09 AM
        Whether or not you think bitcoin is a waste of energy based on usefulness is one thing.

        What you can't argue though, is that bitcoin was literally designed to waste energy.  That's what proof of work is.  It requires the waste of energy to generate encrypted hex numbers - solving the hash.  Proof of work requires that nodes on a network provide evidence that they have wasted energy through expended computational power in order to achieve (theoretically) decentralized consensus.
        A blockchain reward goes to the winner.  The other nodes do not "provide evidence that they have wasted energy".  They lose silently, without providing any evidence they did so.  The energy did not get thrown away, as you keep claiming with the word "waste", but rather went to securing the blockchain.  Bitcoin mining has to run at scale, at full speed, to prevent any smaller set of computers from creating a fake blockchain.

        No, waste is an accurate word. Very close to 100% of the energy used by a CPU gets converted to heat. There's no physical end product coming out the end of a computer, just information. The heat generated is considered "waste heat" and it's a huge problem for data centers. A lot has gone into how to move all this waste heat, which is why large data centers are often located near bodies of cold water. Bitcoin's 95.5 TWh of energy consumption in 2022 pretty much all went up in heat. Physically speaking, it's no different than running a huge army of space heaters. Yes, it solved some math problems along the way and secured the block chain, but is that really worth the enormous energy expenditure?
        Which is more likely: cpus use 0% energy, or you're confused?

        https://forums.tomshardware.com/threads/what-is-the-average-cpu-power-effeciency.3548098/
        https://en.wikipedia.org/wiki/Thermal_design_power

        You do realize that the forum thread you posted proves my point, right?

        Quote
        CPUs are approximately 100% efficient at converting power to heat - practically every watt going under the IHS will ultimately come out as heat, though a small part of it will be dissipated by the PCB, traces and whatever is connected at the end of IO lanes.

        Unless the goal of Bitcoin is to be a giant distributed resistive heater, all the "efficient" heat is waste heat.

        You missed that poster being corrected:

        Quote
        You are confusing TDP with power
        ...
        I think you are mixing up TDP (Thermal Design Power ) with power usage (Watts).
        TDP is not a measure of power power consumption....even though TDP is correlated with power consumption. The more power CPU uses the higher the TDP.

        Quote
        Comparing the electrical and thermal energies doesn't tell you much either.
        Take a FX8350, probably 100W of electrical and thermal power output.
        Take an i5-3570k, probably 65W of electrical and maybe 90w of thermal power
        ...
        Comparing Electrical to thermal power ratings just tells electrically how efficient it is great if you are looking at a heater, but it could bare no relationship to it's computational effectiveness, it's more likely to tell you how they measure TDP.

        Cpus do not run on zero energy, nor do they generate free energy (65W vs 90W).  That's why I linked to the wikipedia entry for TDP, which also shows who was correct in that discussion.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 19, 2023, 08:26:53 AM
        Whether or not you think bitcoin is a waste of energy based on usefulness is one thing.

        What you can't argue though, is that bitcoin was literally designed to waste energy.  That's what proof of work is.  It requires the waste of energy to generate encrypted hex numbers - solving the hash.  Proof of work requires that nodes on a network provide evidence that they have wasted energy through expended computational power in order to achieve (theoretically) decentralized consensus.
        A blockchain reward goes to the winner.  The other nodes do not "provide evidence that they have wasted energy".  They lose silently, without providing any evidence they did so.  The energy did not get thrown away, as you keep claiming with the word "waste", but rather went to securing the blockchain.  Bitcoin mining has to run at scale, at full speed, to prevent any smaller set of computers from creating a fake blockchain.

        No, waste is an accurate word. Very close to 100% of the energy used by a CPU gets converted to heat. There's no physical end product coming out the end of a computer, just information. The heat generated is considered "waste heat" and it's a huge problem for data centers. A lot has gone into how to move all this waste heat, which is why large data centers are often located near bodies of cold water. Bitcoin's 95.5 TWh of energy consumption in 2022 pretty much all went up in heat. Physically speaking, it's no different than running a huge army of space heaters. Yes, it solved some math problems along the way and secured the block chain, but is that really worth the enormous energy expenditure?
        Which is more likely: cpus use 0% energy, or you're confused?

        https://forums.tomshardware.com/threads/what-is-the-average-cpu-power-effeciency.3548098/
        https://en.wikipedia.org/wiki/Thermal_design_power

        You do realize that the forum thread you posted proves my point, right?

        Quote
        CPUs are approximately 100% efficient at converting power to heat - practically every watt going under the IHS will ultimately come out as heat, though a small part of it will be dissipated by the PCB, traces and whatever is connected at the end of IO lanes.

        Unless the goal of Bitcoin is to be a giant distributed resistive heater, all the "efficient" heat is waste heat.

        You missed that poster being corrected:

        Quote
        You are confusing TDP with power
        ...
        I think you are mixing up TDP (Thermal Design Power ) with power usage (Watts).
        TDP is not a measure of power power consumption....even though TDP is correlated with power consumption. The more power CPU uses the higher the TDP.

        Quote
        Comparing the electrical and thermal energies doesn't tell you much either.
        Take a FX8350, probably 100W of electrical and thermal power output.
        Take an i5-3570k, probably 65W of electrical and maybe 90w of thermal power
        ...
        Comparing Electrical to thermal power ratings just tells electrically how efficient it is great if you are looking at a heater, but it could bare no relationship to it's computational effectiveness, it's more likely to tell you how they measure TDP.

        Cpus do not run on zero energy, nor do they generate free energy (65W vs 90W).  That's why I linked to the wikipedia entry for TDP, which also shows who was correct in that discussion.

        I did not address TDP because it's not relevant to this discussion. From the Wikipedia you linked:

        Quote
        The thermal design power (TDP), sometimes called thermal design point, is the maximum amount of heat generated by a computer chip or component (often a CPU, GPU or system on a chip) that the cooling system in a computer is designed to dissipate under any workload.

        TDP is about the capacity of cooling systems, and the maximum amount of heat they can remove to keep the CPU from overheating. I was being nice by skipping over this, because, frankly, it shows that you don't really know what you're talking about and are just grasping at whatever you can find online.

        The fact is, almost 100% of the electricity consumed by CPUs (and GPUs, most of this stuff is actually using GPU farms), ends up as waste heat.

        I spent a good amount of my career building large scale distributed systems at Google. I managed a service that ran on 100k CPU cores. TDP is absolutely essential because all those CPUs consume so much energy, and that energy ends up as heat. I became friends with a guy on the Google Bus who was a Thermal Engineer, and his entire job was designing industrial heat exchangers. Why did Google hire this guy and his team? Because some of our huge data centers were cooled by river water.

        So when I reference a BTC transaction consuming 703 kWh (estimates vary, so I picked on one the lower end), which you conveniently ignored, I'm talking actual power consumption by the BTC ecosystem, not the TDP. This is actual used energy per transaction, which is converted to heat and dissipated by individual cooling systems. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on November 19, 2023, 11:41:14 AM
        Still focused on 'means of exchange' ? Speculation on growth - leading to Store of Value and Unit of Account is where it's at, especially for us fortunate ones in the wealthier nations.
        The 'means of exchange' will start, and is starting, in the poorer places - they need something better than their weak currencies asap. I haven't tried to track progress recently and a quick look revealed the usual vague 'crypto' references and lots of both-ways bias. Actual progress being made in this area ? I don't know.

        Thus far, Bitcoin is a story.    For Bitcoin to grow in a meaningful way, it needs to move beyond the story and provide utility <insert you idea of utility here> that's better than current alternatives.    We know objectively that Bitcoin is a worse payment system than the traditional finance system.     It is definitely not a unit of account.    Store of value is a little bit of a question mark.   It works if you time your entry points correctly.  However, most people don't have that ability.  I know I don't.   So there remains the chicken and egg problem.  For it Bitcoin to increase in value, more people need to want to own it than currently want to own it.   And beyond the story, there is no real reason for most people to own it. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 19, 2023, 01:20:17 PM
        Whether or not you think bitcoin is a waste of energy based on usefulness is one thing.

        What you can't argue though, is that bitcoin was literally designed to waste energy.  That's what proof of work is.  It requires the waste of energy to generate encrypted hex numbers - solving the hash.  Proof of work requires that nodes on a network provide evidence that they have wasted energy through expended computational power in order to achieve (theoretically) decentralized consensus.
        A blockchain reward goes to the winner.  The other nodes do not "provide evidence that they have wasted energy".  They lose silently, without providing any evidence they did so.  The energy did not get thrown away, as you keep claiming with the word "waste", but rather went to securing the blockchain.  Bitcoin mining has to run at scale, at full speed, to prevent any smaller set of computers from creating a fake blockchain.

        No, waste is an accurate word. Very close to 100% of the energy used by a CPU gets converted to heat. There's no physical end product coming out the end of a computer, just information. The heat generated is considered "waste heat" and it's a huge problem for data centers. A lot has gone into how to move all this waste heat, which is why large data centers are often located near bodies of cold water. Bitcoin's 95.5 TWh of energy consumption in 2022 pretty much all went up in heat. Physically speaking, it's no different than running a huge army of space heaters. Yes, it solved some math problems along the way and secured the block chain, but is that really worth the enormous energy expenditure?

        It's obviously true that Bitcoin mining results in some waste heat. That's true for all computing processes** - whether CPU, abacus or synapse, etc. In fact, it's true for every aspect of the entirety of human action since the dawn of time. EVERYTHING we do results in some waste energy. The point you are making is a truism, it's a non-point.

        The only interesting question is whether Bitcoin nets out as 'a waste of energy', ie. whether the output is more valuable than the total energy input -  and that's a subjective question.


        Also, compare:
        The structure of Fort Knox is the consequence of a big expenditure of energy, and the only reason that much energy was expended was to ensure that no wannabe gold thieves could break in without a correspondingly big expenditure of energy - an amount that's generally out of reach. A simple fence would have cost far less energy to build, but it would also require far less energy to breach - an amount that's widely available. The fact that the construction of Fort Knox required a big expenditure of energy is not a problem, it's not a failing - it's the whole point. Fort Knox is a big wall of security energy that could only be breached by a big force of attack energy.

        I'll go out on a limb and state a general rule that:
        Only a high energy defence can reliably resist high energy attacks.



        **
        Electricity generation worldwide in 2022 = 30,000 TWh (https://www.statista.com/statistics/270281/electricity-generation-worldwide/)
        Computers, data centers and networks consume 10% of the world's electricity. (https://en.wikipedia.org/wiki/IT_energy_management)
        3,000 TWh 'wasted' on "just information".

        Yes, all computing requires energy. As the number of computations increases, so does the energy consumption. None of this is in dispute.

        By definition, then, Proof of Work is designed to consume energy (https://en.wikipedia.org/wiki/Proof_of_work).

        Quote
        Proof of work (PoW) is a form of cryptographic proof in which one party (the prover) proves to others (the verifiers) that a certain amount of a specific computational effort has been expended.

        Aah, we're getting closer. At least we've progressed from 'designed to waste energy'.

        However, your link text badly misquotes the source. Here's what it says (my bold): "The purpose of proof-of-work algorithms is not proving that certain work was carried out or that a computational puzzle was "solved", but deterring manipulation of data by establishing large energy and hardware-control requirements to be able to do so."

        PoW was not designed to consume energy. PoW was designed to provide security - and reliable security unavoidably requires a lot of energy - just like Fort Knox as described above.

        What really matters is how efficiently these computational cycles are being used. So it's sensible to compare the energy expenditure per transaction . A single BTC transaction consumes around 703 kWh, whereas 100,000 VISA transactions requires around 149 kWh (source (https://www.statista.com/statistics/881541/bitcoin-energy-consumption-transaction-comparison-visa/)). The efficiency difference is just astounding, with BTC transactions consuming 471,812 times the energy of a VISA transaction. Can you really tell us that you think this isn't horribly wasteful?

        ETA: To help put these numbers into perspective, a dishwasher uses around 1.5 kWh per load. Which means a BTC transaction uses around 466 dishwasher loads of electricity. My household does about one load of dishes per day, so a single BTC transaction uses more electricity than my household of 4 uses doing dishes for a year. Com'on, that's grotesque.

        I think you know as well as I do that the Bitcoin vs Visa comparison is a completely lame and irrelevant comparison.

        A Bitcoin transaction is an all-encompassing final settlement, it's the entire story, the end.

        A Visa transaction is a small part of a complete transaction - it is not final settlement. Furthermore, Visa sits on top of a multitude of other banking, currency, security, etc. systems - it is very far from 'the entire story'. Aside from the obvious additional transaction elements leading to final settlement, Visa is dependent on the legitimacy of currency which is, in turn, dependent on Gov power which is, in turn, dependent on military power, etc. etc. etc. I doubt it's possible to calculate the true cost of a Bitcoin_equivalent_fully_accounted_to_final_settlement_Visa_transaction as it's distributed far and wide in a thousand pieces.

        A Lightning transaction is probably a good-enough equivalent to a Visa transaction.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 19, 2023, 02:36:16 PM
        Still focused on 'means of exchange' ? Speculation on growth - leading to Store of Value and Unit of Account is where it's at, especially for us fortunate ones in the wealthier nations.
        The 'means of exchange' will start, and is starting, in the poorer places - they need something better than their weak currencies asap. I haven't tried to track progress recently and a quick look revealed the usual vague 'crypto' references and lots of both-ways bias. Actual progress being made in this area ? I don't know.

        Thus far, Bitcoin is a story.    For Bitcoin to grow in a meaningful way, it needs to move beyond the story and provide utility <insert you idea of utility here> that's better than current alternatives.    We know objectively that Bitcoin is a worse payment system than the traditional finance system.     It is definitely not a unit of account.    Store of value is a little bit of a question mark.   It works if you time your entry points correctly.  However, most people don't have that ability.  I know I don't.   So there remains the chicken and egg problem.  For it Bitcoin to increase in value, more people need to want to own it than currently want to own it.   And beyond the story, there is no real reason for most people to own it.

        Bitcoin is a worse payment system than the traditional finance system ?
        Probably, for buying a coffee in the US - and will probably remain so for a long time.
        Maybe not for larger amounts and/or less developed places.
        And Lightning is developing quickly - watch this space.

        It is definitely not a unit of account ?
        Not currently for most people in any practical sense, no.
        Some are using it as such but Bitcoin needs to be much larger (and hence, more stable) for wider recognition as a UoA.
        Note that the USD is a pretty poor UoA too - it's hardly a stable datum.

        Store of value is a little bit of a question mark. It works if you time your entry points correctly. ?
        Not so. It works reliably if your timescale is appropriate. Especially, if you DCA, ie. don't try to time your entry points at all.
        Some are using it as such but Bitcoin needs to be much larger (and hence, more stable) for wider recognition as a SoV.

        Again, the reason (for a wealthy person in a stable country) to own Bitcoin is mainly speculation on it becoming a general SoV and general UoA and more widely used as general MoE. If Bitcoin reaches it's full potential, we will all individually decide when it becomes a SoV and UoA for us, and maybe MoE too.

        The chicken and egg problem is mostly a myth imo.
        No telephones without telephone lines but no telephone lines without telephones. It'll never happen. etc. etc.

        Looking at the broad trend - regardless of your dim view, Bitcoin is growing - and it's interested_audience is broadening. There's plenty of reasons to think it will continue to grow - probably at an accelerating rate as it becomes more understood and more attractive to more and more people. We're quite low on the potential S-curve.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on November 19, 2023, 02:55:38 PM
        Note that the USD is a pretty poor UoA too - it's hardly a stable datum.

        It's way more stable than Bitcoin ever has been or shows any sign of ever being. If I promise to give you US$1,000 a year from now or a decade from now I have a pretty good sense for what I'm getting into. Due to consistent inflation I can expect I won't be giving up quite as much value as I would be giving up if I gave you US$1,000 today, but the error bars around what US$1,000 will be worth in the short to medium term aren't actually that big. Compare that to if I promise to give you 0.1 BTC in ten years. I have literally no idea what I just promised. If you're right about BTC's long-term trajectory I might owe you a car or even a house. If I'm right I might owe you a pizza.

        Quote
        Store of value is a little bit of a question mark. It works if you time your entry points correctly. ?
        Not so. It works reliably if your timescale is appropriate.

        There is far from sufficient data on this point. BTC has trended upward so far, but the track record just isn't there for most people to have any confidence it will stay that way in the long run. I have reason to expect an ounce of gold will hold its value pretty well over my lifetime because it has already done so for most of human history. BTC is a comparative blip in the timeline.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 19, 2023, 03:25:46 PM
        Whether or not you think bitcoin is a waste of energy based on usefulness is one thing.

        What you can't argue though, is that bitcoin was literally designed to waste energy.  That's what proof of work is.  It requires the waste of energy to generate encrypted hex numbers - solving the hash.  Proof of work requires that nodes on a network provide evidence that they have wasted energy through expended computational power in order to achieve (theoretically) decentralized consensus.
        A blockchain reward goes to the winner.  The other nodes do not "provide evidence that they have wasted energy".  They lose silently, without providing any evidence they did so.  The energy did not get thrown away, as you keep claiming with the word "waste", but rather went to securing the blockchain.  Bitcoin mining has to run at scale, at full speed, to prevent any smaller set of computers from creating a fake blockchain.

        No, waste is an accurate word. Very close to 100% of the energy used by a CPU gets converted to heat. There's no physical end product coming out the end of a computer, just information. The heat generated is considered "waste heat" and it's a huge problem for data centers. A lot has gone into how to move all this waste heat, which is why large data centers are often located near bodies of cold water. Bitcoin's 95.5 TWh of energy consumption in 2022 pretty much all went up in heat. Physically speaking, it's no different than running a huge army of space heaters. Yes, it solved some math problems along the way and secured the block chain, but is that really worth the enormous energy expenditure?

        It's obviously true that Bitcoin mining results in some waste heat. That's true for all computing processes** - whether CPU, abacus or synapse, etc. In fact, it's true for every aspect of the entirety of human action since the dawn of time. EVERYTHING we do results in some waste energy. The point you are making is a truism, it's a non-point.

        The only interesting question is whether Bitcoin nets out as 'a waste of energy', ie. whether the output is more valuable than the total energy input -  and that's a subjective question.


        Also, compare:
        The structure of Fort Knox is the consequence of a big expenditure of energy, and the only reason that much energy was expended was to ensure that no wannabe gold thieves could break in without a correspondingly big expenditure of energy - an amount that's generally out of reach. A simple fence would have cost far less energy to build, but it would also require far less energy to breach - an amount that's widely available. The fact that the construction of Fort Knox required a big expenditure of energy is not a problem, it's not a failing - it's the whole point. Fort Knox is a big wall of security energy that could only be breached by a big force of attack energy.

        I'll go out on a limb and state a general rule that:
        Only a high energy defence can reliably resist high energy attacks.



        **
        Electricity generation worldwide in 2022 = 30,000 TWh (https://www.statista.com/statistics/270281/electricity-generation-worldwide/)
        Computers, data centers and networks consume 10% of the world's electricity. (https://en.wikipedia.org/wiki/IT_energy_management)
        3,000 TWh 'wasted' on "just information".

        Yes, all computing requires energy. As the number of computations increases, so does the energy consumption. None of this is in dispute.

        By definition, then, Proof of Work is designed to consume energy (https://en.wikipedia.org/wiki/Proof_of_work).

        Quote
        Proof of work (PoW) is a form of cryptographic proof in which one party (the prover) proves to others (the verifiers) that a certain amount of a specific computational effort has been expended.

        Aah, we're getting closer. At least we've progressed from 'designed to waste energy'.

        However, your link text badly misquotes the source. Here's what it says (my bold): "The purpose of proof-of-work algorithms is not proving that certain work was carried out or that a computational puzzle was "solved", but deterring manipulation of data by establishing large energy and hardware-control requirements to be able to do so."

        PoW was not designed to consume energy. PoW was designed to provide security - and reliable security unavoidably requires a lot of energy - just like Fort Knox as described above.

        What really matters is how efficiently these computational cycles are being used. So it's sensible to compare the energy expenditure per transaction . A single BTC transaction consumes around 703 kWh, whereas 100,000 VISA transactions requires around 149 kWh (source (https://www.statista.com/statistics/881541/bitcoin-energy-consumption-transaction-comparison-visa/)). The efficiency difference is just astounding, with BTC transactions consuming 471,812 times the energy of a VISA transaction. Can you really tell us that you think this isn't horribly wasteful?

        ETA: To help put these numbers into perspective, a dishwasher uses around 1.5 kWh per load. Which means a BTC transaction uses around 466 dishwasher loads of electricity. My household does about one load of dishes per day, so a single BTC transaction uses more electricity than my household of 4 uses doing dishes for a year. Com'on, that's grotesque.

        I think you know as well as I do that the Bitcoin vs Visa comparison is a completely lame and irrelevant comparison.

        A Bitcoin transaction is an all-encompassing final settlement, it's the entire story, the end.

        A Visa transaction is a small part of a complete transaction - it is not final settlement. Furthermore, Visa sits on top of a multitude of other banking, currency, security, etc. systems - it is very far from 'the entire story'. Aside from the obvious additional transaction elements leading to final settlement, Visa is dependent on the legitimacy of currency which is, in turn, dependent on Gov power which is, in turn, dependent on military power, etc. etc. etc. I doubt it's possible to calculate the true cost of a Bitcoin_equivalent_fully_accounted_to_final_settlement_Visa_transaction as it's distributed far and wide in a thousand pieces.

        A Lightning transaction is probably a good-enough equivalent to a Visa transaction.

        Nope! Not letting you just make that semantic shift. What part of "certain amount of a specific computational effort has been expended" don't you understand. The reason it's called Proof of Work is that it's designed to be computationally intensive. And the competitive nature of Bitcoin mining means that around 99.99% of this computational work is discarded (source (https://www.forbes.com/advisor/investing/cryptocurrency/bitcoins-energy-usage-explained/)). In very real, physical terms, computational effort == work == energy consumption. It is indeed quite accurate to say Bitcoin is designed to waste energy.

        And the Bitcoin vs VISA comparison is absolutely fair. We're talking about monetary transactions. I enter my CC number, and the VISA transaction completes the order. Yes, there is some other overhead associated with these transactions. But the same is true for Bitcoin. Mining operations require buildings, and server infrastructure to manage and monitor the mining.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 19, 2023, 03:40:28 PM
        Note that the USD is a pretty poor UoA too - it's hardly a stable datum.

        It's way more stable than Bitcoin ever has been or shows any sign of ever being. If I promise to give you US$1,000 a year from now or a decade from now I have a pretty good sense for what I'm getting into. Due to consistent inflation I can expect I won't be giving up quite as much value as I would be giving up if I gave you US$1,000 today, but the error bars around what US$1,000 will be worth in the short to medium term aren't actually that big. Compare that to if I promise to give you 0.1 BTC in ten years. I have literally no idea what I just promised. If you're right about BTC's long-term trajectory I might owe you a car or even a house. If I'm right I might owe you a pizza.

        Well, yeah. I didn't claim otherwise (except for "or shows any sign of ever being" which is just an opinion).

        My point was simply that the USD is not a stable datum. We generally measure things against a stable datum - and the USD ain't one, not even close.

        Store of value is a little bit of a question mark. It works if you time your entry points correctly. ?
        Not so. It works reliably if your timescale is appropriate.

        There is far from sufficient data on this point. BTC has trended upward so far, but the track record just isn't there for most people to have any confidence it will stay that way in the long run. I have reason to expect an ounce of gold will hold its value pretty well over my lifetime because it has already done so for most of human history. BTC is a comparative blip in the timeline.

        That, again, is a matter of opinion. Existing history + BitcoinUnderstanding is enough for some. It's enough for me.

        And I clearly said it's currently too small and volatile for most people in the sentence following where you chopped me off in your 'quote'.

        If you prefer to wait for a longer time period, maybe even one equivalent to 'human history' to gather sufficient data, that's your choice. Knock yourself out.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on November 19, 2023, 04:21:21 PM
        Note that the USD is a pretty poor UoA too - it's hardly a stable datum.

        It's way more stable than Bitcoin ever has been or shows any sign of ever being. If I promise to give you US$1,000 a year from now or a decade from now I have a pretty good sense for what I'm getting into. Due to consistent inflation I can expect I won't be giving up quite as much value as I would be giving up if I gave you US$1,000 today, but the error bars around what US$1,000 will be worth in the short to medium term aren't actually that big. Compare that to if I promise to give you 0.1 BTC in ten years. I have literally no idea what I just promised. If you're right about BTC's long-term trajectory I might owe you a car or even a house. If I'm right I might owe you a pizza.

        Well, yeah. I didn't claim otherwise (except for "or shows any sign of ever being" which is just an opinion).

        My point was simply that the USD is not a stable datum. We generally measure things against a stable datum - and the USD ain't one, not even close.

        We use the units we have. USD is a better unit of account than BTC because even though it is not a perfectly "stable datum" it's miles closer to being one than BTC ever has been or shows any signs of being. Yes, that's an opinion, but it's an informed one. Bitcoin has been much more volatile than all major fiat currencies for its entire existence. What evidence is there that this is at all likely to change going forward?

        Quote
        Store of value is a little bit of a question mark. It works if you time your entry points correctly. ?
        Not so. It works reliably if your timescale is appropriate.

        There is far from sufficient data on this point. BTC has trended upward so far, but the track record just isn't there for most people to have any confidence it will stay that way in the long run. I have reason to expect an ounce of gold will hold its value pretty well over my lifetime because it has already done so for most of human history. BTC is a comparative blip in the timeline.

        That, again, is a matter of opinion. Existing history + BitcoinUnderstanding is enough for some. It's enough for me.

        And I clearly said it's currently too small and volatile for most people in the sentence following where you chopped me off in your 'quote'.

        If you prefer to wait for a longer time period, maybe even one equivalent to 'human history' to gather sufficient data, that's your choice. Knock yourself out.

        If I'm looking for something to serve as a store of value I will indeed base my decision on whether that thing has a reasonable history of being a store of value, yes. Thanks for your approval.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 19, 2023, 04:23:34 PM
        Whether or not you think bitcoin is a waste of energy based on usefulness is one thing.

        What you can't argue though, is that bitcoin was literally designed to waste energy.  That's what proof of work is.  It requires the waste of energy to generate encrypted hex numbers - solving the hash.  Proof of work requires that nodes on a network provide evidence that they have wasted energy through expended computational power in order to achieve (theoretically) decentralized consensus.
        A blockchain reward goes to the winner.  The other nodes do not "provide evidence that they have wasted energy".  They lose silently, without providing any evidence they did so.  The energy did not get thrown away, as you keep claiming with the word "waste", but rather went to securing the blockchain.  Bitcoin mining has to run at scale, at full speed, to prevent any smaller set of computers from creating a fake blockchain.

        No, waste is an accurate word. Very close to 100% of the energy used by a CPU gets converted to heat. There's no physical end product coming out the end of a computer, just information. The heat generated is considered "waste heat" and it's a huge problem for data centers. A lot has gone into how to move all this waste heat, which is why large data centers are often located near bodies of cold water. Bitcoin's 95.5 TWh of energy consumption in 2022 pretty much all went up in heat. Physically speaking, it's no different than running a huge army of space heaters. Yes, it solved some math problems along the way and secured the block chain, but is that really worth the enormous energy expenditure?

        It's obviously true that Bitcoin mining results in some waste heat. That's true for all computing processes** - whether CPU, abacus or synapse, etc. In fact, it's true for every aspect of the entirety of human action since the dawn of time. EVERYTHING we do results in some waste energy. The point you are making is a truism, it's a non-point.

        The only interesting question is whether Bitcoin nets out as 'a waste of energy', ie. whether the output is more valuable than the total energy input -  and that's a subjective question.


        Also, compare:
        The structure of Fort Knox is the consequence of a big expenditure of energy, and the only reason that much energy was expended was to ensure that no wannabe gold thieves could break in without a correspondingly big expenditure of energy - an amount that's generally out of reach. A simple fence would have cost far less energy to build, but it would also require far less energy to breach - an amount that's widely available. The fact that the construction of Fort Knox required a big expenditure of energy is not a problem, it's not a failing - it's the whole point. Fort Knox is a big wall of security energy that could only be breached by a big force of attack energy.

        I'll go out on a limb and state a general rule that:
        Only a high energy defence can reliably resist high energy attacks.



        **
        Electricity generation worldwide in 2022 = 30,000 TWh (https://www.statista.com/statistics/270281/electricity-generation-worldwide/)
        Computers, data centers and networks consume 10% of the world's electricity. (https://en.wikipedia.org/wiki/IT_energy_management)
        3,000 TWh 'wasted' on "just information".

        Yes, all computing requires energy. As the number of computations increases, so does the energy consumption. None of this is in dispute.

        By definition, then, Proof of Work is designed to consume energy (https://en.wikipedia.org/wiki/Proof_of_work).

        Quote
        Proof of work (PoW) is a form of cryptographic proof in which one party (the prover) proves to others (the verifiers) that a certain amount of a specific computational effort has been expended.

        Aah, we're getting closer. At least we've progressed from 'designed to waste energy'.

        However, your link text badly misquotes the source. Here's what it says (my bold): "The purpose of proof-of-work algorithms is not proving that certain work was carried out or that a computational puzzle was "solved", but deterring manipulation of data by establishing large energy and hardware-control requirements to be able to do so."

        PoW was not designed to consume energy. PoW was designed to provide security - and reliable security unavoidably requires a lot of energy - just like Fort Knox as described above.

        What really matters is how efficiently these computational cycles are being used. So it's sensible to compare the energy expenditure per transaction . A single BTC transaction consumes around 703 kWh, whereas 100,000 VISA transactions requires around 149 kWh (source (https://www.statista.com/statistics/881541/bitcoin-energy-consumption-transaction-comparison-visa/)). The efficiency difference is just astounding, with BTC transactions consuming 471,812 times the energy of a VISA transaction. Can you really tell us that you think this isn't horribly wasteful?

        ETA: To help put these numbers into perspective, a dishwasher uses around 1.5 kWh per load. Which means a BTC transaction uses around 466 dishwasher loads of electricity. My household does about one load of dishes per day, so a single BTC transaction uses more electricity than my household of 4 uses doing dishes for a year. Com'on, that's grotesque.

        I think you know as well as I do that the Bitcoin vs Visa comparison is a completely lame and irrelevant comparison.

        A Bitcoin transaction is an all-encompassing final settlement, it's the entire story, the end.

        A Visa transaction is a small part of a complete transaction - it is not final settlement. Furthermore, Visa sits on top of a multitude of other banking, currency, security, etc. systems - it is very far from 'the entire story'. Aside from the obvious additional transaction elements leading to final settlement, Visa is dependent on the legitimacy of currency which is, in turn, dependent on Gov power which is, in turn, dependent on military power, etc. etc. etc. I doubt it's possible to calculate the true cost of a Bitcoin_equivalent_fully_accounted_to_final_settlement_Visa_transaction as it's distributed far and wide in a thousand pieces.

        A Lightning transaction is probably a good-enough equivalent to a Visa transaction.

        Nope! Not letting you just make that semantic shift. What part of "certain amount of a specific computational effort has been expended" don't you understand. The reason it's called Proof of Work is that it's designed to be computationally intensive. And the competitive nature of Bitcoin mining means that around 99.99% of this computational work is discarded (source (https://www.forbes.com/advisor/investing/cryptocurrency/bitcoins-energy-usage-explained/)). In very real, physical terms, computational effort == work == energy consumption. It is indeed quite accurate to say Bitcoin is designed to waste energy.

        Nope. No, it's not accurate to say Bitcoin is designed to waste energy.

        Did I not make it sufficiently clear that the sentence I quoted was also directly from your linked Wikipedia source ? It's just a few sentences below the sentence you quoted.

        Look more closely, the 2x sentences do not contradict each other. This is hardly surprising given that they come from the same source. The sentence you quoted describes what PoW is. The sentence I quoted clarifies the purpose of PoW, ie. what it is designed to achieve.

        Yes, Bitcoin does indeed consume a lot of energy. It was NOT designed with that as it's objective. It's an unavoidable consequence of what it is trying to achieve.

        And please check your sources. Your latest source (https://www.forbes.com/advisor/investing/cryptocurrency/bitcoins-energy-usage-explained/) mainly quotes Paul Brady from EY. Here's what Google says: "Paul Brody is Global Blockchain Leader for EY (Ernst & Young). Under his leadership, EY is established a global presence in the blockchain space with a particular focus on public blockchains, assurance, and business application development in the Ethereum ecosystem."
        An Ethereum guy hating on Bitcoin / PoW ? Not exactly impartial.

        And the Bitcoin vs VISA comparison is absolutely fair. We're talking about monetary transactions. I enter my CC number, and the VISA transaction completes the order. Yes, there is some other overhead associated with these transactions. But the same is true for Bitcoin. Mining operations require buildings, and server infrastructure to manage and monitor the mining.

        Good grief. Is that what you really think ? LOL
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 19, 2023, 04:54:23 PM
        Note that the USD is a pretty poor UoA too - it's hardly a stable datum.

        It's way more stable than Bitcoin ever has been or shows any sign of ever being. If I promise to give you US$1,000 a year from now or a decade from now I have a pretty good sense for what I'm getting into. Due to consistent inflation I can expect I won't be giving up quite as much value as I would be giving up if I gave you US$1,000 today, but the error bars around what US$1,000 will be worth in the short to medium term aren't actually that big. Compare that to if I promise to give you 0.1 BTC in ten years. I have literally no idea what I just promised. If you're right about BTC's long-term trajectory I might owe you a car or even a house. If I'm right I might owe you a pizza.

        Well, yeah. I didn't claim otherwise (except for "or shows any sign of ever being" which is just an opinion).

        My point was simply that the USD is not a stable datum. We generally measure things against a stable datum - and the USD ain't one, not even close.

        We use the units we have. USD is a better unit of account than BTC because even though it is not a perfectly "stable datum" it's miles closer to being one than BTC ever has been or shows any signs of being. Yes, that's an opinion, but it's an informed one. Bitcoin has been much more volatile than all major fiat currencies for its entire existence. What evidence is there that this is at all likely to change going forward?

        It's entire existence ? 15 years from a niche cypherGeek project to a $700B monster. Yes, unsurprisingly, that's been pretty volatile.

        Evidence? Well, in general terms, big things tend to be less volatile than small things. As Bitcoin grows it is reasonable to expect that it should also become less volatile. That said, I'm as certain as I can be that there will be more major shocks to come along the way - it won't be a smooth passage.

        There's a few Bitcoin volatility charts around. Don't know how good any of them are, but this one is fairly clear and covers the full lifetime:

        https://buybitcoinworldwide.com/volatility-index/ (https://buybitcoinworldwide.com/volatility-index/)

        Store of value is a little bit of a question mark. It works if you time your entry points correctly. ?
        Not so. It works reliably if your timescale is appropriate.

        There is far from sufficient data on this point. BTC has trended upward so far, but the track record just isn't there for most people to have any confidence it will stay that way in the long run. I have reason to expect an ounce of gold will hold its value pretty well over my lifetime because it has already done so for most of human history. BTC is a comparative blip in the timeline.

        That, again, is a matter of opinion. Existing history + BitcoinUnderstanding is enough for some. It's enough for me.

        And I clearly said it's currently too small and volatile for most people in the sentence following where you chopped me off in your 'quote'.

        If you prefer to wait for a longer time period, maybe even one equivalent to 'human history' to gather sufficient data, that's your choice. Knock yourself out.

        If I'm looking for something to serve as a store of value I will indeed base my decision on whether that thing has a reasonable history of being a store of value, yes. Thanks for your approval.

        You're welcome :-)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 20, 2023, 04:54:50 AM
        Whether or not you think bitcoin is a waste of energy based on usefulness is one thing.

        What you can't argue though, is that bitcoin was literally designed to waste energy.  That's what proof of work is.  It requires the waste of energy to generate encrypted hex numbers - solving the hash.  Proof of work requires that nodes on a network provide evidence that they have wasted energy through expended computational power in order to achieve (theoretically) decentralized consensus.
        A blockchain reward goes to the winner.  The other nodes do not "provide evidence that they have wasted energy".  They lose silently, without providing any evidence they did so.  The energy did not get thrown away, as you keep claiming with the word "waste", but rather went to securing the blockchain.  Bitcoin mining has to run at scale, at full speed, to prevent any smaller set of computers from creating a fake blockchain.

        No, waste is an accurate word. Very close to 100% of the energy used by a CPU gets converted to heat. There's no physical end product coming out the end of a computer, just information. The heat generated is considered "waste heat" and it's a huge problem for data centers. A lot has gone into how to move all this waste heat, which is why large data centers are often located near bodies of cold water. Bitcoin's 95.5 TWh of energy consumption in 2022 pretty much all went up in heat. Physically speaking, it's no different than running a huge army of space heaters. Yes, it solved some math problems along the way and secured the block chain, but is that really worth the enormous energy expenditure?
        Which is more likely: cpus use 0% energy, or you're confused?

        https://forums.tomshardware.com/threads/what-is-the-average-cpu-power-effeciency.3548098/
        https://en.wikipedia.org/wiki/Thermal_design_power

        You do realize that the forum thread you posted proves my point, right?

        Quote
        CPUs are approximately 100% efficient at converting power to heat - practically every watt going under the IHS will ultimately come out as heat, though a small part of it will be dissipated by the PCB, traces and whatever is connected at the end of IO lanes.

        Unless the goal of Bitcoin is to be a giant distributed resistive heater, all the "efficient" heat is waste heat.

        You missed that poster being corrected:

        Quote
        You are confusing TDP with power
        ...
        I think you are mixing up TDP (Thermal Design Power ) with power usage (Watts).
        TDP is not a measure of power power consumption....even though TDP is correlated with power consumption. The more power CPU uses the higher the TDP.

        Quote
        Comparing the electrical and thermal energies doesn't tell you much either.
        Take a FX8350, probably 100W of electrical and thermal power output.
        Take an i5-3570k, probably 65W of electrical and maybe 90w of thermal power
        ...
        Comparing Electrical to thermal power ratings just tells electrically how efficient it is great if you are looking at a heater, but it could bare no relationship to it's computational effectiveness, it's more likely to tell you how they measure TDP.

        Cpus do not run on zero energy, nor do they generate free energy (65W vs 90W).  That's why I linked to the wikipedia entry for TDP, which also shows who was correct in that discussion.

        I did not address TDP because it's not relevant to this discussion. From the Wikipedia you linked:

        Quote
        The thermal design power (TDP), sometimes called thermal design point, is the maximum amount of heat generated by a computer chip or component (often a CPU, GPU or system on a chip) that the cooling system in a computer is designed to dissipate under any workload.

        TDP is about the capacity of cooling systems, and the maximum amount of heat they can remove to keep the CPU from overheating. I was being nice by skipping over this, because, frankly, it shows that you don't really know what you're talking about and are just grasping at whatever you can find online.

        The fact is, almost 100% of the electricity consumed by CPUs (and GPUs, most of this stuff is actually using GPU farms), ends up as waste heat.

        I spent a good amount of my career building large scale distributed systems at Google. I managed a service that ran on 100k CPU cores. TDP is absolutely essential because all those CPUs consume so much energy, and that energy ends up as heat. I became friends with a guy on the Google Bus who was a Thermal Engineer, and his entire job was designing industrial heat exchangers. Why did Google hire this guy and his team? Because some of our huge data centers were cooled by river water.

        So when I reference a BTC transaction consuming 703 kWh (estimates vary, so I picked on one the lower end), which you conveniently ignored, I'm talking actual power consumption by the BTC ecosystem, not the TDP. This is actual used energy per transaction, which is converted to heat and dissipated by individual cooling systems.
        Your anecdotal experience suggests you're more familiar with cpus and heat than I am, so do you have a high quality source stating that nearly 100% of electrical energy used by cpus is turned into heat?

        This thread began with GuitarStv's post and my reply, and was focused on the use of the word "waste" in reference to heat vs energy usage.  You did not "reference a BTC transaction consuming 703 kWh" in this series of replies.

        If your sole concern is proof of work and wasted energy, do you like Ethereum and dislike Bitcoin?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 20, 2023, 07:44:53 AM
        If your sole concern is proof of work and wasted energy, do you like Ethereum and dislike Bitcoin?

        PoS should be much less wasteful than PoW, which is designed to be wasteful.  It's a step in the right direction.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on November 20, 2023, 08:24:00 AM
        If your sole concern is proof of work and wasted energy, do you like Ethereum and dislike Bitcoin?

        PoS should be much less wasteful than PoW, which is designed to be wasteful.  It's a step in the right direction.

        I'll chime in here.  PoS are the actual scams, where you are purely exit liquidity for 'founders' who created the coin out of thin air at no cost to themselves, then pay a yield to the largest holders ie/ themselves.   Proof of work is what gives Bitcoin it's decentralization and value.  The largest holders are not the beneficiaries of the supply issue, those who do the work are.

        IMO energy usage for bitcoin is not 'wasted' energy, it is the goal of just about any industry to take input energy and turn it into economic value.  Bitcoin mining is driving forward cleaner and cheaper energy adoption and monetizing it.  Small countries with natural resources to develop like hydro and volcanic thermal energy will be able to use Bitcoin mining income to help pay for developing these energy sources for the benefit of their societies.  Making electricity in remote places is very inefficient, to get the electricity to where it's needed.  Think of Bitcoin as like a giant battery, you can turn energy into hard currency and then later use that currency as you see fit.  It's like finding oil or gold.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 20, 2023, 08:27:42 AM
        Think of Bitcoin as like a giant battery, you can turn energy into hard currency and then later use that currency as you see fit.  It's like finding oil or gold.

        What the actual fuck?

        Bitcoin is nothing like a giant battery.  The wasted energy from bitcoin is never recovered or available to do real work.  Assuming bitcoin even has value in the future the best you can hope for is to use it to pay someone to generate more energy in the future.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on November 20, 2023, 08:29:20 AM
        Think of Bitcoin as like a giant battery, you can turn energy into hard currency and then later use that currency as you see fit.  It's like finding oil or gold.

        What the actual fuck?

        Bitcoin is nothing like a giant battery.  The wasted energy from bitcoin is never recovered or available to do real work.  Assuming bitcoin even has value in the future the best you can hope for is to use it to pay someone to generate more energy in the future.

        Yep about the kind of response I figured I would get.  I'll be leaving now LMAO
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 20, 2023, 08:52:39 AM
        Your anecdotal experience suggests you're more familiar with cpus and heat than I am, so do you have a high quality source stating that nearly 100% of electrical energy used by cpus is turned into heat?

        How about the Laws of Physics, specifically the First Law of Thermodynamics (https://en.wikipedia.org/wiki/Laws_of_thermodynamics) and the conservation of energy (https://en.wikipedia.org/wiki/Conservation_of_energy). Energy can be converted to mass, and vice versa, but mass and energy as a whole cannot be created or destroyed. That is, energy and mass are conserved.

        A CPU has no moving parts (no kinetic energy). Nor does it store up energy for later use* (potential energy). It produces no sound (sound waves are really another kind of kinetic energy), nor does it produce any physical byproduct (mass).

        For the sake of simplicity, consider a computer with no fans or hard disk drives (the last vestiges of moving parts in modern computers). Install a Watt meter to measure energy consumption and run a computationally intensive task such as Bitcoin mining or benchmark test or whatever you prefer, and observe the Watt meter spike. Where did this energy go, since (as mentioned above) there are no moving parts, no battery, energy isn't somehow being recycled back to the grid, and no physical product is being produced, then it has to be asked... how is energy and mass conserved? The answer is waste heat.

        Or, as Scientific American puts it (https://blogs.scientificamerican.com/observations/why-do-computers-use-so-much-energy/):

        Quote
        There are several reasons, but one of the most important is that it is far cheaper to keep computer servers cool when they’re on the seafloor. This cooling is not a trivial expense. Precise estimates vary, but currently about 5 percent of all energy consumption in the U.S. goes just to running computers—a huge cost to the economy as whole. Moreover, all that energy used by those computers ultimately gets converted into heat. This results in a second cost: that of keeping the computers from melting.


        *While there may be some small capacitors and CMOS batteries, these have very little capacity and aren't storing up for later use.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 20, 2023, 09:16:16 AM
        Think of Bitcoin as like a giant battery, you can turn energy into hard currency and then later use that currency as you see fit.  It's like finding oil or gold.

        What the actual fuck?

        Bitcoin is nothing like a giant battery.  The wasted energy from bitcoin is never recovered or available to do real work.  Assuming bitcoin even has value in the future the best you can hope for is to use it to pay someone to generate more energy in the future.

        Yep about the kind of response I figured I would get.  I'll be leaving now LMAO

        TBH, I'm struggling a bit with the battery analogy.

        I agree with the benefit Bitcoin can bring to electricity generation in remote places. Bitcoin in this context is a Store of Value, and I think everyone here understands the concept of Store of Value - no analogy required.

        Maybe, to a less financially savvy audience, the analogy of a 'value battery' (as opposed to a conventional 'energy battery') might be helpful. Here on MMM, I think it confuses more than it clarifies - and invites (wilful?) misinterpretation.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on November 20, 2023, 11:00:40 AM
        Small countries with natural resources to develop like hydro and volcanic thermal energy will be able to use Bitcoin mining income to help pay for developing these energy sources for the benefit of their societies.  Making electricity in remote places is very inefficient, to get the electricity to where it's needed.  Think of Bitcoin as like a giant battery, you can turn energy into hard currency and then later use that currency as you see fit.  It's like finding oil or gold.

        The thing about Bitcoin is that it is always going to do something great...someday.   If this is a good idea, how come no one has done it?  And before you can say "El Salvador" they've only talked about doing it someday.

        I suspect the reason is that Bitcoin mining is a shit business.   US-based Bitcoin miners have lost epic amounts of money the last few years.   I'm not aware of any publicly traded US Bitcoin miners who are profitable.   Maybe the recent runup in prices will change that.   Regardless, it is at best a marginal business.   In the meantime, the miners are locked in a global arms race trying up their hashrates or be eliminated by somebody else who does.   All the while starting down the barrel of the halving.   
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Glenstache on November 20, 2023, 11:13:17 AM

        Small countries with natural resources to develop like hydro and volcanic thermal energy will be able to use Bitcoin mining income to help pay for developing these energy sources for the benefit of their societies.  Making electricity in remote places is very inefficient, to get the electricity to where it's needed.  Think of Bitcoin as like a giant battery, you can turn energy into hard currency and then later use that currency as you see fit.  It's like finding oil or gold.

        A less generous interpretation of the quote is that small countries can be exploited for BTC mining. Would they spend the money for excess energy or enough to support the mining CPUs? This is only castable as a public good once the energy is diverted from the BTC mining and assuming that the energy generation is constructed such that it does not cause other harms. How many people were displaced to build the hypothetical hydroelectric plant? What were the environmental controls on the drilling program and massive water use associated with the volcanic geothermal plant? I feel like we have heard this script before from the East India Company.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 20, 2023, 11:58:50 AM
        Small countries with natural resources to develop like hydro and volcanic thermal energy will be able to use Bitcoin mining income to help pay for developing these energy sources for the benefit of their societies.  Making electricity in remote places is very inefficient, to get the electricity to where it's needed.  Think of Bitcoin as like a giant battery, you can turn energy into hard currency and then later use that currency as you see fit.  It's like finding oil or gold.

        The thing about Bitcoin is that it is always going to do something great...someday.   If this is a good idea, how come no one has done it?  And before you can say "El Salvador" they've only talked about doing it someday.

        I suspect the reason is that Bitcoin mining is a shit business.   US-based Bitcoin miners have lost epic amounts of money the last few years.   I'm not aware of any publicly traded US Bitcoin miners who are profitable.   Maybe the recent runup in prices will change that.   Regardless, it is at best a marginal business.   In the meantime, the miners are locked in a global arms race trying up their hashrates or be eliminated by somebody else who does.   All the while starting down the barrel of the halving.

        It's, at least, started :  https://www.coindesk.com/consensus-magazine/2023/04/17/gridless-mining-extends-power-in-africa/ (https://www.coindesk.com/consensus-magazine/2023/04/17/gridless-mining-extends-power-in-africa/)

        But I guess, like everything else new, these things take time.


        As for general Bitcoin Mining: what you're describing is a free market, ie. a tough world where only the best, fittest and most efficient survive. That's a good thing - right ?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 20, 2023, 12:12:29 PM

        Small countries with natural resources to develop like hydro and volcanic thermal energy will be able to use Bitcoin mining income to help pay for developing these energy sources for the benefit of their societies.  Making electricity in remote places is very inefficient, to get the electricity to where it's needed.  Think of Bitcoin as like a giant battery, you can turn energy into hard currency and then later use that currency as you see fit.  It's like finding oil or gold.

        A less generous interpretation of the quote is that small countries can be exploited for BTC mining. Would they spend the money for excess energy or enough to support the mining CPUs? This is only castable as a public good once the energy is diverted from the BTC mining and assuming that the energy generation is constructed such that it does not cause other harms. How many people were displaced to build the hypothetical hydroelectric plant? What were the environmental controls on the drilling program and massive water use associated with the volcanic geothermal plant? I feel like we have heard this script before from the East India Company.

        A more generous interpretation of the quote is that small countries could benefit massively and experience immediate and everlasting prosperity, but groundless speculation has little value imo.

        Alternatively, we could look at what's actually proposed and is starting to happen - albeit in a small way to date.  https://www.coindesk.com/consensus-magazine/2023/04/17/gridless-mining-extends-power-in-africa/ (https://www.coindesk.com/consensus-magazine/2023/04/17/gridless-mining-extends-power-in-africa/)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on November 20, 2023, 01:43:20 PM
        The latest latecomers to Bitcoin will lose zero purchasing power in the act of transferring their fiat to Bitcoin. Example: You have $1M in 2030, and $1M could buy a Ferrari - you transfer it to Bitcoin - your Bitcoin will buy that same Ferrari (even if $1M = just 1BTC).
        You will have missed out on the purchasing power gains you could have made by buying that 1BTC today for $35k, but Bitcoin hasn't taken anything away from you. You just made a bad decision today.
        Of course, I could be wrong, it could all go to zero. In which case, you made a good decision today.

        If inflation/debasement continues to be a problem, your $1M (and equivalent BTC) might only buy a Prius in 2030. Again, Bitcoin hasn't taken anything away from you - the $ took it.

        So it's basically just a bet that this will happen, in this specific way, and you'd end up astronomically wealthy. While everyone else who do nothing just see no significant change, just switch to BTC when it happens. Well, then the worst case scenario doesn't really sound that bad to me. I think i'll take my chances (mostly because I think this is completely idiotic and will never happen, but even if it does; "eh, whatever").

        And more important; I obviously don't keep all my wealth in "debased fiat"! Duh, that's why we all here have stocks; the value will grow faster than inflation (what you call debasing..). So like your example I might have 1BTC worth today in stocks, and in the future when that 1BTC buy a ferrari, I might be able to sell the same number of stocks and buy the same ferrari. So what did I loose?! I don't see that being any less likely than the same trajectory for BTC (ok, I see it as more likely obvi, or I'd buy BTC as well..). So comparing BTC vs cash in the mattress is disingenuous; nobody is saying that won't loose value. Even the most finance illiterate person knows inflation exists (and then they buy gold..).

        You're saying: BTC value will grow faster than inflation, faster then the market, "everyone" will switch to crypto in the future (even though it's a huge PIA), AND; that crypto will be exactly the one you've put your value into, rather than the gazillion other shitcoins out there! Sorry, that seems like a really far-fetched bet, especially when as we discussed, worst case is you end up about the same as I would have anyway! There is extremally little reason to hoard BTC now! What about ether? or any of the others??
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 20, 2023, 04:45:26 PM
        The latest latecomers to Bitcoin will lose zero purchasing power in the act of transferring their fiat to Bitcoin. Example: You have $1M in 2030, and $1M could buy a Ferrari - you transfer it to Bitcoin - your Bitcoin will buy that same Ferrari (even if $1M = just 1BTC).
        You will have missed out on the purchasing power gains you could have made by buying that 1BTC today for $35k, but Bitcoin hasn't taken anything away from you. You just made a bad decision today.
        Of course, I could be wrong, it could all go to zero. In which case, you made a good decision today.

        If inflation/debasement continues to be a problem, your $1M (and equivalent BTC) might only buy a Prius in 2030. Again, Bitcoin hasn't taken anything away from you - the $ took it.

        So it's basically just a bet that this will happen, in this specific way, and you'd end up astronomically wealthy. While everyone else who do nothing just see no significant change, just switch to BTC when it happens. Well, then the worst case scenario doesn't really sound that bad to me. I think i'll take my chances (mostly because I think this is completely idiotic and will never happen, but even if it does; "eh, whatever").

        The first sentence, pretty much, yes. I should clarify that 'astronomical wealth' is not my main nor only objective. I believe that Bitcoin is a force for good, and fairness, and honesty - and I'm happy that every £GBP I transfer to BTC is pushing it forward a little more.

        I don't know why you say "everyone else" will "switch" "when it happens". I clearly described my expectation as a gradual transition, people gradually get on board, gradually allocate a little more to BTC, etc. I made no mention of "everyone" or a "switch" and I have no concept of a time "when it happens" -  it's been happening for years, it's happening now and I expect it to continue to happen for some considerable time.

        And more important; I obviously don't keep all my wealth in "debased fiat"! Duh, that's why we all here have stocks; the value will grow faster than inflation (what you call debasing..). So like your example I might have 1BTC worth today in stocks, and in the future when that 1BTC buy a ferrari, I might be able to sell the same number of stocks and buy the same ferrari. So what did I loose?! I don't see that being any less likely than the same trajectory for BTC (ok, I see it as more likely obvi, or I'd buy BTC as well..). So comparing BTC vs cash in the mattress is disingenuous; nobody is saying that won't loose value. Even the most finance illiterate person knows inflation exists (and then they buy gold..).

        Well yes, I get that of course - I was trying to be concise. The point was just that if the $ has less purchasing power in 2030, the value was lost to the $, and not lost to Bitcoin.
        I hope your confidence that stock values will grow faster than inflation comes good for you (and me).

        I refer to 'debasing' as that is the problem that Bitcoin addresses. Inflation isn't the root problem - it's a symptom. Also, inflation has other causes, eg. supply shortages, that Bitcoin does not address.

        You're saying: BTC value will grow faster than inflation, faster then the market, "everyone" will switch to crypto in the future (even though it's a huge PIA), AND; that crypto will be exactly the one you've put your value into, rather than the gazillion other shitcoins out there! Sorry, that seems like a really far-fetched bet, especially when as we discussed, worst case is you end up about the same as I would have anyway! There is extremally little reason to hoard BTC now! What about ether? or any of the others??

        My expectation is that Bitcoin will grow waaaay more than inflation and the market.
        No, again, I didn't say "everyone" and I don't know why you keep insisting on a "switch". See above.
        Bitcoin is very different. The briefest, generalised, approximate description of the difference = decentralised and network effect.
        "worst case is you end up about the same as I would have anyway!" ?  I don't know what this means.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 21, 2023, 07:22:50 AM
        If your sole concern is proof of work and wasted energy, do you like Ethereum and dislike Bitcoin?

        PoS should be much less wasteful than PoW, which is designed to be wasteful.  It's a step in the right direction.
        I'll chime in here.  PoS are the actual scams, where you are purely exit liquidity for 'founders' who created the coin out of thin air at no cost to themselves, then pay a yield to the largest holders ie/ themselves.   Proof of work is what gives Bitcoin it's decentralization and value.  The largest holders are not the beneficiaries of the supply issue, those who do the work are.
        Is Ethereum a scam because it uses proof of stake?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on November 21, 2023, 07:25:28 AM

        No, again, I didn't say "everyone" and I don't know why you keep insisting on a "switch". See above.
        Bitcoin is very different. The briefest, generalised, approximate description of the difference = decentralised and network effect.
        "worst case is you end up about the same as I would have anyway!" ?  I don't know what this means.

        I keep saying "everyone" because BTC will only increase (significantly) in value if enough/large number of people adopt it as means of exchange. I don't know what the number of people, or percentage is. And clearly BTC can incase in "value" to stupid levels despite this. But right now that is only a greater fool game, to have real value BTC has to be useful for something. Right now only being useful to buy heroin and receive ransomware extortion is not very applicable to the general populace.

        Agree my last sentence was poorly phrased. I think I meant worst case I end up about the same level of wealth I would have with stocks, I don't see that as a very high risk. Not enough to gamble on BTC.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on November 21, 2023, 07:36:06 AM
        If your sole concern is proof of work and wasted energy, do you like Ethereum and dislike Bitcoin?

        PoS should be much less wasteful than PoW, which is designed to be wasteful.  It's a step in the right direction.
        I'll chime in here.  PoS are the actual scams, where you are purely exit liquidity for 'founders' who created the coin out of thin air at no cost to themselves, then pay a yield to the largest holders ie/ themselves.   Proof of work is what gives Bitcoin it's decentralization and value.  The largest holders are not the beneficiaries of the supply issue, those who do the work are.
        Is Ethereum a scam because it uses proof of stake?

        Absolutely.  I think like ~70% was premined for Vitalik and his mates and now they changed it so the large holders get the lions share of the yield (ie/ themselves) instead of PoW miners.  And they get to do this under the guise of 'saving energy' LMAO.  Bitcoin is the only real asset IMO, apart from a select few other PoW projects the rest are fairly obvious grifts/scams created out of thin air to dump on retail for huge profit when the bull market comes around.

        Ethereum and all the other 'defi' chains like it are also the enabler coins that enable all the more obvious scams.  99% of defi I would say is ponzi schemes and scams for founders to dump on retail or rug pull them.  That said I have made a lot of money in defi the last few years LMAO.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 21, 2023, 08:23:18 AM
        Your anecdotal experience suggests you're more familiar with cpus and heat than I am, so do you have a high quality source stating that nearly 100% of electrical energy used by cpus is turned into heat?

        How about the Laws of Physics, specifically the First Law of Thermodynamics (https://en.wikipedia.org/wiki/Laws_of_thermodynamics) and the conservation of energy (https://en.wikipedia.org/wiki/Conservation_of_energy). Energy can be converted to mass, and vice versa, but mass and energy as a whole cannot be created or destroyed. That is, energy and mass are conserved.

        A CPU has no moving parts (no kinetic energy). Nor does it store up energy for later use* (potential energy). It produces no sound (sound waves are really another kind of kinetic energy), nor does it produce any physical byproduct (mass).

        For the sake of simplicity, consider a computer with no fans or hard disk drives (the last vestiges of moving parts in modern computers). Install a Watt meter to measure energy consumption and run a computationally intensive task such as Bitcoin mining or benchmark test or whatever you prefer, and observe the Watt meter spike. Where did this energy go, since (as mentioned above) there are no moving parts, no battery, energy isn't somehow being recycled back to the grid, and no physical product is being produced, then it has to be asked... how is energy and mass conserved? The answer is waste heat.
        A user named "FINate" on this forum isn't a "high quality source" for me.


        Or, as Scientific American puts it (https://blogs.scientificamerican.com/observations/why-do-computers-use-so-much-energy/):

        Quote
        There are several reasons, but one of the most important is that it is far cheaper to keep computer servers cool when they’re on the seafloor. This cooling is not a trivial expense. Precise estimates vary, but currently about 5 percent of all energy consumption in the U.S. goes just to running computers—a huge cost to the economy as whole. Moreover, all that energy used by those computers ultimately gets converted into heat. This results in a second cost: that of keeping the computers from melting.

        *While there may be some small capacitors and CMOS batteries, these have very little capacity and aren't storing up for later use.
        A random article from Scientific American might not be high quality source, but the author of that article is a subject expert.  I'm not sure why he needed to use the qualifier "ultimately" in that sentence, but he stated that the electrical energy all comes out as waste heat.  So you are right to say all energy from computers is emitted as heat - waste heat.

        "David Wolpert is resident faculty at the Santa Fe Institute where he uses nonequilibrium statistical physics to analyze the thermodynamics of computing systems."
        https://www.scientificamerican.com/author/david-wolpert/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 21, 2023, 08:45:18 AM
        Is Ethereum a scam because it uses proof of stake?
        Absolutely.  I think like ~70% was premined for Vitalik and his mates and now they changed it so the large holders get the lions share of the yield (ie/ themselves) instead of PoW miners.  And they get to do this under the guise of 'saving energy' LMAO.  Bitcoin is the only real asset IMO, apart from a select few other PoW projects the rest are fairly obvious grifts/scams created out of thin air to dump on retail for huge profit when the bull market comes around.

        Ethereum and all the other 'defi' chains like it are also the enabler coins that enable all the more obvious scams.  99% of defi I would say is ponzi schemes and scams for founders to dump on retail or rug pull them.  That said I have made a lot of money in defi the last few years LMAO.
        You need to be more specific.  Vitalik owns 0.2% of circulating Ethereum (0.284M out of 120.251M ETH), which I would not call "the lion's share" of anything, and you haven't specified who these "mates" are.
        https://coinpaper.com/2255/vitalik-buterin-net-worth-the-complete-breakdown-of-ethereum-founder-s-on-chain-holdings

        "guise of saving energy. LMAO" doesn't convince me of anything.  It's your opinion, not evidence of a scam.

        Do you blame the fake coin scammers, or the Ethereum blockchain they used?  By the same "token" (ha!), Bitcoin is responsible for ransomware attacks.  That said, I would agree with you Ethereum bears some responsibility for providing a platform on which other crypto currencies can be built.  But on the flip side, that also fosters innovation.

        I think crypto needs to be weighed on "market cap", the number of coins times their price (on publicly traded markets).  Some of the large successes of tokens based on Ethereum (like Axie Infinity) outweigh the tiny market caps of the many scam coins.
        https://www.coindesk.com/learn/which-crypto-projects-are-based-on-ethereum/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 21, 2023, 09:16:04 AM
        Your anecdotal experience suggests you're more familiar with cpus and heat than I am, so do you have a high quality source stating that nearly 100% of electrical energy used by cpus is turned into heat?

        How about the Laws of Physics, specifically the First Law of Thermodynamics (https://en.wikipedia.org/wiki/Laws_of_thermodynamics) and the conservation of energy (https://en.wikipedia.org/wiki/Conservation_of_energy). Energy can be converted to mass, and vice versa, but mass and energy as a whole cannot be created or destroyed. That is, energy and mass are conserved.

        A CPU has no moving parts (no kinetic energy). Nor does it store up energy for later use* (potential energy). It produces no sound (sound waves are really another kind of kinetic energy), nor does it produce any physical byproduct (mass).

        For the sake of simplicity, consider a computer with no fans or hard disk drives (the last vestiges of moving parts in modern computers). Install a Watt meter to measure energy consumption and run a computationally intensive task such as Bitcoin mining or benchmark test or whatever you prefer, and observe the Watt meter spike. Where did this energy go, since (as mentioned above) there are no moving parts, no battery, energy isn't somehow being recycled back to the grid, and no physical product is being produced, then it has to be asked... how is energy and mass conserved? The answer is waste heat.
        A user named "FINate" on this forum isn't a "high quality source" for me.


        Or, as Scientific American puts it (https://blogs.scientificamerican.com/observations/why-do-computers-use-so-much-energy/):

        Quote
        There are several reasons, but one of the most important is that it is far cheaper to keep computer servers cool when they’re on the seafloor. This cooling is not a trivial expense. Precise estimates vary, but currently about 5 percent of all energy consumption in the U.S. goes just to running computers—a huge cost to the economy as whole. Moreover, all that energy used by those computers ultimately gets converted into heat. This results in a second cost: that of keeping the computers from melting.

        *While there may be some small capacitors and CMOS batteries, these have very little capacity and aren't storing up for later use.
        A random article from Scientific American might not be high quality source, but the author of that article is a subject expert.  I'm not sure why he needed to use the qualifier "ultimately" in that sentence, but he stated that the electrical energy all comes out as waste heat.  So you are right to say all energy from computers is emitted as heat - waste heat.

        "David Wolpert is resident faculty at the Santa Fe Institute where he uses nonequilibrium statistical physics to analyze the thermodynamics of computing systems."
        https://www.scientificamerican.com/author/david-wolpert/

        I tried ¯\_(ツ)_/¯

        I didn't quote myself as an authority, but rather the laws of science. This is really basic stuff, covered in my high school physics class. I'm not going to waste my time and energy arguing about fundamental reality.

        If you're genuinely curious about the topic I recommend starting with some web searches, something like "do computers convert electricity to heat." You'll mostly find people weighing in (StackExchange, Quora, Reddit, etc.), so really a "wisdom of the crowds" thing, because there's no debate about the science.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 21, 2023, 09:50:07 AM

        No, again, I didn't say "everyone" and I don't know why you keep insisting on a "switch". See above.
        Bitcoin is very different. The briefest, generalised, approximate description of the difference = decentralised and network effect.
        "worst case is you end up about the same as I would have anyway!" ?  I don't know what this means.

        I keep saying "everyone" because . . .

        But you were supposedly 'quoting' my words back at me, so I corrected you - I did not say it.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on November 21, 2023, 11:16:28 AM

        No, again, I didn't say "everyone" and I don't know why you keep insisting on a "switch". See above.
        Bitcoin is very different. The briefest, generalised, approximate description of the difference = decentralised and network effect.
        "worst case is you end up about the same as I would have anyway!" ?  I don't know what this means.

        I keep saying "everyone" because . . .

        But you were supposedly 'quoting' my words back at me, so I corrected you - I did not say it.

        using "quotes" doesn't mean I quote you, that's
        Quote
        quote
        .

        That just means "air quotes", IE not actually. As in "value" of BTC, since it doesn't actually have any value, and using the phrase is stupid.
        "everyone", just means a lot of people adopts BTC (and it will finally be useful.). A number somewhere between laterally everyone, and a sufficiently high number that it makes BTC actually useful. Shortened to everyone in mocking quotes.. 

        See definition of "air quotes, capture it pretty well, though maybe I didn't use it 100% correctly every time;
        Quote
        indicate that what is being said is ironic or mocking,
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Glenstache on November 21, 2023, 01:28:46 PM

        I keep saying "everyone" because . . .

        But you were supposedly 'quoting' my words back at me, so I corrected you - I did not say it.

        using "quotes" doesn't mean I quote you, that's
        Quote
        quote
        .

        That just means "air quotes", IE not actually. As in "value" of BTC, since it doesn't actually have any value, and using the phrase is stupid.
        "everyone", just means a lot of people adopts BTC (and it will finally be useful.). A number somewhere between laterally everyone, and a sufficiently high number that it makes BTC actually useful. Shortened to everyone in mocking quotes.. 

        See definition of "air quotes, capture it pretty well, though maybe I didn't use it 100% correctly every time;
        Quote
        indicate that what is being said is ironic or mocking,

        When a conversation gets to this level of quoteback, it has usually run it's course.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on November 21, 2023, 01:56:59 PM



        I keep saying "everyone" because . . .

        But you were supposedly 'quoting' my words back at me, so I corrected you - I did not say it.

        using "quotes" doesn't mean I quote you, that's
        Quote
        quote
        .

        That just means "air quotes", IE not actually. As in "value" of BTC, since it doesn't actually have any value, and using the phrase is stupid.
        "everyone", just means a lot of people adopts BTC (and it will finally be useful.). A number somewhere between laterally everyone, and a sufficiently high number that it makes BTC actually useful. Shortened to everyone in mocking quotes.. 

        See definition of "air quotes, capture it pretty well, though maybe I didn't use it 100% correctly every time;
        Quote
        indicate that what is being said is ironic or mocking,

        When a conversation gets to this level of quoteback, it has usually run it's course.

        Definitely true. My post is clearly devoid of any value.

        I do appreciate that latestarter actually responds and explain their reasoning, it's interesting at least. And more than we usually get from crypto fans
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 21, 2023, 02:04:38 PM
        Remember when Binance was held up as one of the legitimate exchanges? Zhao pleads guilty to money laundering and will probably be fined somewhere around $50M. The government is going to regulate crypto into the shadows.

        https://www.cnbc.com/2023/11/21/binance-ceo-changpeng-zhao-to-plead-guilty-to-federal-charges-step-down.html (https://www.cnbc.com/2023/11/21/binance-ceo-changpeng-zhao-to-plead-guilty-to-federal-charges-step-down.html)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 21, 2023, 02:08:06 PM
        It turtles all the way down.




        But the turtles are fraud and environmental destruction.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: clifp on November 21, 2023, 02:42:47 PM
        To me the best reason to add crypto to your portfolio is it gives you an opportunity to patronize such fine, upstanding organizations as FTX and these folks.

        https://apnews.com/article/cryptocurrency-exchange-binance-justice-department-settlement-sec-8314e9697b98cfe3a9827c78e5720914,

        No mere 50 million dollar fine, no sir 4 BILLION dollars.  Couldn't happen to a nicer group of folks.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 21, 2023, 02:43:53 PM
        To me the best reason to add crypto to your portfolio is it gives you an opportunity to patronize such fine, upstanding organizations as FTX and these folks.

        https://apnews.com/article/cryptocurrency-exchange-binance-justice-department-settlement-sec-8314e9697b98cfe3a9827c78e5720914,

        No mere 50 million dollar fine, no sir 4 BILLION dollars.  Couldn't happen to a nicer group of folks.
        And where will they get those funds, other than from customers?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on November 21, 2023, 02:52:43 PM
        It turtles all the way down.




        But the turtles are fraud and environmental destruction.

        I agree, it's clearly the way of the future!
        It's not a shell game
        https://coinmarketcap.com/currencies/turtlecoin/

        Hey, at least it's stable now, at 3/1000 of a penny.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 21, 2023, 04:18:55 PM
        Remember when Binance was held up as one of the legitimate exchanges?

         . . .

        Not really, no. Held up by whom ?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Glenstache on November 21, 2023, 05:35:41 PM
        I do appreciate that latestarter actually responds and explain their reasoning, it's interesting at least. And more than we usually get from crypto fans

        Absolutely. I think the conversation has been really useful in increasing understanding, even if there was not convergene on agreement on adding a low % crypto allocation. The willingness to respond and provide info is why I like these forums. There is usually some pretty clever snark, which I have an artistic appreciation for.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 21, 2023, 07:03:16 PM
        I do appreciate that latestarter actually responds and explain their reasoning, it's interesting at least. And more than we usually get from crypto fans

        Absolutely. I think the conversation has been really useful in increasing understanding, even if there was not convergene on agreement on adding a low % crypto allocation. The willingness to respond and provide info is why I like these forums. There is usually some pretty clever snark, which I have an artistic appreciation for.

        Thanks, appreciated.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 22, 2023, 06:29:03 AM
        Your anecdotal experience suggests you're more familiar with cpus and heat than I am, so do you have a high quality source stating that nearly 100% of electrical energy used by cpus is turned into heat?

        How about the Laws of Physics, specifically the First Law of Thermodynamics (https://en.wikipedia.org/wiki/Laws_of_thermodynamics) and the conservation of energy (https://en.wikipedia.org/wiki/Conservation_of_energy). Energy can be converted to mass, and vice versa, but mass and energy as a whole cannot be created or destroyed. That is, energy and mass are conserved.

        A CPU has no moving parts (no kinetic energy). Nor does it store up energy for later use* (potential energy). It produces no sound (sound waves are really another kind of kinetic energy), nor does it produce any physical byproduct (mass).

        For the sake of simplicity, consider a computer with no fans or hard disk drives (the last vestiges of moving parts in modern computers). Install a Watt meter to measure energy consumption and run a computationally intensive task such as Bitcoin mining or benchmark test or whatever you prefer, and observe the Watt meter spike. Where did this energy go, since (as mentioned above) there are no moving parts, no battery, energy isn't somehow being recycled back to the grid, and no physical product is being produced, then it has to be asked... how is energy and mass conserved? The answer is waste heat.
        A user named "FINate" on this forum isn't a "high quality source" for me.


        Or, as Scientific American puts it (https://blogs.scientificamerican.com/observations/why-do-computers-use-so-much-energy/):

        Quote
        There are several reasons, but one of the most important is that it is far cheaper to keep computer servers cool when they’re on the seafloor. This cooling is not a trivial expense. Precise estimates vary, but currently about 5 percent of all energy consumption in the U.S. goes just to running computers—a huge cost to the economy as whole. Moreover, all that energy used by those computers ultimately gets converted into heat. This results in a second cost: that of keeping the computers from melting.

        *While there may be some small capacitors and CMOS batteries, these have very little capacity and aren't storing up for later use.
        A random article from Scientific American might not be high quality source, but the author of that article is a subject expert.  I'm not sure why he needed to use the qualifier "ultimately" in that sentence, but he stated that the electrical energy all comes out as waste heat.  So you are right to say all energy from computers is emitted as heat - waste heat.

        "David Wolpert is resident faculty at the Santa Fe Institute where he uses nonequilibrium statistical physics to analyze the thermodynamics of computing systems."
        https://www.scientificamerican.com/author/david-wolpert/

        I tried ¯\_(ツ)_/¯

        I didn't quote myself as an authority, but rather the laws of science. This is really basic stuff, covered in my high school physics class. I'm not going to waste my time and energy arguing about fundamental reality.

        If you're genuinely curious about the topic I recommend starting with some web searches, something like "do computers convert electricity to heat." You'll mostly find people weighing in (StackExchange, Quora, Reddit, etc.), so really a "wisdom of the crowds" thing, because there's no debate about the science.
        I think you missed my second paragraph, specifically this quote:
        "So you are right to say all energy from computers is emitted as heat - waste heat."
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 22, 2023, 06:45:02 AM
        Remember when Binance was held up as one of the legitimate exchanges? Zhao pleads guilty to money laundering and will probably be fined somewhere around $50M. The government is going to regulate crypto into the shadows.

        https://www.cnbc.com/2023/11/21/binance-ceo-changpeng-zhao-to-plead-guilty-to-federal-charges-step-down.html (https://www.cnbc.com/2023/11/21/binance-ceo-changpeng-zhao-to-plead-guilty-to-federal-charges-step-down.html)
        A decade ago, was the government trying to regulate traditional finance into the shadows?  BNP Paribas was fined $9 billion in 2014, which would be closer to $12 billion in today's dollars.

        Quote
        HSBC's case was symptomatic of a decade in which major players in the international banking community were fined significantly for processing illegal transactions for criminal enterprises and sanctioned governments, including Cuba, Iran, Sudan, and Syria. Credit Suisse settled for $536 million in 2009; Barclays agreed to pay $298 million in 2010; ING was fined $619 million in 2012; Standard Chartered was fined $330 million in 2012 (and another $1.1 billion in 2019); BNP Paribas was fined $8.9 billion in 2014; and Deutsche Bank paid $258 million in 2015. Each fine was for abetting illegal transactions with countries such as Iran and Libya, blatantly disregarding the Office of Foreign Asset Control (OFAC) guidelines.
        https://www.investopedia.com/stock-analysis/2013/investing-news-for-jan-29-hsbcs-money-laundering-scandal-hbc-scbff-ing-cs-rbs0129.aspx
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 22, 2023, 07:18:24 AM
        Remember when Binance was held up as one of the legitimate exchanges? Zhao pleads guilty to money laundering and will probably be fined somewhere around $50M. The government is going to regulate crypto into the shadows.

        https://www.cnbc.com/2023/11/21/binance-ceo-changpeng-zhao-to-plead-guilty-to-federal-charges-step-down.html (https://www.cnbc.com/2023/11/21/binance-ceo-changpeng-zhao-to-plead-guilty-to-federal-charges-step-down.html)
        I suppose my point is this: Where is a legitimate, law-abiding way to trade or transact in cryptocurrency? What is the advice for a noob who is interested in buying their first whatevercoin? Our prospective noob doesn't want to do a google search and find some fly-by-night operation that's going to disappear with their money. They want a mainstream firm that follows applicable laws. PayPal?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 22, 2023, 08:16:52 AM
        Coinbase.

        Higher fees, but incorporated in the USA, based in the USA, and regulated in the USA. Eleven year history, which counts as ancient in the crypto world.*

        And to pre-empt the obvious report, yes the SEC has sued Coinbase. The lawsuit is about which crypto tokens count as securities and which don't. Based on the recent outcome of the Ripple case, it seems likely, though not certain, the SEC is on the losing end of developing case law and precedent here. If the SEC does wins, Coinbase will have to pay a settlement, which will hurt their profits. Just like when the SEC wins a lawsuit against any major bank, hedge fund, or other company.

        No allegations of misuse of customer funds. No complex derivatives markets. No issues with the DoJ.

        *For context, FTX went from founding to bankruptcy in just over three years. Mt. Gox lasted roughly 4.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 22, 2023, 08:21:35 AM
        Coinbase?  The money launderers?

        https://www.theverge.com/2023/1/4/23538731/coinbase-fine-crypto-money-laundering-laws-new-york (https://www.theverge.com/2023/1/4/23538731/coinbase-fine-crypto-money-laundering-laws-new-york)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on November 22, 2023, 10:07:07 AM



        I keep saying "everyone" because . . .

        But you were supposedly 'quoting' my words back at me, so I corrected you - I did not say it.

        using "quotes" doesn't mean I quote you, that's
        Quote
        quote
        .

        That just means "air quotes", IE not actually. As in "value" of BTC, since it doesn't actually have any value, and using the phrase is stupid.
        "everyone", just means a lot of people adopts BTC (and it will finally be useful.). A number somewhere between laterally everyone, and a sufficiently high number that it makes BTC actually useful. Shortened to everyone in mocking quotes.. 

        See definition of "air quotes, capture it pretty well, though maybe I didn't use it 100% correctly every time;
        Quote
        indicate that what is being said is ironic or mocking,

        When a conversation gets to this level of quoteback, it has usually run it's course.

        Definitely true. My post is clearly devoid of any value.

        I do appreciate that latestarter actually responds and explain their reasoning, it's interesting at least. And more than we usually get from crypto fans

        +1
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 23, 2023, 06:29:25 AM
        Coinbase?  The money launderers?

        https://www.theverge.com/2023/1/4/23538731/coinbase-fine-crypto-money-laundering-laws-new-york (https://www.theverge.com/2023/1/4/23538731/coinbase-fine-crypto-money-laundering-laws-new-york)
        Preventing thefts and stealing are two different things.

        Quote
        New York regulators found that Coinbase had “wide-ranging and long-standing failures” in the company’s anti-money laundering program, potentially putting the platform at risk of “series criminal conduct” ...
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 23, 2023, 07:51:17 AM
        Coinbase?  The money launderers?

        https://www.theverge.com/2023/1/4/23538731/coinbase-fine-crypto-money-laundering-laws-new-york (https://www.theverge.com/2023/1/4/23538731/coinbase-fine-crypto-money-laundering-laws-new-york)
        Preventing thefts and stealing are two different things.

        Quote
        New York regulators found that Coinbase had “wide-ranging and long-standing failures” in the company’s anti-money laundering program, potentially putting the platform at risk of “series criminal conduct” ...

        Money laundering isn't theft.  It's the concealment of the origins of illegally obtained money.  If they're not following the rules to check if the money they're dealing with is legally obtained, they're behaving in an ethically dubious manner that puts their entire legitimate arm of the business at risk.  That's why they agreed to pay the 50 million dollar penalty for not following money laundering laws.

        Doesn't speak well for the whole industry if that's the least shady and most law abiding crypto exchange you can come up with.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 24, 2023, 07:29:19 PM
        Coinbase?  The money launderers?

        https://www.theverge.com/2023/1/4/23538731/coinbase-fine-crypto-money-laundering-laws-new-york (https://www.theverge.com/2023/1/4/23538731/coinbase-fine-crypto-money-laundering-laws-new-york)
        Preventing thefts and stealing are two different things.

        Quote
        New York regulators found that Coinbase had “wide-ranging and long-standing failures” in the company’s anti-money laundering program, potentially putting the platform at risk of “series criminal conduct” ...

        Money laundering isn't theft.  It's the concealment of the origins of illegally obtained money.  If they're not following the rules to check if the money they're dealing with is legally obtained, they're behaving in an ethically dubious manner that puts their entire legitimate arm of the business at risk.  That's why they agreed to pay the 50 million dollar penalty for not following money laundering laws.

        Doesn't speak well for the whole industry if that's the least shady and most law abiding crypto exchange you can come up with.
        Above you falsely called them "money launderers", and here you're clarifying the penalty was "for not following money laundering laws", which was the point of my metaphor.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 24, 2023, 07:39:59 PM
        Doesn't speak well for the whole industry if that's the least shady and most law abiding crypto exchange you can come up with.

        Let's start working down the list of the biggest banks in North America.

        USA:
        #1 Chase. https://www.justice.gov/opa/pr/jpmorgan-chase-co-agrees-pay-920-million-connection-schemes-defraud-precious-metals-and-us
        #2 Bank of America https://www.justice.gov/opa/pr/bank-america-pay-1665-billion-historic-justice-department-settlement-financial-fraud-leading
        #3 Citibank https://www.reuters.com/article/us-citigroup-fine/citibank-fined-70-million-for-anti-money-laundering-compliance-shortcomings-idUSKBN1ET25A/
        And so on.

        Canada:
        #1 RBC https://financialpost.com/news/fp-street/royal-bank-of-canada-bahamas-unit-faulted-in-probe-of-tax-fraud-money-laundering
        #2 TB Bank https://www.reuters.com/business/finance/td-expects-penalties-us-probes-money-laundering-2023-08-24/
        #3 Bank of Nova Scotia https://www.justice.gov/opa/pr/bank-nova-scotia-agrees-pay-604-million-connection-commodities-price-manipulation-scheme
        And so on.

        If the worst you can say about coinbase is that they've had to pay a fine to regulators (like almost any bank of any significant size), that's sounds like pretty good news to me.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 24, 2023, 08:25:09 PM
        Doesn't speak well for the whole industry if that's the least shady and most law abiding crypto exchange you can come up with.

        Let's start working down the list of the biggest banks in North America.

        USA:
        #1 Chase. https://www.justice.gov/opa/pr/jpmorgan-chase-co-agrees-pay-920-million-connection-schemes-defraud-precious-metals-and-us
        #2 Bank of America https://www.justice.gov/opa/pr/bank-america-pay-1665-billion-historic-justice-department-settlement-financial-fraud-leading
        #3 Citibank https://www.reuters.com/article/us-citigroup-fine/citibank-fined-70-million-for-anti-money-laundering-compliance-shortcomings-idUSKBN1ET25A/
        And so on.

        Canada:
        #1 RBC https://financialpost.com/news/fp-street/royal-bank-of-canada-bahamas-unit-faulted-in-probe-of-tax-fraud-money-laundering
        #2 TB Bank https://www.reuters.com/business/finance/td-expects-penalties-us-probes-money-laundering-2023-08-24/
        #3 Bank of Nova Scotia https://www.justice.gov/opa/pr/bank-nova-scotia-agrees-pay-604-million-connection-commodities-price-manipulation-scheme
        And so on.

        If the worst you can say about coinbase is that they've had to pay a fine to regulators (like almost any bank of any significant size), that's sounds like pretty good news to me.

        Fair point!  Banks are apparently pretty shady businesses.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 25, 2023, 03:24:24 PM
        "Bitcoin/PoW is designed to waste energy" ??

        The problem with this statement is:
           (i) it is ambiguous - it conflates the objective and the method.
           (ii) it takes zero account of output value, so it conflates 'consume' and 'waste'.

        The objective of Bitcoin/PoW is decentralised and secure digital property = true.
        The method of Bitcoin/PoW consumes a lot of energy = true.

        Does consume = waste ?

         All energy consumption includes wasting energy = uninteresting truism.
          Breathing wastes energy but breathing is clearly not 'a waste of energy'.
          The only interesting question is whether something is 'a waste of energy'.

         'a waste of energy' = total input energy > output value   (and output value is subjective)
          Bitcoin is ‘a waste of energy' if you don't, subjectively, value Bitcoin = another uninteresting truism.

         'a waste of energy' = using methodA instead of equally effective and more energy-efficient methodB.
         
          Is Proof of Stake an equally effective and more energy-efficient method than PoW ?
           No. PoS is not equally effective at all. PoS is not decentralised. PoS requires trust in the big stakeholders, and they can't be deposed by the masses. Jason Lowery (https://www.youtube.com/watch?v=ikPnr23h7qg) provides a good explanation of PoW vs PoS from first principles.
           Proof of Work is the only effective method we have for 'decentralised and secure' digital property.

          Is Visa an equally effective and more energy-efficient solution than Bitcoin ?
           No. Visa is in no way equivalent to Bitcoin. Bitcoin is final settlement vs Visa's entries on temporary ledgers. Moreover, Bitcoin is a standalone system vs Visa's multitude of dependencies on other systems.
           In just security terms, Visa is like a Post-It note with your name on it stuck to a dollar bill. That's only secure if it's in a safe that's in a vault that's in a trusted bank that's in a well-policed neighbourhood that's in a nation that's protected by a legal system that's supported by a government that's protected by a powerful military, etc. - and all those dependencies consume a vast amount of energy. Bitcoin is independent of all of that.


        "But it still seems so wasteful. All those TWh consumed making pointless guesses at a pointless solution to some pointless problem!"
        It can seem wasteful to a casual observer as the outcome is invisible and intangible. The outcome, and the whole point of PoW, is a 'wall of energy' behind which Bitcoin is secure. It, necessarily, requires substantial energy to create a substantial 'wall of energy'. Every one of those 'pointless' guesses is like a brick in Bitcoin's version of a Fort Knox wall.

        Bitcoin's 'wall of energy' is directly equivalent to the Fort Knox 'walls of energy'.
        Both, necessarily, cost a significant amount of energy to build and maintain.
        Breaching either would, necessarily, require a (generally, prohibitively) significant amount of energy.

        There is no low-energy security solution that will reliably protect from high-energy attacks.
        There is a reason why Fort Knox walls aren't low-energy fences.
        There is a reason why Bitcoin isn't low-energy Proof of Stake.
        It's the same reason.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: deborah on November 25, 2023, 04:22:38 PM
        The main issue for me is that cryptocurrencies, because of the way they’re designed (not tied to any particular country, anyone can create them…), are extremely attractive to criminals and rogue states. North Korea has stolen millions of dollars in normal currency, and several billions of dollars in cryptocurrency, because it’s easier, and less traceable. The spread of fentanyl is being enhanced by the use of cryptocurrencies by the criminals and governments concerned.

        They are also designed to consume enormous amounts of energy in their creation, and since this is mainly not renewable energy (partly because rogue states are creating a lot), it generates a lot of CO2 emissions.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 25, 2023, 08:49:21 PM
        @LateStarter - Fair point about "proof of stake" making control of Ethereum centralized.  In the past, the entire Bitcoin Core Team worked for the same start-up company that was developing the Lightning Network.  Having that group's salaries controlled by one CEO seems centralized to me.  Expanding the block size could have made their work less relevant, so all of them were opposed to it.  Seeing the alignment of their personal incentives and what they decided for Bitcoin gave me the impression of centralized group think for Bitcoin development.  I'm open to contrary evidence.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 25, 2023, 09:00:12 PM
        There's several news articles about North Korea's criminal activity via Bitcoin.  Of the largest cyrpto exchanges, Binance international and Binance U.S. both make the top five.  They recently got fined for a lack of anti-money laundering practices by the SEC, with other government agencies being part of this settlement:
        https://www.justice.gov/opa/pr/binance-and-ceo-plead-guilty-federal-charges-4b-resolution

        Just this week, the SEC announced it was going after Kraken (#3 exchange) for being unregistered.  No mention of anti-money laundering, which I think was dealt with in a prior settlement.
        https://www.sec.gov/news/press-release/2023-237

        North Korea's thefts via crypto is a problem.  The trend I see is new anti-money laundering practices at the largest crypto exchanges, which will make it harder for North Korea to launder stolen crypto.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on November 25, 2023, 11:51:17 PM
          Is Visa an equally effective and more energy-efficient solution than Bitcoin ?
           No. Visa is in no way equivalent to Bitcoin. Bitcoin is final settlement vs Visa's entries on temporary ledgers. Moreover, Bitcoin is a standalone system vs Visa's multitude of dependencies on other systems.
           In just security terms, Visa is like a Post-It note with your name on it stuck to a dollar bill. That's only secure if it's in a safe that's in a vault that's in a trusted bank that's in a well-policed neighbourhood that's in a nation that's protected by a legal system that's supported by a government that's protected by a powerful military, etc. - and all those dependencies consume a vast amount of energy. Bitcoin is independent of all of that.

        You've brought up this point a few times now and I just have to say it's extremely unpersuasive. Yes, it's true that most of our global financial system is secured not just by computers and cryptography, but also by piles of contracts and regulations and national governments that have the power to enforce such things. Governments use a lot of energy, yes, but it's disingenuous to suggest that dividing this energy usage by the number of Visa transactions is at all a relevant comparison with Bitcoin. Governments predate electronic banking, and securing the modern banking system is but one of the many purposes for which we have a military and court system and all the other government functions.

        You know what else is facilitated by our existing set of strong governments? The international telecommunications network (aka "internet") that transmits blockchain transactions around the world, as well as the data centers and power plants that do most of the mining. Hard to make a Bitcoin mining operation price-competitive in a country where reliable network connections and power supply can't be counted on and you need to build all that from scratch before you can run your first hash.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 26, 2023, 07:17:15 AM
          Is Visa an equally effective and more energy-efficient solution than Bitcoin ?
           No. Visa is in no way equivalent to Bitcoin. Bitcoin is final settlement vs Visa's entries on temporary ledgers. Moreover, Bitcoin is a standalone system vs Visa's multitude of dependencies on other systems.
           In just security terms, Visa is like a Post-It note with your name on it stuck to a dollar bill. That's only secure if it's in a safe that's in a vault that's in a trusted bank that's in a well-policed neighbourhood that's in a nation that's protected by a legal system that's supported by a government that's protected by a powerful military, etc. - and all those dependencies consume a vast amount of energy. Bitcoin is independent of all of that.

        You've brought up this point a few times now and I just have to say it's extremely unpersuasive. Yes, it's true that most of our global financial system is secured not just by computers and cryptography, but also by piles of contracts and regulations and national governments that have the power to enforce such things. Governments use a lot of energy, yes, but it's disingenuous to suggest that dividing this energy usage by the number of Visa transactions is at all a relevant comparison with Bitcoin. Governments predate electronic banking, and securing the modern banking system is but one of the many purposes for which we have a military and court system and all the other government functions.

        I'm, of course, not suggesting that the entire costs/energies of safes and vaults and banks and policing and legal and governments and militarys should be applied to Visa. However, Visa is built on top of all those things and is dependent on all those things - all those things use vast energies and we all pay handsomely for them through other channels. It is disingenuous to compare Bitcoin with Visa without considering a (probably incalculable) proportion of all those significant additional costs/energies.

        The main point is that Bitcoin and Visa are very different animals - comparison is mostly pointless and meaningless.
        A Lightning transaction is a reasonable comparison to a Visa transaction. Like Visa, Lightning is not final settlement and it's dependent on a big supporting infrastructure. Like Visa, Lightning is the tip of an iceberg.

        You know what else is facilitated by our existing set of strong governments? The international telecommunications network (aka "internet") that transmits blockchain transactions around the world, as well as the data centers and power plants that do most of the mining. Hard to make a Bitcoin mining operation price-competitive in a country where reliable network connections and power supply can't be counted on and you need to build all that from scratch before you can run your first hash.

        Bitcoin is 'dependent' on internet and energy supplies but it's extremely flexible and agnostic about where it finds them. Bitcoin is not dependent on any specific corner of the internet, nor any specific power plant, nor any country/government, etc. Micro-generation and Starlink, etc. are all increasingly available and further decentralise Bitcoin's infrastructure dependencies.

        I'm not claiming that Bitcoin is entirely independent of infrastructure but it's dependencies are in no way comparable with those of Visa.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 26, 2023, 09:24:00 AM
        @LateStarter - Fair point about "proof of stake" making control of Ethereum centralized.  In the past, the entire Bitcoin Core Team worked for the same start-up company that was developing the Lightning Network.  Having that group's salaries controlled by one CEO seems centralized to me.  Expanding the block size could have made their work less relevant, so all of them were opposed to it.  Seeing the alignment of their personal incentives and what they decided for Bitcoin gave me the impression of centralized group think for Bitcoin development.  I'm open to contrary evidence.

        The block size war was before my time - I'm a relative newcomer. I don't know who comprised the core team then but I know it's pretty diverse now.

        My understanding is that the drive for retaining small blocks was that small blocks are easy for a cheap node to manage = more nodes = more decentralisation. This is a key aspect of Bitcoin and it's something that Bitcoiners value highly. Thus, Lightning was developed (by small block supporters) to permit the required increased transactions, albeit offchain, while retaining small blocks. This all makes good sense to me.
        I hadn't heard the version where small nodes were retained just to protect Lightning - in effect, hobbling Bitcoin against it's better interests for no good reason other than to defend their pet Lightning project. It's not impossible, but it seems a bit of a stretch to me.
        On balance, the first version makes waaay more sense to me, though I concede that it's also what I would like to be true.

        Ultimately though, whilst a few core developers are undoubtedly influential, it is the many miners and nodes that vote and decide what code/fork/parameters prevail - that's the point. And anyone with a little interest can set up a node and vote. If the majority miners/nodes want small blocks, then small blocks it is - developers be damned. The big block solutions are out there for anyone that wants to participate and promote them but, so far, they're a bit of a sideshow.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on November 26, 2023, 11:58:26 AM
        I'm, of course, not suggesting that the entire costs/energies of safes and vaults and banks and policing and legal and governments and militarys should be applied to Visa. However, Visa is built on top of all those things and is dependent on all those things - all those things use vast energies and we all pay handsomely for them through other channels. It is disingenuous to compare Bitcoin with Visa without considering a (probably incalculable) proportion of all those significant additional costs/energies.

        Another way to look at it is that a stable government with a military strong enough to repel most foreseeable invasions is something most people would want to have even if our financial transactions were still settled by transporting bits of silver and gold around. Once you have a stable government, the ability to have secure electronic financial transactions without using a large city's worth of electricity seeking the lucky hash of the hour is one of many things we get "for free."

        So...the question of whether the Bitcoin energy consumption is a "waste" or not comes down to whether you believe we can count on having a reasonably stable government to live under. If we can, then all that hashing is unnecessary and you can use the lower-energy systems that a stable government enables.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on November 26, 2023, 01:53:52 PM
        So...the question of whether the Bitcoin energy consumption is a "waste" or not comes down to whether you believe we can count on having a reasonably stable government to live under. If we can, then all that hashing is unnecessary and you can use the lower-energy systems that a stable government enables.

        This is very well put.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 26, 2023, 03:52:42 PM
        I'm, of course, not suggesting that the entire costs/energies of safes and vaults and banks and policing and legal and governments and militarys should be applied to Visa. However, Visa is built on top of all those things and is dependent on all those things - all those things use vast energies and we all pay handsomely for them through other channels. It is disingenuous to compare Bitcoin with Visa without considering a (probably incalculable) proportion of all those significant additional costs/energies.

        Another way to look at it is that a stable government with a military strong enough to repel most foreseeable invasions is something most people would want to have even if our financial transactions were still settled by transporting bits of silver and gold around. Once you have a stable government, the ability to have secure electronic financial transactions without using a large city's worth of electricity seeking the lucky hash of the hour is one of many things we get "for free."

        So...the question of whether the Bitcoin energy consumption is a "waste" or not comes down to whether you believe we can count on having a reasonably stable government to live under. If we can, then all that hashing is unnecessary and you can use the lower-energy systems that a stable government enables.

        What??  You're missing the point by a country mile if you think the objective is 'a reasonably stable government to live under'.
        The objective is to have an independent, decentralised, uncensorable, immutable, hard money, etc. etc. - a money that can't be debased at will by Govs and Central Banks.

        That has significant value to me, so Bitcoin is absolutely not 'a waste of energy' in my view.

        We're back to my main point that; with regard to energy & waste, the only interesting question is whether or not Bitcoin is 'a waste of energy', and the answer is subjective.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on November 26, 2023, 04:40:44 PM
        I'm, of course, not suggesting that the entire costs/energies of safes and vaults and banks and policing and legal and governments and militarys should be applied to Visa. However, Visa is built on top of all those things and is dependent on all those things - all those things use vast energies and we all pay handsomely for them through other channels. It is disingenuous to compare Bitcoin with Visa without considering a (probably incalculable) proportion of all those significant additional costs/energies.

        Another way to look at it is that a stable government with a military strong enough to repel most foreseeable invasions is something most people would want to have even if our financial transactions were still settled by transporting bits of silver and gold around. Once you have a stable government, the ability to have secure electronic financial transactions without using a large city's worth of electricity seeking the lucky hash of the hour is one of many things we get "for free."

        So...the question of whether the Bitcoin energy consumption is a "waste" or not comes down to whether you believe we can count on having a reasonably stable government to live under. If we can, then all that hashing is unnecessary and you can use the lower-energy systems that a stable government enables.

        What??  You're missing the point by a country mile if you think the objective is 'a reasonably stable government to live under'.

        The objective is to have a way to conduct business electronically. If you can assume a stable government to enforce various contracts and regulations, you end up with a group of centralized payment processors like Visa that just have numbers in a database on the backend and aren't dragged down by all the computational overhead inherent in a decentralized solution. If you don't assume your government will enforce the agreements surrounding the transactions you want to make, you'll end up with something more like Bitcoin. Decentralization is less efficient than centralization and should therefore not be expected to come into common use except for cases where a centralized solution is inadequate or unavailable.

        Quote
        The objective is to have an independent, decentralised, uncensorable, immutable, hard money, etc. etc. - a money that can't be debased at will by Govs and Central Banks.

        That may be an objective that you have, but most people don't care. They'll pay for their everyday goods using the most convenient method available to them. And for the millionth time, "debasement" of currency (inflation) may be a reason not to hold piles of that currency as a long-term investment, but it isn't sufficient reason to avoid using that currency as a unit of exchange or unit of account. For those things you want to have the value of the currency you're using to be predictable over the short to medium term. Whether that value is predictably trending lower or staying flat is a secondary concern.

        Quote
        We're back to my main point that; with regard to energy & waste, the only interesting question is whether or not Bitcoin is 'a waste of energy', and the answer is subjective.

        And my point is that the subjectivity mostly resolves to the question of how much you think the existing centralized solutions can be relied upon (i.e. how stable is the government). A less-efficient alternative system is only valuable to the extent that it is actually necessary. For most of us, it just isn't.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 26, 2023, 05:11:49 PM
        Since bitcoin is useless in practice as a currency, and nearly every transaction needs to be transformed back into real money . . . the full energy costs of the banking system are required in addition to hashing costs to support it.  Comparing bitcoin energy costs without them is nonsensical.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 26, 2023, 05:35:28 PM
        I'm, of course, not suggesting that the entire costs/energies of safes and vaults and banks and policing and legal and governments and militarys should be applied to Visa. However, Visa is built on top of all those things and is dependent on all those things - all those things use vast energies and we all pay handsomely for them through other channels. It is disingenuous to compare Bitcoin with Visa without considering a (probably incalculable) proportion of all those significant additional costs/energies.

        Another way to look at it is that a stable government with a military strong enough to repel most foreseeable invasions is something most people would want to have even if our financial transactions were still settled by transporting bits of silver and gold around. Once you have a stable government, the ability to have secure electronic financial transactions without using a large city's worth of electricity seeking the lucky hash of the hour is one of many things we get "for free."

        So...the question of whether the Bitcoin energy consumption is a "waste" or not comes down to whether you believe we can count on having a reasonably stable government to live under. If we can, then all that hashing is unnecessary and you can use the lower-energy systems that a stable government enables.

        What??  You're missing the point by a country mile if you think the objective is 'a reasonably stable government to live under'.

        The objective is to have a way to conduct business electronically. If you can assume a stable government to enforce various contracts and regulations, you end up with a group of centralized payment processors like Visa that just have numbers in a database on the backend and aren't dragged down by all the computational overhead inherent in a decentralized solution. If you don't assume your government will enforce the agreements surrounding the transactions you want to make, you'll end up with something more like Bitcoin. Decentralization is less efficient than centralization and should therefore not be expected to come into common use except for cases where a centralized solution is inadequate or unavailable.

        Quote
        The objective is to have an independent, decentralised, uncensorable, immutable, hard money, etc. etc. - a money that can't be debased at will by Govs and Central Banks.

        That may be an objective that you have, but most people don't care. They'll pay for their everyday goods using the most convenient method available to them. And for the millionth time, "debasement" of currency (inflation) may be a reason not to hold piles of that currency as a long-term investment, but it isn't sufficient reason to avoid using that currency as a unit of exchange or unit of account. For those things you want to have the value of the currency you're using to be predictable over the short to medium term. Whether that value is predictably trending lower or staying flat is a secondary concern.

        Quote
        We're back to my main point that; with regard to energy & waste, the only interesting question is whether or not Bitcoin is 'a waste of energy', and the answer is subjective.

        And my point is that the subjectivity mostly resolves to the question of how much you think the existing centralized solutions can be relied upon (i.e. how stable is the government). A less-efficient alternative system is only valuable to the extent that it is actually necessary. For most of us, it just isn't.

        But we're just back to discussing Means of Exchange as if it's all-important again. It's not an issue and is not the use-case for us wealthy fortunates in stable nations. I was only drawn into it to dispute the Visa-energy comparison.
        In any case, if/when Bitcoin as everyday MoE does become a thing, it will not be high-energy onChain Bitcoin - it will be on low-energy Lightning or similar.
        I watch the MoE developments in the tougher parts of the world with great interest, but it's of very little direct interest to me - and I wouldn't expect it be of much interest to you either. I spend GBP via Visa & Mastercard all the time without much concern.

        The issue, for me, is that fiat debasement forces us all to take risks with our hard-earned capital in an effort to retain our purchasing power. I've got some in Index Funds, just like a good Mustachian - it's, at best, a sticking plaster solution. I've also got some in Bitcoin - it's potentially a cure.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 26, 2023, 11:55:15 PM
        The Lightning Network isn't Bitcoin.  As mentioned, proof of work secures the Bitcoin Blockchain.  If Ethereum's flaw is not using proof of work, doesn't that mean the Lightning Network is flawed by not using proof of work?

        As to the block size debate, Bitcoin hobbled itself with small block sizes, and Bitcoin Core Developers did nothing to change it.  When the developers all joined the company making the Lightning Network, that became a conflict of interest.  Their pre-IPO stock options and salaries came from one company, which directly benefits from a lack of progress on Bitcoin's block size.  For different reasons, miners benefit: limited transactions means a bidding war, with the transaction fees all going to the miner of the next block.  If users don't like it... well, they still need a transaction to sell their Bitcoin.

        In practical terms, the Lightning Network carries 0.0% of the transaction volume of Bitcoin.  $78.2M in August means $2.52 million/day.
        "In August 2023, Lightning Network processed a transaction volume of $78.2 million"

        Bitcoin's blockchain is measured in billions per day.  Much like crypto itself, Lightning Network represents a potential technology that has not proven itself yet.
        "Bitcoins sent last 24h 193,820 BTC ($7,238,880,278) 0.9912% market cap
        https://bitinfocharts.com/bitcoin/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 27, 2023, 06:54:31 AM
        The Lightning Network isn't Bitcoin.  As mentioned, proof of work secures the Bitcoin Blockchain.  If Ethereum's flaw is not using proof of work, doesn't that mean the Lightning Network is flawed by not using proof of work?

        Of course Lightning is not Bitcoin.
        Lightning is not comparable to Ethereum either. If Lightning claimed to be a foundational base layer for a money, as Ethereum does, it would be flawed. Clearly, it claims no such thing.

        As to the block size debate, Bitcoin hobbled itself with small block sizes, and Bitcoin Core Developers did nothing to change it.  When the developers all joined the company making the Lightning Network, that became a conflict of interest.  Their pre-IPO stock options and salaries came from one company, which directly benefits from a lack of progress on Bitcoin's block size.  For different reasons, miners benefit: limited transactions means a bidding war, with the transaction fees all going to the miner of the next block.  If users don't like it... well, they still need a transaction to sell their Bitcoin.

        Yes, I see the CoI risk, but the version I provided a few posts back still makes the most sense to me.
        I don't see Bitcoin as hobbled. Small blocks = more decentralisation. That's more important to me than a high throughput of transactions.
        Bitcoin onChain should be reserved for significant transactions - keep it simple, even if that means it's too clunky and expensive for buying a coffee.
        Put all the complexity, easy access, clever features, etc. etc. etc. etc. on Layer2 and above. Simplicity is hard enough to do right, but complexity is way harder by definition, and complexity ALWAYS includes bugs. Let those bugs exist in Lightning and on Layer3's, etc. sitting on top it. Problems WILL occur - but they won't threaten the foundational base layer, and that's what's really important - imo.

        In practical terms, the Lightning Network carries 0.0% of the transaction volume of Bitcoin.  $78.2M in August means $2.52 million/day.
        "In August 2023, Lightning Network processed a transaction volume of $78.2 million"

        Bitcoin's blockchain is measured in billions per day.  Much like crypto itself, Lightning Network represents a potential technology that has not proven itself yet.
        "Bitcoins sent last 24h 193,820 BTC ($7,238,880,278) 0.9912% market cap
        https://bitinfocharts.com/bitcoin/

        I think the "general trend" is a better guide than the old "not happened yet" - which is pointlessly obvious and says nothing about the likelihood of it happening in the future.

        How long do you think it should take for a radical new concept (digital property?? - WTF??!!) and the associated technology to be widely understood and adopted by the masses ? Currently, for most, Bitcoin = regular crypto-scam warnings from their banks, SBF/FTX headlines in the news, and that's about about it . . .

        Things take time. I can wait. Especially while the general trend is in the right direction.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 27, 2023, 07:43:26 AM
        How long do you think it should take for a radical new concept (digital property?? - WTF??!!) and the associated technology to be widely understood and adopted by the masses ?

        When the technology is obviously useful and provides needed solutions?  Mass adoption time should be a couple years, maybe a decade at the outside.  When the technology doesn't solve any problems or provide anything of benefit?  Mass adoption time should approach infinity (which doesn't mean zero adopters - there will always be a percentage of people susceptible to confidence scams).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 27, 2023, 08:16:09 AM
        Comparing dollar values between lightning and bitcoin is probably not the right criteria.

        By design, lightning should be getting used for small value transactions (i.e. buying a cup of coffee). Lightning doesn't make sense for four figure, five figure, or more transactions where paying the transaction fee to have a transaction included on the blockchain is <0.1% of the total value being transferred.

        Credit cards in the USA are used in approximately 5 trillion worth of in transactions/year. That's less than 10% of $55+ trillion of ACH transfers performed each year in the USA. But credit cards are used for far more total transactions than ACH. The average dollar value per transaction is just a lot lower.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: blue_green_sparks on November 27, 2023, 08:51:34 AM
        General distrust in our institutions does not bode well for any society. It is only these institutions that grant and provide us with rights and protection under the law. Once this facade of protection is gone...well, we have plenty of historical examples of what always happens. This 'anti-institution' mind-set occurs when people lucky enough to have enjoyed these benefits for a long time and become artificially entitled. We are "gonna stick it to the man". It is ridiculous. And of course, the unregulated "de-fi" arena is a basket of scams, rip-offs, rug pulls, volatility, money laundering, energy wasting, Ponzi pump and dump and a whole lot of crypto-babble mainly for obfuscation purposes.

        If it stays unregulated long enough, Quantum computers/AI become will be able to hack into crypto. That should be the end of it. Trad financial institutions will have the same problem, but at least the law is there to help, and they will have the technical growth in security that only large institutions with many very smart people working together can provide.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Glenstache on November 27, 2023, 09:22:33 AM
        If I'm understanding it correctly, the selling point is that BTC or equivalents are stores of wealth where the value proposition is that it is funcitonally finite and not controlled by a central bank with the ability to adjust monetary policy. The selling point is not that it is an efficient means of conducting daily transactions.

        This seems to fit a libertarian philosophy in which less control and more free market is better at the macro level. I do wonder about the implications of a meaningful amount of money shifting into BTC though since it would effectivley be out of circulation and out of use. There is a societal value in having money in circulation and being used for transactions. Having financial tools like banks that can take that money that- for an individual- is in reserve/savings and put it to use to fund mortgages and small business loans and the like is better for the economy in my opinion. Having a store of wealth that takes that money out of circulation is not a selling point for a better economy. It just feels like hoarding. Or am I missing some hidden ability of BTC to be used in these ways?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 27, 2023, 09:24:50 AM
        Alibaba planned to raise money from the IPO of its cloud business, which it called off owing to tensions between the U.S. and China.  They decided to dump their quantum computing research - not reduce, but end the entire thing.  I'm not an expert in quantum computing, but this sounds like a company with experience deciding it lacks promise when they did cost cutting.

        maizefolk - Your example shows a roughly 10x gap between ACH and credit card transaction volume, where the smaller credit card transactions are at a disadvantage.  For Bitcoin and Lightning Network, transaction size may be one factor, but it is not enough by itself to explain a roughly 3000x difference in transaction volume.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 27, 2023, 09:38:20 AM
        Alibaba planned to raise money from the IPO of its cloud business, which it called off owing to tensions between the U.S. and China.  They decided to dump their quantum computing research - not reduce, but end the entire thing.  I'm not an expert in quantum computing, but this sounds like a company with experience deciding it lacks promise when they did cost cutting.

        maizefolk - Your example shows a roughly 10x gap between ACH and credit card transaction volume, where the smaller credit card transactions are at a disadvantage.  For Bitcoin and Lightning Network, transaction size may be one factor, but it is not enough by itself to explain a roughly 3000x difference in transaction volume.

        Bitcoin has many mining pools, where large groups of miners transfer fractions of bitcoin back and forth among each other when they find a block (generating many transactions with zero economic value).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 27, 2023, 09:46:35 AM
        The Lightning Network isn't Bitcoin.  As mentioned, proof of work secures the Bitcoin Blockchain.  If Ethereum's flaw is not using proof of work, doesn't that mean the Lightning Network is flawed by not using proof of work?
        Of course Lightning is not Bitcoin.
        Lightning is not comparable to Ethereum either. If Lightning claimed to be a foundational base layer for a money, as Ethereum does, it would be flawed. Clearly, it claims no such thing.
        I thought we were talking about secure transactions.  I never brought up "foundational base layer for a money" before quoting you in this sentence.  My "as mentioned" referred to a post of yours (*).  If you agree the only way to secure digital assets is with proof of work... and Lightning Network doesn't use proof of work... how do you resolve that difference?  In your view, can Lightning Network ever be secure if it does not use proof of work?


        "Bitcoin/PoW is designed to waste energy" ??
        ...
        Jason Lowery (https://www.youtube.com/watch?v=ikPnr23h7qg) provides a good explanation of PoW vs PoS from first principles.
           Proof of Work is the only effective method we have for 'decentralised and secure' digital property.


        As to timeframe, my comment is deliberately ambiguous.  It tries to represent both crypto detractors and fans in the same sentence - saying potential is there, but it has not been realized as of now.

        My comments on Lightning Network were intended to separate it from Bitcoin.  The value of Bitcoin transferred consists of 0.0% transfers by the Lightning Network.  Bitcoin's shortcomings, at this time, can't be written off by pointing to the Lightning Network.  That said, on its own, the Lightning Network has potential and is growing quite fast.  Once it hits bugs/problems and growth stabilizes, it will be interesting to see where it ends up.

        Visa/MC should not be worried about Bitcoin, which isn't innovating much.  They should be worried about the Lightning Network, which is growing extremely fast.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 27, 2023, 09:50:36 AM
        How long do you think it should take for a radical new concept (digital property?? - WTF??!!) and the associated technology to be widely understood and adopted by the masses ?

        When the technology is obviously useful and provides needed solutions?  Mass adoption time should be a couple years, maybe a decade at the outside.  When the technology doesn't solve any problems or provide anything of benefit?  Mass adoption time should approach infinity (which doesn't mean zero adopters - there will always be a percentage of people susceptible to confidence scams).

        And there will always be a percentage of people too blinkered by the constraints of today's conventions to see the potential for the future. Often, it's those that you might expect to be in exactly the right place and with exactly the right knowledge to see it clearly.
        Here's a few humorous examples for entertainment. They are, undoubtedly, carefully curated extreme examples (and they're probably not all true) but it's probably wise to keep them in mind when confidently asserting the dismal prospects of a new technology:

        This ‘telephone’ has far too many shortcomings to be taken seriously as a means of communication. It has objectively no value.” William Orton, President of Western Union, 1876.

        Fooling around with alternating current (AC) is just a waste of time. Nobody will ever use it.” Thomas Edison, famous inventor and holder of more than 1,000 patents. 1889.

        Heavier than air flying machines are physically impossible”. Lord Kelvin, British Mathematician and Physicist, 1895.

        Airplanes are interesting toys, but of no military value.” Ferdinand Foch, Supreme Commander of All Allied WWI Forces, 1911.

        There is not the slightest indication that nuclear energy will ever be attainable. It would mean the atom would have to be shattered at will”. Albert Einstein, 1932.

        Television will never hold onto an audience. People will very quickly get bored of staring at a plywood box every night”. Darryl Zanuck, 20th Century Fox, 1946.

        Why would we make this? The global potential market for copying machines is 5,000 at absolute most”. IBM, to the guys who would eventually found Xerox, 1959.

        There is practically no chance satellites will ever improve telephone, television or radio reception within the United States.” T. Craven, FCC Commissioner, 1961.

        Remote shopping, while entirely feasible, will certainly flop. It has no chance of success.” Time Magazine, 1966.

        There is no reason an individual would ever want a computer in their home”. Ken Olsen, founder of Digital Equipment Corp, 1977.

        Mobile phones will absolutely never replace the wired telephone”. Marty Cooper, inventor of the mobile phone, 1981.

        The idea of a personal communicator in every pocket is nothing more than a pipe-dream fuelled by greed.” Andy Grove, CEO of Intel, 1992.

        I predict that the internet will go spectacularly supernova, and in 1996 it will catastrophically implode”. Robert Metcalf, inventor of Ethernet, 1995.

        The internet will fade away because most people have nothing to say to each other. By 2005 it will be clear that the internet’s impact on the global economy has been no greater than the fax machine.” Paul Krugman, renowned Economist, 1998.

        Subscription models for music are bankrupt. I think you could make the Second Coming of Jesus himself available on subscription and it wouldn’t be successful.” Steve Jobs, CEO of Apple, 2003.

        I don’t know… there just aren’t that many videos I want to watch.”  Steve Chen, founder of YouTube, expressing doubts about YouTube’s viability as a company. 2005.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: blue_green_sparks on November 27, 2023, 09:53:31 AM
        Alibaba planned to raise money from the IPO of its cloud business, which it called off owing to tensions between the U.S. and China.  They decided to dump their quantum computing research - not reduce, but end the entire thing.  I'm not an expert in quantum computing, but this sounds like a company with experience deciding it lacks promise when they did cost cutting.
        With computing, the advances are exponential with or without the Chinese. In a June report, 20 supercomputer centers around the world reported their AI results, three of them delivering more than an exaflop. That's a quintillion or a billion-billion operations per second. I was reading how Bitcoin has a vulnerability window just waiting to be exploited. There will be a fierce race between encryption and hacking as supercomputing costs come down, access to AI becomes mainstream and the field of cyber-security will explode for sure. How can a static technology of BTC implementation keep up with all of this, I do wonder about that. I am sure there is some decentralized agency looking at it, LOL.


        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 27, 2023, 10:08:36 AM
        Alibaba planned to raise money from the IPO of its cloud business, which it called off owing to tensions between the U.S. and China.  They decided to dump their quantum computing research - not reduce, but end the entire thing.  I'm not an expert in quantum computing, but this sounds like a company with experience deciding it lacks promise when they did cost cutting.

        maizefolk - Your example shows a roughly 10x gap between ACH and credit card transaction volume, where the smaller credit card transactions are at a disadvantage.  For Bitcoin and Lightning Network, transaction size may be one factor, but it is not enough by itself to explain a roughly 3000x difference in transaction volume.

        Bitcoin has many mining pools, where large groups of miners transfer fractions of bitcoin back and forth among each other when they find a block (generating many transactions with zero economic value).
        "zero econonomic value" is your opinion - not a fact.  Up above I cited sources for my data - can you do the same for your claim of "zero economic value"?

        The reality is that groups of miners earn a blockchain reward together, and then divide the profits.


        Since bitcoin is useless in practice as a currency, and nearly every transaction needs to be transformed back into real money . . . the full energy costs of the banking system are required in addition to hashing costs to support it.  Comparing bitcoin energy costs without them is nonsensical.
        p.s.
        I liked this post of yours, GuitarStv, but I didn't comment since I didn't want to join the debate about how much of a country's infrastructure is needed for banks vs Bitcoin.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 27, 2023, 10:20:57 AM
        The Lightning Network isn't Bitcoin.  As mentioned, proof of work secures the Bitcoin Blockchain.  If Ethereum's flaw is not using proof of work, doesn't that mean the Lightning Network is flawed by not using proof of work?
        Of course Lightning is not Bitcoin.
        Lightning is not comparable to Ethereum either. If Lightning claimed to be a foundational base layer for a money, as Ethereum does, it would be flawed. Clearly, it claims no such thing.
        I thought we were talking about secure transactions.  I never brought up "foundational base layer for a money" before quoting you in this sentence.  My "as mentioned" referred to a post of yours (*).  If you agree the only way to secure digital assets is with proof of work... and Lightning Network doesn't use proof of work... how do you resolve that difference?  In your view, can Lightning Network ever be secure if it does not use proof of work?

        "Bitcoin/PoW is designed to waste energy" ??
        ...
        Jason Lowery (https://www.youtube.com/watch?v=ikPnr23h7qg) provides a good explanation of PoW vs PoS from first principles.
           Proof of Work is the only effective method we have for 'decentralised and secure' digital property.

        Yes, "secure transactions" but not "digital property" as mentioned in my quote. Lightning doesn't establish "digital property" (for which, imo, PoW is a requirement) - it just ships it around.
        And I agree that Lightning is less secure than Bitcoin. Security and Convenience tend to be inversely correlated. Bitcoin is very secure and less convenient. Lightning is less secure and more convenient.
        Likewise, my conventional stash is sealed away behind 2FA and a week's notice, whereas my spending money is rattling around in my pocket.

        As to timeframe, my comment is deliberately ambiguous.  It tries to represent both crypto detractors and fans in the same sentence - saying potential is there, but it has not been realized as of now.

        My comments on Lightning Network were intended to separate it from Bitcoin.  The value of Bitcoin transferred consists of 0.0% transfers by the Lightning Network.  Bitcoin's shortcomings, at this time, can't be written off by pointing to the Lightning Network.  That said, on its own, the Lightning Network has potential and is growing quite fast.  Once it hits bugs/problems and growth stabilizes, it will be interesting to see where it ends up.

        Visa/MC should not be worried about Bitcoin, which isn't innovating much.  They should be worried about the Lightning Network, which is growing extremely fast.

        In that case, I completely agree.
        Bitcoin not innovating much is a very good thing imo, as described above.
        Lightning, and not onChain Bitcoin, is absolutely the competitor to Visa/MC.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 27, 2023, 10:23:36 AM
        Alibaba planned to raise money from the IPO of its cloud business, which it called off owing to tensions between the U.S. and China.  They decided to dump their quantum computing research - not reduce, but end the entire thing.  I'm not an expert in quantum computing, but this sounds like a company with experience deciding it lacks promise when they did cost cutting.

        maizefolk - Your example shows a roughly 10x gap between ACH and credit card transaction volume, where the smaller credit card transactions are at a disadvantage.  For Bitcoin and Lightning Network, transaction size may be one factor, but it is not enough by itself to explain a roughly 3000x difference in transaction volume.

        Bitcoin has many mining pools, where large groups of miners transfer fractions of bitcoin back and forth among each other when they find a block (generating many transactions with zero economic value).
        "zero econonomic value" is your opinion - not a fact.  Up above I cited sources for my data - can you do the same for your claim of "zero economic value"?

        The reality is that groups of miners earn a blockchain reward together, and then divide the profits.

        I get that.

        I'm saying that these transactions generate churn for bitcoin, but it's a closed loop.  Miners group together, find a bitcoin, split it among themselves.  Zero economic value because no economic action has taken place.  Nothing has been bought, sold, or traded.  It's an ouroboros.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 27, 2023, 10:40:35 AM
        Alibaba planned to raise money from the IPO of its cloud business, which it called off owing to tensions between the U.S. and China.  They decided to dump their quantum computing research - not reduce, but end the entire thing.  I'm not an expert in quantum computing, but this sounds like a company with experience deciding it lacks promise when they did cost cutting.
        With computing, the advances are exponential with or without the Chinese. In a June report, 20 supercomputer centers around the world reported their AI results, three of them delivering more than an exaflop. That's a quintillion or a billion-billion operations per second. I was reading how Bitcoin has a vulnerability window just waiting to be exploited. There will be a fierce race between encryption and hacking as supercomputing costs come down, access to AI becomes mainstream and the field of cyber-security will explode for sure. How can a static technology of BTC implementation keep up with all of this, I do wonder about that. I am sure there is some decentralized agency looking at it, LOL.
        Quantum computing theory goes back 55 years according to Wikipedia, and actual qubit computers at least 25 years.  If the "advances are exponential" for 25+ years, why hasn't it moved beyond research projects to something useful?

        "1998 ... A working 2-qubit NMR quantum computer"
        https://en.wikipedia.org/wiki/Timeline_of_quantum_computing_and_communication

        Are you aware Bitcoin mining uses specialized hardware?  Supercomputers aren't getting more powerful in isolation - they benefit from advances in chip technology.  The same advances also benefit Bitcoin miners, who use newer specialized hardware to get the most power for the least electricity.  After a number of years, old Bitcoin hardware simply isn't competitive.

        The vulnerability of Bitcoin is well known - you don't need AI to figure it out.  It's called a 51% attack.  A newcomer would need to exceed the entire computing power of all miners in order to take control of Bitcoin.  But consider the financial incentive of someone in this situation:
        (1) send themselves all Bitcoin because they can out-hash everyone else.  People would abandon Bitcoin, or rewrite the code to ignore the new cheater.  Either way, the cheater winds up with nothing for their effort.
        (2) they join the existing blockchain, and get half of all block rewards, which is worth $6 billion/year at present (half of 6.25 x 6/hour x 24/day x 365 x $37k/BTC).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 27, 2023, 11:02:32 AM
        Alibaba planned to raise money from the IPO of its cloud business, which it called off owing to tensions between the U.S. and China.  They decided to dump their quantum computing research - not reduce, but end the entire thing.  I'm not an expert in quantum computing, but this sounds like a company with experience deciding it lacks promise when they did cost cutting.
        With computing, the advances are exponential with or without the Chinese. In a June report, 20 supercomputer centers around the world reported their AI results, three of them delivering more than an exaflop. That's a quintillion or a billion-billion operations per second. I was reading how Bitcoin has a vulnerability window just waiting to be exploited. There will be a fierce race between encryption and hacking as supercomputing costs come down, access to AI becomes mainstream and the field of cyber-security will explode for sure. How can a static technology of BTC implementation keep up with all of this, I do wonder about that. I am sure there is some decentralized agency looking at it, LOL.
        Quantum computing theory goes back 55 years according to Wikipedia, and actual qubit computers at least 25 years.  If the "advances are exponential" for 25+ years, why hasn't it moved beyond research projects to something useful?

        "1998 ... A working 2-qubit NMR quantum computer"
        https://en.wikipedia.org/wiki/Timeline_of_quantum_computing_and_communication

        Are you aware Bitcoin mining uses specialized hardware?  Supercomputers aren't getting more powerful in isolation - they benefit from advances in chip technology.  The same advances also benefit Bitcoin miners, who use newer specialized hardware to get the most power for the least electricity.  After a number of years, old Bitcoin hardware simply isn't competitive.

        The vulnerability of Bitcoin is well known - you don't need AI to figure it out.  It's called a 51% attack.  A newcomer would need to exceed the entire computing power of all miners in order to take control of Bitcoin.  But consider the financial incentive of someone in this situation:
        (1) send themselves all Bitcoin because they can out-hash everyone else.  People would abandon Bitcoin, or rewrite the code to ignore the new cheater.  Either way, the cheater winds up with nothing for their effort.
        (2) they join the existing blockchain, and get half of all block rewards, which is worth $6 billion/year at present (half of 6.25 x 6/hour x 24/day x 365 x $37k/BTC).

        Exactly right.

        Also, if Bitcoin is exploitable by a new tech, then all digital security is exploitable the same tech. A bad actor could wreak havoc across all digital finance, across all digital everything.

        Also, the chance of a fully-formed Quantum Bitcoin Miner suddenly plugging in out of the blue seems extremely remote to me. It seems very likely that there would be time for some pre-emptive defensive action.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 27, 2023, 12:18:51 PM
        The issue of quantum computing has a lot less to do with mining and a lot more to do with the potential to crack the private keys of many bitcoin wallets given knowledge of their public keys.

        Once you have the private key for a bitcoin wallet you can spend the money however you like. And, unlike a 51% attack, it won't be at all obvious to anyone other than the person whose bitcoins you took that anything untoward has happened. You could probably go quite a while just targeting high balance wallets from the early bitcoin era (wallets that no one has touched in a decade indicating they likely forgot the wallet existed or lost access to the private key) before anyone really noticed.

        That said, achieving that in reasonable amounts of time would require quantum computers with hundreds of thousands to millions of qubits. In 25 years the number of qubits in the fastest quantum computers have grown about 500x. But we're still at least three orders of magnitude away from quantum computers that would actually be a problem for bitcoin.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 27, 2023, 12:51:06 PM
        The issue of quantum computing has a lot less to do with mining and a lot more to do with the potential to crack the private keys of many bitcoin wallets given knowledge of their public keys.

        Once you have the private key for a bitcoin wallet you can spend the money however you like. And, unlike a 51% attack, it won't be at all obvious to anyone other than the person whose bitcoins you took that anything untoward has happened. You could probably go quite a while just targeting high balance wallets from the early bitcoin era (wallets that no one has touched in a decade indicating they likely forgot the wallet existed or lost access to the private key) before anyone really noticed.

        That said, achieving that in reasonable amounts of time would require quantum computers with hundreds of thousands to millions of qubits. In 25 years the number of qubits in the fastest quantum computers have grown about 500x. But we're still at least three orders of magnitude away from quantum computers that would actually be a problem for bitcoin.

        That's a fair point. I disagree that nobody would notice transactions from long-dormant wallets though. The onChain analysts would instantly be all over it with much excitement.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 27, 2023, 01:00:35 PM
        If I'm understanding it correctly, the selling point is that BTC or equivalents are stores of wealth where the value proposition is that it is funcitonally finite and not controlled by a central bank with the ability to adjust monetary policy. The selling point is not that it is an efficient means of conducting daily transactions.

        This seems to fit a libertarian philosophy in which less control and more free market is better at the macro level. I do wonder about the implications of a meaningful amount of money shifting into BTC though since it would effectivley be out of circulation and out of use. There is a societal value in having money in circulation and being used for transactions. Having financial tools like banks that can take that money that- for an individual- is in reserve/savings and put it to use to fund mortgages and small business loans and the like is better for the economy in my opinion. Having a store of wealth that takes that money out of circulation is not a selling point for a better economy. It just feels like hoarding. Or am I missing some hidden ability of BTC to be used in these ways?

        My position on this is as follows (described here in terms of what WILL happen' - just to be concise):

        Bitcoin has the potential to be a complete money, ie. a Store of Value, a Unit of Account and a Means of Exchange.

        SoV:
        Bitcoin adoption will be an S-curve. We are well down in the lower regions of the S so it's no surprise that things are quite volatile and jumpy. As progress is made up the S, and especially as things start to flatten out along the top, volatility will reduce. This will make it a much more appealing SoV to a much wider audience. For some it's ok now, for most it's not.

        UoA:
        As Bitcoin's purchasing power becomes more stable, and as adoption widens, it will naturally make sense to start valuing things in BTC.

        MoE:
        Bitcoin is a good MoE for signicant value over distance and, especially, across borders.
        For small value, Lightning/MoE use is starting in the less stable nations and will spread to the more stable. Not necessarily replacing local fiat currencies, but could crowd out weak fiats.

        Depending on your circumstances it could be any and all of those things right now or it could be any and all of those things in the future as things develop along the various paths described.


        For me, right now:
        It's SoV and a Speculation on wide adoption and consequent big increase in value.
        In the future it might become sufficiently widely accepted in my region that I use it as MoE.
        In the future it will probably make more sense to me to value things in BTC, ie. use as UoA.
        I have a pretty good expectation of these things happening in my lifetime.
        I suggest that my adoption path generally applies to most wealthy people in stable nations.

        For someone in Nigeria/Venezuela/Argentina, etc.:
        It might be useful as MoE right now (vs a weak and/or rapidly-debasing fiat).
        It's useful as an SoV even for short-term cash holding in a high inflationary environment.
        Maybe no significant Value to Store, so limited SoV at the moment - but, maybe in the future . . .
        Likewise UoA.
        I suggest this adoption path generally applies to poor people in less stable nations.

        Everyone will choose their own adoption path, and all will be different. It will probably be somewhere between the 2 examples above - and most people reading this will probably follow something like my path.


        I think the 'hoarding' thing is overblown.
        Bitcoin will probably ultimately approx. track global GDP, so big gains won't last forever.
        It will still be possible to profitably lend money; either via a trusted bank, or maybe p2p lending takes off, etc.
        It will still be profitable to invest in good businesses.

        I have every confidence that even the richest die-hard HODLers will want to live well and reap at least some rewards rather than hoard their gains and die mega-rich while living on a pittance. Mustachianism/frugality is even less popular than Bitcoin in the mainstream !
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on November 27, 2023, 04:26:00 PM
        We need a drinking game for how many times we can go through the same set of arguments.

        Actually maybe we don't, I spend enough money on beer already.

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Glenstache on November 27, 2023, 04:50:42 PM
        We need a drinking game for how many times we can go through the same set of arguments.

        Actually maybe we don't, I spend enough money on beer already.

        -W
        And if people talk past each other, you drink a double.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on November 27, 2023, 11:12:23 PM

        If the worst you can say about coinbase is that they've had to pay a fine to regulators (like almost any bank of any significant size), that's sounds like pretty good news to me.

        Do you see the logical fallacy here?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 28, 2023, 01:36:20 AM
        The issue of quantum computing has a lot less to do with mining and a lot more to do with the potential to crack the private keys of many bitcoin wallets given knowledge of their public keys.
        Mining, private keys, bank security and government secrets all involve cryptography that - in theory - quantum computing could crack.  In practice, it has been stuck in research labs for 25 years.

        Once you have the private key for a bitcoin wallet you can spend the money however you like. And, unlike a 51% attack, it won't be at all obvious to anyone other than the person whose bitcoins you took that anything untoward has happened. You could probably go quite a while just targeting high balance wallets from the early bitcoin era (wallets that no one has touched in a decade indicating they likely forgot the wallet existed or lost access to the private key) before anyone really noticed.
        Moving Bitcoin out of Satoshi's wallets would quickly become the leading story on every crypto website.  Targetting early, untouched wallets is actually the worst approach to avoid attention, as people monitor those addresses constantly.

        In May, IBM funded $100 million USD of quantum computing research at various universities.  I don't follow how someone secretly passes up well-funded existing research in quantum computing and keeps it 100% secret.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 28, 2023, 01:41:01 AM
        We need a drinking game for how many times we can go through the same set of arguments.

        Actually maybe we don't, I spend enough money on beer already.

        -W
        "Who's we, sucka?"
        https://www.youtube.com/watch?v=4Y16Tzksgko

        Or maybe you oversimplify the arguments - in which you're not participating - and that's why you think it is the same argument.  Please remind me of the last discussion of quantum computing hacking Satoshi's early wallets.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 28, 2023, 07:07:22 AM
        The issue of quantum computing has a lot less to do with mining and a lot more to do with the potential to crack the private keys of many bitcoin wallets given knowledge of their public keys.
        Mining, private keys, bank security and government secrets all involve cryptography that - in theory - quantum computing could crack.  In practice, it has been stuck in research labs for 25 years.

        That seems like a weak argument.

        The first perceptrons (artificial neural networks) were created in 1958. As recently as 2014, just getting a computer to figure out if a bird was in a picture or not (https://xkcd.com/1425/) was extremely difficult if not impossible.

        So I'm sure that in the ten years after 2014, neural net basted artificial intelligence won't change the way we live in any noticeable way. After all, at this point it has been stuck in research labs for 56 years.

        Note: This isn't an argument that quantum computers will change the way we live dramatically. It is an argument that given technology being stuck in research labs for decades isn't convincing evidence to conclude the technology won't change the way we will dramatically.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: tasimo on November 28, 2023, 08:33:05 AM
        At least blockchain development is more educated in cryptography and has active development into quantum resistance. There are chains that advertise being quantum resistant, though I’m not technical enough to understand it. I’m aware of hashgraph having post quantum resistance for hashing and encryption, but not for consensus or key signing. 

        https://www.theqrl.org/the-future-of-post-quantum-resistant-blockchains/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 28, 2023, 08:43:54 AM

        If the worst you can say about coinbase is that they've had to pay a fine to regulators (like almost any bank of any significant size), that's sounds like pretty good news to me.

        Do you see the logical fallacy here?

        I only see a levelling of the playing field and a little sarcasm.
        The fallacy was holding Coinbase to a higher standard than that typically attained by financial institutions.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on November 28, 2023, 01:06:04 PM
        Not quite.   Coinbase was held up as the least shady because it had only laundered money, not stolen it.  The fact other financial institutions have been caught with the same bad behavior doesn't excuse Coinbase.   The standard shouldn’t be “just as bad as someone else.”   After all, there are plenty of financial institutions that have never been fined for money laundering.  I bank at one.   
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on November 28, 2023, 01:30:17 PM
        Which major banks have been fined for money laundering?

        Or heck, what smaller banks/credit unions?

        I'm not saying I don't believe it, but I just don't follow these things so I'm curious. Seems like there at least should be lots of banks without money laundering problems available to hold my money given how many there are.

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 28, 2023, 02:06:37 PM
        Which major banks have been fined for money laundering?

        Or heck, what smaller banks/credit unions?

        I'm not saying I don't believe it, but I just don't follow these things so I'm curious. Seems like there at least should be lots of banks without money laundering problems available to hold my money given how many there are.

        -W

        A modest correction. The post that started this discussion (https://forum.mrmoneymustache.com/investor-alley/what-do-you-think-of-adding-a-low-of-crypto-allocation/msg3202142/#msg3202142) was a link to a news article in which coinbase was fined for not initially having strict enough anti-money laundering provisions, which they had since addressed.

        I agreed that sounds bad even with the correction. As a check for how unusual that was, I took was I guessed was the same strategy used to find that article (google NameOfCompany + "money laundering") with the three biggest banks in both the USA and Canada and found similar stories for all six (https://forum.mrmoneymustache.com/investor-alley/what-do-you-think-of-adding-a-low-of-crypto-allocation/msg3202813/#msg3202813). The key point is this was just going down the list from largest on down, not cherry picking specific banks that worse than usual.

        If you can plug NameofCompany + "money laundering" into google news search and find stories about almost any large* financial institution paying a fine at some point, then the fact a poster was able to do that for a particular crypto-exchange isn't a very useful datapoint in trying to identify which organizations are corrupt or untrustworthy.

        *I agree there are almost certainly lots of credit unions and small local banks where the same approach would fail. I don't think that is a valid apples-to-apples comparison. Both because the task of compliance is easier at local institutions than multi-national ones and because the SEC/FDIC/DOJ are all going to prioritize enforcement at larger banks with the potential to both have a bigger impact and generate larger fines.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on November 29, 2023, 08:35:42 AM
        Yikes, I guess there is a lot of that!

        Thanks Maizefolk!

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Scandium on November 29, 2023, 09:04:02 AM
        Which major banks have been fined for money laundering?

        Or heck, what smaller banks/credit unions?

        I'm not saying I don't believe it, but I just don't follow these things so I'm curious. Seems like there at least should be lots of banks without money laundering problems available to hold my money given how many there are.

        -W

        But why should we care? If a bank steals customer's money that's certainly an issue. But if they don't follow the myriad of cryptic, broad, and overbearing regulations, for money laundering in this case, that doesn't affect me or my money. So... whatever?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on November 29, 2023, 09:27:27 AM
        Generally I prefer not to be associated with criminal activity, even indirectly, so I'd prefer not to do business with a bank that launders money for drug traffickers or something.

        But that's just me, I guess.

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 29, 2023, 12:11:50 PM
        Generally I prefer not to be associated with criminal activity, even indirectly, so I'd prefer not to do business with a bank that launders money for drug traffickers or something.

        But that's just me, I guess.

        -W

        It's an admirable stance but how do you manage this in practice ?
        Did you Google "your bank/broker/pensionCo" + fraud laundering fines, etc. before opening your accounts ? Or, this Violation Tracker  (https://violationtracker.goodjobsfirst.org/)looks like a pretty good resource.
        Do you regularly check and will you jump ship if any get fined for any misdemeanours ?
        Serious questions as I've never heard of anyone doing this - it seems a bit idealistic and impractical.

        Scrupulously clean financial institutions seem to be a rarity. Sadly, the 4x different UK institutions I use for my SIPP, my ISA, my main bank accounts and my back-up credit card all appear in these lists below = 100% fail.

        Does MMM need to update his recommendations ?
           Vanguard Violations (https://violationtracker.goodjobsfirst.org/parent/vanguard-group)
           Fidelity Violations (https://violationtracker.goodjobsfirst.org/parent/fidelity-investments)
           Betterment Violations (https://violationtracker.goodjobsfirst.org/violation-tracker/-betterment-llc)

        Top 20 FCA fines (https://www.skillcast.com/blog/20-biggest-fca-fines):
           Barclays Bank plc - £284m fine (2015)
           National Westminster Bank Plc - £264.7m fine (2021)
           UBS AG - £233.8m fine (2014)
           Deutsche Bank fined - £226.8m fine (2015)
           Citibank NA - £225.6m fine (2014)
           JPMorgan Chase Bank - £222.1m fine (2014)
           The Royal Bank of Scotland - £217m fine (2014)
           HSBC Bank plc - £216.4m fine (2014)
           Deutsche Bank AG - £163m fine (2017)
           Credit Suisse - £147.2m fine (2021)
           JPMorgan Chase Bank NA - £137.6m fine (2013)
           The Bank of New York Mellon London Branch & Intl Ltd. - £126m fine (2015)
           Lloyd's Banking Group - £117.4m fine (2015)
           Santander UK plc - £107.8m (2022)
           Lloyd's Banking Group - £105m fine (2014)
           Rabobank - £105m fine (2013)
           Standard Chartered Bank - £102m fine (2019)
           Goldman Sachs International - £97m fine (2020)
           Lloyd's Bank General Insurance - £90.7m (2021)
           The Royal Bank of Scotland plc - £87.5m fine (2013)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 29, 2023, 12:18:49 PM
        Fines being issued and people going to jail are signs of a system that is taking care of its corruption and illegal activities problems.

        A lack of enforcement actions indicate an unregulated space. E.g. countries that never seem to convict politicians of corruption are 100% corrupt and markets where there are no enforcement actions are unregulated spaces filled with scams.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on November 29, 2023, 12:29:21 PM
        Looks like Vanguard was fined $23k for something in Pennsylvania involving consumer protection in 2017. Then there are 2 employment discrimination cases that appear to have been settled in 2010 and 2008.

        I'd say that falls far short of money laundering, personally, and given the size of Vanguard, it's a stellar track record.

        I have minimal cash, and it's at a credit union locally. I guess maybe they could be funding meth labs or something, but I doubt it.

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on November 29, 2023, 12:33:59 PM
        Looks like Vanguard was fined $23k for something in Pennsylvania involving consumer protection in 2017. Then there are 2 employment discrimination cases that appear to have been settled in 2010 and 2008.

        I'd say that falls far short of money laundering, personally, and given the size of Vanguard, it's a stellar track record.

        I have minimal cash, and it's at a credit union locally. I guess maybe they could be funding meth labs or something, but I doubt it.

        -W

        At least it would be locally sourced, organic meth though.  I hate it when big meth companies come in and push out all the small time artisanal cooks.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on November 29, 2023, 12:40:34 PM
        Lab to table, man. That Chinese meth is just not the same.

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 29, 2023, 01:47:45 PM
        Looks like Vanguard was fined $23k for something in Pennsylvania involving consumer protection in 2017. Then there are 2 employment discrimination cases that appear to have been settled in 2010 and 2008.

        I'd say that falls far short of money laundering, personally, and given the size of Vanguard, it's a stellar track record.

        I have minimal cash, and it's at a credit union locally. I guess maybe they could be funding meth labs or something, but I doubt it.

        -W

        Maybe that source (https://violationtracker.goodjobsfirst.org/) isn't so good. I hadn't noticed that it missed this incident from 2023 (https://www.reuters.com/business/finance/vanguard-fined-providing-misleading-account-statements-its-customers-2023-06-01/):
        FINRA, Wall Street's self-regulatory organization, said in a filing signed last month by representatives of both parties that Vanguard overstated projected yield and projected annual income for nine money market funds from November 2019 to September 2020. It ordered Vanguard to pay a fine of $800,000.

        And note, for about the 3rd time, that Coinbase was not fined for money laundering. They were fined because their procedures for protecting against money laundering (by customers) were inadequate. That's a very different thing - and it seems less corrupt than overselling your products in 8.5M customer statements.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 29, 2023, 02:02:27 PM
        Fines being issued and people going to jail are signs of a system that is taking care of its corruption and illegal activities problems.

        A lack of enforcement actions indicate an unregulated space. E.g. countries that never seem to convict politicians of corruption are 100% corrupt and markets where there are no enforcement actions are unregulated spaces filled with scams.

        Fines being issued and people going to jail are also signs of fraud and corruption within that system. It is perfectly clear that most significant financial institutions have some fraudulent, corrupt and sometimes just careless things going on.

        Holding Coinbase up as a terrible villain because they were fined, while making excuses for similar fines against most conventional financial institutions is completely ridiculous. And, I say this as no fan of Coinbase, nor Binance, nor FTX, nor any other multi-crypto exchange.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on November 29, 2023, 02:37:11 PM
        Fines being issued and people going to jail are signs of a system that is taking care of its corruption and illegal activities problems.

        A lack of enforcement actions indicate an unregulated space. E.g. countries that never seem to convict politicians of corruption are 100% corrupt and markets where there are no enforcement actions are unregulated spaces filled with scams.

        Fines being issued and people going to jail are also signs of fraud and corruption within that system. It is perfectly clear that most significant financial institutions have some fraudulent, corrupt and sometimes just careless things going on.

        Holding Coinbase up as a terrible villain because they were fined, while making excuses for similar fines against most conventional financial institutions is completely ridiculous. And, I say this as no fan of Coinbase, nor Binance, nor FTX, nor any other multi-crypto exchange.
        Maybe so, but the cost of running a crypto exchange to the same standards as a heavily regulated U.S. bank would seemingly add an astronomical amount of cost. Those costs of compliance would have to be borne by customers, and now we loop back to the question of whether crypto is better than fiat.

        In the grand currency vs. securities debate, this is the risk of the currency side. Crypto as a currency requires banks with all the overhead costs, reserve requirements, FDIC inspections, and disclosures. 

        I don't foresee regular people using crypto without a "helper" organization like a bank any more than I see regular people trading stocks without a broker and recording peer to peer transfers of shares directly at the clearing houses. It just won't happen. It's too technical. If cryptocoins are a currency, then governments will ban, block, or seize any unregulated "bank".
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 29, 2023, 03:29:00 PM
        Maybe so, but the cost of running a crypto exchange to the same standards as a heavily regulated U.S. bank would seemingly add an astronomical amount of cost. Those costs of compliance would have to be borne by customers, and now we loop back to the question of whether crypto is better than fiat.

        Indeed it does add a great deal to the costs, which is why transaction fees at CoinBase are so much higher than many non-US based exchanges.

        But here we loop back to your original question (https://forum.mrmoneymustache.com/investor-alley/what-do-you-think-of-adding-a-low-of-crypto-allocation/msg3202105/#msg3202105) of whether there is any mainstream and law abiding firms that allow users to transact in cryptocurrency.

        The answer is yes. The services they offer cost more than folks flying by the seat of their pants and incorporated in overseas tax havens. The companies offering the service don't do super flashy things that make headlines as much as Binance or FTX did, but they are out there, doing as good a job as most major banks of following applicable laws.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on November 29, 2023, 04:27:45 PM
        Fines being issued and people going to jail are signs of a system that is taking care of its corruption and illegal activities problems.

        A lack of enforcement actions indicate an unregulated space. E.g. countries that never seem to convict politicians of corruption are 100% corrupt and markets where there are no enforcement actions are unregulated spaces filled with scams.

        Fines being issued and people going to jail are also signs of fraud and corruption within that system. It is perfectly clear that most significant financial institutions have some fraudulent, corrupt and sometimes just careless things going on.

        Holding Coinbase up as a terrible villain because they were fined, while making excuses for similar fines against most conventional financial institutions is completely ridiculous. And, I say this as no fan of Coinbase, nor Binance, nor FTX, nor any other multi-crypto exchange.
        Maybe so, but the cost of running a crypto exchange to the same standards as a heavily regulated U.S. bank would seemingly add an astronomical amount of cost. Those costs of compliance would have to be borne by customers, and now we loop back to the question of whether crypto is better than fiat.

        Yeah, probably [shrug] - I'm just not all that interested in these multi-crypto exchanges, so don't have much of an opinion.

        In the grand currency vs. securities debate, this is the risk of the currency side. Crypto as a currency requires banks with all the overhead costs, reserve requirements, FDIC inspections, and disclosures. 

        I don't foresee regular people using crypto without a "helper" organization like a bank any more than I see regular people trading stocks without a broker and recording peer to peer transfers of shares directly at the clearing houses. It just won't happen. It's too technical. If cryptocoins are a currency, then governments will ban, block, or seize any unregulated "bank".

        Bitcoin is a good enough SoV 'bank' for me right now. Bitcoin 'as a currency' like that looks like Legal Tender, and I think we're a loooong way from that in our regions.

        I don't foresee regular people trading stocks without telephoning their suited-up bowler-hatted high-fee stockbroker, it's just too technical - said my Dad. Don't underestimate tomorrow's technology.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 29, 2023, 11:33:04 PM
        The issue of quantum computing has a lot less to do with mining and a lot more to do with the potential to crack the private keys of many bitcoin wallets given knowledge of their public keys.
        Mining, private keys, bank security and government secrets all involve cryptography that - in theory - quantum computing could crack.  In practice, it has been stuck in research labs for 25 years.

        That seems like a weak argument.

        The first perceptrons (artificial neural networks) were created in 1958. As recently as 2014, just getting a computer to figure out if a bird was in a picture or not (https://xkcd.com/1425/) was extremely difficult if not impossible.

        So I'm sure that in the ten years after 2014, neural net basted artificial intelligence won't change the way we live in any noticeable way. After all, at this point it has been stuck in research labs for 56 years.

        Note: This isn't an argument that quantum computers will change the way we live dramatically. It is an argument that given technology being stuck in research labs for decades isn't convincing evidence to conclude the technology won't change the way we will dramatically.
        You quoted me talking only about quantum computers and then said nothing about quantum computers.  Machine learning is not quantum computing.

        Experts on quantum computing:
        https://quantumzeitgeist.com/20-influential-individuals-driving-the-quantum-technology-revolution/

        First expert in that list (Robert "Bob" Sutor) talking about quantum computing one month ago:
        https://www.youtube.com/watch?v=qYwAHhy52jY
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on November 29, 2023, 11:52:56 PM
        Coinbase and Gemini are large U.S. based exchanges.  These exchanges have two levels of fees, based on using a simple or advanced interface.

        Someone who just wants to buy X amount of crypto can use a simple interface, and get charged 1.49% at Gemini.  I had trouble locating Coinbase's current web fees.
        https://www.gemini.com/fees/web-fee-schedule

        Or they can use an advanced interface that looks like a stock market.  If they want a trade immediately, they are a "taker" of an existing order, and pay the higher fee.  If they patiently add an order that is not immediately traded, they are a "maker" of a new order, and pay a lower fee when it finds a buyer/seller.

        https://www.gemini.com/fees/activetrader-fee-schedule
        https://exchange.coinbase.com/fees

        TL;DR - trade crypto paying 1.5% for simple, 0.4% when impatient and 0.2% if patient.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on November 30, 2023, 05:59:11 AM
        You quoted me talking only about quantum computers and then said nothing about quantum computers.

        I quoted you dismissing a technology as having been stuck in the research lab for 25 years and pointed out that other technologies that are changing our world in big ways today had been stuck in research labs for even longer.

        Edit: Note that this doesn't mean quantum computing will change our world in a big way in the future. It only illustrates that your statement that it has been stuck in research labs for 25 years isn't useful evidence to support the claim that quantum computing won't change our world in the future.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 01, 2023, 12:25:04 AM
        You quoted me talking only about quantum computers and then said nothing about quantum computers.

        I quoted you dismissing a technology as having been stuck in the research lab for 25 years and pointed out that other technologies that are changing our world in big ways today had been stuck in research labs for even longer.

        Edit: Note that this doesn't mean quantum computing will change our world in a big way in the future. It only illustrates that your statement that it has been stuck in research labs for 25 years isn't useful evidence to support the claim that quantum computing won't change our world in the future.
        Are you claiming that machine learning came solely from perceptrons, and not from the development of computers?  I could claim pocket calculators come from the abacus, and took 2,000 years to develop, using the same misplaced origin.  In reality, ChatGPT was too expensive to create 10 years ago, but unrelated demand for computing brought down costs until ChatGPT became a practical reality.  Computing power and cost was the bottleneck, not perceptrons.

        Quantum computers are based on creating and using quantum states before the whole thing collapses.  Quantum computing can't simply wait for greater computing power, and then suddenly crack Blockchain addresses.  Every missing piece, from qubits to software to networks, needs to be researched, developed and improved.  Quantum computing has been 2-3 years from a breakthrough for over a decade.  The other poster, who warned of Bitcoin being at risk of hacking by quantum computing, is relying on hype rather than expert opinion.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: blue_green_sparks on December 01, 2023, 08:45:58 AM
        One can visit this page to see the cloud-based quantum computing resources available now.
        https://en.wikipedia.org/wiki/Cloud-based_quantum_computing

        I would say there have been breakthroughs already and as with any new technology, it is very hard to determine its future usefulness and developmental timeframe this early on (especially if you believe some of the claims about computational power.) The use of AI and traditional supercomputers to aid in the design of quantum computers is another unknown variable. And besides quantum computers there are other 'orders of magnitude' advances being researched in traditional computing such as the emulation of biological neural networks.

        Will bitcoin as implemented be useful for the generational transfer of wealth? I think it is something for long-horizon bitcoiners to consider. I am sure there are many people who have no idea there could be such future risks. If a first supercomputer hack occurs, it will be such big news. We would see a drop faster than that FTT token, I would think.

        Most crypto related anomalies like "Bitcoin Sender Struck With $3.1M Transaction Fee"; are related to the exchanges or simply due to various very unforgiving operator error.

        https://web3isgoinggreat.com/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on December 01, 2023, 12:44:58 PM
        One can visit this page to see the cloud-based quantum computing resources available now.
        https://en.wikipedia.org/wiki/Cloud-based_quantum_computing

        I would say there have been breakthroughs already and as with any new technology, it is very hard to determine its future usefulness and developmental timeframe this early on (especially if you believe some of the claims about computational power.) The use of AI and traditional supercomputers to aid in the design of quantum computers is another unknown variable. And besides quantum computers there are other 'orders of magnitude' advances being researched in traditional computing such as the emulation of biological neural networks.

        Will bitcoin as implemented be useful for the generational transfer of wealth? I think it is something for long-horizon bitcoiners to consider. I am sure there are many people who have no idea there could be such future risks. If a first supercomputer hack occurs, it will be such big news. We would see a drop faster than that FTT token, I would think.

        As discussed earlier, any supercomputer capable of breaking Bitcoin is capable of breaking just about anything and everything. A bad actor could wreak havoc right across the board. However, the chance of a fully-formed Bitcoin/everything breaker suddenly plugging in without warning seems remote in the greatest extreme. Bitcoin Miners and Bitcoin people in general have great interest in any and all technolgical developments that might affect Bitcoin. If just one Bitcoiner, or even just one person with a conscience, got to hear about it . . .

        I'm as concerned about this scenario as I am concerned about NKorea suddenly, out of the blue, launching a new weapon that's so far advanced that the rest of the world is defenceless against it. It's theoretically possible, but . . .

        Most crypto related anomalies like "Bitcoin Sender Struck With $3.1M Transaction Fee"; are related to the exchanges or simply due to various very unforgiving operator error.

        https://web3isgoinggreat.com/

        The 'unforgiving' side of things can seem scary at first but it's part and parcel of 'immutable'. It's nothing new - we all know that physical reality/time is immutable, and we're all generally comfortable with it. We know our lives are on the line when we cross the road, so we take great care. We should take similar care transacting Bitcoin, when our money is on the line.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on December 01, 2023, 02:21:17 PM
        The 'unforgiving' side of things can seem scary at first but it's part and parcel of 'immutable'. It's nothing new - we all know that physical reality/time is immutable, and we're all generally comfortable with it. We know our lives are on the line when we cross the road, so we take great care. We should take similar care transacting Bitcoin, when our money is on the line.

        We didn't create physical reality and time, so we're stuck with 'em.  Sure.

        But if your life is on the line every single time you cross the road, there's a pretty big fucking problem that needs to be fixed.  This can be handled with traffic laws, legal enforcement, better vehicle regulation, better road design, better driver education, signs and on road devices.  Road deaths are acknowledged to be an issue though.

        We fucking designed Bitcoin.  So why aren't we fixing this obvious problem?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on December 01, 2023, 03:42:59 PM
        One can visit this page to see the cloud-based quantum computing resources available now.
        https://en.wikipedia.org/wiki/Cloud-based_quantum_computing

        I would say there have been breakthroughs already and as with any new technology, it is very hard to determine its future usefulness and developmental timeframe this early on (especially if you believe some of the claims about computational power.) The use of AI and traditional supercomputers to aid in the design of quantum computers is another unknown variable. And besides quantum computers there are other 'orders of magnitude' advances being researched in traditional computing such as the emulation of biological neural networks.

        Will bitcoin as implemented be useful for the generational transfer of wealth? I think it is something for long-horizon bitcoiners to consider. I am sure there are many people who have no idea there could be such future risks. If a first supercomputer hack occurs, it will be such big news. We would see a drop faster than that FTT token, I would think.

        As discussed earlier, any supercomputer capable of breaking Bitcoin is capable of breaking just about anything and everything. A bad actor could wreak havoc right across the board. However, the chance of a fully-formed Bitcoin/everything breaker suddenly plugging in without warning seems remote in the greatest extreme. Bitcoin Miners and Bitcoin people in general have great interest in any and all technolgical developments that might affect Bitcoin. If just one Bitcoiner, or even just one person with a conscience, got to hear about it . . .

        I'm as concerned about this scenario as I am concerned about NKorea suddenly, out of the blue, launching a new weapon that's so far advanced that the rest of the world is defenceless against it. It's theoretically possible, but . . .

        Most crypto related anomalies like "Bitcoin Sender Struck With $3.1M Transaction Fee"; are related to the exchanges or simply due to various very unforgiving operator error.

        https://web3isgoinggreat.com/

        The 'unforgiving' side of things can seem scary at first but it's part and parcel of 'immutable'. It's nothing new - we all know that physical reality/time is immutable, and we're all generally comfortable with it. We know our lives are on the line when we cross the road, so we take great care. We should take similar care transacting Bitcoin, when our money is on the line.
        I've thought about the super-fast encryption breaker problem too, because some outcomes might put an expiration date on our entire financial system.

        The simple solution for username/password or username/biometric logins (i.e bank or brokerage accounts) is to have a time delay for each username's subsequent password attempt. A ten or twenty second delay, or a delay that gets longer with each incorrect password attempt, can extend the time it takes a brute force attack to locate a password to many years of trying random combinations.

        This simple method is immune to the increasing speed of the hacker's equipment. However an AI information skimmer could do better by generating a few million potential passwords out of your personal information revealed online - year of birth, favorite things, favorite authors or characters, school mascot, sayings, word patterns, old passwords obtained from previous hacks, etc, thus generating a smaller solution set and guessing many password within a few months of trying, even with the time delays. An AI could also screen out possible passphrases that are not pronounceable, dramatically limiting the solution set.

        With biometrics, there could be genetic patterns that could be assumed from information revealed online that reduce the solution set. An AI might find all sorts of patterns to make itself a better password cracker - patterns our sciences have never discovered. Maybe blue eyed people with type AB blood never have a certain pattern in their retinas?

        So account-level time delays are a useful way to keep brute force hackers out of individual accounts, but they don't stop the hacker from trying a new username with each password combination in an attempt to breach any one account in the system. In large systems with potentially billions of users, the odds increase for the cracking program to randomly luck into at least one correct username/password combination, even if the odds are astronomical. The defender cannot set the whole system to time delay with each wrong password guess or else it could be locked up by anyone and thus would always be locked. If nothing comes up on the first attempt of a billion unique usernames plus a billion possible passwords, the hacker can roll again after the 10-20 second delay has passed, and so on. Even with an escalating time delay, the hacker has a reasonable chance of getting into somebody's account because they can throw very large numbers at very steep odds. Being that somebody or reimbursing that somebody may be a cost of doing business.

        At its core, the problem is our authentication data must be small enough to be convenient. The size of "convenient" means memorable in a human brain (containing dozens of other passwords) or portable as part of a human body (but then unchangeable if breached). The size of "convenient" doesn't change much, but the capabilities of brute force or AI-led password guessing attempts are constantly increasing. In theory, this dynamic leads to a crossover point where hacking capabilities exceed the possible security level of any convenient form of authentication data.

        At that time we would no longer have a reliable way to trade in electronic formats, which could mean worldwide economic collapse if it happened fast enough. There is no guarantee offensive tech won't evolve faster than defensive tech, or the rules of our slow-moving economic systems.

        Time delays could still be part of the answer, but at some point the brute force or AI-led attacks come so constantly that all user accounts are always at the maximum time delay. The maximum time delay can only be as high as a user is willing to tolerate. 20-30 seconds perhaps? One minute to make a sale?

        Another possible solution is three-factor: username + passphrase + biometric, for example. I don't see this as a good solution because it's even less convenient and more costly than a time delay, and because it is essentially an extended password, which only kicks the can down the road. Plus the biometric element can never be changed, even if compromised. If we assume our data will eventually be compromised - as passwords currently are, then the biometric part is a false security blanket.

        We could end up living in a world where we all carry around physical tokens containing authentication chains dozens of petabytes in size just to access each time-delayed account. Losing such a device might mean losing your money, unless some meatspace identity verification procedure was applied. Such a system would be far less efficient than our current world of 12-character-passwords-by-email. Yet it would get around the "convenient size" limitation and allow electronic commerce to continue despite quantum computing and ubiquitous AIs with near-infinite cryptographic cracking power.

        We're currently using layers of cryptographic scrambling on as many of these elements as possible to prevent in-transit interception, but cryptography is essentially a problem of processing speeds and intelligence, and we can't hide behind these fast-falling barriers forever.

        Cryptocurrencies deserve credit as an initial attempt to address this looming issue, but the method of hiding keys behind usernames, passwords, and website businesses built by shady characters in legal gray areas has been a disaster for so many people who have had their accounts and wallets hacked. If anything, all the false security of cryptocurrency only made it easier to steal. I bet there are technical lessons to be learned beneath the FOMO-throwing-money-at-obvious-frauds layer.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on December 01, 2023, 05:44:21 PM
        The 'unforgiving' side of things can seem scary at first but it's part and parcel of 'immutable'. It's nothing new - we all know that physical reality/time is immutable, and we're all generally comfortable with it. We know our lives are on the line when we cross the road, so we take great care. We should take similar care transacting Bitcoin, when our money is on the line.

        We didn't create physical reality and time, so we're stuck with 'em.  Sure.

        But if your life is on the line every single time you cross the road, there's a pretty big fucking problem that needs to be fixed.  This can be handled with traffic laws, legal enforcement, better vehicle regulation, better road design, better driver education, signs and on road devices.  Road deaths are acknowledged to be an issue though.

        We fucking designed Bitcoin.  So why aren't we fixing this obvious problem?

        What problem ? The problem of living in reality where cause-->effect ? Your life is on the line with every breath and every heart beat - never mind crossing the damned road. It's a fundamental matter of principle, not a problem that can be fixed.

        I'm in favour of traffic laws, good roads, etc. They're all good ideas and can reduce the risks.
        I'm in favour of the technologies making Bitcoin more user-friendly, etc. for the same reasons.
        However, reality remains the final arbiter. Your actions are final and have consequences, and time is uni-directional.
        If you get hit by a car, you got hit by a car. No ifs or buts - it's done and it can't be undone.
        If you pay me Bitcoin, the Bitcoin is mine. No ifs or buts - it's done and it can't be undone.

        There is a partial solution if you want one. It's called Virtual Reality, like Frogger, where you can die crossing the road and come back to life and have another go. Most of us find these worlds unsatisfying though - ironically, because everything is inconsequential/pointless.
        Similarly, you can use your fiat bank (for Visa, bank transfers, online payments, etc.) which is it's own Virtual Reality where physical laws don't count. What counts is banking rules and the authorisation decisions of powerful banker overseers. This can be seen as a comforting safety net but it comes at multiple costs, eg. these trusted overseers demand to be paid handsomely, can make mistakes, have conflicts-of-interests, can take liberties, etc.
        The overseers are the final arbiter. Your actions are not final, they must be authorised and may be denied or reversed, etc.
        If your Frog gets hit by a car, never mind - have another go. Forget it ever happened, maybe you were jostled so it shouldn't count anyway . . . or maybe . . .
        If you transfer some $ to me, they might appear in my account - only to disappear again. Maybe an overseer says you broke some rule, maybe an overseer says I broke some rule, or maybe . . .

        When it comes to crossing the road, I choose reality, immutability - and I accept the consequences of my actions, including those of my mistakes. Similarly, I like the idea of reality, immutability for my money.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on December 01, 2023, 07:42:29 PM
        One can visit this page to see the cloud-based quantum computing resources available now.
        https://en.wikipedia.org/wiki/Cloud-based_quantum_computing

        I would say there have been breakthroughs already and as with any new technology, it is very hard to determine its future usefulness and developmental timeframe this early on (especially if you believe some of the claims about computational power.) The use of AI and traditional supercomputers to aid in the design of quantum computers is another unknown variable. And besides quantum computers there are other 'orders of magnitude' advances being researched in traditional computing such as the emulation of biological neural networks.

        Will bitcoin as implemented be useful for the generational transfer of wealth? I think it is something for long-horizon bitcoiners to consider. I am sure there are many people who have no idea there could be such future risks. If a first supercomputer hack occurs, it will be such big news. We would see a drop faster than that FTT token, I would think.

        As discussed earlier, any supercomputer capable of breaking Bitcoin is capable of breaking just about anything and everything. A bad actor could wreak havoc right across the board. However, the chance of a fully-formed Bitcoin/everything breaker suddenly plugging in without warning seems remote in the greatest extreme. Bitcoin Miners and Bitcoin people in general have great interest in any and all technolgical developments that might affect Bitcoin. If just one Bitcoiner, or even just one person with a conscience, got to hear about it . . .

        I'm as concerned about this scenario as I am concerned about NKorea suddenly, out of the blue, launching a new weapon that's so far advanced that the rest of the world is defenceless against it. It's theoretically possible, but . . .

        Most crypto related anomalies like "Bitcoin Sender Struck With $3.1M Transaction Fee"; are related to the exchanges or simply due to various very unforgiving operator error.

        https://web3isgoinggreat.com/

        The 'unforgiving' side of things can seem scary at first but it's part and parcel of 'immutable'. It's nothing new - we all know that physical reality/time is immutable, and we're all generally comfortable with it. We know our lives are on the line when we cross the road, so we take great care. We should take similar care transacting Bitcoin, when our money is on the line.
        I've thought about the super-fast encryption breaker problem too, because some outcomes might put an expiration date on our entire financial system.

        The simple solution for username/password or username/biometric logins (i.e bank or brokerage accounts) is to have a time delay for each username's subsequent password attempt. A ten or twenty second delay, or a delay that gets longer with each incorrect password attempt, can extend the time it takes a brute force attack to locate a password to many years of trying random combinations.

        This simple method is immune to the increasing speed of the hacker's equipment. However an AI information skimmer could do better by generating a few million potential passwords out of your personal information revealed online - year of birth, favorite things, favorite authors or characters, school mascot, sayings, word patterns, old passwords obtained from previous hacks, etc, thus generating a smaller solution set and guessing many password within a few months of trying, even with the time delays. An AI could also screen out possible passphrases that are not pronounceable, dramatically limiting the solution set.

        With biometrics, there could be genetic patterns that could be assumed from information revealed online that reduce the solution set. An AI might find all sorts of patterns to make itself a better password cracker - patterns our sciences have never discovered. Maybe blue eyed people with type AB blood never have a certain pattern in their retinas?

        So account-level time delays are a useful way to keep brute force hackers out of individual accounts, but they don't stop the hacker from trying a new username with each password combination in an attempt to breach any one account in the system. In large systems with potentially billions of users, the odds increase for the cracking program to randomly luck into at least one correct username/password combination, even if the odds are astronomical. The defender cannot set the whole system to time delay with each wrong password guess or else it could be locked up by anyone and thus would always be locked. If nothing comes up on the first attempt of a billion unique usernames plus a billion possible passwords, the hacker can roll again after the 10-20 second delay has passed, and so on. Even with an escalating time delay, the hacker has a reasonable chance of getting into somebody's account because they can throw very large numbers at very steep odds. Being that somebody or reimbursing that somebody may be a cost of doing business.

        At its core, the problem is our authentication data must be small enough to be convenient. The size of "convenient" means memorable in a human brain (containing dozens of other passwords) or portable as part of a human body (but then unchangeable if breached). The size of "convenient" doesn't change much, but the capabilities of brute force or AI-led password guessing attempts are constantly increasing. In theory, this dynamic leads to a crossover point where hacking capabilities exceed the possible security level of any convenient form of authentication data.

        At that time we would no longer have a reliable way to trade in electronic formats, which could mean worldwide economic collapse if it happened fast enough. There is no guarantee offensive tech won't evolve faster than defensive tech, or the rules of our slow-moving economic systems.

        Time delays could still be part of the answer, but at some point the brute force or AI-led attacks come so constantly that all user accounts are always at the maximum time delay. The maximum time delay can only be as high as a user is willing to tolerate. 20-30 seconds perhaps? One minute to make a sale?

        Another possible solution is three-factor: username + passphrase + biometric, for example. I don't see this as a good solution because it's even less convenient and more costly than a time delay, and because it is essentially an extended password, which only kicks the can down the road. Plus the biometric element can never be changed, even if compromised. If we assume our data will eventually be compromised - as passwords currently are, then the biometric part is a false security blanket.

        We could end up living in a world where we all carry around physical tokens containing authentication chains dozens of petabytes in size just to access each time-delayed account. Losing such a device might mean losing your money, unless some meatspace identity verification procedure was applied. Such a system would be far less efficient than our current world of 12-character-passwords-by-email. Yet it would get around the "convenient size" limitation and allow electronic commerce to continue despite quantum computing and ubiquitous AIs with near-infinite cryptographic cracking power.

        We're currently using layers of cryptographic scrambling on as many of these elements as possible to prevent in-transit interception, but cryptography is essentially a problem of processing speeds and intelligence, and we can't hide behind these fast-falling barriers forever.

        Cryptocurrencies deserve credit as an initial attempt to address this looming issue, but the method of hiding keys behind usernames, passwords, and website businesses built by shady characters in legal gray areas has been a disaster for so many people who have had their accounts and wallets hacked. If anything, all the false security of cryptocurrency only made it easier to steal. I bet there are technical lessons to be learned beneath the FOMO-throwing-money-at-obvious-frauds layer.

        Arms races are as old as life itself.
        If Quantum Computers can be used to launch a significant attack, it seems likely that Quantum Computers can also be used to mount a significant defence.
        AI seems like a different, less predictable, animal. Who knows where that will lead us ?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 02, 2023, 01:17:00 AM
        One can visit this page to see the cloud-based quantum computing resources available now.
        https://en.wikipedia.org/wiki/Cloud-based_quantum_computing

        I would say there have been breakthroughs already and as with any new technology, it is very hard to determine its future usefulness and developmental timeframe this early on (especially if you believe some of the claims about computational power.)
        You listed no breakthroughs, just that you "would say" they exist.  My comment on "2-3 years from a breakthrough" is quantum computing expert Robert Sutor criticizing the hype around quantum computing.
        https://www.youtube.com/watch?v=qYwAHhy52jY
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 02, 2023, 02:24:40 AM
        If/when quantum computing gets close to breaking cryptography, that would be a risk to both Bitcoin addresses and the blockchain.  Most cryptography assumes factoring large integers takes far longer than Shor's Algorithm, which is a quantum computing approach to factoring.  Searching for Shor's Algorithm brings up research papers with the numbers 15 and 21 being factored.
        https://en.wikipedia.org/wiki/Shor%27s_algorithm

        Hybrid algorithms use conventional computers to pre-compute a starting point, which lets them use 3 qubits.

        Quote
        For example, the factorization of 1,099,551,473,989 relied on classical pre-processing to reduce the problem to a three-qubit quantum circuit.  Furthermore, the three numbers factored in this paper (200,099, 291,311, and 1,099,551,473,989) can easily be factored using Fermat's factorization method, requiring only 3, 1, and 1 iterations of the loop respectively.
        https://en.wikipedia.org/wiki/Integer_factorization_records#Records_for_efforts_by_quantum_computers

        I interpret this to mean factoring using quantum computing is stuck at using a handful of qubits.  A year ago IBM rolled out a 433 qubit computer, and a month ago Atom Computer announced a 1000 qubit computer.  Why is the capacity of the latest quantum computers a hundred times greater than the number of qubits used to research factoring?

        https://newsroom.ibm.com/2022-11-09-IBM-Unveils-400-Qubit-Plus-Quantum-Processor-and-Next-Generation-IBM-Quantum-System-Two
        https://atom-computing.com/quantum-startup-atom-computing-first-to-exceed-1000-qubits/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: crimp on December 02, 2023, 11:03:08 AM
        I’m not a quantum expert, but the following is my understanding of the distinction.

        Quantum annealing machines can’t (efficiently) run Shor’s algorithm. The annealing machines have higher number of qubits but are designed to solve certain kinds of optimization problems.

         Universal quantum computers are harder to scale, require advanced refrigeration, and need lots of error correction. For every logical qubit you can reliably use to compute you need several additional physical qubits to correct errors. The  433 and 1000 figures are likely physical qubits, not logical qubits.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 02, 2023, 10:31:57 PM
        Error correction is a much bigger challenge than I realized.  There's 7-qubit-code error correction that divides the number of physical qubits by 7, resulting in logical qubits with tolerable error rates (results are still probabilities).
        https://en.wikipedia.org/wiki/Quantum_error_correction#Models

        Quantum computers factoring numbers have have 3 logical qubits, but behind the scenes run on a 21 qubit computer (each group of 7 forming one usable qubit).  This also means I need to be careful which articles I read, as non-experts will confuse needing 3 logical qubits with needing 3 physical qubits (as I initially did).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: wantstoinvest on December 03, 2023, 11:20:52 AM
        Any one have any insight on why crypto has been rising in the lat few weeks? Does it change anyones opinion on having a crypto allocation?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on December 03, 2023, 02:47:05 PM
        I've read other people claiming the price increase reflects anticipation of the SEC being forced to approve bitcoin ETFs which would (they say) unlock a lot more US consumer demand for purchasing bitcoin.

        We're also about five months away from the next halving of the blockchain reward, which has historically been associated with a significant increase in the price of bitcoin as the supply of new bitcoin entering the market drops while demand presumably remains constant.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on December 03, 2023, 03:08:15 PM
        Any one have any insight on why crypto has been rising in the lat few weeks? Does it change anyones opinion on having a crypto allocation?

        Some of Bitcoin's rise is probably due to an inrush of Mustachian purchases resulting from my persuasive arguments here.

        Also, the seemingly imminent Spot ETFs expected to bring institutional money in + a general legitimisation/normalisation of Bitcoin.

        Also, anticipation of the next halving around April 2024.

        Also, signs of more "monetary easing" creeping back in / on the horizon.

        All bullish for Bitcoin.

        As for the rest of crypto ? Mostly riding coat-tails imo, but I don't really know . . . (and don't much care either).
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 03, 2023, 10:23:21 PM
        I've read other people claiming the price increase reflects anticipation of the SEC being forced to approve bitcoin ETFs which would (they say) unlock a lot more US consumer demand for purchasing bitcoin.
        The price of BTC-USD spiked on Oct 23, 2023.
        https://finance.yahoo.com/quote/BTC-USD/

        Also on Oct 23, 2023 :
        Quote
        The D.C. Circuit Court of Appeals closed the books on a dispute between the U.S. Securities and Exchange Commission (SEC) and Grayscale, with a final ruling that effectively orders the agency to scrap its rejection of the asset manager's spot bitcoin ETF application.
        https://www.coindesk.com/policy/2023/10/23/grayscale-court-victory-over-sec-in-spot-bitcoin-etf-case-made-final/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on December 04, 2023, 12:35:01 AM
        Bitcoin following gold up IMO aswell as anticipation of the ETFs and the halving.  The market is looking for harder assets as it begins to realise that the USA is basically insolvent, the national debt is now rising exponentially and the only choice soon will be to print its way into oblivion.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 04, 2023, 12:11:53 PM
        Bitcoin's market cap rose $75 billion in anticipation of a spot Bitcoin ETF.  I doubt there's $75B of new demand from institutional investors - they can already buy Bitcoin without the ETF.  Combine that with my thesis for a ceiling on market gains, and I think Bitcoin's +38% gains since Oct 20th are excessive.

        I've opened a small short position in shares of $MSTR (currently $560/sh), which move closely with the price of Bitcoin.  Does anyone else have negative exposure to Bitcoin?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on December 04, 2023, 02:12:14 PM
        Bitcoin following gold up IMO aswell as anticipation of the ETFs and the halving.  The market is looking for harder assets as it begins to realise that the USA is basically insolvent, the national debt is now rising exponentially and the only choice soon will be to print its way into oblivion.
        1) Why would halving - the Bitcoin equivalent of a large interest rate cut - increase the value of Bitcoin? Is new supply really that big a part of the daily float, and is that supply expected to actually drop?

        2) The U.S. National Debt as a percentage of GDP has been flat-to-down since 2021. Since the USA is clearly not insolvent and the national debt is clearly not rising exponentially in inflation-adjusted terms, isn't that a negative for Bitcoin?
        (https://fred.stlouisfed.org/graph/fredgraph.png?g=1cbUi)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on December 04, 2023, 08:44:49 PM
        Bitcoin following gold up IMO aswell as anticipation of the ETFs and the halving.  The market is looking for harder assets as it begins to realise that the USA is basically insolvent, the national debt is now rising exponentially and the only choice soon will be to print its way into oblivion.
        1) Why would halving - the Bitcoin equivalent of a large interest rate cut - increase the value of Bitcoin? Is new supply really that big a part of the daily float, and is that supply expected to actually drop?[/img]

        Ok i'll try and break it down for you.  The vast majority of Bitcoin is locked away in cold wallets by long term holders, it doesn't move.  Also that percentage of bitcoin that is held by long term holders is continually increasing.  Bitcoin is traded on the margins on exchanges, there is only a small percentage of 'liquid' supply that is not owned by long term holders.  You have your regular buyers and your regular sellers and together on the exchange supply vs demand they determine the price.

        After the halving, miners are suddently selling half as much, HODLers are buying just as much as always or more as many are anticipating the price to rise. This throws out the delicate balance between supply and demand and Bitcoin for sale quickly dries up on exchanges = supply shock. The only thing that can give is price. Price goes up.  You only need to look at bitcoins long term charts and you can clearly see the effects of the 4 year halving cycle on bitcoins price.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on December 04, 2023, 08:56:28 PM
        Bitcoin following gold up IMO aswell as anticipation of the ETFs and the halving.  The market is looking for harder assets as it begins to realise that the USA is basically insolvent, the national debt is now rising exponentially and the only choice soon will be to print its way into oblivion.
        2) The U.S. National Debt as a percentage of GDP has been flat-to-down since 2021. Since the USA is clearly not insolvent and the national debt is clearly not rising exponentially in inflation-adjusted terms, isn't that a negative for Bitcoin?
        (https://fred.stlouisfed.org/graph/fredgraph.png?g=1cbUi)

        That's one way to look at it.  Another way to look at it is debt interest payments as a percentage of the budget and debt interest payments as a percentage of tax revenue.

        America are now inbetween a rock and a hard place where they have to keep interest rates high to keep a lid on inflation but they also cannot afford to pay the interest without printing more money which will drive inflation higher down the road.  The other problem is that nations like China and Saudi Arabia who used to buy a lot of this debt are now reluctant to buy it and reducing their positions.  If debt buyers don't line up to fund the deficits than the money printers switch on.

        (https://i.imgur.com/YN5Yv0t.png)

        Keep in mind that Defense spending accounts for 12 percent of all federal spending and nearly half of discretionary spending, just to put it in perspective how huge the debt interest bill is becoming.

        Good article here actually

        https://www.cnbc.com/2023/11/17/ray-dalio-says-us-reaching-a-point-where-our-debt-problem-gets-even-worse.html#:~:text=Economy-,Ray%20Dalio%20says%20U.S.%20reaching%20an%20inflection%20point%20where,problem%20quickly%20gets%20even%20worse&text=Soaring%20U.S.%20government%20debt%20is,founder%20Ray%20Dalio%20said%20Friday.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 05, 2023, 01:16:22 AM
        The all-time high in cold BTC wallets has not been matched by an all-time high in the price of BTC, although it has risen +150% YTD.  Crypto exchange Bitfinex released this analysis on Nov 27 2023 :
        Quote
        An unprecedented 13.65 million Bitcoin, approximately 70 percent of the total circulating supply, has not been transacted or moved for over a year, a new
        all-time high.
        PDF https://blog.bitfinex.com/wp-content/uploads/2023/11/Bitfinex-Alpha-82.pdf

        Many (most?) BTC trades avoid blockchain fees.  Crypto exchange Binance doesn't touch its 2.5% of all BTC when its customers trade Bitcoin.  They update internal records.  Same for Grayscale (3.3% of all BTC) when shares of $GBTC change hands.  These transactions are off the chain (!), which hides the volume from those analyzing cold wallets.

        Yes, a large majority of BTC wallets are cold, but most trading of BTC doesn't involve wallets or on chain transactions.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on December 05, 2023, 07:36:00 AM
        The all-time high in cold BTC wallets has not been matched by an all-time high in the price of BTC, although it has risen +150% YTD.  Crypto exchange Bitfinex released this analysis on Nov 27 2023 :
        Quote
        An unprecedented 13.65 million Bitcoin, approximately 70 percent of the total circulating supply, has not been transacted or moved for over a year, a new
        all-time high.
        PDF https://blog.bitfinex.com/wp-content/uploads/2023/11/Bitfinex-Alpha-82.pdf

        Many (most?) BTC trades avoid blockchain fees.  Crypto exchange Binance doesn't touch its 2.5% of all BTC when its customers trade Bitcoin.  They update internal records.  Same for Grayscale (3.3% of all BTC) when shares of $GBTC change hands.  These transactions are off the chain (!), which hides the volume from those analyzing cold wallets.

        Yes, a large majority of BTC wallets are cold, but most trading of BTC doesn't involve wallets or on chain transactions.

        Makes sense.  Blockchain is a shitty way to do transactions - on a day to day basis any security it provides is unimportant in comparison to the need to actually move bitcoin around so of course circumventing it would be a top priority for anyone interested in trading it.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on December 05, 2023, 10:03:28 AM
        The all-time high in cold BTC wallets has not been matched by an all-time high in the price of BTC, although it has risen +150% YTD.  Crypto exchange Bitfinex released this analysis on Nov 27 2023 :
        Quote
        An unprecedented 13.65 million Bitcoin, approximately 70 percent of the total circulating supply, has not been transacted or moved for over a year, a new
        all-time high.
        PDF https://blog.bitfinex.com/wp-content/uploads/2023/11/Bitfinex-Alpha-82.pdf

        Many (most?) BTC trades avoid blockchain fees.  Crypto exchange Binance doesn't touch its 2.5% of all BTC when its customers trade Bitcoin.  They update internal records.  Same for Grayscale (3.3% of all BTC) when shares of $GBTC change hands.  These transactions are off the chain (!), which hides the volume from those analyzing cold wallets.

        Yes, a large majority of BTC wallets are cold, but most trading of BTC doesn't involve wallets or on chain transactions.
        We are imagining all these Bitcoin sitting in cold wallets (e.g. solid state drives or USB sticks in people's safes) but what if a large percentage of them were lost over the years, as drives failed and got lost, as computers got wiped, as thieves stole stuff and never found the Bitcoin on them, as people died along with knowledge of their keys or passwords, as people simply forgot keys and passwords, etc?

        The HODL'ed versus LOST ratio wouldn't really affect the day to day supply and demand or new mining, but it might affect the odds of Bitcoin ever being used for day-to-day transactions. If most of the "currency" is lost, then the supply is much lower than is assumed. That means the number of people holding Bitcoin is lower than it might appear, and the size of the market for Bitcoin is much smaller than we assume when we imagine everyone putting Bitcoin in cold storage for years.

        If a high percentage of Bitcoin were lost - that's bullish because supply is lower than expected and >90% of Bitcoin that can exist (according to the current rules) has already been mined. I.e. The slowing trickle of newly mined supply is the only thing keeping Bitcoins available for sale. Yet it's also bearish because it means the fan club of HODL'ers is smaller than thought and cryptocurrency isn't as popular as it seems when one simply multiplies number of coins by price.

        I am unaware of any way to distinguish whether a coin that didn't move for a year, or five years, is being cold stored or if it was lost, never to be found again. I.e. if it's on a thumb drive, are those Bitcoin in a safe and destined to be spent some day, or is it 30 feet deep in a landfill? I think this detail matters for an "asset" whose value is completely dependent upon a narrative of expanding public interest.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on December 05, 2023, 03:25:18 PM
        The all-time high in cold BTC wallets has not been matched by an all-time high in the price of BTC, although it has risen +150% YTD.  Crypto exchange Bitfinex released this analysis on Nov 27 2023 :
        Quote
        An unprecedented 13.65 million Bitcoin, approximately 70 percent of the total circulating supply, has not been transacted or moved for over a year, a new
        all-time high.
        PDF https://blog.bitfinex.com/wp-content/uploads/2023/11/Bitfinex-Alpha-82.pdf

        Many (most?) BTC trades avoid blockchain fees.  Crypto exchange Binance doesn't touch its 2.5% of all BTC when its customers trade Bitcoin.  They update internal records.  Same for Grayscale (3.3% of all BTC) when shares of $GBTC change hands.  These transactions are off the chain (!), which hides the volume from those analyzing cold wallets.

        Yes, a large majority of BTC wallets are cold, but most trading of BTC doesn't involve wallets or on chain transactions.

        More Bitcoin in cold wallets is a positive sign - is it not ?  Fewer Bitcoin on exchanges = fewer Bitcoin at non-custodial risk and fewer Bitcoin being actively traded.
        Maybe I'm missing something, but you seem to be arguing against points that nobody has made.

        We are imagining all these Bitcoin sitting in cold wallets (e.g. solid state drives or USB sticks in people's safes) but what if a large percentage of them were lost over the years, as drives failed and got lost, as computers got wiped, as thieves stole stuff and never found the Bitcoin on them, as people died along with knowledge of their keys or passwords, as people simply forgot keys and passwords, etc?

        The HODL'ed versus LOST ratio wouldn't really affect the day to day supply and demand or new mining, but it might affect the odds of Bitcoin ever being used for day-to-day transactions. If most of the "currency" is lost, then the supply is much lower than is assumed. That means the number of people holding Bitcoin is lower than it might appear, and the size of the market for Bitcoin is much smaller than we assume when we imagine everyone putting Bitcoin in cold storage for years.

        If a high percentage of Bitcoin were lost - that's bullish because supply is lower than expected and >90% of Bitcoin that can exist (according to the current rules) has already been mined. I.e. The slowing trickle of newly mined supply is the only thing keeping Bitcoins available for sale. Yet it's also bearish because it means the fan club of HODL'ers is smaller than thought and cryptocurrency isn't as popular as it seems when one simply multiplies number of coins by price.

        I am unaware of any way to distinguish whether a coin that didn't move for a year, or five years, is being cold stored or if it was lost, never to be found again. I.e. if it's on a thumb drive, are those Bitcoin in a safe and destined to be spent some day, or is it 30 feet deep in a landfill? I think this detail matters for an "asset" whose value is completely dependent upon a narrative of expanding public interest.

        There are widely-publicised speculations that as many as 6M Bitcoin could be lost - it's common knowledge. Lost Bitcoin doesn't mean lost or reduced interest. The 'losers' still own the Bitcoin and it's safe to assume they still care about Bitcoin - they just can't access their lost Bitcoin. They are the ultimate HODLers - taking one for the team.

        Complete non-issue = zero concern.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: blue_green_sparks on December 05, 2023, 09:48:02 PM
        The 'losers' still own the Bitcoin and it's safe to assume they still care about Bitcoin - they just can't access their lost Bitcoin. They are the ultimate HODLers - taking one for the team.

        This made me chuckle. There truly is a "crypto language" that will probably be studied by linguists and sociologists someday. Us degen whales can't stand those paperhanded FUDsters who diss dApp and DeFi. It's probably nothing, LFG.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 06, 2023, 03:49:26 AM
        The all-time high in cold BTC wallets has not been matched by an all-time high in the price of BTC, although it has risen +150% YTD.  Crypto exchange Bitfinex released this analysis on Nov 27 2023 :
        Quote
        An unprecedented 13.65 million Bitcoin, approximately 70 percent of the total circulating supply, has not been transacted or moved for over a year, a new
        all-time high.
        PDF https://blog.bitfinex.com/wp-content/uploads/2023/11/Bitfinex-Alpha-82.pdf

        Many (most?) BTC trades avoid blockchain fees.  Crypto exchange Binance doesn't touch its 2.5% of all BTC when its customers trade Bitcoin.  They update internal records.  Same for Grayscale (3.3% of all BTC) when shares of $GBTC change hands.  These transactions are off the chain (!), which hides the volume from those analyzing cold wallets.

        Yes, a large majority of BTC wallets are cold, but most trading of BTC doesn't involve wallets or on chain transactions.

        More Bitcoin in cold wallets is a positive sign - is it not ?  Fewer Bitcoin on exchanges = fewer Bitcoin at non-custodial risk and fewer Bitcoin being actively traded.
        Maybe I'm missing something, but you seem to be arguing against points that nobody has made.
        Look where Juan Ponce de León, two posts above that one, replies to ChpBstrd asking about halving.  He claims a balance exists between supply and demand, which is upset by halving of block rewards (which reduces new supply).

        Exchanges use cold wallets.  For example, Binance moved $4 billion USD worth of Bitcoin from a cold wallet a week or so ago (very likely to pay fines to the U.S. government).
        https://blockworks.co/news/binance-cold-wallet-usdt
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on December 06, 2023, 04:18:13 AM
        The 'losers' still own the Bitcoin and it's safe to assume they still care about Bitcoin - they just can't access their lost Bitcoin. They are the ultimate HODLers - taking one for the team.

        This made me chuckle. There truly is a "crypto language" that will probably be studied by linguists and sociologists someday. Us degen whales can't stand those paperhanded FUDsters who diss dApp and DeFi. It's probably nothing, LFG.

        I responded to a post that speculated about "HODLers" and the "HODL'd versus LOST ratio" in the same language as the original post - for clarity.

        Language is interesting and changes all the time, particularly in specialised subjects, and especially with new tech. If linguists and sociologists do study it someday, they'll conclude that "crypto-language" is nothing more than typical in-group shorthand and humour. I'm an older fellow, not really one of the cool kids, and don't use "crypto-language" much - but it's clear and concise, and can sometimes be useful.



        This message was screened for Viruses, Malware, Spam and Phishing content before being sent from an Android device via Bluetooth and WiFi through several Firewalls.
        Chuckle, chuckle . . . There truly is a "tech-bro language" that will probably be studied by linguists and sociologists someday . . .
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on December 06, 2023, 05:36:12 AM
        The all-time high in cold BTC wallets has not been matched by an all-time high in the price of BTC, although it has risen +150% YTD.  Crypto exchange Bitfinex released this analysis on Nov 27 2023 :
        Quote
        An unprecedented 13.65 million Bitcoin, approximately 70 percent of the total circulating supply, has not been transacted or moved for over a year, a new
        all-time high.
        PDF https://blog.bitfinex.com/wp-content/uploads/2023/11/Bitfinex-Alpha-82.pdf

        Many (most?) BTC trades avoid blockchain fees.  Crypto exchange Binance doesn't touch its 2.5% of all BTC when its customers trade Bitcoin.  They update internal records.  Same for Grayscale (3.3% of all BTC) when shares of $GBTC change hands.  These transactions are off the chain (!), which hides the volume from those analyzing cold wallets.

        Yes, a large majority of BTC wallets are cold, but most trading of BTC doesn't involve wallets or on chain transactions.

        More Bitcoin in cold wallets is a positive sign - is it not ?  Fewer Bitcoin on exchanges = fewer Bitcoin at non-custodial risk and fewer Bitcoin being actively traded.
        Maybe I'm missing something, but you seem to be arguing against points that nobody has made.
        Look where Juan Ponce de León, two posts above that one, replies to ChpBstrd asking about halving.  He claims a balance exists between supply and demand, which is upset by halving of block rewards (which reduces new supply).

        And Juan is, of course, correct. Bitcoin halving will clearly affect the Bitcoin supply/demand balance.

        Exchanges conducting customer transactions internally/offChain have zero effect on the overall supply/demand balance - they're just buffers that soak up some of the to-ing and fro-ing.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on December 06, 2023, 07:33:02 AM
        Most crypto related anomalies like "Bitcoin Sender Struck With $3.1M Transaction Fee"; are related to the exchanges or simply due to various very unforgiving operator error.

        https://web3isgoinggreat.com/

        The 'unforgiving' side of things can seem scary at first but it's part and parcel of 'immutable'. It's nothing new - we all know that physical reality/time is immutable, and we're all generally comfortable with it. We know our lives are on the line when we cross the road, so we take great care. We should take similar care transacting Bitcoin, when our money is on the line.

        And, note that 'immutable' is not synonymous with 'unresolvable'.

        The $3.1M fee you mentioned is being (has been?) voluntarily refunded: https://cryptoslate.com/antpool-to-refund-record-3-1m-bitcoin-transaction-fee-after-costly-user-mistake/ (https://cryptoslate.com/antpool-to-refund-record-3-1m-bitcoin-transaction-fee-after-costly-user-mistake/).
        Likewise, the similar Paxos $500k fee that occurred in September was voluntarily refunded.

        If you fat-finger 0.1BTC instead of 0.01BTC to your crack dealer, you probably won't get it back. But if you're dealing with honest people with a conscience and/or a reputation to protect, immutable errors can be resolved.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: crimp on December 06, 2023, 07:52:17 AM

        If you fat-finger 0.1BTC instead of 0.01BTC to your crack dealer, you probably won't get it back. But if you're dealing with honest people with a conscience and/or a reputation to protect, immutable errors can be resolved.

        This is basically the value proposition of the traditional financial system. There’s nothing wrong with augmenting cryptographic protections in practice with some amount of trust or legal contract, but it is kind of telling that the blockchain-based payments systems rely on significant externally enforced social protocols just like banks do. At some point it seems to me relying on a slow database and generally honest counterparties is not particularly compelling as opposed to a fast database and generally honest counterparties.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on December 06, 2023, 10:13:39 AM

        If you fat-finger 0.1BTC instead of 0.01BTC to your crack dealer, you probably won't get it back. But if you're dealing with honest people with a conscience and/or a reputation to protect, immutable errors can be resolved.

        This is basically the value proposition of the traditional financial system. There’s nothing wrong with augmenting cryptographic protections in practice with some amount of trust or legal contract, but it is kind of telling that the blockchain-based payments systems rely on significant externally enforced social protocols just like banks do. At some point it seems to me relying on a slow database and generally honest counterparties is not particularly compelling as opposed to a fast database and generally honest counterparties.

        This couldn't be further from the truth - it's a complete misunderstanding / misinterpretation / misrepresentation.

        The Bitcoin offering is completely different from "the value proposition of the traditional financial system". Bitcoin absolutely categorically does not "rely on significant externally enforced social protocols just like banks do".

        My point was simply that an honest party can voluntarily refund a payment made in error or whatever, and that there is history of honest parties doing just that - including the specific 'unforgiving' case quoted by blue_green_sparks being forgiven.
        The fact that a party may behave honourably does not, in any way, detract from the fundamental permissionless trustless immutability of a Bitcoin transaction.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: crimp on December 06, 2023, 11:50:53 AM

        If you fat-finger 0.1BTC instead of 0.01BTC to your crack dealer, you probably won't get it back. But if you're dealing with honest people with a conscience and/or a reputation to protect, immutable errors can be resolved.

        This is basically the value proposition of the traditional financial system. There’s nothing wrong with augmenting cryptographic protections in practice with some amount of trust or legal contract, but it is kind of telling that the blockchain-based payments systems rely on significant externally enforced social protocols just like banks do. At some point it seems to me relying on a slow database and generally honest counterparties is not particularly compelling as opposed to a fast database and generally honest counterparties.

        This couldn't be further from the truth - it's a complete misunderstanding / misinterpretation / misrepresentation.

        The Bitcoin offering is completely different from "the value proposition of the traditional financial system". Bitcoin absolutely categorically does not "rely on significant externally enforced social protocols just like banks do".

        My point was simply that an honest party can voluntarily refund a payment made in error or whatever, and that there is history of honest parties doing just that - including the specific 'unforgiving' case quoted by blue_green_sparks being forgiven.
        The fact that a party may behave honourably does not, in any way, detract from the fundamental permissionless trustless immutability of a Bitcoin transaction.

        I understand the cryptographic assumptions and security properties of Bitcoin. I design, implement and review cryptography software professionally. We just disagree philosophically in regards to whether those properties are attractive as a contribution to an overall payments ecosystem.

        My position is that in a payments ecosystem, the database and settlement layer is only a subset. In both banking and cryptocurrency there have been numerous instances of lawyers forcing clawbacks of funds sent in error, exchanges sending money back when they receive it in error, etc. In cryptocurrency you also get the recurring comedy of offering a carrot ('white hat' rewards) or stick (law enforcement) to those who abuse protocols to steal funds. I posit that in both banking and cryptocurrency the existence of informal, socially-enforced means of correcting for human error is a feature, not a bug.

        The difference is that in the banking system, these guard rails and relationships are explicitly the product on offer. Fraud protections and AML requirements offer a social good separate from the underlying database technology used to move around figures in ledger(s). In the cryptocurrency world, people argue that the social enforcement is unimportant to the ecosystem because the security proofs demonstrate that the basic transaction substrate (Bitcoin) is secure. This is true in the powerful, limited technical sense of cryptographic proofs, but elides the context in which the technology is actually used. In practice, many cryptocurrency proponents seem change their philosophy suddenly when they realize they accidentally sent too much money or sent funds to the wrong address. They then look for legal means to recoup their funds (assuming they didn't destroy them entirely by sending them to an invalid address)! A very similar story has played out in various ways in the world of smart contracts.

        If you're going to fall back on the legal system or the honor of others in any case, why not use a fast settlements layer instead of a slow one? Either code is law or it isn't. Luckily, it isn't.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 06, 2023, 12:30:04 PM
        Bitcoin halving will clearly affect the Bitcoin supply/demand balance.

        Exchanges conducting customer transactions internally/offChain have zero effect on the overall supply/demand balance - they're just buffers that soak up some of the to-ing and fro-ing.
        Sure, less Bitcoin produced per day is less supply.  What I question is how much it matters - how much Bitcoin's price will change in anticipation of halving.  There's a lack of data, since halving happens once every 4 years.

        One article claimed the May 2020 halving caused Bitcoin's price to soar compared to "two months prior".  They compared to the lows during Covid-19 panic, didn't mention Covid-19 at all, and then attributed the price gains to the halving.  To me that's very poor attribution of what caused the price gains.

        Yet if we go back to July 2016, Bitcoin was faily unknown.  No futures market, no $GBTC and no $BITO.  Mt Gox was hacked 2 years before, causing a huge drop.  I could believe a halving boosted enthusiam and price in 2016, but many factors present now were absent then.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on December 06, 2023, 01:38:00 PM
        And Juan is, of course, correct. Bitcoin halving will clearly affect the Bitcoin supply/demand balance.

        Sure, of course it will have some effect, it's just rather incredible that it seems to have so much effect.

        Right now there are 6.25 BTC added to the supply per block mined. There are 144 blocks mined on an average day, so that means about 900 BTC added to the blockchain per day. That represents an approximately 0.0046% increase per day of the overall supply. Within the next few months that number will be cut down to 0.0023%. Both of these numbers are essentially insignificant fractions of the overall supply, and they're also much less than 1% of the overall daily trading volume per Coinmarketcap. Furthermore each future halving is more or less scheduled already, so you'd think it would already be priced in to a large extent, rather than something people react to as if it was some sort of surprise.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on December 06, 2023, 03:03:36 PM

        If you fat-finger 0.1BTC instead of 0.01BTC to your crack dealer, you probably won't get it back. But if you're dealing with honest people with a conscience and/or a reputation to protect, immutable errors can be resolved.

        This is basically the value proposition of the traditional financial system. There’s nothing wrong with augmenting cryptographic protections in practice with some amount of trust or legal contract, but it is kind of telling that the blockchain-based payments systems rely on significant externally enforced social protocols just like banks do. At some point it seems to me relying on a slow database and generally honest counterparties is not particularly compelling as opposed to a fast database and generally honest counterparties.

        This couldn't be further from the truth - it's a complete misunderstanding / misinterpretation / misrepresentation.

        The Bitcoin offering is completely different from "the value proposition of the traditional financial system". Bitcoin absolutely categorically does not "rely on significant externally enforced social protocols just like banks do".

        My point was simply that an honest party can voluntarily refund a payment made in error or whatever, and that there is history of honest parties doing just that - including the specific 'unforgiving' case quoted by blue_green_sparks being forgiven.
        The fact that a party may behave honourably does not, in any way, detract from the fundamental permissionless trustless immutability of a Bitcoin transaction.

        I understand the cryptographic assumptions and security properties of Bitcoin. I design, implement and review cryptography software professionally. We just disagree philosophically in regards to whether those properties are attractive as a contribution to an overall payments ecosystem.

        My position is that in a payments ecosystem, the database and settlement layer is only a subset. In both banking and cryptocurrency there have been numerous instances of lawyers forcing clawbacks of funds sent in error, exchanges sending money back when they receive it in error, etc. In cryptocurrency you also get the recurring comedy of offering a carrot ('white hat' rewards) or stick (law enforcement) to those who abuse protocols to steal funds. I posit that in both banking and cryptocurrency the existence of informal, socially-enforced means of correcting for human error is a feature, not a bug.

        The difference is that in the banking system, these guard rails and relationships are explicitly the product on offer. Fraud protections and AML requirements offer a social good separate from the underlying database technology used to move around figures in ledger(s). In the cryptocurrency world, people argue that the social enforcement is unimportant to the ecosystem because the security proofs demonstrate that the basic transaction substrate (Bitcoin) is secure. This is true in the powerful, limited technical sense of cryptographic proofs, but elides the context in which the technology is actually used. In practice, many cryptocurrency proponents seem change their philosophy suddenly when they realize they accidentally sent too much money or sent funds to the wrong address. They then look for legal means to recoup their funds (assuming they didn't destroy them entirely by sending them to an invalid address)! A very similar story has played out in various ways in the world of smart contracts.

        If you're going to fall back on the legal system or the honor of others in any case, why not use a fast settlements layer instead of a slow one? Either code is law or it isn't. Luckily, it isn't.

        Please expand on the "numerous examples of lawyers forcing clawbacks of [Bitcoin] sent in error".

        Also, re. the "many [Bitcoin] proponents changing their philosophy suddenly when they realize they accidentally sent too much money or sent funds to the wrong address". Many ? Evidence ? Regardless, humans are humans - see also the many keen dog owners who became much less enthusiastic when they got bitten, the many keen parachutists who . . . , etc. etc. A few unfortunate/careless exceptions changing their minds doesn't invalidate the initial premise.

        I've not suggested that anyone should "fall back on the legal system or the honor of others" - those are your words. I merely pointed out that, contrary to what was claimed, errors can be recoverable and recoveries have been made. I do not propose this as a 'fall back on' strategy - simply that you might get lucky if you're dealing with honourable people.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on December 06, 2023, 03:32:06 PM
        And Juan is, of course, correct. Bitcoin halving will clearly affect the Bitcoin supply/demand balance.
        Sure, of course it will have some effect, it's just rather incredible that it seems to have so much effect.

        Right now there are 6.25 BTC added to the supply per block mined. There are 144 blocks mined on an average day, so that means about 900 BTC added to the blockchain per day. That represents an approximately 0.0046% increase per day of the overall supply. Within the next few months that number will be cut down to 0.0023%. Both of these numbers are essentially insignificant fractions of the overall supply, and they're also much less than 1% of the overall daily trading volume per Coinmarketcap. Furthermore each future halving is more or less scheduled already, so you'd think it would already be priced in to a large extent, rather than something people react to as if it was some sort of surprise.
        I think this is the answer I was looking for. Supply inflation around 1.68% per year is expected to halve. Will that result in a shortage of Bitcoin? IDK. I'd have to know the amount of fiat currency flowing into Bitcoin (i.e. demand), plus the elasticity of Bitcoin, to answer that question. But what I can tell from this answer is that we're talking about a 0.86% slower increase in the supply of Bitcoin, not a major change.

        That sort of perspective is important when thinking about something that runs on narratives of "it will go up because of this" or "it will go down because of that" and has no other real-world touchpoints to confirm things like we have with fiat currencies traded in markets. It's also a rare hard number in a world of faux transactions and bad data.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on December 08, 2023, 02:13:32 PM
        Bitcoin halving will clearly affect the Bitcoin supply/demand balance.

        Exchanges conducting customer transactions internally/offChain have zero effect on the overall supply/demand balance - they're just buffers that soak up some of the to-ing and fro-ing.
        Sure, less Bitcoin produced per day is less supply.  What I question is how much it matters - how much Bitcoin's price will change in anticipation of halving.  There's a lack of data, since halving happens once every 4 years.

        One article claimed the May 2020 halving caused Bitcoin's price to soar compared to "two months prior".  They compared to the lows during Covid-19 panic, didn't mention Covid-19 at all, and then attributed the price gains to the halving.  To me that's very poor attribution of what caused the price gains.

        Yet if we go back to July 2016, Bitcoin was faily unknown.  No futures market, no $GBTC and no $BITO.  Mt Gox was hacked 2 years before, causing a huge drop.  I could believe a halving boosted enthusiam and price in 2016, but many factors present now were absent then.

        We only have the data we have. It's surprising how often that data is sufficient to validate negative characteristics, eg. volatility, yet it's never enough to validate anything positive.

        I agree. On the face of it, that's a rubbish article. I'd ignore it.

        If halving has an effect, it is likely to be independent of those other things. They might add to it or subtract from it, but they won't negate it.

        And Juan is, of course, correct. Bitcoin halving will clearly affect the Bitcoin supply/demand balance.
        Sure, of course it will have some effect, it's just rather incredible that it seems to have so much effect.

        Right now there are 6.25 BTC added to the supply per block mined. There are 144 blocks mined on an average day, so that means about 900 BTC added to the blockchain per day. That represents an approximately 0.0046% increase per day of the overall supply. Within the next few months that number will be cut down to 0.0023%. Both of these numbers are essentially insignificant fractions of the overall supply, and they're also much less than 1% of the overall daily trading volume per Coinmarketcap. Furthermore each future halving is more or less scheduled already, so you'd think it would already be priced in to a large extent, rather than something people react to as if it was some sort of surprise.
        I think this is the answer I was looking for. Supply inflation around 1.68% per year is expected to halve. Will that result in a shortage of Bitcoin? IDK. I'd have to know the amount of fiat currency flowing into Bitcoin (i.e. demand), plus the elasticity of Bitcoin, to answer that question. But what I can tell from this answer is that we're talking about a 0.86% slower increase in the supply of Bitcoin, not a major change.

        That sort of perspective is important when thinking about something that runs on narratives of "it will go up because of this" or "it will go down because of that" and has no other real-world touchpoints to confirm things like we have with fiat currencies traded in markets. It's also a rare hard number in a world of faux transactions and bad data.

        Measuring the supply of new Bitcoin vs Total Bitcoin is unlikely to be very useful imo. We know that many BTC are lost. We know that many BTC haven't moved for a long time - and should probably not be considered 'supply' in any practical sense.
        Also note that, when thinking in terms of "the amount of fiat currency flowing into Bitcoin", each halving removes a greater amount of new BTC in fiat value terms.

        Halving has, historically, preceded a bull run. Some Bitcoiners are expecting (assuming?) that this will be repeated in 2024 because it's consistently happened before, supply/demand, etc. Some Bitcoiners are expecting that it will not - because (i) correlation <> causation, (ii) this time it's different - it's priced in, (iii) the effect is becoming too small in BTC terms, (iv) too many are too confident of a dead cert and they will be easy pickings for big traders who can make it not so.

        I'm in the "don't know" camp. Bitcoin is still deep in it's speculation stage and it will jump around on rumours, expectations and gossip about halving (and everything else) just as much as and more than other prices do. Maybe we'll see a self-fulfilling prophecy halving bull run, maybe it will be a damp squib. One thing is certain - with Halving, Spot ETFs and who knows what in the fiat world, Recessions, Debt Crises, Interest Rates, Debasements, Inflations, etc. 2024-5 is unlikely to be dull - and it will be tricky to isolate the effects of each cause.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 12, 2023, 11:20:18 AM
        I'd like to do some research from on the Bitcoin miner's perspective, but I suspect our discussion of halving has run its course.

        Sometimes cause & effect are clear.  The same day spot Bitcoin ETFs were handed a victory in court, Bitcoin jumped +13%.  Other gains may be debatable, but that $40 billion increase in Bitcoin's market cap is clearly tied to the events of October 20, 2023.  I guess people ignore the events two years ago, when a futures Bitcoin ETF launched and collected $1 billion in new money... then went nowhere.  Is a spot Bitcoin ETF 40x better, and unlocks $40 billion in new investments?  In my view, that is doubtful.

        I have a theory that $GBTC and $TQQQ are both highly speculative, risky investments with similar returns.  That shows up when comparing their performance, with a big gap opening up during the meme stocks hype of early 2021.  Then GBTC crashed down and rejoined TQQQ again.  Keeping that same 5 year comparison, GBTC is currently 1/3rd ahead of TQQQ (Add 100%, the original investment, to their gains then divide).  My theory is that hype over a spot Bitcoin ETF will fade, causing GBTC to crash back down near TQQQ again.

        A day ago I closed my short position in a Bitcoin stock.  I'm expecting the SEC to approve spot Bitcoin ETFs in 1 or 4 weeks, and I don't want to hold a short position when it happens - I want to hold a short position after it happens.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on December 12, 2023, 01:12:39 PM
        It could be as simple as:

        Bitcoin goes up whenever there is media attention (halving, lawsuit, new investment vehicles, new platforms, celebrities, etc.) because this is what attracts new money to this particular asset.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 16, 2023, 11:24:16 AM
        Rather than derail the predictions thread into crypto, I thought I'd mention what I know about ETFs and how that relates to Bitcoin.

        For each ETF, a list of investment banks is authorized to keep the price of the ETF near its assets.  If the ETF is too cheap, the bank buys ETF shares and converts those into the underlying stock.  It unlocks the 500 stocks from an S&P 500 ETF to make a profit.  Their buying and selling pushes the ETF and underlying shares closer together in price.  The big bank arbitrages enough to make a profit, and its actions push ETF prices closer to their underlying assets.

        On Coinbase's exchange, customers don't trade Bitcoin "on chain" - their buys and sells are not recorded in Bitcoin's blockchain.  Instead, Coinbase keeps track of who bought, who sold, and how much BTC and cash they have in their accounts.

        I assume Bitcoin ETFs (which do not exist yet), will follow a combination of the above.  Some company will need to create electronic records tracking Bitcoin ownership.  They might have 3 assets, to oversimplify: Bitcoin, cash, and "Bitcoin ETF shares".  A big bank, if the ETF shares are too cheap, might do something like this:

        (1) somehow lock in the amount & price of the conversion in step (3)
        (2) use cash account to buy "Bitcoin ETF shares"
        (3) ask Coinbase to convert those "Bitcoin ETF shares" into equivalent Bitcoin
        (4) sell its new Bitcoin asset for cash

        This is speculation based on what I know - again, this ETF doesn't exist, and this has never been done before.  But the above steps would tend to drive the ETF price closer to the price of Bitcoin, and the institutional investor would profit off it.

        BlackRock and iShares do not need to hold Bitcoin to run an ETF.  They can use Coinbase as their Bitcoin custodian, which is what they already listed in SEC filings.  The most famous case of self-custody was the Madoff ponzi scheme, which is why I would prefer to avoid any ETF that self-custodies its own/customer assets.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on December 16, 2023, 12:51:04 PM
        Rather than derail the predictions thread into crypto, I thought I'd mention what I know about ETFs and how that relates to Bitcoin.

        For each ETF, a list of investment banks is authorized to keep the price of the ETF near its assets.  If the ETF is too cheap, the bank buys ETF shares and converts those into the underlying stock.  It unlocks the 500 stocks from an S&P 500 ETF to make a profit.  Their buying and selling pushes the ETF and underlying shares closer together in price.  The big bank arbitrages enough to make a profit, and its actions push ETF prices closer to their underlying assets.

        On Coinbase's exchange, customers don't trade Bitcoin "on chain" - their buys and sells are not recorded in Bitcoin's blockchain.  Instead, Coinbase keeps track of who bought, who sold, and how much BTC and cash they have in their accounts.

        I assume Bitcoin ETFs (which do not exist yet), will follow a combination of the above.  Some company will need to create electronic records tracking Bitcoin ownership.  They might have 3 assets, to oversimplify: Bitcoin, cash, and "Bitcoin ETF shares".  A big bank, if the ETF shares are too cheap, might do something like this:

        (1) somehow lock in the amount & price of the conversion in step (3)
        (2) use cash account to buy "Bitcoin ETF shares"
        (3) ask Coinbase to convert those "Bitcoin ETF shares" into equivalent Bitcoin
        (4) sell its new Bitcoin asset for cash

        This is speculation based on what I know - again, this ETF doesn't exist, and this has never been done before.  But the above steps would tend to drive the ETF price closer to the price of Bitcoin, and the institutional investor would profit off it.

        BlackRock and iShares do not need to hold Bitcoin to run an ETF.  They can use Coinbase as their Bitcoin custodian, which is what they already listed in SEC filings.  The most famous case of self-custody was the Madoff ponzi scheme, which is why I would prefer to avoid any ETF that self-custodies its own/customer assets.
        I appreciate this reasoning. Sounds like BLK wants to be to cryptocurrency what Levi Strauss was to the California gold rush. They'll make money on fees and they'll make money on self-arbitrage. The question is the risk they are taking with Coinbase, and the risk of getting hacked / betrayed by insiders, just like so many individual investors have experienced.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 16, 2023, 10:42:30 PM
        Coinbase has 5% of all Bitcoin, from what I recall, but they keep it spread across wallets.  Given their importance as a custodian, a hack there might even result in a halt on trading of Bitcoin ETFs.

        The SEC document I quoted in the predictions thread (*) shows BlackRock (BLK) will not self-custody Bitcoin for its iShares Bitcoin Trust ETF.  iShares ETFs provide better support for put/call options, and I expect them to win that niche among Bitcoin ETFs.

        Everyone else is up against Grayscale Bitcoin Trust (GBTC) converting to an ETF.  They will start with both $20 billion in assets and years of experience that new ETFs can't match.  GBTC's 2% expense ratio will face pressure from newer ETFs with lower annual fees.

        (*)
        According to this SEC filing, BlackRock will rely on Coinbase to hold Bitcoin.

        Quote
        BlackRock Fund Advisors (the “Trustee”) is the trustee of the Trust; Coinbase Custody Trust Company, LLC (the “Bitcoin Custodian”) is the custodian for the Trust’s bitcoin holdings
        https://www.sec.gov/Archives/edgar/data/1980994/000143774923028549/bit20231017_s1a.htm
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on December 17, 2023, 12:01:57 AM
        Even though I don't think much of coinbase what I will say is they are very good at custodying Bitcoin in cold storage wallets. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Metalcat on December 22, 2023, 09:46:23 AM
        Thought I would come back to this thread.

        I chatted not too long ago with some blockchain video game developers and feel like I grasped some crypto utility, a very small example, but it clicked for me how people can think of blockchain as the new internet, ie the network that early adopters seem insane for being a big deal because in the early years it was largely useless.

        I guess because I lived with a video game developer back in the day when Second Life was the "next big thing" I have a bit more intuitive understanding of why the fanboys are, well, fanboy-ing. These developers were talking about the utility of blockchain for easier, small increments exchange within their game ecosystem.

        So with that little tiny nugget of "hmm...I guess I could see how this isn't totally fucking useless, but I still don't see the big picture" I then read 5 books about crypto/blockchain, which I wanted to do after reading about governments/banks looking into developing their own systems, so I just wanted to feel less ignorant about the whole thing.

        I think the issue I've come across is that I see no reasonable path for investment. If I am willing to stipulate that blockchain is the next big revolutionary thing, then I came to the same conclusion that someone (I don't remember who) already stated earlier in this long thread: it's still wild speculation unless and until the utility becomes clear, because just like the dot com disaster, you can't just broadly invest in the concept.

        Even if I have total faith in crypto changing the world (I don't), I have no idea which investment vehicle would be a good idea. And if it does end up being crucial to the economy as a whole, it's value will be picked up in my index investing. Because whether *I* put money directly into blockchain tech or not, the entities I'm invested in will.

        Just like with the dot com boom and crash, I don't have the hubris to believe that I have any insight into how this could play out. I have no clue what entities could possibly end up established as dominant crypto tech forces, because I have no idea how it's potential utility could play out.

        Contrary to all of the books I've read though, I'm not convinced that I should buy Bitcoin, specifically. My gut says that Bitcoin is the Yahoo of crypto, but that's pure, wild speculation with no expertise to back it up in any way, shape or form, and perhaps I will be proven very wrong and Bitcoin will find its elusive use case and become ubiquitous and factor heavily into my index investing returns. Or perhaps I will be proven right and A LOT of people will make a ton of money off of Bitcoin the same way a ton of people made money off of Yahoo. Who knows? But that's kind of my point.

        Who knows...

        But I won't beat myself for having missed any crypto moonshots because I'm unconvinced that anyone is making big money off of crypto at this stage because they are magically more insightful than everyone else. It's still mostly complete fucking morons in my world banging on about crypto and a few VERY smart people speaking passionately about the potential of blockchain, but conservatively about how to invest in that potential.

        My sense is that it will be very difficult to invest really intelligently in blockchain itself, similar to how you couldn't really invest in the internet. Buying crypto coins and NFTs is not the same as investing based on the utility of the overall tech. It's more likely that just like with the internet, the big winners are going to be the companies that figure out how to make blockchain useful, not necessarily the specific coins/NFTs within them.

        This is a bad example because MLB isn't a publicly traded company, but imagine it were, what would be the better investment, MLB NFTs because they're worth a lot, or MLB stock because they figured out how to make money off of NFTs?

        ...or I could still be missing something... I still don't feel like I understand any of this, but I know that I understand a lot more than the fucking morons in my life who keep hammering on about how stupid I am for not buying crypto coins. So there's that...
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on December 22, 2023, 10:44:27 AM
        ...or I could still be missing something... I still don't feel like I understand any of this, but I know that I understand a lot more than the fucking morons in my life who keep hammering on about how stupid I am for not buying crypto coins. So there's that...

        So much this^^^

        Your comparison to the dotcom bubble is apt. Back in those days I became increasingly concerned as those with the least competency became more vocal about their "investments." The same exact thing happened with "real estate investors" (many of the same people in my circles) before the subprime mortgage crisis. The louder the irrationality (e.g. FOMO), the more skeptical I become.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on December 22, 2023, 11:19:23 AM
        ...or I could still be missing something... I still don't feel like I understand any of this, but I know that I understand a lot more than the fucking morons in my life who keep hammering on about how stupid I am for not buying crypto coins. So there's that...

        So much this^^^

        Your comparison to the dotcom bubble is apt. Back in those days I became increasingly concerned as those with the least competency became more vocal about their "investments." The same exact thing happened with "real estate investors" (many of the same people in my circles) before the subprime mortgage crisis. The louder the irrationality (e.g. FOMO), the more skeptical I become.

        I'm about to short BTC bigtime. Just trying to figure out the numbers and timing today actually. May need to get in and be set as soon as the 24th before midnight.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on December 22, 2023, 12:05:24 PM
        ...or I could still be missing something... I still don't feel like I understand any of this, but I know that I understand a lot more than the fucking morons in my life who keep hammering on about how stupid I am for not buying crypto coins. So there's that...

        So much this^^^

        Your comparison to the dotcom bubble is apt. Back in those days I became increasingly concerned as those with the least competency became more vocal about their "investments." The same exact thing happened with "real estate investors" (many of the same people in my circles) before the subprime mortgage crisis. The louder the irrationality (e.g. FOMO), the more skeptical I become.

        I'm about to short BTC bigtime. Just trying to figure out the numbers and timing today actually. May need to get in and be set as soon as the 24th before midnight.
        I gave up on this line of thinking when I realized crypto operates independently of any reasoning, evidence, or logic. Any rationalization a person can come up with for why it will go up or down is utterly divorced from what will actually happen. If we think we can identify the reasons why it goes up or down, we're probably wrong. There are no earnings, no revenue, no interest, no hard assets, no contracts, no nothing - so to use investment reasoning is to start from the wrong point of view.

        It's a lot like trying to overthink a slot machine. We can rationalize about a particular machine being "hot" or "lucky" or "on a payout algorithm" but what we can't see is the inner workings of a relatively simple machine, which looks nothing like our theories about luck, patterns, behavior, etc. and is simply designed to keep the players putting more coins in.

        If there's no good reason to think crypto will go up or down, but there are other ways to invest our money that do have reasons to believe they'll go up, then it makes more sense to take the probable win over the coin flip, just like it makes more sense to own stocks rather than playing slot machines.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Metalcat on December 22, 2023, 02:04:39 PM
        ...or I could still be missing something... I still don't feel like I understand any of this, but I know that I understand a lot more than the fucking morons in my life who keep hammering on about how stupid I am for not buying crypto coins. So there's that...

        So much this^^^

        Your comparison to the dotcom bubble is apt. Back in those days I became increasingly concerned as those with the least competency became more vocal about their "investments." The same exact thing happened with "real estate investors" (many of the same people in my circles) before the subprime mortgage crisis. The louder the irrationality (e.g. FOMO), the more skeptical I become.

        I'm about to short BTC bigtime. Just trying to figure out the numbers and timing today actually. May need to get in and be set as soon as the 24th before midnight.
        I gave up on this line of thinking when I realized crypto operates independently of any reasoning, evidence, or logic. Any rationalization a person can come up with for why it will go up or down is utterly divorced from what will actually happen. If we think we can identify the reasons why it goes up or down, we're probably wrong. There are no earnings, no revenue, no interest, no hard assets, no contracts, no nothing - so to use investment reasoning is to start from the wrong point of view.

        It's a lot like trying to overthink a slot machine. We can rationalize about a particular machine being "hot" or "lucky" or "on a payout algorithm" but what we can't see is the inner workings of a relatively simple machine, which looks nothing like our theories about luck, patterns, behavior, etc. and is simply designed to keep the players putting more coins in.

        If there's no good reason to think crypto will go up or down, but there are other ways to invest our money that do have reasons to believe they'll go up, then it makes more sense to take the probable win over the coin flip, just like it makes more sense to own stocks rather than playing slot machines.

        Yep, the more I read the more I understand that I can stay a passive investor and still benefit from whatever utility blockchain may have down the line. It will get baked into existing systems if it's the next big thing, or the new systems will grow up and make their way into the collective larger system.

        I will miss all of the huge moonshot opportunities to try and buy in before things skyrocket, but I already missed that with Google, Amazon, Apple, Facebook, Tesla. But I'm not a gambler, I feel zero FOMO about missing out on moonshots.

        In the meantime, I continue on my goal to even try and understand blockchain, how and when it could be useful, and what, if anything, that could ever mean for me personally or professionally. I'm not a software person *at all* so it's all very difficult for me to grasp. I *know* a lot of software people, so I get the broad strokes of things, but despite reading multiple books on the topic, I feel like I understand quite well *why* so much of what people would say about crypto made no sense to me, but I don't necessarily feel like I really understand it...if that makes sense.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on December 22, 2023, 03:37:56 PM
        ...or I could still be missing something... I still don't feel like I understand any of this, but I know that I understand a lot more than the fucking morons in my life who keep hammering on about how stupid I am for not buying crypto coins. So there's that...

        So much this^^^

        Your comparison to the dotcom bubble is apt. Back in those days I became increasingly concerned as those with the least competency became more vocal about their "investments." The same exact thing happened with "real estate investors" (many of the same people in my circles) before the subprime mortgage crisis. The louder the irrationality (e.g. FOMO), the more skeptical I become.

        I'm about to short BTC bigtime. Just trying to figure out the numbers and timing today actually. May need to get in and be set as soon as the 24th before midnight.
        I gave up on this line of thinking when I realized crypto operates independently of any reasoning, evidence, or logic. Any rationalization a person can come up with for why it will go up or down is utterly divorced from what will actually happen. If we think we can identify the reasons why it goes up or down, we're probably wrong. There are no earnings, no revenue, no interest, no hard assets, no contracts, no nothing - so to use investment reasoning is to start from the wrong point of view.

        It's a lot like trying to overthink a slot machine. We can rationalize about a particular machine being "hot" or "lucky" or "on a payout algorithm" but what we can't see is the inner workings of a relatively simple machine, which looks nothing like our theories about luck, patterns, behavior, etc. and is simply designed to keep the players putting more coins in.

        If there's no good reason to think crypto will go up or down, but there are other ways to invest our money that do have reasons to believe they'll go up, then it makes more sense to take the probable win over the coin flip, just like it makes more sense to own stocks rather than playing slot machines.

        There are a few good predictive catalysts that are easy to see if you know where to look. I can tell you in my opinion that I don't think you're far off from being correct regarding your general statements above.

        Understanding what moves crypto is like studying an alien language while having zero resources at your side.

        However I also think I have some really good tools in my box regarding BTC and I'm very confident it'll be making a drop. IMHO I personally suspect it will either happen directly over Christmas, and if not then, very early in January.

        I'm talking a heavy drop.

        Let's revisit this post and see if I was right. I'll tell you exactly what my catalysts were regardless of if I was right or wrong. If it doesn't drop we can watch to see if those specific catalysts played a prime role or not when it does drop, and discuss why. I genuinely find this very interesting.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on December 22, 2023, 07:45:39 PM
        How big a drop do you need bitcoin to make to conclude you were correct? 20%? 30%? Something more or less than that?

        When does very early January end? Jan 10th?

        I’m interested to see if your prediction pans out or not.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 22, 2023, 09:37:55 PM
        I'm about to short BTC bigtime. Just trying to figure out the numbers and timing today actually. May need to get in and be set as soon as the 24th before midnight.
        You're the only person besides me who is planning to short crypto.  If you post your thesis, I will analyze it.  If you post links, I'll take a look.  I think the quality of our decisions can be improved by challenging each other's thesis.

        I believe multiple spot Bitcoin ETFs will be approved within 3 weeks, per the SEC deadline for ARC21's application.  It would be unfair to give ARC21 the advantage of starting early, so I expect multiple ETFs get approved at once.

        I consider it very likely BTC goes above $50k on that news ($43.5k now, so +15%).  It is probable that it rises above $60k (38% jump) in the first week, but not a certainty.  I doubt BTC doubles.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on December 22, 2023, 10:53:13 PM
        This will be interesting.  One genius planning to short crypto before the ETF approval, another will short it after.  Who will win???
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on December 23, 2023, 12:39:33 AM
        How big a drop do you need bitcoin to make to conclude you were correct? 20%? 30%? Something more or less than that?

        When does very early January end? Jan 10th?

        I’m interested to see if your prediction pans out or not.

        Within reason, I'm expecting (and will gladly accept my reasoning to be wrong as I'm a day trader and not a crypto trader) at LEAST 25% drop within a span of 3 days total, followed by a slight uptick and another 10% drop... I mean, there's infinite ways it could play out but let's just say for sake of simplicity, over a period of 5 to 7 days total, 30 to 40% drop. Before Jan 10th for sure IMHO.

        If I'm wrong I'll have no embarrassment or shame. I'm just doing my best to deliver money to myself. Always learning, always willing to share outcomes and failures as well as wins. I'm really confident about what I'm saying but if it doesn't play out I have no excuses, only data about why I made the decisions I made. Simple, right? Stay tuned! And don't think I'm some genius and follow my prediction, PLEASE. I am not an advisor nor responsible for your losses. Never follow the trades or ideas of another. That's one reason I only share the ideas AFTER the fact.



        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on December 23, 2023, 01:11:28 AM
        I'm about to short BTC bigtime. Just trying to figure out the numbers and timing today actually. May need to get in and be set as soon as the 24th before midnight.
        You're the only person besides me who is planning to short crypto.  If you post your thesis, I will analyze it.  If you post links, I'll take a look.  I think the quality of our decisions can be improved by challenging each other's thesis.

        I believe multiple spot Bitcoin ETFs will be approved within 3 weeks, per the SEC deadline for ARC21's application.  It would be unfair to give ARC21 the advantage of starting early, so I expect multiple ETFs get approved at once.

        I consider it very likely BTC goes above $50k on that news ($43.5k now, so +15%).  It is probable that it rises above $60k (38% jump) in the first week, but not a certainty.  I doubt BTC doubles.

        Wait so you're expecting it to jump, yet you plan on shorting it?  Or are you saying you expect a rise for BTC but will short other cryptos? You need to be more clear because you sound extremely contradictory.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on December 23, 2023, 01:27:04 AM
        This will be interesting.  One genius planning to short crypto before the ETF approval, another will short it after.  Who will win???

        1.) Both can win. Who says it won't dip heavily before approval and then rip upward prior to approval? Or simply dip heavily and stay there until approval?

        2.). Who says that it's not possible to rip higher in anticipation of approval, only to fall hard weeks after approval and then rise again when MMs buy the dip of the people who bought FOMO and don't know how to hold?

        On and on... The most interesting is that you seem to be the genius watching the other genuises from the sidelines. Are you taking part or are you just stirring the pot? Maybe you have a genuinely sincere interest and your sarcasm isn't sarcasm, which would be cool. Let's see what happens! Either way, I've got the money to burn and I've already invested the time. I'm quite confident but that doesn't mean jack-sh*t. Merry Christmas!
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on December 23, 2023, 03:14:24 AM
        Oh I'm genuinely interested in Bitcoin, it's the hardest asset on earth and I have no doubt it will continue to appreciate over the long term vs fiat currencies printed out of thin air by central banks to steal the wealth of their citizens via currency inflation.  What the USD price of bitcoin will do over Christmas/january/thanksgiving or any other small window of time I have no idea and anyone who says they do is basically lying LMAO.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 23, 2023, 09:40:25 AM
        I'm about to short BTC bigtime. Just trying to figure out the numbers and timing today actually. May need to get in and be set as soon as the 24th before midnight.
        You're the only person besides me who is planning to short crypto.  If you post your thesis, I will analyze it.  If you post links, I'll take a look.  I think the quality of our decisions can be improved by challenging each other's thesis.

        I believe multiple spot Bitcoin ETFs will be approved within 3 weeks, per the SEC deadline for ARC21's application.  It would be unfair to give ARC21 the advantage of starting early, so I expect multiple ETFs get approved at once.

        I consider it very likely BTC goes above $50k on that news ($43.5k now, so +15%).  It is probable that it rises above $60k (38% jump) in the first week, but not a certainty.  I doubt BTC doubles.

        Wait so you're expecting it to jump, yet you plan on shorting it?  Or are you saying you expect a rise for BTC but will short other cryptos? You need to be more clear because you sound extremely contradictory.
        You plan to short Bitcoin now, after which I expect Bitcoin to jump, and then I will short it after the jump.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 23, 2023, 10:05:48 AM
        This will be interesting.  One genius planning to short crypto before the ETF approval, another will short it after.  Who will win???
        Did you slip both of us IQ tests, or is "genius" intended to be a sarcastic personal attack?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on December 23, 2023, 10:07:39 AM
        This will be interesting.  One genius planning to short crypto before the ETF approval, another will short it after.  Who will win???
        Did you slip both of us IQ tests, or is "genius" intended to be a sarcastic personal attack?

        In time you'll get over it I promise.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on December 23, 2023, 10:15:12 AM
        I'll tell you what guys, there are times when shorting bitcoin has been very profitable.  But 4 months before the halving is not one of those times.  In an election year with the fed possibly lowering rates, the planets are lining back up for bitcoin.  It's the greatest performing asset on the planet and shorting such an asset comes with extreme risk.  Of course you could be right and catch a dip but I believe any significant dips are going to be bought up fast.  If you do try this trade and are in profit I suggest you take it while you can.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on December 23, 2023, 10:21:53 AM
        This will be interesting.  One genius planning to short crypto before the ETF approval, another will short it after.  Who will win???
        Did you slip both of us IQ tests, or is "genius" intended to be a sarcastic personal attack?
        In time you'll get over it I promise.
        Making personal attacks is against the forum rules.
        https://forum.mrmoneymustache.com/forum-information-faqs/forum-rules/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: onecoolcat on December 27, 2023, 09:19:56 AM
        IDK what is going to happen with the ETF decision, nor what will happen in the markets once a decision is published.  For all I know, the price action for a ETF approval is already baked into Bitcoin's price and the markets will sell off into an announcement, or the ETF gets denied and its a total bloodbath, or the ETF is approved and it sparks a massive bullrun unlike any other. 

        I'm just not going to do anything and will react accordingly to any movement.  Prices collapse, I am buying.  Prices pump, I am sitting tight.  I prefer a bloodbath because I rather buy more.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: EverythingisNew on December 27, 2023, 01:10:08 PM
        Do you think that the SEC will issue more guidance on crypto regulation before approving the spot-ETFs? It seems to me that the SEC is letting crypto push them and their only regulation is charging “bad actors” in federal court.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on December 27, 2023, 01:19:31 PM
        Do you think that the SEC will issue more guidance on crypto regulation before approving the spot-ETFs? It seems to me that the SEC is letting crypto push them and their only regulation is charging “bad actors” in federal court.

        I think they'll pretend that they want to issue more guidance prior to passing but will pass before they actually create anything solid. Similar to cannabis.

        "Okay, so it's legal, but now what?"

        And then the literal endless flow of legislation will start pouring in. This is when you'll begin to see the darker side of what crypto's "regulation" will deliver to the world.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on December 27, 2023, 02:22:19 PM
        Do you think that the SEC will issue more guidance on crypto regulation before approving the spot-ETFs? It seems to me that the SEC is letting crypto push them and their only regulation is charging “bad actors” in federal court.

        I don't see why more regulations are needed, do you?   Binance and Changpeng Zhao admitted they broke of slew of existing regulations and CZ is looking at jail time as a result.   Kraken is being sued for allegedly breaking existing regulations.   SBF went to jail for breaking existing regulations.   The Winklevoss Twins are being sued for allegedly breaking existing regulations.   Mashinsky has been sued and charged for allegedly breaking regulations.    I'm no expert on securities law of course, but it seems like the existing regulations are perfectly applicable.

        I don't know where the SEC's thinking is at right now, but previously they have rejected Bitcoin ETFs in part because of concerns that a small number of individuals could manipulate the price through wash trading.    Wash trading is already illegal. So what new regulation is needed? 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on December 27, 2023, 06:21:33 PM
        Do you think that the SEC will issue more guidance on crypto regulation before approving the spot-ETFs? It seems to me that the SEC is letting crypto push them and their only regulation is charging “bad actors” in federal court.

        Another big thing about the "acceptance" of crypto regulation that a lot of people don't understand is taxes. Most of these big players brought their ideas to the SEC in a sneaky format that that the IRS deems as untaxable. Obviously, favorable for them and the average buyer, but highly unfavorable to the SEC and their friends. That's what the main arguments have really been about all this time.

        Some have folded to the SEC to an extent and presented a model that IS taxable, but causes them much more potential headaches with actually bringing the product to market efficiently, to say the least.

        This is why my opinion is they'll let it pass, then the never-ending regulation will occur, then adjustments will follow for government use of some of these instruments and/or their technologies in a way which they weren't originally intended for, using blanket laws and screwing the whole "regulated crypto market" into something that most crypto fans never imagined or expected.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on December 27, 2023, 08:48:13 PM
        Do you think that the SEC will issue more guidance on crypto regulation before approving the spot-ETFs? It seems to me that the SEC is letting crypto push them and their only regulation is charging “bad actors” in federal court.

        I don't see why more regulations are needed, do you?   Binance and Changpeng Zhao admitted they broke of slew of existing regulations and CZ is looking at jail time as a result.   Kraken is being sued for allegedly breaking existing regulations.   SBF went to jail for breaking existing regulations.   The Winklevoss Twins are being sued for allegedly breaking existing regulations.   Mashinsky has been sued and charged for allegedly breaking regulations.    I'm no expert on securities law of course, but it seems like the existing regulations are perfectly applicable.

        I don't know where the SEC's thinking is at right now, but previously they have rejected Bitcoin ETFs in part because of concerns that a small number of individuals could manipulate the price through wash trading.    Wash trading is already illegal. So what new regulation is needed?
        Great points, but there are inherent difficulties enforcing regulations in a semi-decentralized worldwide crypto marketplace. Existing regulations work well in the format of exchanges, market makers, and brokers, all of which have accountable individuals and any of which can be fined or prosecuted. But whose neck do you choke when an account allegedly from Thailand launders dogecoin through a brand new tumbler and spits it out across a dozen international accounts which also trade with the tumbler?

        Perhaps the lesson of what’s happening is that the US is prosecuting any identifiable person using crypto the way it was designed to be used - which is as a technical way to dodge regulations and commit crimes. The era of confused regulators and legal loopholes is over. Either crypto brokers follow securities laws to the letter - which may be impossible given the configuration of existing products and markets - or crypto exchanges are regulated out of existence.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on December 27, 2023, 09:01:19 PM
        Do you think that the SEC will issue more guidance on crypto regulation before approving the spot-ETFs? It seems to me that the SEC is letting crypto push them and their only regulation is charging “bad actors” in federal court.

        I don't see why more regulations are needed, do you?   Binance and Changpeng Zhao admitted they broke of slew of existing regulations and CZ is looking at jail time as a result.   Kraken is being sued for allegedly breaking existing regulations.   SBF went to jail for breaking existing regulations.   The Winklevoss Twins are being sued for allegedly breaking existing regulations.   Mashinsky has been sued and charged for allegedly breaking regulations.    I'm no expert on securities law of course, but it seems like the existing regulations are perfectly applicable.

        I don't know where the SEC's thinking is at right now, but previously they have rejected Bitcoin ETFs in part because of concerns that a small number of individuals could manipulate the price through wash trading.    Wash trading is already illegal. So what new regulation is needed?
        Great points, but there are inherent difficulties enforcing regulations in a semi-decentralized worldwide crypto marketplace. Existing regulations work well in the format of exchanges, market makers, and brokers, all of which have accountable individuals and any of which can be fined or prosecuted. But whose neck do you choke when an account allegedly from Thailand launders dogecoin through a brand new tumbler and spits it out across a dozen international accounts which also trade with the tumbler?

        Perhaps the lesson of what’s happening is that the US is prosecuting any identifiable person using crypto the way it was designed to be used - which is as a technical way to dodge regulations and commit crimes. The era of confused regulators and legal loopholes is over. Either crypto brokers follow securities laws to the letter - which may be impossible given the configuration of existing products and markets - or crypto exchanges are regulated out of existence.

        Your last paragraph is very interesting mainly because in my long-term opinion, cryptos will be regulated out of existence - at least in the way that we know them to exist today - and reshaped into a totally different investment instrument where only the MMs get to break the rules.

        I feel quite strongly that crypto technologies and blockchain will be used by corporations an establishment players as a way to implement heavy control and regulation over society - and I'm not talking about a society of investors, I'm talking about literally using the tech to "make the world safer", with similar results to the war on drugs, the war on terror... I think you get the idea. I'd be curious to hear your honest opinion on that.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on December 28, 2023, 12:58:54 AM
        Great points, but there are inherent difficulties enforcing regulations in a semi-decentralized worldwide crypto marketplace. Existing regulations work well in the format of exchanges, market makers, and brokers, all of which have accountable individuals and any of which can be fined or prosecuted. But whose neck do you choke when an account allegedly from Thailand launders dogecoin through a brand new tumbler and spits it out across a dozen international accounts which also trade with the tumbler?

        The question was if the SEC would issue more guidance.   In your example, money laundering is already illegal.  No more guidance needed.  The guy with the account allegedly from Thailand broke the law. 

        Quote
        Perhaps the lesson of what’s happening is that the US is prosecuting any identifiable person using crypto the way it was designed to be used - which is as a technical way to dodge regulations and commit crimes. The era of confused regulators and legal loopholes is over. Either crypto brokers follow securities laws to the letter - which may be impossible given the configuration of existing products and markets - or crypto exchanges are regulated out of existence.

        Is that the case?  Of the crypto exchanges that have been busted or are under scrutiny like FTX, Voyager, Celsius, Kraken, Binance, etc. all the issues are related to blatant and clearcut violations of existing laws. And even then, it took brutally flagrant criminal activity to attract attention from regulators. 

        I think if crypto exchanges were reasonably compliant with existing rules there wouldn't be a problem.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on December 28, 2023, 06:36:01 AM
        Of the crypto exchanges that have been busted or are under scrutiny like FTX, Voyager, Celsius, Kraken, Binance, etc. all the issues are related to blatant and clearcut violations of existing laws. And even then, it took brutally flagrant criminal activity to attract attention from regulators. 

        I think if crypto exchanges were reasonably compliant with existing rules there wouldn't be a problem.

        I don't think the statement that crypto exchanges are only getting in trouble for blatant and clearcut issues correct in all cases. Binance and FTX yes.

        If you look at the lawsuit the SEC filed against Kraken, one of the things Kraken is being sued for is operating as a securities exchange without registering with the SEC, and allowing trading in securities not registered with the SEC. This is both a case where the law is not clearcut, and where the SEC's current interpretation of existing rules create a can't win scenario for crypto exchanges.

        Basically the SEC is arguing that cryptocurrencies like DASH meet the legal definition of securities. Security offerings need to be registered with the SEC and traded on exchanges registered with the SEC. SEC registered exchanges are also only allowed to trade securities which are also registered with the SEC.

        The problem here is that it what counts as a security in the crypto space is not a question of settled law. Even the SEC has, grudgingly, agreed bitcoin is not a security. Etherium probably isn't either. At the other end of the spectrum, a bunch of ICOs issued tokens which clearly met the Howey test and so clearly are securities. That's a big part of why US based exchanges tend to list a lot fewer cryptos than internationally based exchanges. They're avoiding anything their own lawyers say might be a security. But in the last year the SEC has sued a lot of exchanges for allowing trade in tokens like DASH which have been around almost a decade and which that most people outside the SEC thought were not securities and so safe to trade.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on December 28, 2023, 11:14:41 AM
        I'll stipulate there might be some grey area as to if some tokens are securities or not, but some of them 100% guaranteed are.   Anything that had an ICO, for example.   Yet, Kraken was operating as if none of them are.   You can't use the grey area defense if you are operating without grey areas.   

        And as a topper, they were charged with lots of violations that have nothing specifically to do with crypto, like co-mingling customers funds and improper lending practices.   Again, that's clear cut.  The regulations are already in place and have been for decades.   

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on December 28, 2023, 01:19:41 PM
        If you agree that there are a lot of tokens where it isn’t clear whether or not they are securities then yes we need better regs because it isn’t possible for crypto exchanges to follow the law when the law is not clearly defined.

        I don’t know how many cryptocurrencies were listed on Kraken, but I do know the SEC went after coinbase with the same argument and there they listed only a small fraction of the currencies out there and were doing in house assessments of which ones did or didn’t likely meet the Howey test. The SEC’s complaint even lists that one of Coinbase’s disclosures was that a major risk was that the SEC isn’t clear about what cryptocurrencies are or aren’t securities.

        One of the key ways to ensure good compliance with the law is to make sure people can know what the law actually is. Currents regs don’t do that.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on December 28, 2023, 04:30:34 PM
        One of the key ways to ensure good compliance with the law is to make sure people can know what the law actually is. Currents regs don’t do that.

        This is a red herring argument.   Kraken et. al. didn't get tripped up by the marginal cases.  They got busted by the clear cut cases.   The SEC only needs to prove that Kraken was trading one security before it must register as a brokerage.   

        Years ago, the SEC said essentially anything with an ICO is a security.   The logic is that the founders promote the ICO as a way raise money to grow the network, which means token owners have a reasonable expectation of the token going up in value--which meets the Howey test.    Was Kraken trading more than zero tokens with an ICO?  You bet they were.   They were even trading tokens that other exchanges had been busted for.   And the founders of the tokens helpfully have made voluminous posts on Reddit, Twitter, etc. proclaiming how their ICO will grow the enterprise and make everyone rich and continued to make posts how the project's goal is to make tons of money for the adopters.   The SEC has reams of evidence that dozens of these tokens are securities and they told everybody these were almost certainly securities years in advance.   

        If Kraken et. al. was in compliance with the clear cut cases (that is, the ones with reams of evidence) but out of compliance with some marginal cases, then this would probably be resolved by a sit down.   Instead, they are blatantly out of compliance with ALL of the cases.    They have been acting as if none of the tokens are securities when they knew for certain many of them were.  That's why the hammer is coming down.   
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on December 28, 2023, 07:39:49 PM
        If Kraken et. al. was in compliance with the clear cut cases (that is, the ones with reams of evidence) but out of compliance with some marginal cases, then this would probably be resolved by a sit down.   Instead, they are blatantly out of compliance with ALL of the cases.    They have been acting as if none of the tokens are securities when they knew for certain many of them were.  That's why the hammer is coming down.   

        It seems like we have a fundamental disagreement about the state of the facts on the ground before we even get to interpretation of how regulations need to change.

        There are something like 8,000 cryptocurrencies out there. Of course many of these are incredibly niche and minor. An exchange like Binance which was trying to argue (unsuccessfully it turned out) they weren't subject to US law trades perhaps 350 cryptocurrencies, which is probably a decent proxy for the total number of cryptocurrencies any crypto exchange might like to trade in the absence of regulatory constraints.

        Kraken was trading approximately 220 cryptocurrencies. Of these, more than 40 weren't accessible to US customers, presumably because Kraken had determined these would qualify as securities under US law.

        Kraken was not operating as if no cryptocurrencies were securities.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on December 28, 2023, 07:59:40 PM
        Kraken was not operating as if no cryptocurrencies were securities.

        Yes, they objectively were.  Kraken never registered as broker or dealer of securities, even though they were trading securities that had previously been clearly described by the SEC as securities.  Kraken also not follow required protocols required for brokers and dealers of securities. 

        Kraken did not differentiate between and securities and non-securities.  All crypto was treated as a non-security.   

        At no time did Kraken (allegedly) treat any crypto like a security.  That's why they are in the doghouse. 

         
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on December 28, 2023, 08:22:09 PM
        Kraken was not operating as if no cryptocurrencies were securities.

        Yes, they objectively were.  Kraken never registered as broker or dealer of securities, even though they were trading securities that had previously been clearly described by the SEC as securities.  Kraken also not follow required protocols required for brokers and dealers of securities. 

        Kraken did not differentiate between and securities and non-securities.  All crypto was treated as a non-security.   

        At no time did Kraken (allegedly) treat any crypto like a security.  That's why they are in the doghouse.

        I don't think anyone has figured out how to register a cryptocurrency as a security with the SEC. As a result, any cryptocurrency that is a security is also, by definition, an unregistered security. Acting as a broker or dealer of unregistered securities would not be legal.

        The way that Kraken treated many cryptocurrencies like unregistered securities was by making the decision not to provide broker or dealer services to US costumers for a wide range of crypto tokens including, but not limited to: ACA, AGLD, ALICE, ASTR, ATLAS, AUDIO, BONK, CFG, CSM, C98, GENS, GLMR, HDX, INJ, INTR, JASMY, KIN, LMWR, MC, MV, NMR, NODL, NYM, ORCA, OTP, OXY, PARA, PEPE, PERP, PICA, POL, PSTAKE, PYTH, RAY, REQ, ROOK, SAMO, SDN, STEP, SUI, TEER, WOO, YGG or XRT.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on December 28, 2023, 09:49:39 PM
        I don't think anyone has figured out how to register a cryptocurrency as a security with the SEC. As a result, any cryptocurrency that is a security is also, by definition, an unregistered security. Acting as a broker or dealer of unregistered securities would not be legal.

        You are correct that it is perfectly legal to broker unregistered securities.  However it 100% illegal to broker unregistered securities to unqualified investors.  Which certainly includes a vast percentage of Kraken's customer base and probably most people on this board. 

        The issue, according to the complaint is that Kraken itself was not registered as securities broker.  So even if the crypto was registered, Kraken still could not legally broker it. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on December 28, 2023, 11:06:30 PM
        I really don't care about shitcoins and what is a security and what isn't.  But clearly the solution is just not to offer these services to Americans at all and just have Bitcoin-only exchanges.  What the Americans then do with their bitcoin, including perhaps selling it to a no-KYC offshore exchange in an anonymous way and swapping it for whatever shitcoin scam that takes their fancy, would be up to them.  Bitcoin doesn't know or care about exchanges, securities, ETFs, SEC, regulations or anything else.  Bitcoin will just keep on pumping out blocks every 10 minutes.  You can't stop it and you can't govern it, Bitcoin is true financial sovereignty from government tyranny.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on December 29, 2023, 06:59:39 AM
        I don't think anyone has figured out how to register a cryptocurrency as a security with the SEC. As a result, any cryptocurrency that is a security is also, by definition, an unregistered security. Acting as a broker or dealer of unregistered securities would not be legal.

        You are correct that it is perfectly legal to broker unregistered securities.  However it 100% illegal to broker unregistered securities to unqualified investors.  Which certainly includes a vast percentage of Kraken's customer base and probably most people on this board. 

        The issue, according to the complaint is that Kraken itself was not registered as securities broker.  So even if the crypto was registered, Kraken still could not legally broker it.

        I said it would not be legal to broker unregistered securities. I agree my statement was too broad and there are potential workaround based on dealing only with qualified investors, but, as you point out, Kraken wasn't using those workarounds so it would certainly not be legal for Kraken to broker unregistered securities.

        Since no (or essentially no) cryptocurrencies are registered as securities, there is no reason for Kraken to register as a securities broker with the SEC. The two possible outcomes are:

        1) The cryptocurrency is not a security. Kraken can offer exchange services for this cryptocurrency to its customers. (Bitcoin falls into this category, ether probably does, arguably large number of other cryptocurrencies that fail to meet the Howey test, but this is where the lack of clear regulation is a problem)
        2) The cryptocurrency is a security. By definition that also makes it an unregistered security. Kraken cannot offer exchange services for this cryptocurrency to its US customers. (Lots of ICOs where profit was potentially going to be returned to token holders clearly fall into this category.)

        In neither of those cases can Kraken treat any cryptocurrency on this exchange as a security or register as a security broker with the SEC. It simply can't touch any cryptocurrencies that fall into category #2.

        We know there were cryptocurrencies Kraken believed fell into category #2 and wouldn't let any of its US customers trade. The reason there is a lawsuit is that the SEC is looking at the same laws and regulations as Kraken and arguing Kraken didn't put enough cryptocurrences into category #2.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on December 29, 2023, 11:37:49 AM
        We know there were cryptocurrencies Kraken believed fell into category #2 and wouldn't let any of its US customers trade. The reason there is a lawsuit is that the SEC is looking at the same laws and regulations as Kraken and arguing Kraken didn't put enough cryptocurrences into category #2.

        I'm going to go on record as saying that defense won't fly because Kraken wasn't tripped up by the marginal cases, they were tripped up by the flagrant cases.   It is analogous to saying "I didn't steal all the money at the bank, therefore I didn't intend to steal any of it." 

        Years ago, the SEC opined that most crypto were indeed securities, especially those with an ICO.   In the complaint, the SEC listed a number of tokens with ICOs that were described by their founders in great detail in their white papers and social media as money making enterprises.  That 100% makes them securities.    This is not a grey area.   They check all the boxes.   

        And it is even worse than that.  On its own website Kraken described many of these tokens as having functional utility and provided reasons why they should increase in value, therefore making money for their owners.  That is literally the definition of a security.  The notion this definition was unclear to them or they needed clarification simply isn't plausible. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on December 29, 2023, 03:44:49 PM
        I agree that the SEC has made it very clear that, in their opinion, pretty much all cryptocurrency besides bitcoin and maybe ether are securities. If they are right, since there is no way to register these as securities, if the SEC's opinion is sustained in court, it will eventually make the trading of non-bitcoin cryptocurrency de facto illegal for US citizens. If the SEC is right and every crypto other than bitcoin in a security, there is no way for cryptocurrency exchanges that offer trading in non-bitcoin cryptocurrencies to comply with current law short of ceasing to exist.

        However so far, when it comes to its views on cryptocurrency, the SEC has been repeatedly losing in court. They lost when they trying to prevent the creation of bitcoin ETFs. More relevant to our discussion, the SEC also lost when they claimed Ripple/XRP constituted a (unregistered) security.* So it seems quite reasonable that exchanges are doing their best to figure out which securities would and wouldn't fail the Howey test themselves, rather than depend on the SEC's opinions on crypto which have a history of not holding up well in court. Deciding to disagree with the SEC's opinion means the exchanges were almost certainly were going to get sued and we'll see how it works out in court.

        In the absence of specific laws passed by congress, that's what we'll continue to see. The SEC will sue based on trying to squeeze existing pre-cryptocurrency laws to fit situations the writers of those laws never envisioned. Sometimes the SEC will win and sometimes they'll lose. Eventually we'll have a solid set of precedent which will at least provide clarity to future crypto exchanges (if any can legally exist under whatever those precedents end up being). It sure seems to me we'd be better off with laws and regulation passed specifically with crypto in mind that considers the tradeoffs, rather than whatever semi-accidental combination of precedents we'll end up with if we continue down the current path.

        But I stand by my statement that you were incorrect to claim these are "blatant and clearcut issues."

        *It's slightly more complicated than that, but for the purposes on transactions on the secondary markets like the ones offered by coinbase/kraken/etc the judge ruled that XRP was not a security.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on December 29, 2023, 04:38:53 PM
        If they are right, since there is no way to register these as securities, if the SEC's opinion is sustained in court, it will eventually make the trading of non-bitcoin cryptocurrency de facto illegal for US citizens. If the SEC is right and every crypto other than bitcoin in a security, there is no way for cryptocurrency exchanges that offer trading in non-bitcoin cryptocurrencies to comply with current law short of ceasing to exist.

        THIS is exactly what I believe is going to happen. I also believe this is a legitimate "goal" of theirs.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on December 31, 2023, 10:57:48 PM
        About a 155% return for Bitcoin in 2023.  Stuck to my guns and kept buying all year.  Let's see how 2024 goes plenty happening with Bitcoin halving, Bitcoin spot ETFs, possible fed rate cuts and an election year.  I will keep buying.  I'm tipping Bitcoin over 100k at years end, good luck to all holders.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on January 01, 2024, 05:32:20 AM
        Performance over 1 year (Jan 1 2023 to Dec 31 2023) was impressive :

        BTC-USD $16,547.91 to $42,265.19 , up +155%
        GBTC $8.22 to $34.62 , up +321%
        MSTR $145.67 to $631.62 , up +334%
        COIN $36.49 to $173.92 , up +377%

        https://finance.yahoo.com/quote/BTC-USD/history?p=BTC-USD
        https://finance.yahoo.com/quote/GBTC/history?p=GBTC
        https://finance.yahoo.com/quote/MSTR/history?p=MSTR
        https://finance.yahoo.com/quote/COIN/history?p=COIN

        But if you compare 2 year performance (from Jan 1 2022), not so much :

        BTC-USD 46,311.75 to 42,265.19 , 2y -9%
        GBTC 35.29 to 34.62 , 2y -2%
        MSTR 550.61 to 631.62 , 2y +15%
        COIN 256.27 to 173.92 , 2y -32%
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on January 01, 2024, 08:03:55 PM
        (https://i.redd.it/ti53nszjlx9c1.jpeg)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 02, 2024, 11:47:31 AM
        Always interesting to look at any data from 2020 and see how the vast majority of major stocks & instruments made gains. Completely disconnected from the economy during a global pandemic.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: clarkfan1979 on January 02, 2024, 12:38:11 PM
        Performance over 1 year (Jan 1 2023 to Dec 31 2023) was impressive :

        BTC-USD $16,547.91 to $42,265.19 , up +155%
        GBTC $8.22 to $34.62 , up +321%
        MSTR $145.67 to $631.62 , up +334%
        COIN $36.49 to $173.92 , up +377%

        https://finance.yahoo.com/quote/BTC-USD/history?p=BTC-USD
        https://finance.yahoo.com/quote/GBTC/history?p=GBTC
        https://finance.yahoo.com/quote/MSTR/history?p=MSTR
        https://finance.yahoo.com/quote/COIN/history?p=COIN

        But if you compare 2 year performance (from Jan 1 2022), not so much :

        BTC-USD 46,311.75 to 42,265.19 , 2y -9%
        GBTC 35.29 to 34.62 , 2y -2%
        MSTR 550.61 to 631.62 , 2y +15%
        COIN 256.27 to 173.92 , 2y -32%



        This thread was created on September 6, 2021 and Bitcoin was trading at 51,715. Today it's trading at $45,000, so that would be around -13% over the past 2.33 years.

        During the same timeline the S&P 500 improved from 4500 to 4734. That's +5.2% + dividends over the past 2.33 years.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 02, 2024, 04:31:51 PM
        Always interesting to look at any data from 2020 and see how the vast majority of major stocks & instruments made gains. Completely disconnected from the economy during a global pandemic.

        Indeed. It was a significant factor in my 'getting' Bitcoin.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on January 05, 2024, 10:35:08 AM
        Here's a fun read about the latest Ponzi scheme - this one was $1.3B.
        https://arstechnica.com/tech-policy/2024/01/crypto-hedge-fund-ceo-may-not-exist-probe-finds-no-record-of-identity/ (https://arstechnica.com/tech-policy/2024/01/crypto-hedge-fund-ceo-may-not-exist-probe-finds-no-record-of-identity/)

        IMO this is the correct way to invest in crypto. Set up a fake company and disappear with the coins/cash. More of a money laundering challenge than a technical challenge.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 05, 2024, 02:26:58 PM
        Here's a fun read about the latest Ponzi scheme - this one was $1.3B.
        https://arstechnica.com/tech-policy/2024/01/crypto-hedge-fund-ceo-may-not-exist-probe-finds-no-record-of-identity/ (https://arstechnica.com/tech-policy/2024/01/crypto-hedge-fund-ceo-may-not-exist-probe-finds-no-record-of-identity/)

        IMO this is the correct way to invest in crypto. Set up a fake company and disappear with the coins/cash. More of a money laundering challenge than a technical challenge.

        As shitty as that is, gotta give credit where credit is due. There is a certain level of genius behind that. I mean, getting Steve Wozniak to endorse it and all? How much do you have to pay for that? Speaks volumes about Wozniak too - I can't imagine them paying him much more than $1MM but who knows.

        "I can’t wait for the HyperVerse.” LOL...

        (https://i2-prod.mirror.co.uk/incoming/article28052028.ece/ALTERNATES/s615b/0_Screen-Shot-2022-09-21-at-160326.png)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on January 05, 2024, 02:44:12 PM
        Here's a fun read about the latest Ponzi scheme - this one was $1.3B.
        https://arstechnica.com/tech-policy/2024/01/crypto-hedge-fund-ceo-may-not-exist-probe-finds-no-record-of-identity/ (https://arstechnica.com/tech-policy/2024/01/crypto-hedge-fund-ceo-may-not-exist-probe-finds-no-record-of-identity/)

        IMO this is the correct way to invest in crypto. Set up a fake company and disappear with the coins/cash. More of a money laundering challenge than a technical challenge.

        As shitty as that is, gotta give credit where credit is due. There is a certain level of genius behind that. I mean, getting Steve Wozniak to endorse it and all? How much do you have to pay for that? Speaks volumes about Wozniak too - I can't imagine them paying him much more than $1MM but who knows.

        "I can’t wait for the HyperVerse.” LOL...

        (https://i2-prod.mirror.co.uk/incoming/article28052028.ece/ALTERNATES/s615b/0_Screen-Shot-2022-09-21-at-160326.png)
        Why would you pay them when you could deepfake them?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 05, 2024, 03:02:46 PM
        Here's a fun read about the latest Ponzi scheme - this one was $1.3B.
        https://arstechnica.com/tech-policy/2024/01/crypto-hedge-fund-ceo-may-not-exist-probe-finds-no-record-of-identity/ (https://arstechnica.com/tech-policy/2024/01/crypto-hedge-fund-ceo-may-not-exist-probe-finds-no-record-of-identity/)

        IMO this is the correct way to invest in crypto. Set up a fake company and disappear with the coins/cash. More of a money laundering challenge than a technical challenge.

        As shitty as that is, gotta give credit where credit is due. There is a certain level of genius behind that. I mean, getting Steve Wozniak to endorse it and all? How much do you have to pay for that? Speaks volumes about Wozniak too - I can't imagine them paying him much more than $1MM but who knows.

        "I can’t wait for the HyperVerse.” LOL...

        (https://i2-prod.mirror.co.uk/incoming/article28052028.ece/ALTERNATES/s615b/0_Screen-Shot-2022-09-21-at-160326.png)
        Why would you pay them when you could deepfake them?

        You could just photoshop that in 10 mins... but why risk blowing your cover when someone calls fake? According to the article, it seems that they really did speak about the company (on video or something)... Someone put some serious planning into it.

        I suppose it could have been deep faked video but at that point I'd suspect we'd hear Wozniak announce that. Sounds like he never confirmed either way.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on January 05, 2024, 03:14:27 PM
        I'm guessing something like Cameo that lets people pay a couple of hundred bucks to get celebrities to record personalized video messages?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 05, 2024, 04:00:09 PM
        I'm guessing something like Cameo that lets people pay a couple of hundred bucks to get celebrities to record personalized video messages?

        Article does mention that as possibility..

        *Plot twist -

        Breaking Story: Millions of celebrity fans upset, call for immediate legal action after Cameo revealed to use up to 90% deep fake AI videos

        "Amber was so sad when she found out. Devastated. It literally ruined not only her birthday which was 3 months ago, but surely all of her future birthdays. We're just in shock. How this was ever allowed to happen is just wrong on every level. We've had to resort to online counseling for the trauma. She still hasn't left her room and refuses to eat for the last week. She tore up all her Lil Nas X posters."

        - Gina M., mom of Amber, 15.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Metalcat on January 05, 2024, 04:59:31 PM
        I'm guessing something like Cameo that lets people pay a couple of hundred bucks to get celebrities to record personalized video messages?

        Yep, the article I read explained that all of the celebrities who "endorsed" it are highly active on Cameo.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 05, 2024, 09:10:37 PM
        I'm guessing something like Cameo that lets people pay a couple of hundred bucks to get celebrities to record personalized video messages?

        Yep, the article I read explained that all of the celebrities who "endorsed" it are highly active on Cameo.

        I read that too but I'm surprised that Wozniak (being who he is) doesn't have someone managing damage control and actively preventing him from making serious fuck ups. I'm surprised he's not limited by a company contract to what/where he posts publicly.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on January 06, 2024, 10:30:13 PM
        I'm surprised how long it lasted... surprised Australia does nothing for years... and surprised they have two other scams in progress (as of a month ago, the date of the following article).

        Quote
        Many investors have reported losses thanks to a cryptocurrency investment scheme called HyperVerse, which operated in Australia from around 2018 to mid-2023. Several financial watchdogs issued warnings about the company, including the UK, Canada, Germany, and New Zealand. The Hungarian central bank warned in August 2022 that the HyperVerse project was a "suspected pyramid scheme... behind which there is no real economic activity... There is a significant chance that investors may permanently lose part or all of their invested capital."
        Estimates by Chainalysis suggest that victims have lost a combined $1.3 billion (with a B) to the scam thus far.

        The scheme's operators Sam Lee and Zijing "Ryan" Xu were also behind Blockchain Global, a collapsed company that operated the Australian ACX crypto exchange that collapsed in 2019. The company is in liquidation, and creditor claims are expected to surpass $50 million. Although Lee and Xu were reported for investigation to the Australian Securities & Investments Commission, ASIC did not take any action.

        Lee has also been involved in other investment platforms, including two that are currently active: StableDao and We Are All Satoshi. Both platforms were the target of cease and desist letters from the Californian Department of Financial Protection and Innovation in September 2023, who described them both as "fraudulent pyramid and Ponzi scheme".
        https://web3isgoinggreat.com/single/hyperverse-scam

        Because I wasn't sure of the above as a source... I looked up one of the founders and discovered they fled to Dubai when HyperFund was exposed as a Ponzi scheme... over two years ago.

        https://behindmlm.com/companies/hyperfund-confirms-executives-fleeing-to-dubai/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on January 07, 2024, 12:09:10 AM
        Quote
        Jan 5 (Reuters) - Investment management firms, stock exchanges and the U.S. Securities and Exchange Commission on Friday discussed final wording changes on filings for spot bitcoin ETFs, a step that could lead to U.S. approval of the funds for the first time next week, sources familiar with the matter said.
        https://www.reuters.com/markets/us/us-spot-bitcoin-etfs-could-win-approval-next-week-after-last-minute-application-2024-01-06/

        I view spot Bitcoin ETFs as hype that will inflate the price of Bitcoin, so I plan to short it.  I expect the SEC to grant approval to multiple ETFs, which I predict sends BTC-USD above $50,000.  Within days or weeks I expect spot Bitcoin ETFs to be open for investment, at which point I'll short again.  Then I wait for the hype to fade.

        Most crypto fans seem to view spot Bitcoin ETFs as a huge step, but I think it's incremental.  Grayscale's GBTC has over $20 billion in assets and charges an expense ratio of 2% per year.  Spot Bitcoin ETFs will charge less than 2%/year, pressuring GBTC to lose customers or lower their fees.  That's the incremental improvement I see.

        Fans of crypto seem to view spot Bitcoin ETFs as unlocking institutional investment in crypto.  I view it as incremental because of the many other ways to buy Bitcoin.  Most of the new ETFs will rely on Coinbase as a Bitcoin custodian - which institutional money could do without an ETF.  Or they can buy in the Bitcoin futures market... or shares of GBTC.

        The final deadline for ARC21's spot Bitcoin ETF application is this week, so I expect approval of that and other applications (out of fairness).  I will probably short Bitcoin stocks because they drop further than Bitcoin, and are cheaper to short.  An alternative is buying BITI, which is short Bitcoin futures.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on January 07, 2024, 12:34:41 AM
        If I was going to short bitcoin, which I wouldn't I would use a defi lending protocol like AAVE.  You would basically get paid a small amount to short it as you would make more interest on your supplied collateral than you would be paying to borrow wrapped btc.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on January 08, 2024, 05:33:48 AM
        If I was going to short bitcoin, which I wouldn't I would use a defi lending protocol like AAVE.  You would basically get paid a small amount to short it as you would make more interest on your supplied collateral than you would be paying to borrow wrapped btc.
        AAVE lost over -18% in the past week.  What happens in this scenario if AAVE drops 40% while Bitcoin only drops 20%?  To me that sounds like seizing defeat from the jaws of victory.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on January 08, 2024, 07:43:41 AM
        If I was going to short bitcoin, which I wouldn't I would use a defi lending protocol like AAVE.  You would basically get paid a small amount to short it as you would make more interest on your supplied collateral than you would be paying to borrow wrapped btc.
        AAVE lost over -18% in the past week.  What happens in this scenario if AAVE drops 40% while Bitcoin only drops 20%?  To me that sounds like seizing defeat from the jaws of victory.

        You don't have to hold AAVE coin to use the lending protocol.  You would use a 'stablecoin' as collateral like USDC, borrow wbtc and swap that to USDC as well, when Bitcoin goes down in value (if you're right), you then buy the bitcoin back cheaper and pay off your loan.  Anyhow, I'm not suggesting you actually do this, as it comes with its own risks, that's just how I would do it.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Glenstache on January 08, 2024, 04:47:58 PM
        Among the things that will erode public confidence in crypto, fairly or not:
        https://www.theguardian.com/technology/2024/jan/04/chief-executive-of-collapsed-crypto-fund-hyperverse-does-not-appear-to-exist

        Total pyramid scheme, which is not specific to it being crypto. The paid celebrity endorsement angle is interesting, in addition to the spokesperson literally not being a real person.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 08, 2024, 05:17:55 PM
        Among the things that will erode public confidence in crypto, fairly or not:
        https://www.theguardian.com/technology/2024/jan/04/chief-executive-of-collapsed-crypto-fund-hyperverse-does-not-appear-to-exist

        Total pyramid scheme, which is not specific to it being crypto. The paid celebrity endorsement angle is interesting, in addition to the spokesperson literally not being a real person.

        Wait until the public discovers that federal reserve notes are also a pyramid scheme... that will be a bad day, I think "the top will be in" then for sure!
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on January 09, 2024, 09:48:03 AM
        Among the things that will erode public confidence in crypto, fairly or not:
        https://www.theguardian.com/technology/2024/jan/04/chief-executive-of-collapsed-crypto-fund-hyperverse-does-not-appear-to-exist

        Total pyramid scheme, which is not specific to it being crypto. The paid celebrity endorsement angle is interesting, in addition to the spokesperson literally not being a real person.

        Wait until the public discovers that federal reserve notes are also a pyramid scheme... that will be a bad day, I think "the top will be in" then for sure!

        Please explain to us how federal reserve notes are a pyramid scheme. Here's a definition to get things started: https://www.investopedia.com/insights/what-is-a-pyramid-scheme/

        Quote
        A pyramid scheme is a fraudulent and unsustainable investment pitch that relies on promising unrealistic returns from imaginary investments. The early investors actually get paid those big returns, which leads them to recommend the scheme to others. Investors' returns are paid out of the new money flowing in. Eventually, no new investors can be found and the pyramid collapses.

        In a variation of the pyramid scheme, investors at each level charge initiation fees that are paid by the next layer of investors. A portion of those fees is paid on to those in the top layers of the pyramid. Eventually, no one is left to recruit. The pyramid collapses.

        If you don't like this definition then, please, tell us what you think a pyramid scheme is.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on January 09, 2024, 11:49:29 AM
        Quote
        A pyramid scheme is a fraudulent and unsustainable investment pitch that relies on promising unrealistic returns from imaginary investments. The early investors actually get paid those big returns, which leads them to recommend the scheme to others. Investors' returns are paid out of the new money flowing in. Eventually, no new investors can be found and the pyramid collapses.

        Hey look!  If you remove two words, it's also the definition of crypto.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on January 09, 2024, 12:49:30 PM
        Quote
        A pyramid scheme is a fraudulent and unsustainable investment pitch that relies on promising unrealistic returns from imaginary investments. The early investors actually get paid those big returns, which leads them to recommend the scheme to others. Investors' returns are paid out of the new money flowing in. Eventually, no new investors can be found and the pyramid collapses.

        Hey look!  If you remove two words, it's also the definition of crypto.

        Those two words really matter. If there's no fraud, no cooking of the books to deceive investors, it's not a pyramid scheme. Instead, it's a speculative bubble, like Tulip Mania.

        Curious if @WayDownSouth will actually respond. It's the kind of thing crypto zealots say with great confidence, but rarely back with substance.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 09, 2024, 01:09:12 PM
        Quote
        A pyramid scheme is a fraudulent and unsustainable investment pitch that relies on promising unrealistic returns from imaginary investments. The early investors actually get paid those big returns, which leads them to recommend the scheme to others. Investors' returns are paid out of the new money flowing in. Eventually, no new investors can be found and the pyramid collapses.

        Hey look!  If you remove two words, it's also the definition of crypto.

        Those two words really matter. If there's no fraud, no cooking of the books to deceive investors, it's not a pyramid scheme. Instead, it's a speculative bubble, like Tulip Mania.

        Curious if @WayDownSouth will actually respond. It's the kind of thing crypto zealots say with great confidence, but rarely back with substance.

        Well, Steve made a good point above. Same as crypto. Let's say Ponzi, or, Pyramid.... they're not precise definitions but let's assume that "fradulent" is loosely defined just for the sake of this explanation. Central banks (the FED being one) have an unlimited ability to purchase based on a zero-balance account. Government bonds are basically a glorified IOU, and have no true value until purchased. So from the point of origination, both instruments are essentially "imaginary". The "early investors" are world banks, central banks, governments.

        You can pretty much follow the trail from there if you'd like, it's not extremely hard to figure out. It's also a good practice to understand these things by doing your own research rather than just asking someone and deciding to believe them (or not believe them) ....regardless of if that person is an "authority" on the subject or a nobody from an internet forum.

        I could care less about money or cryptocurrency. Unfortunately, money makes it easier to acquire free time, and also other important items like food and housing. I'm not a crypto zealot, or a zealot of any form. And I'll accept your use of the term zealot being loosely (but sufficiently) related to your point at hand in the same way you should be receptive to my use of "pyramid scheme".

        Hope you guys has a good holiday break and got some R&R (whether FIREd or not). Even the retired need rest and relaxation to be in good humor and at peace.

        (BTW I was planning to short BTC heavily but I'm not so sure it's going to work as planned so I haven't started that endeavor just yet but I'm watching very closely. It keeps dragging but this week should be very telling!)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on January 09, 2024, 01:22:15 PM
        Well, Steve made a good point above. Same as crypto. Let's say Ponzi, or, Pyramid.... they're not precise definitions but let's assume that "fradulent" is loosely defined just for the sake of this explanation. Central banks (the FED being one) have an unlimited ability to purchase based on a zero-balance account. Government bonds are basically a glorified IOU, and have no true value until purchased. So from the point of origination, both instruments are essentially "imaginary". The "early investors" are world banks, central banks, governments.

        There is no fraud here.   
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on January 09, 2024, 01:25:59 PM
        Well, Steve made a good point above. Same as crypto. Let's say Ponzi, or, Pyramid.... they're not precise definitions but let's assume that "fradulent" is loosely defined just for the sake of this explanation. Central banks (the FED being one) have an unlimited ability to purchase based on a zero-balance account. Government bonds are basically a glorified IOU, and have no true value until purchased. So from the point of origination, both instruments are essentially "imaginary". The "early investors" are world banks, central banks, governments.

        You can pretty much follow the trail from there if you'd like, it's not extremely hard to figure out. It's also a good practice to understand these things by doing your own research rather than just asking someone and deciding to believe them (or not believe them) ....regardless of if that person is an "authority" on the subject or a nobody from an internet forum.

        The problem with this, however, is the Fed is very clear about its long-term goal to devalue the dollar through moderate inflation. This is why it's not a good idea to hold large amounts of cash for long periods. The Fed doesn't want people hoarding cash as this is unproductive and bad for the velocity of money. No one is promising high future returns to buyers, but instead are being told they will almost certainly have a negative return.

        If you have a beef with the incentives backed into the system for various players, fine. But it's all transparent and it's not fraudulent or a pyramid scheme.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Glenstache on January 09, 2024, 01:29:14 PM
        Well, Steve made a good point above. Same as crypto. Let's say Ponzi, or, Pyramid.... they're not precise definitions but let's assume that "fradulent" is loosely defined just for the sake of this explanation. Central banks (the FED being one) have an unlimited ability to purchase based on a zero-balance account. Government bonds are basically a glorified IOU, and have no true value until purchased. So from the point of origination, both instruments are essentially "imaginary". The "early investors" are world banks, central banks, governments.

        There is no fraud here.
        When it comes down to it all forms of currency outside of direct barter are a glorified transferrable IOU. Regular currencies, crypto, mini gold ingots, stone wheels at the bottom of the ocean, etc all have value for commerce almost exclusively as a perceived store of value (ie, a glorified IOU). The ability of central banks to adjust supply is a novel financial tool that has proven immensely valuable through the ability to stabilize economies over the last century or so that they have been in use. Are there risks associated with that capability? Of course. Have there been bad actors that have used the printing press poorly? Of course. And that is why the Fed is, and should remain, as detached from the political process/control as possible.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 09, 2024, 02:28:26 PM
        Well, Steve made a good point above. Same as crypto. Let's say Ponzi, or, Pyramid.... they're not precise definitions but let's assume that "fradulent" is loosely defined just for the sake of this explanation. Central banks (the FED being one) have an unlimited ability to purchase based on a zero-balance account. Government bonds are basically a glorified IOU, and have no true value until purchased. So from the point of origination, both instruments are essentially "imaginary". The "early investors" are world banks, central banks, governments.

        There is no fraud here.
        When it comes down to it all forms of currency outside of direct barter are a glorified transferrable IOU. Regular currencies, crypto, mini gold ingots, stone wheels at the bottom of the ocean, etc all have value for commerce almost exclusively as a perceived store of value (ie, a glorified IOU). The ability of central banks to adjust supply is a novel financial tool that has proven immensely valuable through the ability to stabilize economies over the last century or so that they have been in use. Are there risks associated with that capability? Of course. Have there been bad actors that have used the printing press poorly? Of course. And that is why the Fed is, and should remain, as detached from the political process/control as possible.

        I can agree with most of what you're saying completely, apart from the fact the Fed (or any central bank for that matter) being detached from political process and control. While I do believe it SHOULD be that way, I'd personally be very comfortable saying  it's a fact that central banks dictate political processes (both directly and indirectly), and maintain an absolutely immense amount of control.

        If you have control over a nation's currency, you definitely don't need to worry about the laws that govern said country having any impact on you, correct? I think that's quite fair to say. Therefore, you would also have direct control over that country and its political processes through monetary "policy". Taxpayers, for example, do not get to vote on the rules and boundaries of how fractional reserve banking works, and neither does the government. The latter may seem to play out that way in a public view, but history and action shows a very distinct, clear, and different situation.

        You make several good points though which I do agree with. We could be trading seashells or powdered dog shit if the majority decides it's valuable, but at the end of the day that only works at the barter level or person-to-person transactions. In our actual society, the monetary policy may be publicly governed by legislation, but I trust very much that any legislation which laid heavy stones in the path of the Fed would never come to fruition in the first place.

        I suppose I see it as simple as this - control the issuance, flow, and levels of any serious currency, and you control all those who use it. Of course there are small exceptions (many), but I have always seen central banking institutions as far above the law, and even if responsible for success or failure, able to do as they please with total impunity.

        It should not be confused (or presumed to be the idea) of them running an intentional ponzi or pyramid scheme but clearly they'll ensure their own safety and success before they ensure the financial security of the general public when worse comes to worse. After all it's in their bests "interests" (haha) to keep the wheels turning so they can continue issuing debt perpetually until A.) everything collapses, or, B.) they own it all... both very undesirable scenarios for society as a whole.

        With ALLLLLLL of that being said. It's not a sustainable system. The debt cannot ever be paid back to them, and anyone with a calculator that's able to process a sufficient number of 0's can do the math and see these facts. This is how they slowly begin to acquire "public assets", natural resources, and debts that are more physical in nature... In the end, they'll own it all and then decide how things operate - whether there is a government who acts as PR or not... and we're already much farther than halfway there IMO.

        I mean, I enjoy discussing these things and all that but nobody can say for sure what/when/where/why/how it all truly works, and/or how it will play out except for those who are actually executing these policies and calling the shots. Definitely not the lazy turds in DC.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 09, 2024, 02:43:18 PM
        Well, Steve made a good point above. Same as crypto. Let's say Ponzi, or, Pyramid.... they're not precise definitions but let's assume that "fradulent" is loosely defined just for the sake of this explanation. Central banks (the FED being one) have an unlimited ability to purchase based on a zero-balance account. Government bonds are basically a glorified IOU, and have no true value until purchased. So from the point of origination, both instruments are essentially "imaginary". The "early investors" are world banks, central banks, governments.

        There is no fraud here.

        Master Telecaster, refrain from telling me more of what Auntie Yellen told you over the holiday dinner. I mentioned very recently that discussing these subjects is interesting and enjoyable but I won't be taking your bait any longer.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on January 09, 2024, 02:52:39 PM
        When it comes down to it all forms of currency outside of direct barter are a glorified transferrable IOU. Regular currencies, crypto, mini gold ingots, stone wheels at the bottom of the ocean, etc all have value for commerce almost exclusively as a perceived store of value (ie, a glorified IOU). The ability of central banks to adjust supply is a novel financial tool that has proven immensely valuable through the ability to stabilize economies over the last century or so that they have been in use. Are there risks associated with that capability? Of course. Have there been bad actors that have used the printing press poorly? Of course. And that is why the Fed is, and should remain, as detached from the political process/control as possible.

        Not even that glorified, really.   The oldest recorded financial transactions in human history are debt/credit transactions.  Which is to say exchanging imaginary money.   
        From the 12th century to 1826 English subjects paid[urlhttps://maa.org/press/periodicals/convergence/mathematical-treasures-english-tally-sticks] taxes using wooden sticks that represented money[/url].   Yes, that's right.  You paid taxes with wood sticks.  And examples like that are ubiquitous around the world.   

        Fractional reserve lending--a.k.a creating money out thin air--has existed as long as there have been lenders.   And believe it or not, private banks create way more money out of thin air than central banks.    And yes, the system implodes from time to time, which is why the guardrails and regulations look the way the do. 

        I get the impression most crypto enthusiasts learned about crypto before learning about traditional money.   If you want to argue that the system is rigged to benefit the wealthy, you'll get no quibble from me.   But the way the monetary system itself works isn't fraud, and the basics haven't changed a whole lot throughout human history and barely at all since the creation of modern banking, which was like 600 years ago or something.  The arguments against the traditional money system (e.g. it's fraud!) to paint crypto as an alternative aren't very compelling once you understand how money works.   
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on January 09, 2024, 03:04:28 PM
        There is no fraud here.

        Master Telecaster, refrain from telling me more of what Auntie Yellen told you over the holiday dinner. I mentioned very recently that discussing these subjects is interesting and enjoyable but I won't be taking your bait any longer.

        I've observed there is nothing that causes a crypto enthusiast more distress that a simple statement of fact with no editorializing. 

        I wonder why that is?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 09, 2024, 03:05:34 PM
        When it comes down to it all forms of currency outside of direct barter are a glorified transferrable IOU. Regular currencies, crypto, mini gold ingots, stone wheels at the bottom of the ocean, etc all have value for commerce almost exclusively as a perceived store of value (ie, a glorified IOU). The ability of central banks to adjust supply is a novel financial tool that has proven immensely valuable through the ability to stabilize economies over the last century or so that they have been in use. Are there risks associated with that capability? Of course. Have there been bad actors that have used the printing press poorly? Of course. And that is why the Fed is, and should remain, as detached from the political process/control as possible.

        Fractional reserve lending--a.k.a creating money out thin air--has existed as long as there have been lenders.   And believe it or not, private banks create way more money out of thin air than central banks.    And yes, the system implodes from time to time, which is why the guardrails and regulations look the way the do. 

        Wrong again, telecaster. You do know that the reserves required by the federal reserve are 0. Zero. So they are literally creating debt (money) out of thin air with interest added from the get go.

        I know what you were thinking about how the fractional reserve system allows a bank to lend X amount per each dollar they hold, thereby creating money from thin air. However, when the central bank issues currency to the big banks, there is a term for it. I think it's "reserve deposit" or something, I am not 100% sure. Either way, that only happens for account holders - those who have accounts with the central banks. And, for example, since the Fed has a zero-balance requirement and clearly puts out more cash then they have by creating it on-demand, they are in fact the largest issuer of "thin air" money that there is.

        Hope you learned something new today. We all should, I know I did.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 09, 2024, 03:10:25 PM
        There is no fraud here.

        Master Telecaster, refrain from telling me more of what Auntie Yellen told you over the holiday dinner. I mentioned very recently that discussing these subjects is interesting and enjoyable but I won't be taking your bait any longer.

        I've observed there is nothing that causes a crypto enthusiast more distress that a simple statement of fact with no editorializing. 

        I wonder why that is?

        This is why I don't wanna respond to you. The only thing interesting to me about crypto is why so many people think it's "the future, man!".....

        For fuck's sake my friend, I am not a crypto enthusiast nor am I under distress. Thirdly, you're not stating facts.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on January 09, 2024, 03:50:56 PM
        Fractional reserve lending--a.k.a creating money out thin air--has existed as long as there have been lenders.   And believe it or not, private banks create way more money out of thin air than central banks.    And yes, the system implodes from time to time, which is why the guardrails and regulations look the way the do. 

        Wrong again, telecaster. You do know that the reserves required by the federal reserve are 0. Zero. So they are literally creating debt (money) out of thin air with interest added from the get go.

        I know what you were thinking about how the fractional reserve system allows a bank to lend X amount per each dollar they hold, thereby creating money from thin air. However, when the central bank issues currency to the big banks, there is a term for it. I think it's "reserve deposit" or something, I am not 100% sure. Either way, that only happens for account holders - those who have accounts with the central banks. And, for example, since the Fed has a zero-balance requirement and clearly puts out more cash then they have by creating it on-demand, they are in fact the largest issuer of "thin air" money that there is.

        Hope you learned something new today. We all should, I know I did.

        I don't know why you are upset.  I stated plainly that central banks create money out of thin air.  We have no disagreement at all on that point     I was just noting that private banks create even more money than the Fed.   FWIW, private banks in the US create almost $11 trillion dollars per year on average. (https://www.philadelphiafed.org/the-economy/banking-and-financial-markets/funding-liquidity-creation-by-banks)   That's far, far more than the Fed, even when QE was going full steam.  This phenomenon was described a hundred years ago.  It isn't a new idea.   

        Again, I don't understand this fact got you so agitated.   I didn't see anything controversial in what I wrote.   I wasn't even responding to you.   I was merely elaborating on @Glenstache 's observations on the imaginary nature of money, which I happen to think is an interesting topic.   
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Glenstache on January 09, 2024, 04:16:38 PM
        The zero basis instead of a gold standard is interesting. My understanding is that there is a recognition that what is actually giving the money value is the economy that it is embedded in. The more robust the economy, the more useful/valuable the medium of exchange within that economy is. Having a target inflation rate for the value of that money that is something other than zero seems sensical as there was inflation long before fiat currency. It is also not a bad thing IMHO to incentivize keeping money in circulation. There is a greater-good benefit to encouraging use of money. I also see that it forces people to have either a decreasing store of wealth if they are saving for a rainy day, etc. or are forced to store the resources as stocks or investments of some sort if they do wish to accumulate. But, to my mind the solution to the human effects of that is a good social safety net  rather than a libertarian no-government approach. And that seems to get at the nub of a lot of the friction over crypto. Many of the proponents of crypto like the (albeit-digital) tangible uniqueness of the resource and that it is decoupled from central banks and governments. There is a feeling of freedom as lack of constraint with it. Many of the doubters do not share that same zeal or buy that crypto actually delivers on that or that the lack of structure actually solves the problems/issues that crypto purports to get around. Arguing around the marginal technical issues is pointless because they don't get at the philosophical basis for why the true-believers have such a strong draw to it. The technology is a means to an idealistic end that is not universally viewed as a utopia.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on January 09, 2024, 04:21:22 PM
        When it comes down to it all forms of currency outside of direct barter are a glorified transferrable IOU. Regular currencies, crypto, mini gold ingots, stone wheels at the bottom of the ocean, etc all have value for commerce almost exclusively as a perceived store of value (ie, a glorified IOU). The ability of central banks to adjust supply is a novel financial tool that has proven immensely valuable through the ability to stabilize economies over the last century or so that they have been in use. Are there risks associated with that capability? Of course. Have there been bad actors that have used the printing press poorly? Of course. And that is why the Fed is, and should remain, as detached from the political process/control as possible.

        Fractional reserve lending--a.k.a creating money out thin air--has existed as long as there have been lenders.   And believe it or not, private banks create way more money out of thin air than central banks.    And yes, the system implodes from time to time, which is why the guardrails and regulations look the way the do. 

        Wrong again, telecaster. You do know that the reserves required by the federal reserve are 0. Zero. So they are literally creating debt (money) out of thin air with interest added from the get go.

        I know what you were thinking about how the fractional reserve system allows a bank to lend X amount per each dollar they hold, thereby creating money from thin air. However, when the central bank issues currency to the big banks, there is a term for it. I think it's "reserve deposit" or something, I am not 100% sure. Either way, that only happens for account holders - those who have accounts with the central banks. And, for example, since the Fed has a zero-balance requirement and clearly puts out more cash then they have by creating it on-demand, they are in fact the largest issuer of "thin air" money that there is.

        Hope you learned something new today. We all should, I know I did.

        You have it backwards.  Reserve deposits are deposits member banks must make with the District Federal Reserve Bank to satisfy their reserve requirements. Member banks fund loans primarily through customer deposits. [old, but still relevant: https://www.chicagofed.org/~/media/publications/economic-perspectives/1977/ep-may-jun1977-part2-erdevig-pdf.pdf]

        The central bank doesn't "issue currency" to member banks. Rather, member banks create currency when they lend.

        If a member bank experiences a short-term liquidity squeeze it can borrow directly from the Fed discount window. In such cases the Fed creates new money, though this is less common because banks use this as a last resort because the terms are less favorable.

        https://www.investopedia.com/terms/f/federalreservebank.asp
        https://www.investopedia.com/terms/f/fractionalreservebanking.asp
        https://www.investopedia.com/terms/d/discountwindow.asp
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on January 09, 2024, 04:24:53 PM
        The zero basis instead of a gold standard is interesting. My understanding is that there is a recognition that what is actually giving the money value is the economy that it is embedded in. The more robust the economy, the more useful/valuable the medium of exchange within that economy is. Having a target inflation rate for the value of that money that is something other than zero seems sensical as there was inflation long before fiat currency. It is also not a bad thing IMHO to incentivize keeping money in circulation. There is a greater-good benefit to encouraging use of money. I also see that it forces people to have either a decreasing store of wealth if they are saving for a rainy day, etc. or are forced to store the resources as stocks or investments of some sort if they do wish to accumulate. But, to my mind the solution to the human effects of that is a good social safety net  rather than a libertarian no-government approach. And that seems to get at the nub of a lot of the friction over crypto. Many of the proponents of crypto like the (albeit-digital) tangible uniqueness of the resource and that it is decoupled from central banks and governments. There is a feeling of freedom as lack of constraint with it. Many of the doubters do not share that same zeal or buy that crypto actually delivers on that or that the lack of structure actually solves the problems/issues that crypto purports to get around. Arguing around the marginal technical issues is pointless because they don't get at the philosophical basis for why the true-believers have such a strong draw to it. The technology is a means to an idealistic end that is not universally viewed as a utopia.
        I agree, and will add that when we talk about what "should" happen according to our values, we should keep in mind we are NOT talking about what "will" happen or how other people "will" behave. Thus we risk ending up with a political slogan instead of an investment thesis.

        An example:
        People "should" delete social media apps from their devices, because these have effects that are bad for their users and we want what's best for the human species. However they "will" not delete them, and Meta, Bytedance, and Google "will" keep making fortunes for their investors.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on January 09, 2024, 04:49:51 PM
        Somebody hacked the SEC's account this afternoon, posted that bitcoin ETFs were approved, and maybe traded on the $1,000 spike caused by the misinformation. Now bitcoin is about $750 lower than before the post.

        https://finance.yahoo.com/news/sec-says-unauthorized-message-about-bitcoin-etf-approvals-not-accurate-221322008.html (https://finance.yahoo.com/news/sec-says-unauthorized-message-about-bitcoin-etf-approvals-not-accurate-221322008.html)

        Standard crypto stuff.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 09, 2024, 05:57:22 PM
        When it comes down to it all forms of currency outside of direct barter are a glorified transferrable IOU. Regular currencies, crypto, mini gold ingots, stone wheels at the bottom of the ocean, etc all have value for commerce almost exclusively as a perceived store of value (ie, a glorified IOU). The ability of central banks to adjust supply is a novel financial tool that has proven immensely valuable through the ability to stabilize economies over the last century or so that they have been in use. Are there risks associated with that capability? Of course. Have there been bad actors that have used the printing press poorly? Of course. And that is why the Fed is, and should remain, as detached from the political process/control as possible.

        Fractional reserve lending--a.k.a creating money out thin air--has existed as long as there have been lenders.   And believe it or not, private banks create way more money out of thin air than central banks.    And yes, the system implodes from time to time, which is why the guardrails and regulations look the way the do. 

        Wrong again, telecaster. You do know that the reserves required by the federal reserve are 0. Zero. So they are literally creating debt (money) out of thin air with interest added from the get go.

        I know what you were thinking about how the fractional reserve system allows a bank to lend X amount per each dollar they hold, thereby creating money from thin air. However, when the central bank issues currency to the big banks, there is a term for it. I think it's "reserve deposit" or something, I am not 100% sure. Either way, that only happens for account holders - those who have accounts with the central banks. And, for example, since the Fed has a zero-balance requirement and clearly puts out more cash then they have by creating it on-demand, they are in fact the largest issuer of "thin air" money that there is.

        Hope you learned something new today. We all should, I know I did.

        You have it backwards.  Reserve deposits are deposits member banks must make with the District Federal Reserve Bank to satisfy their reserve requirements. Member banks fund loans primarily through customer deposits. [old, but still relevant: https://www.chicagofed.org/~/media/publications/economic-perspectives/1977/ep-may-jun1977-part2-erdevig-pdf.pdf]

        The central bank doesn't "issue currency" to member banks. Rather, member banks create currency when they lend.

        If a member bank experiences a short-term liquidity squeeze it can borrow directly from the Fed discount window. In such cases the Fed creates new money, though this is less common because banks use this as a last resort because the terms are less favorable.

        https://www.investopedia.com/terms/f/federalreservebank.asp
        https://www.investopedia.com/terms/f/fractionalreservebanking.asp
        https://www.investopedia.com/terms/d/discountwindow.asp

        They DO often issue currency but you're correct that they don't "issue currency" - they issue debt in exchange for bonds, or, with interest/terms attached. It's not even currency because they don't require any reserves to issue it. They create more money out of thin air than other banks combined most likely. The fractional reserve is at minimum regulated to where they must have X amount of dollars to "lend" money that's technically non-existant based on the fact they they expect the debtor to pay and that allows them to maintain their program of fractional reserve banking.

        The Fed does not utilize fractional reserve - the fed is the only one who is creating bills/digits/debt (whatever you prefer to call it) completely from thin air. From zero. They require absolutely nothing. So I understand what you're saying and maybe we'd both be correct in a way. Big banks possibly issue higher volume overall in sum, but they're limited supposedly by regulations (which they also break as a large majority are insolvent). The reserve is not limited, governed, or regulated by anyone in regards to what they decide to "lend", or buy. And of course, banks have their deposits from people and businesses so I'm not trying to say that ALL money in circulation is invaluable or created from thin air, just to clarify I'm not a (complete) idiot. lol

        I think I'm pretty solid with my opinion but again I don't work for them and the information available comes from sources that surely aren't designed to paint them in a bad light or show how their system of perpetual debt creation literally relies on the issuance of new debt to prevent total collapse. That's another story for another day/thread whatever.

        There's a lot of great info out there, a lot of BS out there, mis/dis information, and a lot of "who knows"... All I know is when you follow the money and have a better-than-general understanding of the product and concepts at play, it becomes quite apparent what high-level financiers are really doing, and a lot of what they're doing is shafting us while they rake it in... and it's not by accident, regardless of their excuses, IMO.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on January 09, 2024, 06:36:35 PM
        When it comes down to it all forms of currency outside of direct barter are a glorified transferrable IOU. Regular currencies, crypto, mini gold ingots, stone wheels at the bottom of the ocean, etc all have value for commerce almost exclusively as a perceived store of value (ie, a glorified IOU). The ability of central banks to adjust supply is a novel financial tool that has proven immensely valuable through the ability to stabilize economies over the last century or so that they have been in use. Are there risks associated with that capability? Of course. Have there been bad actors that have used the printing press poorly? Of course. And that is why the Fed is, and should remain, as detached from the political process/control as possible.

        Fractional reserve lending--a.k.a creating money out thin air--has existed as long as there have been lenders.   And believe it or not, private banks create way more money out of thin air than central banks.    And yes, the system implodes from time to time, which is why the guardrails and regulations look the way the do. 

        Wrong again, telecaster. You do know that the reserves required by the federal reserve are 0. Zero. So they are literally creating debt (money) out of thin air with interest added from the get go.

        I know what you were thinking about how the fractional reserve system allows a bank to lend X amount per each dollar they hold, thereby creating money from thin air. However, when the central bank issues currency to the big banks, there is a term for it. I think it's "reserve deposit" or something, I am not 100% sure. Either way, that only happens for account holders - those who have accounts with the central banks. And, for example, since the Fed has a zero-balance requirement and clearly puts out more cash then they have by creating it on-demand, they are in fact the largest issuer of "thin air" money that there is.

        Hope you learned something new today. We all should, I know I did.

        You have it backwards.  Reserve deposits are deposits member banks must make with the District Federal Reserve Bank to satisfy their reserve requirements. Member banks fund loans primarily through customer deposits. [old, but still relevant: https://www.chicagofed.org/~/media/publications/economic-perspectives/1977/ep-may-jun1977-part2-erdevig-pdf.pdf]

        The central bank doesn't "issue currency" to member banks. Rather, member banks create currency when they lend.

        If a member bank experiences a short-term liquidity squeeze it can borrow directly from the Fed discount window. In such cases the Fed creates new money, though this is less common because banks use this as a last resort because the terms are less favorable.

        https://www.investopedia.com/terms/f/federalreservebank.asp
        https://www.investopedia.com/terms/f/fractionalreservebanking.asp
        https://www.investopedia.com/terms/d/discountwindow.asp

        They DO often issue currency but you're correct that they don't "issue currency" - they issue debt in exchange for bonds, or, with interest/terms attached. It's not even currency because they don't require any reserves to issue it. They create more money out of thin air than other banks combined most likely. The fractional reserve is at minimum regulated to where they must have X amount of dollars to "lend" money that's technically non-existant based on the fact they they expect the debtor to pay and that allows them to maintain their program of fractional reserve banking.

        The Fed does not utilize fractional reserve - the fed is the only one who is creating bills/digits/debt (whatever you prefer to call it) completely from thin air. From zero. They require absolutely nothing. So I understand what you're saying and maybe we'd both be correct in a way. Big banks possibly issue higher volume overall in sum, but they're limited supposedly by regulations (which they also break as a large majority are insolvent). The reserve is not limited, governed, or regulated by anyone in regards to what they decide to "lend", or buy. And of course, banks have their deposits from people and businesses so I'm not trying to say that ALL money in circulation is invaluable or created from thin air, just to clarify I'm not a (complete) idiot. lol

        I think I'm pretty solid with my opinion but again I don't work for them and the information available comes from sources that surely aren't designed to paint them in a bad light or show how their system of perpetual debt creation literally relies on the issuance of new debt to prevent total collapse. That's another story for another day/thread whatever.

        There's a lot of great info out there, a lot of BS out there, mis/dis information, and a lot of "who knows"... All I know is when you follow the money and have a better-than-general understanding of the product and concepts at play, it becomes quite apparent what high-level financiers are really doing, and a lot of what they're doing is shafting us while they rake it in... and it's not by accident, regardless of their excuses, IMO.

        I think what you're describing is the Fed's Open Market Operation (OMO): https://www.federalreserve.gov/monetarypolicy/openmarket.htm

        This is the primary way the Fed manages M1 money supply, by buying/selling securities on the open market. This activity is done in response to meet FOMC objectives.

        Indeed, the Federal Reserve doesn't need reserves or anything like that to lend or buy securities. That's by design, and a wonderful thing. The 2007-2008 financial crisis very likely would have resulted in 1930's level suffering if the Feds didn't aggressively pump tons of liquidity into the system. https://www.frbsf.org/education/publications/doctor-econ/2007/august/temporary-reserves-liquidity-injection/

        You may disagree with the design of the Federal Reserve System. Certainly the Hard Money, Austrian School, and now Crypto folks really dislike it.  But that doesn't make it fraudulent or a pyramid scheme. What we have came about democratically, and it's very transparent, though difficult to understand so ripe for conspiracy theories from those who want to create a problem in the mind of consumers because they have a product to sell.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 10, 2024, 05:56:43 AM
        Somebody hacked the SEC's account this afternoon, posted that bitcoin ETFs were approved, and maybe traded on the $1,000 spike caused by the misinformation. Now bitcoin is about $750 lower than before the post.

        https://finance.yahoo.com/news/sec-says-unauthorized-message-about-bitcoin-etf-approvals-not-accurate-221322008.html (https://finance.yahoo.com/news/sec-says-unauthorized-message-about-bitcoin-etf-approvals-not-accurate-221322008.html)

        Standard crypto stuff.

        Haha - standard anti-crypto stuff.

        What do you think would happen to the S&P if someone hacked the Fed's account and posted about big QE plans in the pipeline ? Would it reflect badly on the S&P ? or the Fed ?

        This was in no way a failure of Bitcoin. The only thing proven here is that Bitcoin (which behaved exactly as would be expected) is more reliable and secure than the SEC (who got hacked).

        And the only people affected were short-term traders who are only trying to pick each other's pockets anyway, so . . . yawn . . . whatever . . .
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on January 10, 2024, 07:58:18 AM
        Nobody 'hacked' the SEC.  This happened entirely on twitter.  The platform that Elon Musk has been busy cutting security (as well as all other services) on for months now.  Given Musk's history of manipulating crypto, it wouldn't surprise me at all if he was directly involved.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on January 10, 2024, 08:41:39 AM
        Nobody 'hacked' the SEC.  This happened entirely on twitter.  The platform that Elon Musk has been busy cutting security (as well as all other services) on for months now.  Given Musk's history of manipulating crypto, it wouldn't surprise me at all if he was directly involved.
        Slander much?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: maizefolk on January 10, 2024, 08:51:12 AM
        Within reason, I'm expecting (and will gladly accept my reasoning to be wrong as I'm a day trader and not a crypto trader) at LEAST 25% drop within a span of 3 days total, followed by a slight uptick and another 10% drop... I mean, there's infinite ways it could play out but let's just say for sake of simplicity, over a period of 5 to 7 days total, 30 to 40% drop. Before Jan 10th for sure IMHO.

        Well we're now at January 10th.  The biggest drop I saw since you posted was a very brief 9% decline but definitely nothing in the 25-30% range. The USD price of bitcoin was $43.7k when this was posted and $45.2k as I write this.

        @WayDownSouth now that the period you were predicting price moves in has passed would you care to talk about the reasoning that went into the prediction and how, if at all, your views have changed as you make future predictions as a result of this unexpected outcome?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 10, 2024, 11:14:53 AM
        Nobody 'hacked' the SEC.  This happened entirely on twitter.  The platform that Elon Musk has been busy cutting security (as well as all other services) on for months now.  Given Musk's history of manipulating crypto, it wouldn't surprise me at all if he was directly involved.

        Wild speculation might be fun, but it looks like the SEC failed to properly manage the security of their X account - and the SEC got hacked.

        SEC:   (Reuters (https://www.reuters.com/technology/sec-account-hack-renews-spotlight-xs-security-concerns-2024-01-10/))
        An SEC spokesperson on Tuesday said the "unauthorized access" of its account by an "unknown party" had been revoked and the agency was working with law enforcement and others in the government to investigate the matter.

        X:  (X (https://twitter.com/safety/status/1744922467674546242?))
        We can confirm that the account @SECGov was compromised and we have completed a preliminary investigation. Based on our investigation, the compromise was not due to any breach of X’s systems. but rather due to an unidentified individual obtaining control over a phone number associated with the @SECGov account through a third party. We can also confirm that the account did not have two-factor authentication enabled at the time the account was compromised. We encourage all users to enable this extra layer of security. More information and tips on how to keep your account secure can be found in our Help Center
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on January 10, 2024, 11:27:25 AM
        Regardless, there's no reason at all for the SEC to be on any form of social media.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on January 10, 2024, 11:43:32 AM
        Regardless, there's no reason at all for the SEC to be on any form of social media.
        I wouldn't be surprised to see governments producing their own social media for press releases, notifications, etc. Its not like it's cutting edge tech any more. Might not be a bad idea actually, if there is risk of billionaires tweaking the knobs behind the scenes to affect government communication.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 10, 2024, 11:48:20 AM
        Regardless, there's no reason at all for the SEC to be on any form of social media.

        I agree. Yet they choose to . . .
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on January 10, 2024, 12:49:01 PM
        Regardless, there's no reason at all for the SEC to be on any form of social media.
        I agree. Yet they choose to . . .
        Another part of the story about why journalism no longer exists.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: FINate on January 10, 2024, 12:54:21 PM
        Regardless, there's no reason at all for the SEC to be on any form of social media.
        I wouldn't be surprised to see governments producing their own social media for press releases, notifications, etc. Its not like it's cutting edge tech any more. Might not be a bad idea actually, if there is risk of billionaires tweaking the knobs behind the scenes to affect government communication.

        It wouldn't be terribly difficult and the government could make something that works better. They don't even need to provide a client app, though it would be easy to provide a reference implementation. Just come up with a protocol similar to RSS, add metadata for things like agency, message type, and so on for filtering. Cryptographically sign payloads so they can be authenticated by client apps, but otherwise just let these things float around to whoever is interested. Make them immutable and caching is a no brainer.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on January 10, 2024, 01:13:23 PM
        Regardless, there's no reason at all for the SEC to be on any form of social media.
        I wouldn't be surprised to see governments producing their own social media for press releases, notifications, etc. Its not like it's cutting edge tech any more. Might not be a bad idea actually, if there is risk of billionaires tweaking the knobs behind the scenes to affect government communication.

        It wouldn't be terribly difficult and the government could make something that works better. They don't even need to provide a client app, though it would be easy to provide a reference implementation. Just come up with a protocol similar to RSS, add metadata for things like agency, message type, and so on for filtering. Cryptographically sign payloads so they can be authenticated by client apps, but otherwise just let these things float around to whoever is interested. Make them immutable and caching is a no brainer.

        Immutable cryptography?  Why . . . it could actually issue a new cryptocurrency for a legitimate reason!  Novel idea.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: lifeanon269 on January 10, 2024, 03:47:49 PM
        Looks like the bitcoin ETFs were officially approved by the SEC. Soon there will be retirement accounts and pensions with allocations of these bitcoin funds. Should be an interesting year.

        https://www.sec.gov/news/statement/gensler-statement-spot-bitcoin-011023
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 10, 2024, 03:52:18 PM
        Looks like the bitcoin ETFs were officially approved by the SEC. Soon there will be retirement accounts and pensions with allocations of these bitcoin funds. Should be an interesting year.

        https://www.sec.gov/news/statement/gensler-statement-spot-bitcoin-011023

        Was just working on a post about this after replying to a different post.. This is what I was waiting for, they said it was almost surely going to be approved by the 9th or 10th... No massive movement yet.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 10, 2024, 03:59:24 PM
        Within reason, I'm expecting (and will gladly accept my reasoning to be wrong as I'm a day trader and not a crypto trader) at LEAST 25% drop within a span of 3 days total, followed by a slight uptick and another 10% drop... I mean, there's infinite ways it could play out but let's just say for sake of simplicity, over a period of 5 to 7 days total, 30 to 40% drop. Before Jan 10th for sure IMHO.

        Well we're now at January 10th.  The biggest drop I saw since you posted was a very brief 9% decline but definitely nothing in the 25-30% range. The USD price of bitcoin was $43.7k when this was posted and $45.2k as I write this.

        @WayDownSouth now that the period you were predicting price moves in has passed would you care to talk about the reasoning that went into the prediction and how, if at all, your views have changed as you make future predictions as a result of this unexpected outcome?

        I haven't put a single dollar in yet on a short because it's going to be a very quick entry and I'm just not feeling it yet, I keep waiting for an opening, thought it was yesterday when I got an alert about a spike and was running to check and see if I should short but false flag.

        I'm getting less and less likely to try and short it but am ready to at a moments notice if my parameters are met. Have a ton of different alarms ready to throw signals but nothing is panning out. The truth is more drama is happening than expected and more confusion. Didn't think it'd be this bad. Give me a couple more days because I'm really expecting something to pop (either up or down) any day/hour/minute now. I won't drag it on any longer than Monday evening, mustache promise.

        Edit: https://www.marketwatch.com/story/sec-approves-spot-bitcoin-etfs-for-trade-starting-thursday-a6e1417b?mod=home-page

        I was confident this would happen yesterday but I was watching more for signals from a few specific stocks which didn't print anything noticeable or "strange" - at least not strange enough for me to warrant a short entry. Now that it's approved obviously my perspective changed seeing where the price is, HOWEVER, still expecting the same percentage drop over the same period of time. Will discuss Monday after we see where this goes!
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 10, 2024, 04:14:37 PM
        Somebody hacked the SEC's account this afternoon, posted that bitcoin ETFs were approved, and maybe traded on the $1,000 spike caused by the misinformation. Now bitcoin is about $750 lower than before the post.

        https://finance.yahoo.com/news/sec-says-unauthorized-message-about-bitcoin-etf-approvals-not-accurate-221322008.html (https://finance.yahoo.com/news/sec-says-unauthorized-message-about-bitcoin-etf-approvals-not-accurate-221322008.html)

        Standard crypto stuff.


        Seems kinda sketchy, same time the next day and they approve it. Sounds like someone accidentally published it a day early and they're covering their asses. Maybe not. Coincidence meter on this one is showing really low IMO.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: HPstache on January 10, 2024, 04:14:47 PM
        It appears the tweet was correct afterall... just went out at the wrong time.  Bitcoin ETFs coming up soon
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 10, 2024, 04:26:14 PM
        It appears the tweet was correct afterall... just went out at the wrong time.  Bitcoin ETFs coming up soon

        ....but but... they said they got hacked an unauthorized post!?

        Well, now their post from October makes them look REALLY fucking dumb and incompetent.

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Rosy on January 10, 2024, 06:26:25 PM
        Well, well - bitcoin has survived it all.
        To be traded on Thursday by Blackrock, (Goldman Sachs in the mix too) and all the other 10 financial institutions running the new show.
        Never a dull day in the crypto world but this was more dramatic than anyone expected.

        Is there a line waiting to buy into all eleven ETF's and what will happen to the price of BTC?
        We'll see what happens between now and the halving in April. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 11, 2024, 03:37:09 PM
        The spike up to 48,700 today was what I'm expecting to be the top before this starts dropping off rather quickly. One would maybe suppose a lot more action today on something so "long awaited", but I think there's a lot of people who were trying to NOT get screwed and see what happened before entering a buying frenzy.

        And....... It seems that nothing much happened at all. It looks like support might have moved up $1,000 but can't really confirm that yet. In all honesty and IMHO I think tomorrow and the weekend will tell-all on what's going to happen over the next few weeks. It's either going way up or way down but I can't see it holding here.

        The BTC "purists" seem to not like the idea, while many other crypto-fans love the idea of the ETF. The stock market itself (not the crypto market) seems equally divided for many different reasons.

        I'm going to say my bet is still on a big drop but with all the unexpected drama I won't be entering a short position unless I get the signs I'm looking for. This small spike we see saw today (and the other day during fake news) were about the right size of the spike(s) I was expecting to happen but timing was clearly off.

        If tomorrows high is lower than today's high, I expect it to begin to drop as early as market close tomorrow. This is nothing like I'm used to playing with but I do have the skill to at least attempt to get it right and if it does drop I'll definitely be making some good cash on that. Honestly it's proving much more difficult than I expected, and, I already expected extreme difficulty with getting a proper entry. The whole SEC thing really threw a wrench in things - there's a lot of controversy around that, and it's my opinion that it single-handedly ruined the natural course of what would have occurred today... AS far as feelings go, I don't have any on either side. I planned to short, and I still plan to short, but I'm seeing it more and more difficult to plan. If it moons overnight or hits the floor tomorrow, I don't even know if I'll really be able to identify a decent catalyst without it being a "best guess".

        Anyway I'll still share my perspective on what exactly I'm watching, had been watching, am/was thinking, and what made me want (and expect to be able) to confidently short this with full detail. But I'm going to wait until Monday evening (as I smentioned yesterday).

        It's really mind-bending. This is why I don't mess with crypto in the first place - the cryptosphere is shady enough as it is. Drag the SEC and a dozen big market players into the mix and it's 50-fold worse. It's looking like this a total shit-show. I don't want to see anyone lose their money so whatever your personal plans are, stick to them and please don't be swayed by what I'm saying here - I simply promised to share my thoughts and my strategy behind trying to short this thing.

        I have the strong feeling that if there isn't serious upward movement in the next 24 hours, a bitcoin bloodbath will follow. I will explain why I feel/felt that way on Monday when I revisit this.



        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 12, 2024, 09:08:07 AM
        [snip]

        The BTC "purists" seem to not like the idea, while many other crypto-fans love the idea of the ETF. The stock market itself (not the crypto market) seems equally divided for many different reasons.

        [snip]

        Bitcoin purists will always buy actual Bitcoin rather than the ETF, and will always encourage others to do the same where possible. That said, I'm pretty sure most Bitcoin purists see the Spot ETFs as a good thing - a gateway to Bitcoin for the masses.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 12, 2024, 10:31:44 AM
        [snip]

        The BTC "purists" seem to not like the idea, while many other crypto-fans love the idea of the ETF. The stock market itself (not the crypto market) seems equally divided for many different reasons.

        [snip]

        Bitcoin purists will always buy actual Bitcoin rather than the ETF, and will always encourage others to do the same where possible. That said, I'm pretty sure most Bitcoin purists see the Spot ETFs as a good thing - a gateway to Bitcoin for the masses.

        I think you're right about the first part. I think you're wrong about the second part. I think they know that the ETF would probably spark doom for BTC price overall and into the future but that's just my opinion. I don't think the masses will never hold real bitcoin and the ETFs IMO are so disconnected from crypto (and in line with normal stock market BS) that they're going to damage and dilute the purpose, need, and belief in bitcoin in the general public - even though the general public will assume they're holding actual bitcoin instead of pieces of stock.

        Could go either way though. It's diving right now and I made a nice chunk already today on a couple quick shorts. We'll see what happens over the weekend.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: seattlecyclone on January 12, 2024, 11:37:21 AM
        [snip]

        The BTC "purists" seem to not like the idea, while many other crypto-fans love the idea of the ETF. The stock market itself (not the crypto market) seems equally divided for many different reasons.

        [snip]

        Bitcoin purists will always buy actual Bitcoin rather than the ETF, and will always encourage others to do the same where possible. That said, I'm pretty sure most Bitcoin purists see the Spot ETFs as a good thing - a gateway to Bitcoin for the masses.

        It's a "gateway" to the masses participating in BTC's price changes for investment purposes. The story justifying BTC's value in the first place is that someday the masses will actually be personally doing blockchain transactions, right? These ETFs have nothing to do with that.

        I will say that the ETF managers (with appropriate SEC oversight) are probably going to be better at managing their private keys than your average ETF investor, so I generally see this as a positive thing getting the speculators with little technical knowledge onto a safer, more centralized solution.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 12, 2024, 12:12:08 PM
        [snip]

        The BTC "purists" seem to not like the idea, while many other crypto-fans love the idea of the ETF. The stock market itself (not the crypto market) seems equally divided for many different reasons.

        [snip]

        Bitcoin purists will always buy actual Bitcoin rather than the ETF, and will always encourage others to do the same where possible. That said, I'm pretty sure most Bitcoin purists see the Spot ETFs as a good thing - a gateway to Bitcoin for the masses.

        I think you're right about the first part. I think you're wrong about the second part. I think they know that the ETF would probably spark doom for BTC price overall and into the future but that's just my opinion. I don't think the masses will never hold real bitcoin and the ETFs IMO are so disconnected from crypto (and in line with normal stock market BS) that they're going to damage and dilute the purpose, need, and belief in bitcoin in the general public - even though the general public will assume they're holding actual bitcoin instead of pieces of stock.

        Well, that's your opinion but we weren't discussing your opinion. We were discussing the opinions of 'Bitcoin purists'.

        Most of the vocal Bitcoiners are, and have been for some time, more positive than negative about the likely effects of Spot ETFs (which have long been inevitable in any case).

        Could go either way though. It's diving right now and I made a nice chunk already today on a couple quick shorts. We'll see what happens over the weekend.

        Short term price moves are of very little relevance to anything and are of very little interest to me. I'd put them roughly on a par with, say, random brags about winning trades.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 12, 2024, 01:22:47 PM
        [snip]

        The BTC "purists" seem to not like the idea, while many other crypto-fans love the idea of the ETF. The stock market itself (not the crypto market) seems equally divided for many different reasons.

        [snip]

        Bitcoin purists will always buy actual Bitcoin rather than the ETF, and will always encourage others to do the same where possible. That said, I'm pretty sure most Bitcoin purists see the Spot ETFs as a good thing - a gateway to Bitcoin for the masses.

        It's a "gateway" to the masses participating in BTC's price changes for investment purposes. The story justifying BTC's value in the first place is that someday the masses will actually be personally doing blockchain transactions, right? These ETFs have nothing to do with that.

        I will say that the ETF managers (with appropriate SEC oversight) are probably going to be better at managing their private keys than your average ETF investor, so I generally see this as a positive thing getting the speculators with little technical knowledge onto a safer, more centralized solution.

        Maybe a "stepping stone" is a better analogy than a "gateway" . . . . but I think you know what I meant anyway.
        Some wannabee Bitcoin investors can't get direct or easy access to Bitcoin. Spot ETF gives them a chance to participate - albeit by proxy.
        Some don't-know-anything-about-Bitcoin investors might be recommended 1% in Bitcoin ETF - and then they might get interested and educated enough to conclude that what they really want is Bitcoin.

        I think the private-key-management theory is probably irrelevant. I doubt Joe Average Independent Investor will be buying many Spot ETF's. If Joe likes Bitcoin Joe probably wants Bitcoin, and Joe can buy Bitcoin.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: ChpBstrd on January 12, 2024, 01:51:18 PM
        I'm digging waaaaay back in my memory, but I think there was a similar excitement in late 2004 when the GLD ETF was first introduced as an easy way to invest in gold. This vehicle was expected to drive demand to the roof.

        Maybe it did. After a 7.4% drop in the first few months, GLD went on to beat the price performance of the S&P500 over the next 17 years.

        https://yhoo.it/47tFQEs (https://yhoo.it/47tFQEs)
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 12, 2024, 06:00:14 PM
        [snip]

        The BTC "purists" seem to not like the idea, while many other crypto-fans love the idea of the ETF. The stock market itself (not the crypto market) seems equally divided for many different reasons.

        [snip]

        Bitcoin purists will always buy actual Bitcoin rather than the ETF, and will always encourage others to do the same where possible. That said, I'm pretty sure most Bitcoin purists see the Spot ETFs as a good thing - a gateway to Bitcoin for the masses.

        I think you're right about the first part. I think you're wrong about the second part. I think they know that the ETF would probably spark doom for BTC price overall and into the future but that's just my opinion. I don't think the masses will never hold real bitcoin and the ETFs IMO are so disconnected from crypto (and in line with normal stock market BS) that they're going to damage and dilute the purpose, need, and belief in bitcoin in the general public - even though the general public will assume they're holding actual bitcoin instead of pieces of stock.

        Well, that's your opinion but we weren't discussing your opinion. We were discussing the opinions of 'Bitcoin purists'.

        Most of the vocal Bitcoiners are, and have been for some time, more positive than negative about the likely effects of Spot ETFs (which have long been inevitable in any case).

        Could go either way though. It's diving right now and I made a nice chunk already today on a couple quick shorts. We'll see what happens over the weekend.

        Short term price moves are of very little relevance to anything and are of very little interest to me. I'd put them roughly on a par with, say, random brags about winning trades.

        A "more vocal bitcoiner" does not mean that they're a "purist".... I think you've got it messed up and twisted a bit. Ever put any thought into what and why they're "more vocal"? Maybe to gain traction and acquire more public approval.

        You know what else is inevitable? That the approval of spot-etfs for crypto is the stepping stone to mandating regulation of all crypto. And most of the purists know this is a major threat, and therefore they are rightfully pissed off.

        I'm not long on any crypto but I view decentralization of bitcoin as being good. I think this is a gateway to CBDCs more than a gateway to BTC for the average investor as you mentioned previously. That something important to take into consideration, which most purists have done.

        The purists, HOWEVER, were the ones being the most vocal on tuesday and wednsday and thursday and still today - about the short term price moves caused by the SECs mishandling of their twitter account security. Meanwhile the hardcore pro-ETFers were not even caring or thinking about what damage that caused. Respectfully, you gotta consider all angles there.

        Short term price moves being of little relevance is a very less than correct statement.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 12, 2024, 06:07:39 PM
        I'm digging waaaaay back in my memory, but I think there was a similar excitement in late 2004 when the GLD ETF was first introduced as an easy way to invest in gold. This vehicle was expected to drive demand to the roof.

        Maybe it did. After a 7.4% drop in the first few months, GLD went on to beat the price performance of the S&P500 over the next 17 years.

        https://yhoo.it/47tFQEs (https://yhoo.it/47tFQEs)

        That is interesting to know. I wonder if it will beat the S&P at the 30 year mark? With the S&P known to be a "20 year minimum" to see your good return, I'd wonder if it ends up outperforming GLD. What are your thoughts, cheap bastard? (lol, that sounds funny to ask you a financial question by name).

        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on January 12, 2024, 09:23:23 PM
        I'm digging waaaaay back in my memory, but I think there was a similar excitement in late 2004 when the GLD ETF was first introduced as an easy way to invest in gold. This vehicle was expected to drive demand to the roof.

        Maybe it did. After a 7.4% drop in the first few months, GLD went on to beat the price performance of the S&P500 over the next 17 years.

        https://yhoo.it/47tFQEs (https://yhoo.it/47tFQEs)
        I've heard this comparison made on financial TV as well.  At the time, I was surprised they didn't compare to the more recent introduction of futures Bitcoin ETFs, which also involved a surge then flop.

        Riot Blockchain ($RIOT) hit a high of $17.02 after spot Bitcoin ETFs were approved on Jan 11.  It closed the next day at $11.73, falling 31% from that high in two trading days.

        Bitcoin's two day high vs close was a fall of 13%.  It will be interesting to watch how well ETFs track Bitcoin's price moves over time, with IBIT moving -17% and GBTC -11% from two day high to Friday close.


        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 12, 2024, 09:38:31 PM
        [snip]

        The BTC "purists" seem to not like the idea, while many other crypto-fans love the idea of the ETF. The stock market itself (not the crypto market) seems equally divided for many different reasons.

        [snip]

        Bitcoin purists will always buy actual Bitcoin rather than the ETF, and will always encourage others to do the same where possible. That said, I'm pretty sure most Bitcoin purists see the Spot ETFs as a good thing - a gateway to Bitcoin for the masses.

        I think you're right about the first part. I think you're wrong about the second part. I think they know that the ETF would probably spark doom for BTC price overall and into the future but that's just my opinion. I don't think the masses will never hold real bitcoin and the ETFs IMO are so disconnected from crypto (and in line with normal stock market BS) that they're going to damage and dilute the purpose, need, and belief in bitcoin in the general public - even though the general public will assume they're holding actual bitcoin instead of pieces of stock.

        Well, that's your opinion but we weren't discussing your opinion. We were discussing the opinions of 'Bitcoin purists'.

        Most of the vocal Bitcoiners are, and have been for some time, more positive than negative about the likely effects of Spot ETFs (which have long been inevitable in any case).

        Could go either way though. It's diving right now and I made a nice chunk already today on a couple quick shorts. We'll see what happens over the weekend.

        Short term price moves are of very little relevance to anything and are of very little interest to me. I'd put them roughly on a par with, say, random brags about winning trades.

        A "more vocal bitcoiner" does not mean that they're a "purist".... I think you've got it messed up and twisted a bit. Ever put any thought into what and why they're "more vocal"? Maybe to gain traction and acquire more public approval.

        Who said anything about "more vocal" ?
        I'm talking about vocal Bitcoiners as opposed to non-vocal. The vocal are mostly positive. We don't know what the non-vocal think as they are, by definition, silent.

        In my estimation, the following are all Bitcoiner purists. If you think otherwise, please define your term and provide your own example names.
        Back, Bent, Odell, Saylor, Booth, Pysh, Foss, Keiser, Bhatia, Alden, Klippsten, etc. have all expressed mostly positive views on the likely effects of Spot ETFs.
        The most negative/sceptical I've come across is Lepard.

        You know what else is inevitable? That the approval of spot-etfs for crypto is the stepping stone to mandating regulation of all crypto. And most of the purists know this is a major threat, and therefore they are rightfully pissed off.

        Names ? Evidence ?

        I'm not long on any crypto but I view decentralization of bitcoin as being good. I think this is a gateway to CBDCs more than a gateway to BTC for the average investor as you mentioned previously. That something important to take into consideration, which most purists have done.

        Names ? Evidence ?

        The purists, HOWEVER, were the ones being the most vocal on tuesday and wednsday and thursday and still today - about the short term price moves caused by the SECs mishandling of their twitter account security.

        Names ? Evidence ?

        Meanwhile the hardcore pro-ETFers were not even caring or thinking about what damage that caused. Respectfully, you gotta consider all angles there.

        Short term price moves being of little relevance is a very less than correct statement.

        The SEC screwed this up badly but I fail to see any lasting damage (other than to SEC's reputation). A few price swings and it was all over.

        If you're a daytrader, short term price moves are significant and interesting. If you're a serious Bitcoiner, it's just noise.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Metalcat on January 13, 2024, 05:26:05 AM
        Bitcoin ETFs already exist in places outside the US, have you folks looked at how those impacted Bitcoin investing habits of folks in those locations? Might add some data to the speculation as to how investors might respond to these products.

        Or is the thinking that US investors will behave meaningfully differently or that because the US is such a huge market that the behavior of investors will have a much bigger impact, and could create a self-perpetuating wave of investor behaviour?

        I'm just curious why no one has brought data about existing ETFs into the discussion.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 13, 2024, 09:03:29 AM
        [snip]

        The BTC "purists" seem to not like the idea, while many other crypto-fans love the idea of the ETF. The stock market itself (not the crypto market) seems equally divided for many different reasons.

        [snip]

        Bitcoin purists will always buy actual Bitcoin rather than the ETF, and will always encourage others to do the same where possible. That said, I'm pretty sure most Bitcoin purists see the Spot ETFs as a good thing - a gateway to Bitcoin for the masses.

        I think you're right about the first part. I think you're wrong about the second part. I think they know that the ETF would probably spark doom for BTC price overall and into the future but that's just my opinion. I don't think the masses will never hold real bitcoin and the ETFs IMO are so disconnected from crypto (and in line with normal stock market BS) that they're going to damage and dilute the purpose, need, and belief in bitcoin in the general public - even though the general public will assume they're holding actual bitcoin instead of pieces of stock.

        Well, that's your opinion but we weren't discussing your opinion. We were discussing the opinions of 'Bitcoin purists'.

        Most of the vocal Bitcoiners are, and have been for some time, more positive than negative about the likely effects of Spot ETFs (which have long been inevitable in any case).

        Could go either way though. It's diving right now and I made a nice chunk already today on a couple quick shorts. We'll see what happens over the weekend.

        Short term price moves are of very little relevance to anything and are of very little interest to me. I'd put them roughly on a par with, say, random brags about winning trades.

        A "more vocal bitcoiner" does not mean that they're a "purist".... I think you've got it messed up and twisted a bit. Ever put any thought into what and why they're "more vocal"? Maybe to gain traction and acquire more public approval.

        Who said anything about "more vocal" ?
        I'm talking about vocal Bitcoiners as opposed to non-vocal. The vocal are mostly positive. We don't know what the non-vocal think as they are, by definition, silent.

        In my estimation, the following are all Bitcoiner purists. If you think otherwise, please define your term and provide your own example names.
        Back, Bent, Odell, Saylor, Booth, Pysh, Foss, Keiser, Bhatia, Alden, Klippsten, etc. have all expressed mostly positive views on the likely effects of Spot ETFs.
        The most negative/sceptical I've come across is Lepard.

        You know what else is inevitable? That the approval of spot-etfs for crypto is the stepping stone to mandating regulation of all crypto. And most of the purists know this is a major threat, and therefore they are rightfully pissed off.

        Names ? Evidence ?

        I'm not long on any crypto but I view decentralization of bitcoin as being good. I think this is a gateway to CBDCs more than a gateway to BTC for the average investor as you mentioned previously. That something important to take into consideration, which most purists have done.

        Names ? Evidence ?

        The purists, HOWEVER, were the ones being the most vocal on tuesday and wednsday and thursday and still today - about the short term price moves caused by the SECs mishandling of their twitter account security.

        Names ? Evidence ?

        Meanwhile the hardcore pro-ETFers were not even caring or thinking about what damage that caused. Respectfully, you gotta consider all angles there.

        Short term price moves being of little relevance is a very less than correct statement.

        The SEC screwed this up badly but I fail to see any lasting damage (other than to SEC's reputation). A few price swings and it was all over.

        If you're a daytrader, short term price moves are significant and interesting. If you're a serious Bitcoiner, it's just noise.

        All of them that have at least something to say are "vocal", my apology if I incorrectly assumed you saying that "most of the vocal bitcoiners" respresented the majority of those who are front and present in the cryptoshpere, none of which I follow but I've seen what the ones you mention have to say and I think they're primarily full of hot air.

        Go check out the SEC twitter account, check some of the big names who are "less vocal", and you'll see who's there and who's upset. Than you can check their profiles and judge/decide whether they're purists or not since very tight definitions are so important...

        The vast majority of the people you mentioned are not the same type of purists as definition would define otherwise they'd be completely against the ETF from the get-go. They're "pop-coiners", they're corporate front-runners, etc. and are in the public eye of bitcoin to an extent, nothing more. Being intelligent and with good business experience and/or success in one area and presenting as an authority on bitcoin doesn't make them purist. That's like saying a liberal voter is an old-school anarchist.

        Have a good weekend.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 13, 2024, 09:13:52 AM
        Bitcoin ETFs already exist in places outside the US, have you folks looked at how those impacted Bitcoin investing habits of folks in those locations? Might add some data to the speculation as to how investors might respond to these products.

        Or is the thinking that US investors will behave meaningfully differently or that because the US is such a huge market that the behavior of investors will have a much bigger impact, and could create a self-perpetuating wave of investor behaviour?

        I'm just curious why no one has brought data about existing ETFs into the discussion.

        IMHO the bold part. Considering it's the dollar. Population size. Dominance in bitcoin ownership (at least as what's perceived/reported) when compared to foreign markets. The fact that Americans always seem to act and react differently. The particular timing. The economy. The state of everything socio-political.

        I think many people genuinely have no idea that other markets have already been running crypto ETFs if for no reason more than simply never being told.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 13, 2024, 09:25:54 AM

        "Short term price moves are of very little relevance to anything and are of very little interest to me. I'd put them roughly on a par with, say, random brags about winning trades."


        I put your quote in larger font and bold italic so it looks cooler.

        This whole forum is absolutely LOADED with people talking about their wins on all sorts of investments. Massive wins, massive profits over time.

        I, in particular, have very little interest in the irrelevance of opinions coming from someone who makes muted, cheap personal jabs when talking about a few grand.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 13, 2024, 12:48:09 PM
        [snip]

        The BTC "purists" seem to not like the idea, while many other crypto-fans love the idea of the ETF. The stock market itself (not the crypto market) seems equally divided for many different reasons.

        [snip]

        Bitcoin purists will always buy actual Bitcoin rather than the ETF, and will always encourage others to do the same where possible. That said, I'm pretty sure most Bitcoin purists see the Spot ETFs as a good thing - a gateway to Bitcoin for the masses.

        I think you're right about the first part. I think you're wrong about the second part. I think they know that the ETF would probably spark doom for BTC price overall and into the future but that's just my opinion. I don't think the masses will never hold real bitcoin and the ETFs IMO are so disconnected from crypto (and in line with normal stock market BS) that they're going to damage and dilute the purpose, need, and belief in bitcoin in the general public - even though the general public will assume they're holding actual bitcoin instead of pieces of stock.

        Well, that's your opinion but we weren't discussing your opinion. We were discussing the opinions of 'Bitcoin purists'.

        Most of the vocal Bitcoiners are, and have been for some time, more positive than negative about the likely effects of Spot ETFs (which have long been inevitable in any case).

        Could go either way though. It's diving right now and I made a nice chunk already today on a couple quick shorts. We'll see what happens over the weekend.

        Short term price moves are of very little relevance to anything and are of very little interest to me. I'd put them roughly on a par with, say, random brags about winning trades.

        A "more vocal bitcoiner" does not mean that they're a "purist".... I think you've got it messed up and twisted a bit. Ever put any thought into what and why they're "more vocal"? Maybe to gain traction and acquire more public approval.

        Who said anything about "more vocal" ?
        I'm talking about vocal Bitcoiners as opposed to non-vocal. The vocal are mostly positive. We don't know what the non-vocal think as they are, by definition, silent.

        In my estimation, the following are all Bitcoiner purists. If you think otherwise, please define your term and provide your own example names.
        Back, Bent, Odell, Saylor, Booth, Pysh, Foss, Keiser, Bhatia, Alden, Klippsten, etc. have all expressed mostly positive views on the likely effects of Spot ETFs.
        The most negative/sceptical I've come across is Lepard.

        You know what else is inevitable? That the approval of spot-etfs for crypto is the stepping stone to mandating regulation of all crypto. And most of the purists know this is a major threat, and therefore they are rightfully pissed off.

        Names ? Evidence ?

        I'm not long on any crypto but I view decentralization of bitcoin as being good. I think this is a gateway to CBDCs more than a gateway to BTC for the average investor as you mentioned previously. That something important to take into consideration, which most purists have done.

        Names ? Evidence ?

        The purists, HOWEVER, were the ones being the most vocal on tuesday and wednsday and thursday and still today - about the short term price moves caused by the SECs mishandling of their twitter account security.

        Names ? Evidence ?

        Meanwhile the hardcore pro-ETFers were not even caring or thinking about what damage that caused. Respectfully, you gotta consider all angles there.

        Short term price moves being of little relevance is a very less than correct statement.

        The SEC screwed this up badly but I fail to see any lasting damage (other than to SEC's reputation). A few price swings and it was all over.

        If you're a daytrader, short term price moves are significant and interesting. If you're a serious Bitcoiner, it's just noise.

        All of them that have at least something to say are "vocal", my apology if I incorrectly assumed you saying that "most of the vocal bitcoiners" respresented the majority of those who are front and present in the cryptoshpere, none of which I follow but I've seen what the ones you mention have to say and I think they're primarily full of hot air.

        Go check out the SEC twitter account, check some of the big names who are "less vocal", and you'll see who's there and who's upset. Than you can check their profiles and judge/decide whether they're purists or not since very tight definitions are so important...

        The vast majority of the people you mentioned are not the same type of purists as definition would define otherwise they'd be completely against the ETF from the get-go. They're "pop-coiners", they're corporate front-runners, etc. and are in the public eye of bitcoin to an extent, nothing more. Being intelligent and with good business experience and/or success in one area and presenting as an authority on bitcoin doesn't make them purist. That's like saying a liberal voter is an old-school anarchist.

        Have a good weekend.

        Firstly, some clarification:
        My initial statement in this chat "most Bitcoin purists see the Spot ETFs as a good thing" was imprecise and potentially misleading. My apologies.
        My later statement that "vocal Bitcoiners are more positive than negative about the likely effects of Spot ETFs" is better.

        I'd describe the general view that I've seen, and that I broadly share, as:
        Being anti-SpotETF = Canute = a waste of time and energy. A Spot ETF is an inevitable step on the road to maturity.
        A Spot ETF does legitimise Bitcoin. It's acknowledgement from the SEC and several major financial institutions that Bitcoin is a serious thing.
        A Spot ETF provides access for some where direct access to Bitcoin does not exist.
        A Spot ETF is an easy-access, a gateway, an entry point that could get people on the right road towards owning Bitcoin.
        These are all good things.
        On the other hand, a Spot ETF has risks - diversion from the true project, centralisation of capital, opportunities for manipulation, etc., etc.

        I don't think any of the names I listed are pro-SpotETF per se. A Spot ETF goes against the grain - but they acknowledge that it was inevitable and will probably, overall, be beneficial as described above.
        And, for clarity, I've not identified those names as anything more than "vocal". I'm not suggesting they are bastions of truth or the ultimate reference for Bitcoin matters.

        And, returning to this business of "purists":
        You've advised me that my attempted definition was wrong, failed to provide your definition, and invited me to go out and find some examples from a category I clearly don't understand (from a platform I rarely use).
        You need to help me out here. Give me just a couple of names of your "purists" that (i) identify the SpotETF as a major threat, and (ii) think the SpotETF is a gateway to a CDBC, and (iii) were vocal Tue-Thu about the short term price moves - as you described.  With nothing backing them up, all those claims are just groundless assertions.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on January 13, 2024, 01:15:52 PM

        "Short term price moves are of very little relevance to anything and are of very little interest to me. I'd put them roughly on a par with, say, random brags about winning trades."


        I put your quote in larger font and bold italic so it looks cooler.

        This whole forum is absolutely LOADED with people talking about their wins on all sorts of investments. Massive wins, massive profits over time.

        I, in particular, have very little interest in the irrelevance of opinions coming from someone who makes muted, cheap personal jabs when talking about a few grand.

        Context:
        If you're a daytrader, short term price moves are significant and interesting. If you're a serious Bitcoiner, it's just noise.

        Congrats on your win. It just seemed a bit random/superfluous in a discussion about what the "purists" think.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on January 17, 2024, 12:01:18 AM
        Within reason, I'm expecting (and will gladly accept my reasoning to be wrong as I'm a day trader and not a crypto trader) at LEAST 25% drop within a span of 3 days total, followed by a slight uptick and another 10% drop... I mean, there's infinite ways it could play out but let's just say for sake of simplicity, over a period of 5 to 7 days total, 30 to 40% drop. Before Jan 10th for sure IMHO.

        Well we're now at January 10th.  The biggest drop I saw since you posted was a very brief 9% decline but definitely nothing in the 25-30% range. The USD price of bitcoin was $43.7k when this was posted and $45.2k as I write this.

        @WayDownSouth now that the period you were predicting price moves in has passed would you care to talk about the reasoning that went into the prediction and how, if at all, your views have changed as you make future predictions as a result of this unexpected outcome?

        @maizefolk I didn't forget about this I began writing a post this evening but it's a fucking mess. I need to organize it all because it's wayyyyyy too long. stay tuned. Needless to say I didn't hit the target on the big price drop. I'm trying to explain what I saw/felt and my reasoning for wanting to short it massively, but man it's a LOT of info when written out. coming soon.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on January 19, 2024, 10:18:59 AM
        I view spot Bitcoin ETFs as hype that will inflate the price of Bitcoin, so I plan to short it.  I expect the SEC to grant approval to multiple ETFs, which I predict sends BTC-USD above $50,000.  Within days or weeks I expect spot Bitcoin ETFs to be open for investment, at which point I'll short again.  Then I wait for the hype to fade.
        The hype faded.  iShares Bitcoin ETF (IBIT) fell 21% in the eight days since it was listed.  Instead of shorting Bitcoin shares, I just bought one share of IBIT which I sold today.  Demonstrates the same point, and avoids adding another active investment.

        I view Bitcoin as sentiment, not fundamental, so I don't dig as much into research and claims made in articles about it.  This article claims Grayscale sold off $1.3 billion to cover redemptions in $GBTC shares, which is larger than the size of $IBIT (the second largest spot Bitcoin ETF).  Maybe the new ETFs were all funded by people selling the old one (GBTC)?
        https://crypto.news/analyst-grayscale-bitcoin-trust-sellout-has-clear-reasons/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Telecaster on January 19, 2024, 01:17:50 PM
        I view Bitcoin as sentiment, not fundamental, so I don't dig as much into research and claims made in articles about it.  This article claims Grayscale sold off $1.3 billion to cover redemptions in $GBTC shares, which is larger than the size of $IBIT (the second largest spot Bitcoin ETF).  Maybe the new ETFs were all funded by people selling the old one (GBTC)?
        https://crypto.news/analyst-grayscale-bitcoin-trust-sellout-has-clear-reasons/

        My best guess based on my reading is there have been about $1.3 billion in net inflows (that number is changing all the time of course) the rest has been from people exiting GBTC and buying new ETFs.   So there is some new money entering the space, but the hope "the suits will pump our bags" might not be realized.   
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: suddenwealth on January 24, 2024, 06:51:19 AM
        https://er-bybitcoin.com/stacking-em-volume-36-january-2024/

        The orange line is the performance of my bitcoin savings strategy. The blue line is the performance of putting similar amounts on similar days into S&P (the standard boomer savings strategy). The bitcoin strategy has given me a profit of ~330% for the money put in, whereas the S&P strategy would have given me a measly profit of 42% for the money put in, after 6+ years (that can’t be more than inflation really). I made this chart because I used to be obsessed about the early retirement / financial independence thing, blogs like Mr Money Moustache, for example. Basically, they save as much as they can and buy the S&P with it every month. So, I felt like finding the cheat codes and wanted to track just how much better it is to always buy bitcoin instead. Feel free to share this chart to anyone in the FIRE sphere =D.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on January 24, 2024, 07:56:32 AM
        So . . . you're saying you have a scheme to get rich?  And quick?

        :P
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: suddenwealth on January 24, 2024, 08:03:35 AM
        So . . . you're saying you have a scheme to get rich?  And quick?

        :P

        That's not my post and it's not quick. The guy has been DCAing into bitcoin monthly over the past 6 years. He buys 500 euro each month and has built up a stash of 4.47 BTC. 40k worth of purchases that is now worth 178,800.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: GuitarStv on January 24, 2024, 08:16:38 AM
        So . . . you're saying you have a scheme to get rich?  And quick?

        :P

        That's not my post and it's not quick. The guy has been DCAing into bitcoin monthly over the past 6 years. He buys 500 euro each month and has built up a stash of 4.47 BTC. 40k worth of purchases that is now worth 178,800.

        You don't think that more than quadrupling your money in 6 years is quick?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: waltworks on January 24, 2024, 01:09:42 PM
        whereas the S&P strategy would have given me a measly profit of 42% for the money put in, after 6+ years (that can’t be more than inflation really). 

        FWIW, from January 2018 to today, the S&P has returned a real 7% annualized (11% nominal).

        If you're ever bored you can find those returns for any time period here:
        https://dqydj.com/sp-500-return-calculator/

        No comment on the "standard boomer savings strategy" thing...

        -W
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on January 24, 2024, 01:27:53 PM
        So . . . you're saying you have a scheme to get rich?  And quick?

        :P

        That's not my post and it's not quick. The guy has been DCAing into bitcoin monthly over the past 6 years. He buys 500 euro each month and has built up a stash of 4.47 BTC. 40k worth of purchases that is now worth 178,800.

        You don't think that more than quadrupling your money in 6 years is quick?

        Sounds like you're the one saying he has a scheme to get rich.... and quick
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: LateStarter on February 21, 2024, 08:39:34 AM
        Stranded: How Bitcoin is Saving Wasted Energy and Expanding Financial Freedom in Africa (https://bitcoinmagazine.com/check-your-financial-privilege/stranded-bitcoin-saving-wasted-energy-in-africa)

        by Alex Gladstein (https://hrf.org/team/alex-gladstein/): Chief Strategy Officer of the Human Rights Foundation (and a Bitcoiner) - following his Dec2023 visit to Africa.

        An interesting hour's reading for an open mind.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on February 21, 2024, 11:43:46 AM
        So . . . you're saying you have a scheme to get rich?  And quick?

        :P

        That's not my post and it's not quick. The guy has been DCAing into bitcoin monthly over the past 6 years. He buys 500 euro each month and has built up a stash of 4.47 BTC. 40k worth of purchases that is now worth 178,800.

        You don't think that more than quadrupling your money in 6 years is quick?

        Sounds like you're the one saying he has a scheme to get rich.... and quick

        Well he's worth 221k Euros today so he's done extremely well and took in an extra 40k in less than a month since you posted that!
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: suddenwealth on March 11, 2024, 04:34:36 AM
        So . . . you're saying you have a scheme to get rich?  And quick?

        :P

        That's not my post and it's not quick. The guy has been DCAing into bitcoin monthly over the past 6 years. He buys 500 euro each month and has built up a stash of 4.47 BTC. 40k worth of purchases that is now worth 178,800.

        You don't think that more than quadrupling your money in 6 years is quick?

        Sounds like you're the one saying he has a scheme to get rich.... and quick

        Well he's worth 221k Euros today so he's done extremely well and took in an extra 40k in less than a month since you posted that!

        Up another 100k to 321k euros in less than 3 weeks. Bitcoin on a tear. I think it's now safe to say the ETFs weren't priced in.... And the halving still isn't either...
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Juan Ponce de León on March 11, 2024, 08:13:36 AM
        Have the genius bitcoin shorters taken profits yet?
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on March 11, 2024, 10:59:30 AM
        Have the genius bitcoin shorters taken profits yet?
        I think you need a refresher on the forum rules when you mock people as "genius":
        https://forum.mrmoneymustache.com/forum-information-faqs/forum-rules/
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on March 11, 2024, 02:18:28 PM
        Have the genius bitcoin shorters taken profits yet?

        I took a measly few grand around Christmas/New Year but then the conditions I was expecting didn't fit when they approved the ETFs so I dumped that plan.

        I took a few hundred the other day very easily since it I knew it'd drop after that pump.

        I'm trying to pay attention, if I get the chance and this things drops back into the 40's, 30's, or 20's I'll be on it I hope. That doesn't mean I'm wishing people to lose money. I'm just not a buyer in any crypto for that matter. There's enough BS scamming and gameplay in the regular markets for me to get involved with crypto at any serious level. Did it before, made a bit, lost a bit, probably broke even. That was years ago. My trading strategy doesn't wotk well with crypto.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on March 11, 2024, 03:02:53 PM
        So . . . you're saying you have a scheme to get rich?  And quick?

        :P

        That's not my post and it's not quick. The guy has been DCAing into bitcoin monthly over the past 6 years. He buys 500 euro each month and has built up a stash of 4.47 BTC. 40k worth of purchases that is now worth 178,800.

        You don't think that more than quadrupling your money in 6 years is quick?

        Sounds like you're the one saying he has a scheme to get rich.... and quick

        Well he's worth 221k Euros today so he's done extremely well and took in an extra 40k in less than a month since you posted that!

        Up another 100k to 321k euros in less than 3 weeks. Bitcoin on a tear. I think it's now safe to say the ETFs weren't priced in.... And the halving still isn't either...

        You said 321k, really that would be in USD... In euros he's at 295k today... So in about 20 days he gained ANOTHER 70k euros. That's $110k euros approx in less than 45 days.. Impressive.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: clarkfan1979 on March 11, 2024, 03:21:57 PM
        Have the genius bitcoin shorters taken profits yet?

        The original post was from September 6, 2021 and Bitcoin was trading at $52,664. The logic presented in the original post was that Bitcoin has increased in value by 88X since 2016. Maybe it increases in value by 88X in another 6 years?

        Bitcoin is up $72,144 on March 11, 2024. That's an increase of 37% over 2.5 years. Not bad, but very short of 88X. You can probably find 50 stocks in the S&P 500 that have bigger gains. And all that logic would be post-hoc and meaningless.

         
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: WayDownSouth on March 11, 2024, 03:58:07 PM
        Have the genius bitcoin shorters taken profits yet?

        The original post was from September 6, 2021 and Bitcoin was trading at $52,664. The logic presented in the original post was that Bitcoin has increased in value by 88X since 2016. Maybe it increases in value by 88X in another 6 years?

        Bitcoin is up $72,144 on March 11, 2024. That's an increase of 37% over 2.5 years. Not bad, but very short of 88X. You can probably find 50 stocks in the S&P 500 that have bigger gains. And all that logic would be post-hoc and meaningless.

        IMO you have to play it both up and down to really win big.

        It has also gained 180% in 6 months, 251% in 12 months, and 1,774% in 5 years.. Plenty of ups and downs especially in the last 3 years alone for a smart trader holding 1 BTC at $50k to turn it into 10 BTC (approx 720K today) if they executed good shorts and then bought dips with their profits. The thing is you need to really be glued to this and also know what you're doing.

        BTC never makes a big new high and holds. It's a near guarantee that this new ATH - regardless of if it stops today or goes to hit 100k - will drop back to by at 25% to 30% or more within 2 to 3 months or less of wherever/whenever it peaks. And if it climbs up to or shoots up to $120 or $160k, no matter how long it takes, it will drop by a much larger percent.

        It's still a gamble either way. There is no skill involved that a normal day trader or swing trader wouldn't already have. It's not so much the volatility it's the difficulty in marking anything useful as a genuine pattern or precursor of the biggest gains and drops. I've tried and tried and I know I have some good leads and deep research done but they never play out in the time frame I expect and it's impossible to nail down. The high general price makes sniping this shit on a quick climb not worth the risk and same goes for shorting unless you're watching it live and catch a glimpse of a jump and have an order ready.

        Many other ways to make the $ quicker. With that said, being up $120k Euros in less than 45 days without doing anything and only holding about 4.5 coins is an admirable gain for a long-term holder. I'd be taking 50% of that recent $120k profit today and I definitely would NOT be the least bit disappointed in myself for doing so - even if it spiked to 95 tomorrow.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: joe189man on March 11, 2024, 04:15:01 PM
        MicroStrategy Inc. has gone over 3x in the last month
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: MustacheAndaHalf on March 16, 2024, 01:57:27 AM
        MicroStrategy Inc. has gone over 3x in the last month
        Close, but wrong.

        Mar 15 price $1,782.36
        Feb 15 price $718.00
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: Ohio Teacher on March 17, 2024, 06:26:23 AM
        I'm a little late to the thread, but I have a 1% allocation of our nest egg in BTC.  We are 64% VTSAX, 29% VTIAX, 6% cash (VFFXX), and 1% BTC. About a $500K portfolio. It has been my best performing asset class, and also the most volatile. So pretty much what was hoped for and expected.
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: dangbe on March 17, 2024, 08:25:00 PM
        It's still a gamble either way. There is no skill involved that a normal day trader or swing trader wouldn't already have. It's not so much the volatility it's the difficulty in marking anything useful as a genuine pattern or precursor of the biggest gains and drops.

        Crypto has the simplest pattern ever as long as you zoom out far enough.  Every 4 years, sometime between October and January, BTC will hit its highest high. 
        All Time Highs:
        2013 December
        2017 December
        2021 November
        2025 ???

        This year has thrown a bit of a loop to this pattern though with an ATH off the four year cycle, but I'm betting that there will be a significant retracement before climbing all next year for the 2025 ATH at the end of the year.  I could be wrong and patterns don't repeat forever, but it certainly paid off very well in 2021. 
        Title: Re: What do you think of adding a low% of crypto allocation
        Post by: joe189man on March 18, 2024, 10:27:58 AM
        MicroStrategy Inc. has gone over 3x in the last month
        Close, but wrong.

        Mar 15 price $1,782.36
        Feb 15 price $718.00

        Sorry - add about a week back to Feb 7 price of $505
        So serious